UKRAINE: UK & France Commit Peacekeepers & Witkoff Talks Up Sec. Guarantees
Following a meeting of the 'Coalition of the Willing' in Paris on 6 Jan, France and the UK have formally committed to sending troops to Ukraine in the event of a peace deal. Those 35 countries in the coalition have all ostensibly pledged readiness to send troops as part of a peacekeeping force. Nevertheless, the declaration of intent signed by French President Emmanuel Macron and UK PM Sir Keir Starmer is the most concrete security guarantee made by any of Ukraine's western partners to date.
- Starmer said the UK and France would "establish military hubs across Ukraine" in the event of a peace deal to deter future Russian aggression. Moscow is yet to comment, but in the past has said any foreign troops on Ukrainian soil are a "legitimate target".
- Also present, German Chancellor Friedrich Merz indicated that his country's troops could be deployed to Ukraine as part of ceasefire monitoring efforts. Merz: "...we are not ruling anything out. .. Even after a ceasefire, Germany will continue to bear responsibility for Ukraine's security and thus for common European security."
- Commitments from the three biggest military spenders in Europe are notable, but will mean little without continued US backing. While not part of the Coalition, US presidential envoy Steve Witkoff was present. Witkoff: "Durable security guarantees and robust prosperity commitments are essential to a lasting peace". Witkoff claimed Kyiv's allies are "largely finished" on agreeing these guarantees, "so that people of Ukraine know that when this [war] ends, it ends forever".
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EGBS: Unwind Off Lows in EGBs as Markets Retrace Small Part of Recent Weakness
- Markets see an unwind off the lows in EGBs and especially in German markets, but not too surprising given Bunds have fallen 176 ticks over the past 6 sessions.
- The heavier volumes are going through in Bobls, although this is composed of a combination of swap related trades and option hedges. Initial resistance in Bunds would be seen further out, up to 128.40.
- Near term risks remain to the downside, meaning market focus will be on yields across core EGB markets.
For the German 10yr Yield, reference 127.93:
- 2.85% = 127.61.
- 2.90% = 127.12.
- 2.94% = 126.73 (2025 high and highest Yield since Oct 2023).
FOREX: FX Exchange Roll Pace
FX Exchange traded Roll pace, expiry 15th Dec: Some are rolling early ahead of the FOMC.
- EUR: 13%.
- GBP: 36% (above pace).
- JPY: 31% (above pace).
- CHF: 29% (above pace).
- CAD: 9% (below pace).
- AUD: 29% (above pace).
- NZD: 19% (above pace).
EGB OPTIONS: Schatz Put Ladder strip
DUF6 107.10/107.00/106.90p ladder with DUG6 107.10/107.00/106.90p ladder strip, sold the 1 at 14 and 15 in 5k.
