SECURITY: NATO Def Mins Meet As Ukraine & Europe Assess Trump's Push For Talks

Feb-13 09:00

NATO defence ministers are meeting in Brussels as they grapple with a day that may represent the most significant shift in European geopolitics since Russia's full-scale invasion of Ukraine in Feb 2022. On 12 Feb US Secretary of Defense Pete Hegseth laid out in stark terms the future of European security, which will see a much less involved US and no NATO membership for Ukraine. 

  • This was followed by confirmation from US President Donald Trump that he had spoken to Russian President Vladimir Putin, and that the first stages of negotiations to end the conflict would begin at the Munich Security Conference on 14 Feb. Ukraine's European allies have been at pains to stress that Kyiv must have a prominent role in any talks, but it remains to be seen how much influence Europe can have in the process given the Trump administration's apparent willingness act unilaterally on the matter.
  • The US' shift in stance with regard to European security will have a marked impact on state finances. Without the US security umbrella, European nations will face the choice of major increases in defence spending or being left vulnerable to direct, hybrid, or indirect attack. This in turn will require gov'ts to hike taxes, cut spending, ramp up debt, or a combination of all three.
  • NATO Secretary General Mark Rutte will speak alongside Ukrainian Defence Minister Rustem Umerov at 1225CET (0625ET, 1125GMT) before holding a presser at the end of the meeting at 1615CET (1015ET, 1515GMT). 

Historical bullets

SCANDIS: Danske Recommend Buying 6M ATM NOKSEK Put

Jan-14 08:55

Danske Bank see downside risks to NOKSEK from a strategic and tactical perspective in 2025, and recommend buying an ATM 6M put option (spot ref 0.9820).

  • With implied volatility, risk reversals and butterflies at neutral to cheap levels we opt for a simple ATMS bought put option – although option structures that entail selling of optionality can be considered. The trade is profitable at maturity if NOK/SEK trades below 0.9580
  • Tactically, Danske expect NOKSEK to continue to be "strongly influenced by moves in relative rates and global risk appetite”, viewing the risks to Norges Bank’s easing cycle as skewed towards faster easing.
  • They think long-term headwinds from “elevated unit labour cost growth, negative terms of trade shocks, underperforming asset markets, tightening of global monetary conditions and structural selling flows” will persist for both currencies in 2025, but remain stronger for NOK.
  • Danske “regard speculative positioning in the cross to be long, which should also favour a move lower – potentially already in the coming months”.

MNI EXCLUSIVE: MNI INTERVIEW: Market Overestimating RBA Feb Rate Cut Chance

Jan-14 08:52

A former senior RBA official shares his view on February's meeting.-On MNI Policy MainWire now, for more details please contact sales@marketnews.com

BUNDS: EGBs are paring gains

Jan-14 08:49
  • A full reversal for Bund, albeit still in very contained ranges overall, surprisingly the Bobl outperforms somewhat, but the strip is still nonetheless closer to their earlier lows.
  • Schatz is sold in 5.3k, Bund 5.2k cumulative volumes, no Block.
  • Italian BTP is holding onto gains, helping keep the spread vs Bund 2.4bps tighter, and some of the pullback lower is met by buying interest, BTP is bought in 3k in three clips.