EU ENERGY SECTOR: Additional Suitors For BP’s Castrol Business

A downtick in equities and light demand in EGBs and gilts after the Kremlin states that the 30-day ceasefire outlined by Ukraine is “impossible” without solving all of the prevailing “issues”.

• The BBDXY is incrementally firmer following the headlines.
• The market was already sceptical that the truce would be enacted/lasting, but we are still seeing a modest reaction to the headlines.

• No Impact on Bund following the higher EU Inflation expectations, The US Tnotes is seeing a pick up in Volumes but to the downside , sold in over 5k with the main focus on the US JOLTS and Consumer Confidence on the Data front for today.
• The underperformance in US Treasuries is pushing the Tnotes/Bund spread wider after seeing its tightest level since the 8th April Yesterday.
• For the outright futures (TYM5), support is at 111.10, not only Yesterday's low but also the very short term 23.6% retracement of the 11th/28th April gain.

The Swedish April Economic Tendency Indicator weakened to 94.8 (vs a two tenth downwardly revised 95.0 prior), its lowest since August. The fall was driven by consumers, with overall industry sentiment actually ticking higher on the month. However, expected employment metrics softened, which taken alongside an uptick in firm inflation expectations, highlights a difficult trade-off for the Riksbank. Overall, the survey should support rates to be kept on hold at 2.25% on May 8, but the risks are tilted towards more easing ahead, in our view.

• Consumer confidence reached its lowest since December 2023 at 81.6 (vs 88.8 prior). Consumer’s view of their own personal situation and the general economic situation both deteriorated notably.
• Aggregate business confidence was 99.9 (vs 98.9 prior).
• Manufacturing sentiment rose to 99.6 (vs 96.7 prior), driven by an increase in expected production over the next three months. There was also an uptick in past export orders, which could reflect some tariff front-loading.
• Retail (105.1 vs 104.7 prior) and services (98.0 vs 97.7 prior) sentiment rose a touch, while construction (100.0 vs 101.5) softened.
• There was a fall in expected employment metrics across industries, with manufacturing respondents seeing the first net negative reading since July 2024.
• On an aggregate basis, expected price metrics softened a touch but remain well above last year’s average (23 in April vs 24 in March, 14 avg in 2024). Expected prices amongst food retailers in particular remain elevated at 80 (vs 86 in March).
• Firms inflation expectations over the next 12 months rose to 2.7% Y/Y, from 1.7% in Q4.