RIKSBANK: MNI Riksbank Review: December 2025 - Holding Steady
Dec-18 12:58
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EXECUTIVE SUMMARY
- The Riksbank held the policy rate at 1.75% as unanimously expected. The statement re-iterated that the policy rate is likely to remain at this level for “some time to come”. This was supported by the December MPR rate path, which was steady at 1.75% for the first three quarters through Q3 2026. A reminder that the first three quarters of the path are “owned” by the Executive Board, and therefore constitute a policy signal.
- The Riksbank acknowledged that since September, “growth has been higher and economic activity is assessed to be stronger”. Meanwhile, underlying inflation pressures are expected to remain in line with the target going forward. The Riksbank assesses that “a policy rate at its current level helps to strengthen domestic demand and thus also economic activity. This, in turn, provides the conditions for inflation to stabilise close to the target in the medium term”.
- Overall, the decision was broadly in line with expectations. We thought the Q3 2025 point on the rate path may have been nudged away from 1.75% on account of improving economic activity, but were cognisant that the risk was for a flat path through the policy relevant horizon. The market reaction was very marginally dovish, with 2-year SEK swap rates falling 3bps at the time of writing. This may reflect a lack of endorsement of market pricing which assigns an ~80% implied probability of a hike next year in the rate path and press conference.
- Analysts generally expect the policy rate to remain at 1.75% throughout next year, with most hike expectations reserved for 2027. Danske Bank retain their call for a hike in December 2026, followed by another in March 2027.
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STIR FUTURES: BLOCK: Sep'26 SOFR Buy
Nov-18 12:51
- +5,000 SFRU6 96.835, post time offer at 0746:00ET.
- The Sep'26 contract trades 96.835 last (+0.040).
US TSYS: Early SOFR/Treasury Option Roundup: Better Calls/Rate Cut Pricing Firms
Nov-18 12:36
Better Treasury & SOFR call option volumes overnight, underlying futures firmer - near overnight highs while projected rate cut pricing gaining vs late Monday levels (*): Dec'25 at -11.1bp (-10.2bp), Jan'26 at -22.1bp (-20.1bp), Mar'26 at -32.9bp (-30.9bp), Apr'26 at -40.1bp (-37.6bp).
- SOFR Options:
- 1,000 SFRZ5 96.25/96.31/96.37/96.43 call condors
- 10,000 SFRZ5 96.12/96.25 put spds ref 96.1875
- Block/screen, 4,500 0QZ5 96.68/96.93/96.06 broken put trees ref 96.915
- 3,800 SFRZ5 96.50/96.62 call spds ref96.19
- 2,000 SFRZ5 96.12/96.18/96.25 put flys ref 96.19
- 7,500 SFRZ5 96.18/96.25/96.31/96.37 call condors ref 96.19
- 5,000 SFRZ5 96.12/96.18/96.25/96.31 call condors ref 96.19 to -.1925
- 1,000 SFRZ5 96.25/96.37 1x2 call spds ref 96.1925
- Treasury Options:
- 1,750 FVZ5 110.25/110.5 call spds ref 109-10.5
- 2,500 TYZ5 112.75/113.25 1x2 call spds ref 112-27.5
- 4,500 TYF6 114 calls, 24 ref 112-26
- 2,000 TYZ5 113.5/TYF6 114 call spds, 19
- 3,500 TYZ5 113.5 calls ref 112-26.5
- 2,000 FVG6 110.25/110.5 call spds ref 109-13.25
- 1,400 TUZ5 104.12/104.5 put sds ref 104-05.12
- 2,000 TYZ5 113 puts 30 ref 112-24
- 2,300 TYF6 114 calls, ref 112-20.5
OUTLOOK: Price Signal Summary - Bear Cycle In Bunds Intact
Nov-18 12:23
- In the FI space, a bear theme in Bund futures remains intact and the contract is trading closer to its recent lows. Price has pierced 128.52, the 76.4% retracement of the Sep 25 - Oct 17 bull leg. A clear break of this handle would signal scope for an extension towards 128.25, the Oct 7 low. Key short-term resistance is seen at 129.40, last Thursday’s high. Clearance of this hurdle would signal a reversal.
- The latest sharp pullback in Gilt futures is considered corrective - for now - and the next key support to watch lies at 91.82, the Sep 11 high and a former key breakout level. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. First resistance to watch is 92.85, the Nov 14 high. For bears, a break of 91.82, the Sep 11 high, would strengthen a bear theme and open 91.67, a 50.0% retracement of the Sep 3 - Nov 4 bull leg.
