RUSSIA: Industrial Production Falls 0.7% Y/Y in November

Jake Sherman at Punchbowl News reports on X that he has received 'countless' messages from Republican House Representatives this morning agreeing with the sentiment of a report the outlet ran this morning questioning the wisdom of staying in Congress in light of an extended period of legislative gridlock in the lower chamber and Marjorie Taylor-Greene's decision to retire from the House in January. 

• Sherman writes, "since this ran this morning -- 4 hours ago? -- ive gotten countless text messages from House Republicans agreeing with this sentiment. and saying why the hell should we stay in congress if all we're going to do is vote on censures and be a potted plant."
• Sherman wrote earlier, "The crux of MTG’s message is that Trump and House Republicans are abandoning all of the president’s priorities, falling into complacency and are on the brink of squandering their razor-thin majority... A few other GOP members messaged us over the weekend saying that they, too, are considering retiring in the middle of the term."
• The reporting chimes with a bullet we posted earlier looking at the mathematics of the House majority. If another two Republican House reps follow MTG to the exit, House Speaker Mike Johnson is likely to lose control of the gavel. Such an outcome would hand oversight powers to Democrats, opening up the possibility of Congressional investigations and likely impeachment of members of the Trump administration. See: US: Marjorie Taylor-Greene's Exit Raises Risk Of GOP Losing House Majority

• EUR/USD: $1.1625(E1.4bln)
• USD/JPY: Y156.00($909mln)
• NZD/USD: $0.5600(N$600mln), $0.5720(N$646mln)
• USD/CNY: Cny7.00($1.2bln)

Analysts expect SGBs to cheapen versus swaps going forward, catalysed by the NDO’s November borrowing plan. After narrowing towards (and briefly, through) zero during August and September, the 10-year SEK ASW has now moved back above 10bps. Despite the seemingly consensus nature of the trade, current market pricing doesn't point to much pre-positioning in 10-year ASW tighteners ahead of the borrowing plan's release. That could set the stage for a material move in the aftermath of the report should nominal SGB issuance come in above expectations.

• A reminder that nominal SGBs cheapened materially versus German peers and swaps during the summer, following the announcement of the Government’s expansionary fiscal plan. The SEK80bln of unfunded measures for 2026 (in addition to Ukraine aid) was larger than most analyst/independent forecaster estimates we had seen.
• Analyst views on SEK rates markets ahead of the borrowing plan's release:
  • Danske Bank: "We believe the announcement of an increased nominal SGB supply increase next week should result in SGB ASW cheapening across the curve....we keep our short SGB1066 (May-35) ASW recommendation"
  • Handelsbanken: “"As market attention shifts towards increased issuance following the NDO’s new borrowing forecast, we expect swap spreads to tighten again."..."Currently, the free float – i.e. bonds available to the market – is increasing rapidly, which could lead to greater pricing volatility”
  • SEB: "We are structurally negative SGB 10 ASW and Dec could prove the local high in the ASW on the back of seasonals and a more cautious NDO next week."