EU UTILITIES: Enel: 3Q25 Results   

Swedish September inflation confirmed flash estimates, leaving CPIF ex-energy in line with the Riksbank’s September MPR projection at 2.70% Y/Y (vs 2.92% prior). The signal for monetary policy is neutral – we don’t expect a move away from 1.75% for at least the next few months. 

• Our estimate of seasonally adjusted CPIF ex-energy inflation for September was 0.05% M/M for the second consecutive month. That pulled 3m/3m annualised inflation momentum down to a 13-month low of 2.12%.
• There was another sharp pullback in food inflation in September, to 2.66% Y/Y (vs 3.94% in August, 4.26% in June and July). This was the lowest annual rate since January.
• Meanwhile, goods inflation pressures appear soft:
  • Clothing eased to 2.02% Y/Y (vs 2.95% prior) while footwear pulled back to 0.61% Y/Y (vs 4.66% prior). Monthly price developments were well below September 2024 and the 2010-2019 average for September.
  • Furnishings and household equipment inflation was also soft at -2.31% Y/Y (vs -0.41% prior).
  • Vehicle inflation was -0.05% Y/Y (vs 0.38% prior).
• These trends were somewhat offset by stronger annual services inflation, but we caveat that familiar volatile categories were at play:
  • Car rental and international flight prices saw sequential declines for the second consecutive month (further unwinding summer strength), but Y/Y rates still accelerated relative to August.
  • Meanwhile, package holidays reversed a little of August’s -22.5% M/M fall with a 3.1% rise. The annual rate became less negative at -0.49% Y/Y (vs -5.56% in August) as a result.
  • Accommodation services rose 5.26% M/M, compared to a -0.62% M/M fall in September 2024. That pushed the annual rate up to 6.13% Y/Y (vs 0.2% prior).
• The proportion of subcomponents with annual inflation rates below 3% rose to 65% in September, up from 60% in August.

SX7E (17th Oct) 232/237cs 1x2, bought for 1.15 in 3k.

Gilts follow peers higher as the reduction in short-term French political risk and late Tuesday comments from Fed Chair Powell provide support.

• Futures through resistance at 92.06 and 92.14, strengthening the recent bullish theme. Contract trades as high as 92.39.
• Fresh extension higher would target projection resistance (92.72).
• Yields 4-5bp lower across the curve.
• 10s through support at the August 11 low (4.548%). Uptrend support drawn from the Dec ’24 low is very close (4.536%). The next level of note below there is the August low (4.496%).
• 30s have broken through uptrend support drawn off the April low (5.370%) and trade ~3bp above their August low (5.309%).
• The dovish repricing in GBP STIRs extends a little further.
• SONIA futures 0.5-4.5 firmer, BoE-dated OIS showing ~10bp of easing through year-end.
• The DMO will sell GBP1.5bln of the 0.125% Aug-31 I/L line this morning.
• Comments from BoE’s Ramsden & Breeden are due later today, although the settings and topics of the discussions may limit scope for meaningful comments on monetary policy.
• A reminder that BoE Governor Bailey pointed to the trade off in managing inflation and a softening labour market late on Tuesday. He steered clear of any guidance when it comes to future interest rate decisions. Next week’s CPI data is key.