EU-RUSSIA: EU Set To Pass Workaround To Freeze Russian Assets Long-Term
Dec-12 13:37
Reuters reporting comments from European Commission Exec VP Valdis Dombrovskis regarding the EU's efforts to use frozen Russian assets held in the Union to fund Ukraine's reconstruction. On the Russian Central Bank's claims that the use of the frozen funds would be illegal, Dombrovskis says that EU financial institutions holding the assets are 'fully protected from legal proceedings", and that "under the current EU sanctions regime, central securities depositories like Euroclear [in Belgium, where the bulk of the assets are held] can offset any seizure of their assets in Russia with immobilised Russian assets in the EU."
- Dombrovskis: We can expect Russia will "continue to launch speculative legal proceedings to prevent the EU from upholding international law. That is why in the current sanctions regime, and in the proposal to use Russian assets last week, we included additional protections for institutions holding Russian assets."
- The comments come as the European Council is set to approve the long-term freezing of Russian assets in the EU under a legal workaround known as a 'written procedure'.
- This was passed by a majority rather than all EU ambassadors on 11 Dec and is set to be signed off on today. Hungary and Slovakia have vehemently objected, claiming the move is illegal. However, the Commission's legal text argued it “is a measure that is appropriate in order to avoid further repercussions of unprecedented magnitude on the economic situation of the Union caused by Russia’s actions,”.
- Hungary and Slovakia have, to date, been able to extract concessions from the EU every six months, which is when the renewal of sanctions has to take place. With the written procedure, though, the lapsing of sanctions would not lead to the return of Russian assets, denying Budapest and Bratislava their leverage at Council meetings.
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SWAPS: Several Factors Support Ongoing German Long End Swap Spread Widening
Nov-12 13:37
Buxl ASWs and swap spreads are set to register fresh closing highs for the current widening cycle.
- Today’s widening comes even as the long end lags in outright bond trade (Buxl yields little changed, ~2bp off session highs).
- While broader fixed income demand was noted in the wake of Tuesday’s U.S. weekly ADP employment data, the extension of the widening move was already in play before that data crossed.
- Elsewhere, the German debt brake proposal from the Bundesbank was a probably a secondary factor in late Tuesday/early Wednesday trade, with the bulk of Tuesday’s move taking place before those headlines crossed.
- Indeed, Commerzbank argue that “while it would fit the picture of long-term fiscal restraint, yesterday's noticeable 30-Year Bund swap spread richening was probably not directly triggered by the Bundesbank proposal. Speculation about looming Dutch paying flows in swaps could be behind it. While we see scope for more ultra-long Bund ASW richening in Q1, amid increased paying interest from Dutch pension fonds, the risk is that long UB positions are already a consensus trade”.
MNI: CANADIAN SEP BUILDING PERMITS +4.5% MOM
Nov-12 13:30
- MNI: CANADIAN SEP BUILDING PERMITS +4.5% MOM
- CANADA RESIDENTIAL BUILDING PERMITS +4.8% MOM; NON-RESIDENTIAL +4.0% MOM
US: MNI POLITICAL RISK - House Tees Up Votes To End Govt Shutdown
Nov-12 13:25
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- At 19:30 ET 00:30 GMT, President Donald Trump will host a White House dinner for finance leaders, including the chief executives of Nasdaq and JPMorgan Chase. White House Press Secretary Karoline Leavitt will brief at 13:00 ET 18:00 GMT.
- Secretary of State Marco Rubio will participate in G7 sessions in Canada on Ukraine and maritime security. A meeting with Canadian Foreign Minister Anita Anand will offer an opportunity to reset trade talks.
- The longest government shutdown in US history appears set to end tonight. The House of Representatives will gavel in at 16:00 ET 19:00 GMT to begin voting on the Senate's CR/minibus package. A final vote is expected at around 19:00 ET 00:00 GMT.
- The White House appears to be taking steps to dial down tensions with key trading partners. Trump’s tariffs may be weakening a key security alliance in the Indo-Pacific.
- The White House took another step towards shuttering the Consumer Financial Protection Bureau.
- Washington and Riyadh are finalising agreements ahead of Crown Prince Mohammad bin Salman's visit next week.
- Russia's Foreign Ministry said Moscow is ready to resume talks with Ukraine.
- The most advanced US carrier fleet arrived in Southern Command yesterday. Trump's end goal in Venezuela remains unclear, but experts say the buildup of military assets in the southern Caribbean is inconsistent with small-scale strikes on alleged drug boats.
- Poll of the Day: Nearly half of Democrats disapprove of the government shutdown deal.
Full Article: US DAILY BRIEF
