HUNGARY: NBH Say Liquidity Measures to Remain in Place Until Improvement in Risk Sentiment
Nov-23 08:28
- The NBH left the base rate unchanged at +13.0% in yesterday’s rate decision. However, this rate has little relevance with alternative liquidity measures continuing to anchor short-term market rates.
- Forward guidance was also little changed with the NBH adding that the new measures will remain in place until there is a marked improvement in risk sentiment. The bank also detailed their plans for the two-month deposit facility, with which they plan to roll over the excess liquidity (estimated at ~ HUF 2.5trl) parked at the deposit facility at the end of November.
- Prime Minister Orban has sparked a diplomatic row with a number of surrounding countries after wearing a scarf to a football match depicting a map of the now defunct 'greater Hungary' containing territories now part of Ukraine, Romania, Slovakia, Croatia. Romania voiced "firm disapproval" of Orban's gesture while Ukraine demanded an official apology. The fallout from this action is unlikely to improve relations when the EU is banking on unanimous support for a EUR18bln aid package for Ukraine. Orban is currently blocking the package.
- There are no major data releases scheduled today following yesterday’s rate decision. Average gross wages and unemployment data are left on the docket later this week.
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UK: Signals Point To Sunak Coronation As New PM, Mordaunt Struggles For Support
Oct-24 08:27
It is looking increasingly likely that former Chancellor of the Exchequer Rishi Sunak will be made the next leader of the Conservative Party at 1400BST (0900ET, 1500CET), when nominations for the leadership contest close, given that he may be the only candidate to gain the required nominations to get onto the ballot.
- Sunak's potential coronation as leader without having to face a members vote comes following the announcement by former PM Boris Johnson that he would not be running in the contest (see 2312BST bullet on 23 Oct).
- The other publicly announced figure in the contest, Leader of the Commons Penny Mordaunt, is well short of the 100 signatures from Conservative MPs to get on the ballot (27 public backers at present according to the Guido Fawkes blog).
- Data from Smarkets shows an implied probability of 95.2% that Sunak becomes the next Conservative Party leader, and therefore PM. While his campaign so far has been a low-key one, he is likely to seek to govern according to his summer campaign that he lost to Liz Truss. This focused on a fairly traditional 'fiscal conservative' model, with maintaining sound public finances put above either tax cuts or broad spending commitments in terms of govt' priorities.
Chart 1. Betting Market Implied Probability of Becoming Next Conservative Party Leader, %
Source: Smarkets
STIR: Pricing 1/4 Chance Of 100bp At Next BoE; Terminal Rate Still Falling
Oct-24 08:23
Checking in on the implied BoE rate path ahead of PMIs, and after another eventful few days in UK politics:
- November MPC market pricing currently around 81bp (ie 75bp hike priced, 25% or so chance of a 100bp raise).
- Peak rates are now seen Jun or Aug 2023 at 5.05%. That's about a 17bp drop from Friday's close and well off the 6.25% terminal peak.
Source: BBG, MNI
US TSY OPTIONS: TY and FV Put Selling Early
Oct-24 08:14
Put selling in TY and FV earlier:
- TYZ2 108.00 puts sold at '32 in 5k
- VZ2 105.25 puts sold at 28 down to 23 in 15k (3 clips of 5k at 28, 25 & 23)
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