ENERGY: Russia-Ukraine (December 24)
Ukraine and the US remain split primarily on territorial issues in talks on a peace plan to end Russia’s war, President Volodymyr Zelenskiy said on Wednesday.
- “We now have draft documents that largely reflect the joint Ukrainian-American position, in some respects the American position,” Zelenskiy said.
- He added that negotiations “moved significantly closer to finalizing the documents.”
- Russia is still pressing for Ukraine to give up land in eastern Donetsk, something it rejects.
- The revised 20-point plan is reworked from the original 28-point plan. The U.S. is expected to deliver the 20-point draft to Moscow later on Dec. 24. If approved, the final document must be signed by the leaders of Ukraine, the U.S., Europe, and Russia.
- So far, Ukraine and the U.S. have not reached an agreement on two major issues in the revised plan, points 12 and 14 — control of the Russian-occupied Zaporizhzhia Nuclear Power Plant and control of the Donbas region.
- If the US continues to back Russia’s demand for a Ukrainian retreat in Donetsk to allow for the creation of a special zone, Ukraine would insist that Russia also pull its troops from the area, according to Zelenskiy.
- Zelenskiy’s remarks are the most detailed account yet on the status of the negotiations for a peace deal.
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FRANCE: OATs Unfazed As National Assembly Rejects Revenue Section Of '26 Budget
The 10-year OAT/Bund spread has narrowed ~0.5bps alongside peers today, with no material negative spillover from weekend political developments. The National Assembly overwhelmingly rejected the Revenue section of the 2026 budget, with the initial draft of the bill now moving to the Senate for review. We highlighted throughout last week that there was a clear lack of support for the Revenue bill, which had contributed to modest OAT/Bund widening back to ~76bps (e.g. here)
- In addition to the bad news being priced in through last week, intraday movements have been contained by optimistic signals from policymakers on continued budget negotiations. Finance Minister Lescure noted that “I’m convinced that the majority of parliamentary groups will be able to find the necessary common ground that will allow our country to have a budget”, while a Socialist source told Le Parisien that “The negotiations will continue until the end of the year”.
- This suggests PM Lecornu’s position as PM is stable, at least for now. That said, the outcome of negotiations suggests the PM’s 4.7% 2026 deficit target is unlikely to be met.
- The Social Security section of the budget has been reviewed by the Senate, and needs to be fully approved by December 12. The Revenue section meanwhile must be finalised by December 23. If these deadlines are not met, the government may need to pass a special law to roll over the existing 2025 budget, so that fresh negotiations can continue early next year.
MNI: GERMANY NOV IFO BUSINESS CLIMATE INDEX 88.1
- MNI: GERMANY NOV IFO BUSINESS CLIMATE INDEX 88.1
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 1.55bn at 1.1500/1.1520.
EURUSD 1.38bn at 1.1625 (tue).
AUDUSD 5.59bn at 0.6450/0.6535 (wed).
EURUSD 1.01bn at 1.1525 (wed).
- EURUSD: 1.1500 (773mln), 1.1520 (780mln), 1.1550 (565mln).
- GBPUSD: 1.3150 (269mln).
- USDCAD: 1.4045 (319mln).
