FRANCE: Gov't Spox Acknowledges State Budget May Not Pass By Year-End
Following the narrow passage of the Social Security Financing Bill (PLFSS) in the National Assembly on 9 Dec (by a margin of 247 to 234 with 93 abstentions), PM Sebastien Lecornu now begins laying the groundwork for achieving a similar feat with the draft State Financing Bill (PLF). The Senate is currently examining the PLF ahead of a vote expected on Monday, 15 December. In the likely event that the Senate and National Assembly pass different versions of the legislation, a joint committee will be convened in an effort to reach a compromise.
- Gov't spox Maud Bregeon said on France 2 earlier this morning that "If an agreement is impossible between the National Assembly and the Senate, we will probably continue these discussions in January".
- To continue to levy taxes and make paymen in 2026 without a budget in place, a special law must be passed in parliament. The deadline for this is 19 Dec.
- Unlike with the PLFSS, where the centre-left Socialist Party (PS) gained the key concession of the postponement of the 2023 pension reforms, there has been no such giveaway with the PLF.
- At ~15:00CET (09:00ET, 14:00GMT), a debate on national defence is due to begin in the National Assembly. This is the first of the debates on five key themes called by Lecornu - defence, drug trafficking, agriculture, energy, and the deficit - that are not formally part of the budget negotiations. Instead, they seek to "reach a consensus" and "create a framework for compromise for the future," according to the PM.
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EGBS: Spreads To Bunds Little Changed To Tighter
10-Year spreads vs. Bunds little changed to 1bp tighter on the day, aided by the recovery in wider risk appetite given the tentative movement towards the reopening of the U.S. government.
- OATs & the peripheral see a fairly uniform ~1bp of tightening, no outperformance for Greece evident after a move to Positive outlook at Scope Ratings on Friday.
- French & Belgian fiscal risks remain front and centre on the headline front, while Iberian & BTP outperformance vs. OATs continue to present the medium-term market theme of note.
- EUR 3m10y vol trades further above 50bp but still remains at supressed levels given the market’s late stage/completed view when it comes to the ECB’s rate cutting cycle.
STIR: ECB VP Reaffirms Rates Are In Good Place, ~10bp Of Cuts Still Priced
EUR STIR markets also see modest hawkish adjustments on the back of the upturn in wider risk sentiment given tentative progress towards the reopening of the U.S. government.
- Euribor futures 0.5-2.5 lower, strip steeper.
- ERZ6 1.0 off month-to-date lows.
- ECB-dated OIS still pricing ~40% odds of one further cut in the current cycle.
- Vice President de Guindos reaffirmed the idea that policy settings are in a good place in an interview with Diario de Noticias.
- The Eurozone calendar is very limited today, with nothing in the way of meaningful macro event risks to highlight.
- The German ZEW survey (Tuesday) and final national level HICP data (through the week) headline this week’s Eurozone economic calendar.
ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR (bp) |
Dec-25 | 1.923 | -0.9 |
Feb-26 | 1.908 | -2.4 |
Mar-26 | 1.871 | -6.1 |
Apr-26 | 1.864 | -6.8 |
Jun-26 | 1.833 | -9.9 |
Jul-26 | 1.830 | -10.2 |
Sep-26 | 1.824 | -10.8 |
SILVER TECHS: Trading Above Support
- RES 4: $56.153 2.500 proj of the Aug 20 - Sep 16 - 17 price swing
- RES 3: $55.444 2.382 proj of the Aug 20 - Sep 16 - 17 price swing
- RES 2: $54.480 - High Oct 17 and the bull trigger
- RES 1: $51.071 - 61.8% retracement of Oct 17 - 28 bear leg
- PRICE: $49.888 @ 08:19 GMT Nov 10
- SUP 1: $46.320/45.557 - 50-day EMA / Low Oct 28
- SUP 2: $41.135 - Low Sep 17
- SUP 3: $40.000 - Round number support
- SUP 4: $38.087 - Low Aug 27
Trend signals in Silver remain bullish and recent weakness is considered corrective. The trend has recently been in overbought territory and the retracement has allowed this to unwind. Price remains above support at the 50-day EMA, at $46.320. A clear break of the average would signal scope for a deeper retracement. Key resistance has been defined at $54.480, the Oct 17 high. Initial resistance is $51.071, a Fibonacci retracement.
