GERMANY: Economy Minister Says Debt Brake Discussion "Has Advanced"
Jan-29 13:17
During the press conference following the growth forecast revisions, Reuters also reported the following: "HABECK: INTERNATIONAL INSTITUTIONS CALL FOR A DEBT BRAKE REFORM, DISCUSSION HAS ADVANCED AND GLOBAL CIRCUMSTANCES HAVE CHANGED".
- For context, note that economy minister Habeck has been a long-time proponent of debt-brake reform in Germany. The interesting bit comes via "the discussions have advanced", although little clarity available on that matter. Markets appear unmoved on the headline thus far.
- A recent poll from Forsa-DGAP carried out 10-14 Jan showed for the first time a majority of respondents in favour of reforming the debt brake. A total of 55% of respondents said they were in favour of reform or abolition of the debt brake, with 41% saying it should remain unchanged. The proportion favouring reform/abolition is up from 44% in November 2024, and 32$% in July 2024. Even 55% of CDU supporters and 41% of FDP supporters (both usually seen as strong supporters of fiscal prudence) said they supported reform/abolition.
- See below for a chart on the poll, with the blue line indicating percentages of respondents favouring no debt brake revision and the orange line indicating the percentage of respondents favouring exceptions for investment.
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US TSY FUTURES: Extending Highs
Dec-30 13:13
- Treasury futures continue to march higher, mirroring support in EGBs (see 0754ET bullet), otherwise no substantive headline or Block driver.
- Tsy Mar'25 10Y contract trades 108-25 last (+11) puts it back to last Monday's early range, 10y yield declining .0545 at 4.5709%.
- Curves remain mixed, 2s10s -.050 at 28.792, 5s30s +1.967 at 37.374.
STIR: Repo Reference Rates
Dec-30 13:07
- Secured Overnight Financing Rate (SOFR): 4.46% (-0.07), volume: $2.275T
- Broad General Collateral Rate (BGCR): 4.45% (-0.05), volume: $840B
- Tri-Party General Collateral Rate (TGCR): 4.45% (-0.05), volume: $803B
- (rate, volume levels reflect prior session)
EQUITIES: Futures Through the Friday Lows as Megacaps Underperform Pre-Market
Dec-30 12:59
US futures now through the Friday lows as volumes and participation pick up at the NY crossover. Move lower for stocks is coming alongside a fresh daily low in the US 10yr yield - this is the inverse of the price action we noted into the Friday close, which saw the e-mini S&P drop ~80 points as the US 10y yield added ~5bps.
- An early underperformer amid single stocks had been Boeing - which traded lower by as much as 9% in pre-market trade this morning - but has since trimmed the losses to around 2%. Megacap names are underperforming ahead of the bell (as had been the case last week): Tesla lower by 1.9%, NVidia -0.9%, Apple -0.8%, Meta -0.8%.
- Today's marks one of the last full session of the year for equity markets - so rebalancing flows could prove dominant, estimates of which vary but some notable names see over $20bln of US equities to be sold from US pension funds in order to rebalance against the December price action - a sizeable flow when compared to historicals.
