Bond

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, depreciates after registering gains for the last two successive days amid falling Treasury yields.

UK bond syndication attracts biggest ever order book despite volatility. The UK Debt Management Office’s first public sale of the year impressed with an unprecedented level of demand despite a huge sell-off in gilts over recent months.

The latest Trump administration angle is for rates to be pushed lower through downward pressure on the 10yr yield, through lower inflation and a lower fiscal deficit. Achieve that and we'd agree. But achieve it first. Meanwhile, the Bank of England is likely to cut by 25bp, in line with market pricing. Going forward we see more GBP curve steepening.

The repricing had left traders largely in sync with the Fed, which has adopted a wait-and-see approach as it watches for inflation to come back closer to its 2% target.

"We believe final implementation of the Clearing Rule will provide improvements for this market," SIFMA and the other signatories of the letter said.

Hungary's government plans to further tighten the fiscal deficit; however, fiscal risk remains to the upside due to the political cycle. The debt agency focus is shifting to Hungary government bonds (HGBs), and we will see less retail and FX issuance this year. Average debt maturity should increase with concentration at the long end of the curve.

Poland indicates a second straight year of historically record gross borrowing needs and government bond issuance. At the same time, the Ministry of Finance continues to diversify funding sources to attract demand. The resulting funding split will depend heavily on market interest. We see fiscal risk as balanced for this year, however, elections remain on the calendar ahead.

Foreign investors are exiting CEE4 markets and we see unfavourable conditions for this year. Governments have to rely more and more on domestic demand. Turkey should see a continued return of foreign investors to the local market. In terms of sovereign ratings, we are positive on Turkey but negative on Hungary and Romania.

In our view, the interest rate complex will remain on hold at the first meeting of the National Bank of Hungary in the new year. Some early red flags on the macro side, combined with high financial market volatility, are set to keep the door shut on conventional easing in the coming months.