US: Americans Prioritise Party Over Candidate Quality - Ipsos

• Treasury futures extended lows (TUM6 at 103-15, TYM6 at 110-14) after the $58B 3Y note auction (91282CQR5) tailed: 3.965% high yield vs. 3.960% WI; 2.58x bid-to-cover vs. 2.68x prior.
• Peripheral stats: Indirect take-up retreated to 62.96 from 74.81% (just below 5 auction avg of 64.04%); direct bidder take-up at 20.14 from 11.91% prior (22.6% 5-auction avg); primary dealer take-up to 16.90% vs. 13.28% prior.
• The next 3Y auction is tentatively scheduled for June 9.

• US TSY 3Y NOTE AUCTION: HIGH YLD 3.965%; ALLOTMENT 37.53%
• US TSY 3Y NOTE AUCTION: DEALERS TAKE 16.90% OF COMPETITIVES
• US TSY 3Y NOTE AUCTION: DIRECTS TAKE 20.14% OF COMPETITIVES
• US TSY 3Y NOTE AUCTION: INDIRECTS TAKE 62.96% OF COMPETITIVES
• US TSY 3Y AUCTION: BID/CVR 2.54

President Trump is meeting with his national security team today to discuss a way forward in the Iran war, possibly including resuming military action as a means to pressure Iran, Axios reported.

• Negotiations appear to have hit an impasse after Trump publicly rejected Iran’s counter proposal to end the war.
• Trump reiterated to reports that Iran cannot have a nuclear weapon, and said the ceasefire was on “life support.”
• Two U.S. officials told Axios that Trump is leaning toward some form of renewed military action, with one option being a resumption in “Project Freedom” to guide ships through the Strait of Hormuz.
• This is a risky strategy as it forces Iran either to relinquish its control of the Strait of Hormuz or engage with ships trying to cross, leading to further escalation. It is unclear if many tankers will heed the call to transit while the Iranian threat remains.
• Another option is an even higher risk option which is favoured by the Israelis according to Axios: sending U.S. special forces to seize the uranium. Such an operation would take days or weeks and Trump is naturally said to be hesitant.
• Trump has repeatedly called for Iran to hand over its enriched Uranium stockpiles to the U.S.
• The U.S. had waited 10 days for the proposal, and earlier indications suggested the U.S. was optimistic that Iran would give ground on the key nuclear issue.  However, the proposal appears to have rejected many of Trump’s demands and refused to make concessions on its nuclear programme, Axios added
• Any collapse in the ceasefire is likely to be met with a response by Iran, which continues to threaten the wider energy and water desalination infrastructure of U.S. Persian Gulf allies. These risks will also have to be carefully considered along with whether renewed strikes can realistically push Iran into acquiescing to U.S. demands vis a vis their nuclear programme.