STIR: Repo Reference Rates

The Eurozone Indeed Wage tracker fell in November to a 3.7% 3MMA annualised rate. This represents the 7th consecutive month that the indicator has softened. The tracker peaked at 5.2% in October 2022.

• This metric is used by the ECB as a real-time monthly gauge of wage pressures, alongside more backward looking official Eurostat data, most of which is reported at a quarterly frequency.
• At a country level, wages/salaries in job postings were seen falling in Germany, France and Spain (the Italian data from Indeed is incomplete), with Spain's deceleration lagging most notably.
• The data is somewhat at odds with the release of the Eurozone harmonised labour cost index which accelerated to 5.3% Y/Y in Q3 (vs 4.7% in Q2). The rise was driven by Germany, with both services and industrial sector labour costs rising substantially in Q3. The most encouraging developments were seen in France, while Italian services costs also softened to 2.2% Y/Y (vs 3.1% in Q2).
• Wage growth is now at the forefront of the ECB's concerns re: 2024 policymaking. The December monetary policy statement included an explicit reference to unit labour costs as a driver of domestic price pressures.
• Additionally, comments from Vasle, Wunsch, Muller and Reuters' ECB sources in recent days have all stressed the importance of Q1 '24 wage data in determining the extent to which the ECB can consider pivoting from their current rate stance of "sufficiently restrictive levels for as long as necessary".
• Further decelerations in more real-time indicators like the Indeed tracker will be necessary conditions for the ECB to bring forward any discussion r.e. rate cuts, but corroboration from official quarterly sources will likely also be a prerequisite for any policy pivot.

Source: Indeed.com, MNI

REPO REFERENCE RATES (rate, change from prev. day, volume):

* Secured Overnight Financing Rate (SOFR): 5.32%, 0.01%, $1776B
* Broad General Collateral Rate (BGCR): 5.30%, no change, $642B

* Tri-Party General Collateral Rate (TGCR): 5.30%, no change, $629B

SOFR ticked back up 1bp to 5.32% after three sessions at 5.31%. Highest SOFR volumes since Dec 5, closer to the high of $1850 from Nov 30.

Source: NY Fed

There has been little in the way of headline flow/cross-market impetus to drive SEK's outperformance today, with the latest leg lower in EURSEK enabling a breach of the May 9 low at 11.1622. This sees the cross trade at its lowest level since March, currently 0.5% lower at 11.1423.

• A reminder that last week saw November CPIF come in lower than expected on both the core and headline prints, further justifying the Riksbank's decision to hold rates at 4.00% at the November meeting.
• The domestic docket is quiet until Wednesday, when Riksbank Governor Thedéen speaks on the economic situation and current monetary policy. This provides the first opportunity for markets to judge the Executive Board's reactions to the latest inflation print.
• On the data front, the December Economic Tendency Indicator highlights on Thursday.