NBP: Positive Trends May Allow NBP To Take Key Rate Toward 4%, Then Reflect
The Governor refuses to pre-judge the outcome of the November meeting but notes that there is a tradition in Poland not to adjust interest rates in December. Although he does admit that there is no formal rule around it, he implicitly yet strongly suggests that changing rates in the final month of the year is unlikely.
- The Governor says that the outcome of the November meeting will not depend on the outcome of the October meeting and signals that each interest-rate decision is made independently, in the course of a discussion during an MPC session. He says that the presence of a fresh macroeconomic projection gives the panel more comfort in making decisions.
- Looking further afield, the Governor says that the NBP does not target any specific terminal rate and dismisses this discussion as academic speculation. However, he says that if inflation is at the current level (+2.9% Y/Y), there is no reason to keep the reference rate at 4.50%.
- Glapiński says that if the current favourable macroeconomic picture is maintained, then the MPC could start moving the reference rate towards 4%. After reaching that level, the Council would see if there is room for some more easing. The Governor would prefer cutting rates in 25bp increments.
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US: ROK: South Korean Foreign Minister Seeks Clarity On Georgia Immigration Raid
South Korean Foreign Minister Cho Hyun is in Washington today to discuss an immigration raid at a Hyundai-LG battery factory in Georgia that prompted a furious reaction in Seoul, and threatens to rupture relations with one of the most critical partners in the Trump administration’s high-tech revitalisation programme.
- South Korean President Lee Jae Myung told a Cabinet meeting today that he hopes this "unjust infringement" never happens again.
- Seoul-based journalist Raphael Rashid writes on X: “Korea's entire media establishment across [the] political spectrum has united in unprecedented editorial consensus expressing profound betrayal, outrage, national humiliation, and fundamental breach of US-ROK alliance...”
- “The general sentiment: while Korean media occasionally unite on domestic issues, these are usually severely politicised. Here, the level of scorn spanning from conservative establishment to progressive outlets is extraordinarily rare. They are furious,” continues Rashid.
- Politico notes: “The raid last Thursday ended with some 475 workers, including more than 300 South Koreans, detained. Video showed some of them shackled at the hands, ankles or waist. U.S. Immigration and Customs Enforcement said an ongoing criminal investigation led it to arrest people working illegally. Hyundai said in a statement that it was reviewing its hiring practices, including those of its contractors.”
US PREVIEW: Core CPI Pressures Seen Sustained In August As Goods Prices Pick Up
The following table shows the unrounded estimates we've seen so far for August's various CPI readings (release is Thursday 0830ET). We will have more detail in our full CPI preview out later Tuesday.
- Bloomberg consensus is for core CPI to come in at 0.3% M/M rounded. Unrounded core CPI expectations suggest a slight skew toward risks of a rounded-up 0.4%, with an unrounded MNI median of 0.32% and range of 0.29% to 0.36%. That would be steady from 0.32% in July for the joint-highest M/M since January.
- Early core PCE expectations largely align with core CPI views, ranging from 0.29-0.34% with a 0.31% median - pending Wednesday's PPI data which precede Thursday's CPI release.
- In terms of the category-by-category breakdown, supercore CPI is seen slowing from July's 0.48% (albeit there is a very wide range of views) with housing CPI seen relatively steady but upside pressure vs July in areas such as lodging and car insurance (airfares are also seen remaining strong).
- And core goods prices are roundly seen higher (had printed a below-expected 0.21% in Jul), with vehicle prices seen driving much of the upside, and tariff-impacted categories like apparel seen accelerating in the month.
US TSYS: Early SOFR/Treasury Option Roundup: SOFR Calls, Rate Cut Pricing Eases
Back to better SOFR call volume overnight into early NY trade even as underlying futures trade lower, Treasury options more mixed on lighter volumes. Projected rate cuts receding from late Monday (*) levels: Sep'25 at -27bp (-28.7bp), Oct'25 at -47.3bp (-49.6bp), Dec'25 at -69.2bp (-71.4bp), Jan'26 at -82.3bp (-85.1bp).
- SOFR Options:
- 3,000 96.25/96.37/96.50/96.62 call condors ref 96.36
- Block, 6,500 SFRZ5 96.62/96.75 call spds 1.75
- +2,500 SFRM6/SFRU6 97.50/98.25 call spd strip, 18.5
- 2,000 SFRZ5 96.37/96.43/96.50 call flys ref 96.355
- 2,000 SFRZ5 96.25/96.37 call spds ref 96.38
- 2,850 SFRU5 96.00/96.06/96.18/96.25 call condors, ref 95.985
- +5,000 SFRU5 96.00/96.12 call spds, 1.5
- +2,500 SFRZ5 95.81/95.93 put spds, 0.5 vs. 96.35/0.05%
- +5,000 SFRZ5 96.50/96.62/96.75/96.87 call condors, 1.5
- +10,000 SFRU5 95.93/96.00/96.06 call flys, 2.75
- 2,000 SFRU5 95.87/96.00/96.12 iron flys, 4.0 ref 95.99
- Block, +5,000 SFRU5 95.87/95.93/96.00 call flys, 2
- Block, +2,500 SFRU5 96.00/96.12 call spds, 1.25
- Block/screen, +4,000 SFRZ5 96.50/96.62/96.75/96.87 call condors, 1.5
- +6,000 SFRZ5 96.00/96.12 put spds, 1.75
- -2,000 0QU5 97.00/97.50 call spd vs. 2QU5 97.00/97.37 call spds, 2.0 net
- +5,000 SFRU5 96.00 calls, 1.75
- Treasury Options:
- 2,400 TUV5 104.75/105 1x2 call spds ref 104-14.25
- 2,400 FVZ5 110 calls ref 109-29.25
- 2,500 FVV5 109.75 puts, 17.5 ref 109-28.25
- 5,000 TUV5 104.25/104.5 call spds ref 104-14.88
- 5,000 TYV5 113.5/114 call spds ref 113-13
- +2,000 TYV5 111.75/112.75 put spds 13 vs. 113-08.5/0.08%
- +1,500 TYV 112/113 put spds, 15 vs. 113-16.5/0.23%
- +1,500 TUH6 104.62/105.25 call spds, 13.5 vs. 104-14.75/0.20%
