EMISSIONS: EU End-Of-Day Carbon Summary: EUAs/UKAs Track Weekly Losses

• Greene is due to speak on Wednesday in a speech entitled ‘Supply shocks and monetary policy’ (17:30) at the University of Glasgow Business School. We don't expect this to be market moving unless Greene says that she no longer believes that rates are restrictive. The text will be released here.
• This would be in contrast to her comments in her appearance ahead of the Treasury Select Committee on 3 September, when she said that "I think there are indications that we're still restrictive, but I'm not convinced that we're meaningfully restrictive. We've been in a rate cutting cycle for, you know, a year now, so it can't go on forever with us also being restrictive."
• Greene was also concerned about inflation persistence while being less concerned about downside risks to the labour market. We would be surprised if she changes this tone today. And we would be very surprised if she supported a November cut following her hawkish dissent in August.

At 254bps, the Swiss - German 10-year government bond yield spread stands at its widest levels on record, extending its longer-term trend which started 2022.

• Form a broader perspective, the moves lower in Swiss 10-year yields over the past two years continue to be striking when viewed against global core FI markets, and highlight the unique position the Swiss economy finds itself - characterized by low inflation and the prudent federal fiscal position. German yields increased last year as expansionary fiscal policy reduced scarcity through expected higher issuance. But this has not been the case in Switzerland where scarcity still remains.
• The moves recently in Germany have been seen across the curve - and have generally been driven by the short-end. In Switzerland, the 2-year has remained well anchored as it already anticipates policy rates remaining at or close to zero for an extended period, but there has been a flattening of the 2s10s Swiss curve, partly driven by US-driven factors (that seem to have spilled over more outside of the Eurozone) and partly driven by the expectation that policy rates in Switzerland may remain lower for longer - and notably longer than 2-years.
• Given both the ECB and SNB (preview of tomorrow's decision here) appear to stand near or at end of their rates cycles, further room for adjustment of the Swiss - German 10y spread may be centred around the respective countries' curve shapes. This leaves focus on a potential re-pickup of global core FI steepening, the German fiscal situation, as well as any news on the Swiss trade situation.

• US TSY 17W AUCTION: NON-COMP BIDS $470 MLN FROM $65.000 BLN TOTAL