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EUROZONE ISSUANCE

Austria lowers 2021 funding target

SILVER TECHS

Trading Near Recent Highs

CROSS ASSET

Early Trade Sees EUR/USD Edge Lower

SHORT-STERLING

Huge move lower for short sterling on the open

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  • Yesterday, Poland's Supreme Court once again failed to make a verdict on CHF mortgages and decided to ask the European Court of Justice on how to proceed amid doubts over Polish judiciary revamp according to Bloomberg. This decision was expected by the market due to disagreements between 'old' and 'new' judges, appointed before and after Poland revamped the judicial system.
  • Poland entered into a state of emergency in the 3-kilometer (1.9 miles) area along its border with Belarus following the surge in the number of illegal crossings (BBG).
  • Forwards rates keep reaching new highs as traders are speculating that NBP policymakers will have to hike earlier than expected to curb inflationary pressures, following the positive surprise in inflation this week.
  • FRA 5Mx8M is currently trading 54bps above the Wibor 3M, implying that NBP will hike at least twice (25bps) by February 2022 (see chart).
  • Disagreements over the trajectory of ST rates remain elevated at the NBP; the majority of the board still aims to keep interest rates low while the economic recovery is taking place.
  • Next event to watch will be NBP rate decision on September 8; the central bank is expecting to keep its policy rate steady at 0.1%.

Source: Bloomberg/MNI