HUNGARY: Prospect of Language Tweaks Contemplated Among Sell-Side (2/2)
Dec-12 09:11
Our full preview for the December 16 meeting will be published early next week, but below are some sell-side notes we have already received:
- BofA note that the NBH will likely hold the base rate at 6.50%, but they add that the Inflation Report may present a case for some dovish shift. They say the likelihood of Q1 rate cuts has probably been strengthened by recent inflation developments, but for rate cuts to materialise in a credible way, there needs to be some disinflation progress in services, continued HUF stability, and no additional major fiscal spending ahead of elections. If conditions allow, BofA could see the NBH carrying out small 25bp easing steps in February/March. For now, they keep their base case of unchanged rates before elections.
- Commerzbank note that underlying inflation indicators point to an improving picture for Hungary's inflation landscape. On their preferred seasonally-adjusted month-on-month basis, Commerzbank note that most inflation measures are now annualising to within target, and others are moving gradually in that direction. However, they add that this still represents a somewhat fragile picture and hence the NBH is right to be cautious.
- ING still can't see any clear-cut reasons for the NBH to ease monetary policy in December. Looking further ahead, they still do not anticipate any interest rate cuts in the first half of next year given that the MPC is focused on addressing high inflation expectations. ING believe that the easing cycle will begin in the second half of next year. However, if the NBH intends to lower the base rate in the first half of 2026, they say it must lay the groundwork for this in the December forward guidance.
- JP Morgan think that despite this week’s downside CPI surprise, there is no reason for the NBH to consider easing policy near-term. They expect the central bank to keep rates unchanged until after the elections, when it can have more clarity about policy. JPM see the next 25bps cut happening in June only, but with risks skewed to later and less.
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GILT SYNDICATION: 1.75% Sep-38 linker: Books Open
Nov-12 09:08
- Size: GBP Benchmark (MNI expects GBP GBP4.5-5.5bln)
- Guidance: UKTi 1.125% 22-Nov-2037 (GB00B1L6W962) +10.50/+10.75bps
- Maturity: 22 September 2038
- ISIN: GB00BMY62Z61
- Benchmark: UKTi 1.125% 22-Nov-2037 (GB00B1L6W962)
- Coupon: 1.75% Semi Annual, ACT/ACT
- Expected Settlement Date: 13-November-2025 (T+1)
- Current O/S : £5.5bln
- JLMs: GSIB (B&D/DM) / JPM / NOMURA / SANTANDER
- Timing: Books open, today’s business
Source: Market source and MNI colour
GBP: Spot Slips on Growing Political Risk, Underperformance in UK Bonds
Nov-12 09:02
GBP weakness does coincide with Streeting's comments being more widely circulated in UK media e.g. Here: https://www.telegraph.co.uk/politics/2025/11/12/politics-latest-news-keir-starmer-leadership-challenge-pmqs/ but nothing particularly new after his appearance on the BBC this morning.
- No real standout volumes on the move: GBP futures activity has picked up, but not notably - suggesting price action here may not be tied to sizeable flow. The more gradual nature of the move in spot also supports this.
- Move in GBP may instead be fix related into 9am - or tied to the underperformance in Gilt markets relative to broader European bonds.
- GBPUSD has stabilised just above the new daily low of 1.3115.
GILTS: Leading The Wider Sell Off
Nov-12 08:56
Gilts lead the sell off in core global FI markets this morning.
- A reminder that this comes after Tuesday’s outperformance in the wake of weak UK labour market data and key resistance holding in futures.
- Rumours surrounding a potential leadership challenge within the ruling Labour Party, presence of syndicated gilt supply (albeit I/L) and the bid in equities (gilts having a higher beta than Bunds) seem to be the driving factors.
