EM CEEMEA CREDIT: Rep of Hungary: € BMK L7Y and L12Y - Guidance

RXF6 128/129.5 1x2 call spread, paper pays 22 for the 1 leg in 3.5k

• In the FI space, Bund futures remain in a bear-mode cycle following last week’s impulsive sell-off, and today’s bearish start to the week. The breach of 128.67, the Nov 20 low, confirms a resumption of the bear cycle that started on Oct 17. The contract has traded through the 128.00 handle, paving the way for an extension towards 127.57 next, a 2.000 projection of the Nov 12 - 20 - 26 price swing, ahead of the 127.00 handle. Key short-term resistance is 129.55, Nov 26 high. A corrective bounce would allow an oversold trend condition to unwind.
• A bullish short-term cycle in Gilt futures remains intact and the latest pullback appears corrective - for now. A resumption of gains would signal scope for a climb towards resistance at 92.55, the Nov 11 high. A gap in the daily chart has been filled and initial resistance to watch is 91.93, the Nov 27 high. Support to watch lies at 90.53, the Nov 26 low.

• EURCAD slipped to a 3-month low on Friday, having held a contained range across November. Despite the 1% move lower, the cross remains 8% higher on the year and a pullback towards prior lows at 1.6000 and 1.5770 should not be ruled out. Russia/Ukraine ceasefire odds in 2026 remain at around 47% despite the consistent headlines surrounding peace talks, perhaps constraining the Euro’s upside, while EZ growth data continues to remain moderate at best.
• With the SNB decision also this week, CADCHF has risen back above 0.5800, a significant chart level across July/August this year. Persisting risk optimism highlighted by the resilience for major equity indices provides a tailwind for the cross, while the recent failure for EURCHF below 0.9200 may continue to frustrate remaining Franc longs. August highs at 0.5899 remain an obvious short-term target for CADCHF.
• RBC say the November labour report cements the decision to hold rates this week and is “consistent with our base case that the BoC will not need to reduce interest rates again through next year”. Separately Goldman Sachs note that several arguments they have made in favour of CAD funding still hold. However, recent data has signalled improvement, and GS see risks to CAD funding should growth data ultimately confirm that the economy has made it through the trough and is on an upward trend.