EU REAL ESTATE: Property: Week in Review

Swedish October flash inflation is due tomorrow at 0700GMT/0800CET. Analysts expect CPIF ex-energy inflation to print in line with the Riksbank’s September MPR projection at 2.6% Y/Y (vs 2.70% prior). If realised, this would be neutral for monetary policy, particularly in the wake of today’s unsurprising November decision and policy statement. 

• Higher electricity prices are expected to push headline inflation above the Riksbank’s projection (consensus 2.9% Y/Y vs 2.7% Riksbank).
• At today’s press conference, Governor Thedéen emphasised that the Riksbank projects CPIF inflation excluding energy and food VAT to be broadly in line with the 2% target throughout its forecast horizon. 

Gilts take cues from Tsys, which have softened in the wake of the ADP employment report and guidance from the U.S. Treasury re: future coupon issuance increases.

• Gilt futures trade to lowest levels of the day, breaking Monday’s lows.
• Still, bears don’t challenge initial support at the October 27 low (93.15). The bullish technical theme remains intact.
• Yields now 0.5-3.0bp higher, curve steeper.
• Medium-term uptrend support (drawn off the August ’23 low) remains intact in the 2s10s curve.
• A reminder that we flagged risks of steepening around a dovish outcome at tomorrow’s BoE decision.

• In the aftermath of both the ADP data and the US refunding announcement, pressure on treasuries has provided a supportive tone to the greenback, helping the USD index consolidate gains near recovery highs.
• The higher yields have most notably assisted USDJPY to the best levels of the session, now extending its bounce from the overnight lows to over 100 pips, trading just shy of 154.00. We highlighted yesterday that the pair stalled for a third time around the 154.45 level overnight - a potentially bearish short-term signal against the underlying bullish trend that has been in place in recent weeks.
• This area will remain in focus heading into the ISM services release later today. Above here, attention would be on 154.80, the Feb 12 high.
• Associated moderate pressure on the likes of EURUSD and GBPUSD, although both pairs remain off recent cycle lows, while USDCAD continues to pressure the top of the bullish channel drawn from the Jul 23 low and shown below: