Trial now

2-Year Auction Results


Off Asia Cheaps


PREVIEW: 2-Year JGB Supply Due


Curve Twist Steepens, Futures Narrow

Sign up now for free access to this content.

Please enter your details below and select your areas of interest.

Executive Summary:

  • ECB Governing Council keep options open, according to meeting accounts
  • BoJ ready to boost JGB buys
  • Riksbank begin to factor rate hikes into repo rate projections

Figure 1: AUD/USD Narrows Gap With Two Key Supports


CANADA (MNI): Canadian Firms See Record Wage and Price Gains
Canadian small businesses continue to expect record wage gains over the next year and for the first time in this economic cycle see record wage gains as well, according to a Canadian Federation of Independent Business survey published Thursday. Firms are planning 4.3% price increases over the next year, up from the prior record of 3.9% set in October, and that measure has climbed from 1.9% in December. Expected wage increases jumped to 3.1% from 2.5%, breaking the prior record high of 2.7% in data back to 2009. Wage expectations were just 1.2% at the start of the year.


ECB (MNI) ECB GovCo Keeping Options Open Amid Uncertainty
December's Eurosystem staff growth projections could be revised downwards, ECB Governing Council members suggested at their meeting in October while inflation could be revised upwards, as high fuel, energy prices and supply bottlenecks continue to feed into EZ. Members agreed that the current 'hump' in the short-term inflation outlook is likely to fade through 2022, but there was a general acknowledgement that considerable uncertainty remains, with upside and downside risks broadly balanced. Labour market developments were discussed in the context of possible second round effects, but there was again uncertainty as to whether higher inflation will translate into durable upside pressures.

RIKSBANK (MNI): Riksbank Signals Early QT; End To Zero Rate
The Riksbank expects to raise rates from zero in 2024 and could start reducing the size of its balance sheet even earlier, it signalled on Thursday after its November meeting. Its new projection showed the policy rate edging higher in the second and third quarters of 2024 to stand at 0.19% by the end of its three-year forecast period, pretty much as expected. The September projection had shown no tightening, but the Riksbank has now joined other advanced economy central banks in moving to reduce stimulus while moving ahead of its counterparts in contemplating bond sales before hiking the policy rate.

ENERGY (MNI): Nord Stream 2 Approval To Be Slow-MEPs
Approval for the Nord Stream 2 could take until well into 2023, with the European Parliament likely to insist on a say in the process and member states such as Poland possibly considering legal challenges, German members of the European Parliament for the Green Party told MNI.


JAPAN (MNI): BOJ Ready To Boost JGB Buys As Borrowing Jumps
The Bank of Japan stands ready to buy additional government bonds to ensure the yield curve stays at low levels, MNI understands, as the newly-elected Liberal Democratic Party-led coalition helmed by Prime Minister Fumio Kishida moves ahead with a massive stimulus package.

The government reportedly plans to issue an additional JPY22.1 trillion of JGBs in 2022, a roughly 50% increase from this year's JPY45 trillion net new issuance.

BONDS: Constructive Session For Core Europe, Gilts Outperform

Global core bonds strengthened modestly Thursday, in a session largely devoid of market-moving headlines or trades due to the US Thanksgiving market closure.

  • Gilts outperformed Bunds, with both the UK and German curves flattening slightly. Periphery EGB spreads widened <1bp vs 10Y Bunds.
  • Unsurprisingly, Treasury futures traded on very light volumes and well within the prior session's ranges.
  • In Europe, the accounts of the November ECB meeting suggested among other things that official inflation forecasts would likely be revised up in December (no market reaction).
  • Friday's session likewise set to be quiet with another US holiday-shortened session, though a few European speakers (including Lagarde, Schnabel, and BoE's Pill) are on the agenda.


  • Dec Bund futures (RX) up 47 ticks at 171.01 (L: 170.6 / H: 171.03)
  • Dec Gilt futures (G) up 49 ticks at 125.95 (L: 125.52 / H: 125.98)
  • Dec 10-Yr US futures (TY) up 1.5/32 at 129-28 (L: 129-24 / H: 129-28.5)
  • Dec BTP futures (IK) up 37 ticks at 150.47 (L: 150.17 / H: 150.73)
  • Italy / German 10-Yr spread 0.4bps wider at 130.6bps

FOREX: Thanksgiving Holiday Prompts Tight G10 Ranges

  • Overall, the greenback traded marginally in the red on Thursday with a mixed and subdued performance across G10 currencies. EUR firmed slightly above 1.1200 but remained in a 32-pip range. NZD and CHF were underperformers, both falling around a quarter of one percent. EURCHF edged back toward the key 1.0505 pivot point.
  • Strength in the Swedish krona was a standout after the Riksbank signalled it could start reducing the size of its balance sheet even earlier than their forecast to raise rates from zero in 2024. Broad SEK strength was seen against both the euro and the dollar, in the region of 0.6%.
  • In emerging markets, USDMXN traded with a supportive tone, rising around 0.65%. Ongoing concerns regarding the new central bank governor-elect have prompted the pair to hover just below the 2021 highs of 21.6357.
  • Aussie retail sales are due overnight before Eurozone M3 money supply data during the European session. The US Treasury is also due to publish their report on international economic and exchange rate policies.