EURIBOR OPTIONS: Latest Euribor upside Option, Looking for ECB cuts

• The PDMA notes that Greece's cash reserves amount to E33bln (3 years of financing needs).
• Financing needs for 2025 total E15.283bln (E5.54bln from MT/LT redemptions, E4.75bln interest on debt, E5.29bln of early repayments (including T-bill stock reduction), E5.496bln from other cash requirements (RRF loans, capital increases etc). This is partially offset by a projected primary surplus of E5.793bln.
• Financing sources:
  • GGB issuance: E8.000bln (down from E10.0bln in 2024 plan, E9.55bln executed).
  • Other financing sources (NGEU, EIB, CEB, etc.): E3.027bln
  • Proceeds from equity and investment fund shares E564mln
  • Decrease in cash reserves: E3.692bln

Core global FI markets off session lows, with oil ticking lower and short-term technical levels holding in German paper.

• Continued focus on potential U.S.-China trade tariffs likely factored into the recovery as well, given the readthrough for European growth.
• Core global FI yields still higher on the day.
• Bund futures last -18 at 133.96. German yields 1-2bp higher.
• Bears failed to push Bund yields meaningfully above Dec highs, with 3 tests ultimately failing (2.323% session high vs. prior Dec highs of 2.322%).
• OATs ~1bp wider vs. Bunds (and wider vs. all EGBs on the day), spread sticks to multi-week range, last 80bp. PM Bayrou’s cabinet is set to be named later today.
• Peripherals 0.5bp wider to Bunds, spreads back from session highs as European equities edge away from lows.
• Some attributed the early weakness in bonds to comments from ECB President Lagarde, although we don’t think she was particularly hawkish.
• ECB-dated OIS little changed on the day, showing just under 120bp of ’25 cuts.
• Gilts generally looking to core global FI peers for direction.
• Futures within Friday’s range, -25 at 92.68.
• Yields 2-4bp higher across the curve, steeper, last week’s highs untouched.
• 10-Year spread to Bunds 1bp wider at 223bp.
• BoE-dated OIS stable, showing just over 60bp of cuts through ’25.
• U.S. durable goods and consumer confidence data headlines the macro calendar today, little else of note scheduled.
• Proximity to Christmas will limit liquidity over the coming days.