EU HEALTHCARE: Pfizer (PFE: A2/A) Fair Value
May-14 07:57
4yr: IPT EU Bmk ms+105a.
• FV: ms+65 tempted to go a little tighter with GSK 29s z+55 but these are very old.
• Curve 4s-7s 7.3bps/yr is still quite steep vs GOOGL 5bps for 4s8s.
• 7yr: IPT EU Bmk ms+130a.
• FV: ms+87 comp GSK 32 z+83.
• 12yr: IPT MS+160a.
• FV: ms+115. GSK 36s +108 also comparing DHR/MDT. Curve 5.6bps/yr from 7yr. GOOGL was 5.75bps 8s12s.
• 20yr: IPT EU Bmk ms+195a.
• FV: ms+150 to give a curve 4.4bps/yr from 12yr in line with GOOGL pricing.
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GILTS: Consolidating Friday’s Late Rally
Apr-14 07:45
- Gilt futures are +40 ticks at 91.04, down from an opening high of 91.24 but nonetheless consolidating the rally into Friday’s close. Zooming out though, the contract remains almost 350 ticks below the April 7 high of 94.50.
- Initial support in Gilts is Friday’s low at 90.47, clearance of which would expose the April 9 low at 89.99. Initial resistance is at 91.84, the 20-day EMA.
- Yields are 1.5-6bps lower on the session, with 30s (last week’s notably underperformer) leading.
- Increased correlation to risk assets appears to have reduced the hedging appeal of gilts, while the UK's fiscal fragility and instances of limited liquidity further out the curve point to continued headwinds for UK paper in the near-term.
- SONIA futures are -0.5 to +4.0 ticks through the blues, twist flattening.
- A 25bp BOE cut remains essentially fully priced through May, with 76bps of easing priced through year-end.
- Over the weekend BOE’s Greene provided the familiar view that US tariffs “will impact the economy” but have an “ambiguous” impact on inflation. This broadly echoes remarks from Lombardelli and Breeden last week.
- Meanwhile, Chancellor Reeves said the UK had suspended import tariffs on 89 products, and increased financing support available to exporters via UKEF to GBP80bln from GBP60bln prior.
- Labour market (Tues) and inflation (Weds) data are due this week. MNI’s preview will be out later today.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| May-25 | 4.225 | -23.3 |
| Jun-25 | 4.135 | -32.3 |
| Aug-25 | 3.952 | -50.6 |
| Sep-25 | 3.866 | -59.2 |
| Nov-25 | 3.736 | -72.1 |
| Dec-25 | 3.701 | -75.7 |
| Feb-26 | 3.647 | -81.1 |
| Apr-26 | 3.641 | -81.7 |
| Source: MNI/Bloomberg |
STIR: Still 78bps of ECB Easing Priced Through '25; Cut Expected On Thurs
Apr-14 07:17
A 25bp ECB cut on Thursday remains over 90% implied in ECB-dated OIS, with implied rates through the remainder of this year little changed from Friday’s close. There are 78bps of cuts priced through December, consistent with 3x25bp cuts in total.
- Euribor futures are -2.0 to +0.5 ticks through the blues, twist flattening slightly. Z5 is -1.5 ticks at 98.230. Resistance is seen at 98.335 (Apr 7 and Apr 9 high), with support at 98.170 (Dec 20 high and Apr 11 low).
- US President Trump’s reciprocal tariff declaration on April 2 drove a notable dovish repricing in near-term EUR rates, with the initial announcement featuring more stringent tariffs than many had been assuming. Although the President has since delayed those reciprocal tariffs for 90-days (including temporary reprieve for some consumer electronics goods as of Friday), uncertainty remains extremely high and levies on autos, steel and aluminium remain in place.
- Taken alongside the softer-than-expected March core inflation print and weaker-than-expected March services PMI data, there appear few obstacles to brining the deposit rate to the top of the 1.75-2.25% neutral rate band. The MNI Policy Team’s recent sources piece supported such an outcome.
- Our full ECB preview will be released later this week.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Apr-25 | 2.184 | -23.3 |
| Jun-25 | 2.004 | -41.2 |
| Jul-25 | 1.887 | -52.9 |
| Sep-25 | 1.740 | -67.6 |
| Oct-25 | 1.692 | -72.4 |
| Dec-25 | 1.636 | -78.0 |
| Feb-26 | 1.625 | -79.2 |
| Mar-26 | 1.623 | -79.4 |
| Source: MNI/Bloomberg. | ||
SWEDEN: Riksbank Relief As LT Inflation Expectations Steady In April
Apr-14 07:06
Swedish money market participant 5-year ahead CPIF inflation expectations were steady at 2.3% in April. While this series has moved away from the 2% target in recent months, in line with an acceleration in spot inflation pressures, the Riksbank will be relieved that the April survey did not report a renewed uptick.
- In an interview with MNI earlier this month, Riksbank Deputy Governor Jansson said that rising trade tariffs are likely to depress economic growth, but while their effects on inflation may be short-lived monetary policymakers must be alert to any risk of price expectations becoming de-anchored.
- Jansson noted that while in theory the Riksbank would be able to look through elevated inflation if expectations remain stable in the near-term, Jansson highlighted the difficulties in practice of doing so and made the case for acting decisively if need be.
- One-year ahead expectations were also unchanged at 2.2%, while 2-year ahead expectations ticked up to 2.3% (vs 2.1% prior).
- 1-year ahead GDP growth expectations were revised sharply lower (1.6% vs 2.4% prior), likely reflecting US President Trumps reciprocal tariff announcements. 2-year ahead GDP growth expectations were 2.0% (vs 2.4% prior), and 5-year ahead expectations were 2.0% (vs 2.1% prior).
- As such, money market participants now expect a deeper Riksbank easing cycle over the next 24 months.
- The survey was conducted Apr 7-Apr 11.
