GILTS: Opening calls
Mar-01 07:55
Gilt opening calls, range 99.40/99.57.
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BONDS: Coming off overnight highs ahead of Spanish HICP
Jan-30 07:46
- Bunds and Treasuries had both been trending modestly higher through the Asian session, albeit remaining well within Friday's ranges. However, as Europe has started to come into the office these moves higher are starting to be reversed somewhat.
- Bund futures are now around 15 ticks higher on the day around 137.60, down from a peak of 137.91.
- Spain HICP is the early event risk in around 15 minutes (8:00GMT / 9:00CET) ahead of German GDP at 9:00GMT / 10:00CET.
OUTLOOK: What to watch (2/2)
Jan-30 07:25
- For the BOE, markets price in around 45bp for this week's hike with analysts widely expecting 50bp (a few look for 25bp). Assuming a 50bp hike, the focus will be on the forward guidance and whether the BOE maintains it's conditional "forceful" language or down steps to something more like "limited and gradual increases". The terminal rate is seen around 95bp above current rates including this week's hike.
- For the ECB, markets price 53bp with analysts also looking for 50bp. The questions here will be what the ECB communicates about future policy (given some division among ECB GC members' speeches recently and sources pieces) and whether there is any more clarity given on QT.
OUTLOOK: What to watch (1/2)
Jan-30 07:22
It's a hugely busy week with the Fed, BOE and ECB all announcing their latest interest rate decisions while we will also receive flash inflation prints across Europe ahead of the ECB decision.
- In terms of inflation we will receive Spain HICP this morning at 8:00GMT / 9:00CET with Belgian CPI also due for release today. Tomorrow morning will see French, Portuguese and Irish releases with Germany due in the afternoon (note that there will be no state CPI data, just the national CPI / HICP prints). On Wednesday we will then receive Dutch HICP, Austrian CPI and then at 10:00GMT / 11:00CET we will receive both the Italian and Eurozone prints.
- For the Fed on Wednesday a 25bp hike is widely expected, a downshift from December's 50bp hike. The dovish risks to this meeting appear at least partly priced in, including some expectations of Statement language acknowledging decelerating inflation, or a clear signal that the end of the hiking cycle is near. However, there are many ways Powell could re-emphasize the FOMC’s view that the job is not nearly done yet. Powell will again steer attention away from the pace of hikes and toward the terminal level (which the FOMC envisages as higher than the market does), while pushing back against rate cut pricing for H2 2023. Market terminal rate pricing sees around 58bp of hikes including this week's 25bp. For our full Fed preview see here.
