HUNGARY: ING Expect Rates to Remain Unchanged for the Rest of the Year
Aug-27 08:17
- ING note that the strong messages regarding the need to anchor inflation expectations, and unchanged forward guidance, should be convincing enough to show what the NBH intends to do for the rest of the year. They believe that the central bank is prepared to keep interest rates at their current level for the foreseeable future.
- Against this backdrop, ING assume that the policy rate will remain at 6.50% for the rest of the year. However, they cannot rule out the possibility of a deviation from this towards the end of the year, particularly if major central banks adopt a more dovish approach in contrast to recent market expectations.
- They note that the NBH provides stable support for the forint thanks to its hawkish stance, which should continue for some time. On the other hand, there is still room for pricing in more rate cuts next year, mainly due to weak economic data. This should sooner or later undermine the strength of the HUF, keeping it at 405 for the end of the third quarter and 410 for the end of the year, in ING’s forecast.
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GILTS: /STIR: Goldman Hold Long SONIA Vs Euribor, Eye On QT & Reduced Gilt Risk
Jul-28 07:53
Goldman Sachs note that “despite the previous week’s inflationary speed bump, the UK curve outperformed last week, as soggy activity data insulated gilts from bearish price action in other markets. This muted spillover points to the continuing calming in UK-specific risk premium that had been a feature of UK macro assets in recent years. As inflation risk subsides, the half-life of bouts of gilt volatility seems to be shrinking”.
- They go on to suggest that gilts should “get additional support as the BoE slows the pace of QT from October onwards. Although the pace of active sales picks up in our forecasts, we expect the BoE to skew away from long-end sales. As a result, we maintain our constructive GBP vs EUR rates and continue to recommend long SFIZ6 vs. ERZ6”.
EQUITIES: Estoxx outright Put Buyer
Jul-28 07:47
SX5E (15th Aug) 4900p, bought for 4.70 in ~8.4k.
US TSY OPTIONS: Weekly TY Option
Jul-28 07:45
TY Weekly Option, Friday NFP Expiry:
- TY 111p, bought for '22 in ~5.11k.
