SNB: SNB cuts by 25bp to 0.00%, Inflation Forecast Lower
Jun-19 07:36
- SNB cuts by 25bp to 0.00%.
- Core FX communications paragraph appears materially unchanged on first sight "remain willing to be active in the foreign exchange market as necessary".
- Conditional inflation forecast slightly downwardly revised: 2025 0.2% (vs 0.4%), 2026 0.5% (vs 0.8%), 2027 0.7% (vs 0.8%)
- GDP forecasts marginally downwardly revised: 2025 1.0-1.5% (vs 1.0-1.5% in March meeting); 2026 1.0-1.5% (vs 1.5% in March)
- Press statement with neutral rates outlook:
- "The SNB will continue to monitor the situation closely and adjust its monetary policy if necessary, to ensure that inflation remains within the range consistent with price stability over the medium term."
- "Inflationary pressure has decreased compared to the previous quarter. With today's easing of monetary policy, the SNB is countering the lower inflationary pressure."
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GILTS: Follow Wider Core FI Higher, 30-year Syndi Expected Today
May-20 07:35
Gilt futures extend higher alongside core FI peers, now +28 ticks today at 91.78 and outperforming Bunds. As noted above, there hasn’t been an obvious fundamental driver of the latest bid. A bear cycle in Gilts remains in play following the recent impulsive selloff, and rallies short of the 20-day EMA at 92.20 will be considered corrective. Initial resistance shielding this level is 92.03, the May 16 high. Yesterday’s low at 90.86 provides support.
- 10-year yields are down 3.7bps to 4.63%, with the Gilt/Bund spread tightening 1.5bps to 205.5bps.
- The curve has lightly bull flattened, with 2s10s down 1bp and 10s30s down 0.5bps.
- The DMO is expected to launch the new 5.375% Jan-56 gilt today. MNI expects a GBP5.5-8.5bln transaction size.
- Yesterday evening saw BoE’s Dhingra outline the thought process behind her dovish dissent last week, telling the FT that "I get to pick times when I want to be able to make a more categorical statement about where I think the economy is headed”.
- Comments from BoE hawkish dissenter and chief economist Pill are due this morning (09:00). He previously noted that he will flesh out the thoughts that drove his hawkish dissent at this event.
- UK CPI data, due tomorrow, headlines this week’s UK data calendar. MNI’s preview will be out later this morning.
EURIBOR OPTIONS: Outright Put sellers
May-20 07:32
- ERM5 97.87p, sold at 1.25 in 10k.
- ERM5 97.81p, sold at half in 20k.
BONDS: Some order buying flows going through in Bonds
May-20 07:27
- Just some order flows in Govies on this small spike, Schatz was bought in 7k, Bobl 5k, Bund 10k and in the US, USM5 1k, FVM5 5k, and TYM5 4k.
- As noted on the Bund open, the contract still targets that 130.76 gap mentioned last Week.
