External broker reports, Nordea

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Macroeconomics

<ul><li>The Dutch State Treasury Agency (DSTA) will sell a new 10-year benchmark, maturing on 15 July 2034, for EUR 4 to 6bn via the Dutch Direct Auction on Tuesday 6 February.</li><li>Re-openings during the course of the year are expected to raise the outstanding amount to EUR 12bn.</li><li>The Dutch preliminary funding need for this year amounts to EUR 75.7bn, with total bond funding target set at EUR 40bn, down from EUR 46.3bn in 2023.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

The Dutch State Treasury Agency (DSTA) will sell a new 10-year benchmark, maturing on 15 July 2034, for EUR 4 to 6bn via the Dutch Direct Auction on Tuesday 6 February.Re-openings during the course of the year are expected to raise the outstanding amount to EUR 12bn.The Dutch preliminary funding need for this year amounts to EUR 75.7bn, with total bond funding target set at EUR 40bn, down from EUR 46.3bn in 2023.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

<ul><li>Main findings: The risk-neutral probability distribution for USD 1Y inflation has a substantially larger right-hand skew than the one for EUR-flation, suggesting that markets are starting to factor in risks of accelerating USD inflation.</li><li>Based on the probability functions, the average market-based 1Y USD-flation expectations are anchored ABOVE 2%, while the EUR-flation mean hovers just above 1.5%.</li><li>Still, the Fed was expected to cut MORE than the ECB in 2024 until very recently.</li></ul>

Main findings: The risk-neutral probability distribution for USD 1Y inflation has a substantially larger right-hand skew than the one for EUR-flation, suggesting that markets are starting to factor in risks of accelerating USD inflation.Based on the probability functions, the average market-based 1Y USD-flation expectations are anchored ABOVE 2%, while the EUR-flation mean hovers just above 1.5%.Still, the Fed was expected to cut MORE than the ECB in 2024 until very recently.

Inflation Watch – How are markets pricing inflation in 1 year?

<ul>
<li>Morning and welcome to our latest now-cast update from the Eurozone.</li>
<li>We see a -0.7% MoM print in the Euro-zone HICP with most of the dovish surprise coming from Germany.</li>
<li>Here is a short update on the forecast on a country by country basis.</li>
</ul>


Morning and welcome to our latest now-cast update from the Eurozone.
We see a -0.7% MoM print in the Euro-zone HICP with most of the dovish surprise coming from Germany.
Here is a short update on the forecast on a country by country basis.


EUR HICP Forecast: HUGE Vol in Germany. A Deflation Shock?

<ul><li>Like we mentioned in the first positioning watch of the year, holders of risk-assets have entered a slightly more cautious stance, and the classic risk aversion dynamics seem to be back as inflation expectations have been on the rise yet again since December.</li><li>The Fed now find themselves at an interesting crossroads as the inflation battle may turn out more difficult than anticipated, but the gifts have already been handed out, and markets are again pricing the Fed to be the most dovish central bank in 2024 (mispricing of central banks are apparently a market speciality).</li><li>The chart below is also a clear proof of the market’s inability to be forward-looking.</li></ul>

Like we mentioned in the first positioning watch of the year, holders of risk-assets have entered a slightly more cautious stance, and the classic risk aversion dynamics seem to be back as inflation expectations have been on the rise yet again since December.The Fed now find themselves at an interesting crossroads as the inflation battle may turn out more difficult than anticipated, but the gifts have already been handed out, and markets are again pricing the Fed to be the most dovish central bank in 2024 (mispricing of central banks are apparently a market speciality).The chart below is also a clear proof of the market’s inability to be forward-looking.

Positioning Watch – How are markets positioned in inflation?

Cross Asset Strategy

<ul><li>US Treasury liquidity conditions remain weak and the turmoil in Treasuries during the third quarter of 2023 probably played a major role in the Powell pivot in December in hindsight.</li><li>There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves (USD liquidity).</li><li>It all has to do with the mechanics of leverage ratios in regulation.</li></ul>

US Treasury liquidity conditions remain weak and the turmoil in Treasuries during the third quarter of 2023 probably played a major role in the Powell pivot in December in hindsight.There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves (USD liquidity).It all has to do with the mechanics of leverage ratios in regulation.

USD Liquidity Watch: Treasury Selling Due to Bank Reserves Influx?

Germany

The euro is the official currency of the European Economic & Monetary Union. 

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Bond Watch: Dutch Pick-Up

The Dutch State Treasury Agency (DSTA) will sell a new 10-year benchmark, maturing on 15 July 2034, for EUR 4 to 6bn via theDutch Direct Auctionon...

Nordea

Inflation Watch – How are markets pricing inflation in 1 year?

Main findings: The risk-neutral probability distribution for USD 1Y inflation has a substantially larger right-hand skew than the one for...

Steno Research

EUR HICP Forecast: HUGE Vol in Germany. A Deflation Shock?

Morning and welcome to our latest now-cast update from the Eurozone. We see a -0.7% MoM print in the Euro-zone HICP with most of the dovish...

Steno Research

Positioning Watch – How are markets positioned in inflation?

Like we mentioned in the first positioning watch of the year, holders of risk-assets have entered a slightly more cautious stance, and the classic...

Steno Research

USD Liquidity Watch: Treasury Selling Due to Bank Reserves Influx?

There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves...

Steno Research

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