MEXICO: Amador/Haddad Meeting, Sheinbaum Lofty Approval Ratings Persist

• In the FI space, a bull cycle in Bund futures remains in play and the contract is holding on to the bulk of its recent gains. Fresh short-term cycle highs last week signal scope for a continuation of the uptrend. The contract has cleared 131.14, the 76.4% retracement of the Feb 28 - Mar 11 bear leg. Clearance of this level strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support to watch lies at 129.02, the 20-day EMA.
• Gilt futures maintain a firmer tone despite today’s pullback. A key resistance at 93.79, the Mar 4 high, has recently been cleared and this has been followed by a move through the 94.00 handle. The breach signals scope for a climb towards 94.75, 76.4% of the Dec 3 - Jan 13 bear leg (cont). On the downside, initial support lies at 93.01, the Mar 20 high. A firmer support is seen at 92.13, the 20-day EMA.

As markets consider the EU's retaliatory steps against the US, news this morning affirms that the UK are unlikely to meaningfully push back against US measures - an outcome that adds to the case for GBP underperformance through tariff uncertainty.

• UK PM Starmer announced that the "world has fundamentally changed" and has formally diluted electric vehicle targets for UK car production as well as potentially suggesting fiscal rules could be tweaked to combat an expected lower rate of growth. These policy actions stop well short of the Canadian, Chinese or likely EU response of counter-tariffs and restrictions - all of which carry an inflationary impulse.
• The contrasting official responses expose GBP here, suggesting inflationary pressure from UK countermeasures is low relative to the EU, and the argument for greater government support for businesses is more contained - leaving BoE pricing more subject to easing relative to the ECB.
• We noted above that EURGBP has cleared resistance to open 0.8645 and 0.8768 - meanwhile GBP/USD is meeting the 200-dma at typing (1.2813), to target 1.2784 and 1.2654, the 50% retracement for the YTD rally.

• +5,340 FVM5 109-20, post time offer at 0659:42ET, DV01 $220,000. The 5Y contract trades 109-18 last (+7.25).