POWER: EC Eyes Possibility to Fund Nuclear in Budget

• EUR/USD: Jun19 $1.1415-25(E2.4bln), $1.1545-50(E1.2bln), $1.1585-00(E3.1bln); Jun20 $1.1600(E1.0bln), $1.1615-25(E1.1bln), $1.1700(E1.1bln)
• USD/JPY: Jun20 Y143.00-15($1.9bln), Y146.00($1.9bln)
• EUR/JPY: Jun20 Y162.10-20(E1.3bln)
• AUD/USD: Jun19 $0.6600(A$1.1bln)
• USD/CNY: Jun20 Cny7.3000($1.4bln)

• Date $MM Issuer (Priced *, Launch #)
• 06/17 $5B *EIB 7Y SOFR+50
• 06/17 $3B *KFW 2Y SOFR+26
• 06/17 $675M Islamic Development Bank Sukuk 5Y SOFR+58a
• 06/17 $Benchmark Hyundai Capital AM, 2Y +125a, 2Y SOFR, 3Y +135a, 3Y SOFR, 5J +145a, 5Y SOFR, 7Y +160a
• 06/17 $Benchmark UnitedHealth 3Y +80a, +5Y +95a, 10Y +120a, 30Y +140a
• 06/17 $Benchmark Enterprise Products 3Y +70a, +5Y +90a, +10Y +115a
• 06/17 $Benchmark The Bahamas 11Y 8.5%a

The Riksbank decision is due tomorrow at 0830BST/0930CET. With consensus leaning heavily towards a 25bp rate cut to 2.00%, focus will be on the policy statement guidance and June MPR rate path projection.

• Developments since March support a downward revision to the rate path from its current flat 2.25% level, but we don’t expect the path to move much below 2.00%. It’s still too early for the Executive Board to signal a material chance of a cut to 1.75% in the baseline projection – the June MPR alternative scenarios are best placed to incorporate a dovish pivot of that nature.
• If the rate path troughs at 2.00% and the policy statement is ambiguous on the chances of further easing, there may be modest hawkish risks to the SEK intraday.
• Overnight ATM EURSEK vols have moved up to 9.7 points ahead of the decision, above the 7.6 YTD average. That pushes the breakeven on an overnight ATM straddle expiring at tomorrow’s NY cut to 40 pips in either direction.
• The lower break-even on that structure aligns closely with last Thursday’s low at 10.9033, and this level may be at risk if the hawkish conditions noted above are realised. Firm support is then seen at 10.7941, the April 4 low.
• MNI’s full Riksbank preview is here.