EMERGING MARKETS: Global News: February 12
- US (MNI) – Consensus sees core CPI inflation accelerating to a seasonally adjusted 0.3% m/m in January after 0.225% m/m in December. Headline is expected at 0.32% m/m, owing to a sequential slowing in energy prices vs stronger food prices amidst a serious bird flu outbreak. There's a good chance core CPI ‘surprises’ a tenth higher with 3.2% y/y due to rounding, whilst headline CPI is widely expected to print 2.9% y/y.
- US (MNI) – Jake Sherman at Punchbowl reports that House Speaker Mike Johnson's budget resolution could target $1.5tn in spending cuts. Sherman notes on X that the yet-to-be-finalised resolution could cover $4.5tn for tax cuts, $300bn increase in mandatory spending, and assumes 2.8% in economic growth. Johnson intends to mark up the resolution in the House Budget Committee on Thursday and is targeting the last week of February for a full House vote.
- JAPAN (BBG) – BoJ Governor Kazuo Ueda says that the size of interest rate hikes will depend on the economy, inflation and financial conditions at the time. BoJ’s rate hike to 0.5% last month from 0.25% was appropriate, Ueda said in response to questions in parliament. Risks aren’t zero that price increases in fresh and other foods are impacting sentiment and price expectations among households.
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EU-BOND SYNDICATION: New 3-year / 3.375% Oct-54 tap: Mandate
"The EU has mandated Barclays, BNP Paribas, J.P. Morgan, LBBW and NatWest Markets as Joint Lead Managers for its upcoming EUR Fixed Rate RegS Bearer dual tranche transaction comprising a new long 3-year benchmark line due 4th July 2028 and an increase of EU 3.375% benchmark due 5th October 2054 (EU000A3K4EY2). No further group. The transaction will be launched tomorrow, subject to market conditions. "
MNI comments
- The new 3-year maturing 4 July 2028 was one of the three issues highlighted as likely to launch in H1. We pencil in a tranche size of E5-7bln (we have not seen an EU-bond tranche larger than that since March 2022 - but there is a possibility we go a bit higher with the large H1 EU funding plan).
- The 3.375% Oct-54 tap we pencil in between E4-6bln (possibly partly depending upon the size of the new 3-year).
- We look for a combined E9-13bln total transaction size.
US: SOFR FIX - 13/01/25
SOFR - Bloomberg.
- 1mth 4.30624 0.0037
- 3mth 4.30198 0.01497
- 6mth 4.27941 0.03483
- 12mth 4.24478 0.06645
EUROSTOXX50 TECHS: (H5) Retracement Mode
- RES 4: 5097.00 High Oct 14
- RES 3: 5080.00 High Oct 15
- RES 2: 5068.13 0.764 proj of the Nov 21 - Dec 9 - 20 price swing
- RES 1: 5054.00 High Jul 8
- PRICE: 4950.00 @ 10:47 GMT Jan 13
- SUP 1: 4935.71 50-day EMA
- SUP 2: 4829.00 Low Dec 20 and key short-term support
- SUP 3: 4800.87 76.4% retracement of the Nov 21 - Dec 9 bull cycle
- SUP 4: 4775.00 Low Nov 29
A bull cycle in the Eurostoxx 50 futures contract remains intact and for now, the latest pullback appears corrective. Initial support to watch is 4935.71, the 50-day EMA. A clear break of this EMA would undermine a bullish theme and signal scope for a deeper retracement. For bulls, resistance at 5040.00, Dec 9 high, has recently been pierced. A clear break of it would resume the bull cycle that started on Nov 21 and open 5068.13, a Fibonacci projection.
