FED: US TSY 17W AUCTION: NON-COMP BIDS $450 MLN FROM $69.000 BLN TOTAL

"*IDF SAYS IT BEGAN STRIKING HAMAS, HEZBOLLAH TARGETS IN LEBANON" Bloomberg

France will kick off the main week for the Eurozone December flash inflation release tomorrow at 07:45 GMT / 08:45 CET, following Spain, Belgium and Portugal data from last week. Consensus for HICP currently sits at 0.7% Y/Y, down from 0.79% seen in November vs the initially reported 0.83%. 

Analyst views:

• Goldman Sachs see France 0.7% headline; “core inflation to tick up to 1.3%yoy, reflecting broadly sideways services but higher goods inflation on a year-over-year basis. We expect a 20%mom nsa increase in airfares, a -5%mom nsa drop for package holidays, and broadly stable accommodation services. We see both garments and footwear stronger in sequential terms compared to last December. Outside of core, we look for energy inflation to fall to -6.0%yoy from -4.4% in November, processed food inflation to stay at 1.6%yoy and unprocessed food inflation stay unchanged at 1.3% as well.”
• Morgan Stanley see 0.8% headline as energy disinflation from lower pump prices offsets a modest rebound in services after weak airfares and accommodation in November.

The December flash PMI noted:

• “The latest survey data signalled an easing of cost pressures across France’s private sector economy. The rate of input price inflation eased on the month and was well below its long-term trend."
• "On the other hand, prices charged were virtually unchanged once again as strong competition for work reportedly restricted company pricing power. This was despite a renewed increase in factory gate charges, which rose at the quickest pace in 16 months.”

Bank of France December macroeconomic projections:

• Headline and core inflation seen at 1.2% and 1.4% in 2026 respectively, when factoring in government bills passed after the official projection deadline.
• “In 2027, headline inflation and inflation excluding energy and food are expected to remain unchanged at 1.3% and 1.6%, respectively. Inflation excluding energy and food should reflect private services prices, pushed up by growth in nominal wages. These projections also take account of the postponement until early 2028 of the introduction of EU ETS-2, leading to a downward revision of headline inflation for that year.”
• “The uncertainties surrounding inflation stem in particular from import prices (raw materials, exchange rates, increase in Chinese imports, etc.) in an uncertain international context.”

• EUR Benchmark 10Y Fixed (March 12, 2036) at MS+37 (Revised Guidance was MS+40 Area, Guidance was MS+45)
  • Coupon: Annual, act/act ICMA, long first
• Books closed above E10bln (including E912mln JLM interest): Leads
• Size: E1.75bln (MNI expected E1.5bln)
• Hedge Ratio: 104% vs 2.6% Aug-35 Bund
• Settlement: Jan. 12, 2026 (t+5)
• ISIN: SI0002105227
• Bookrunners: Barclays (B&D), DZ Bank, HSBC, JPM, OTPBSI, RBI
• Timing: Hedge deadline 16:10GMT, Pricing to follow

Details as per market source, with MNI colour.