SPAIN DATA: April Manufacturing PMI: Surprisingly Weak; US Tariff Policy Cited

Gilts look to Tsys for cues early today, moving away from lows as the overnight weakness in U.S. paper is unwound.

• Futures back to little changed at 92.10.
• The short-term trend in the contract remains bearish, despite the recent correction.
• Initial support and resistance of note located at 91.59 and 92.42.
• Yields essentially flat across the curve.
• 2-Year yields are ~5bp off March lows, with gilt bulls failing to challenge that key short-term level (4.127%) yesterday.
• GBP STIRs now a little more dovish on the day, reversing modest early hawkish adjustments.
• BoE-dated OIS showing 53bp cuts through year-end vs. 52bp ahead of the gilt open.
• SONIA futures flat to +2.0.
• Little of note when it comes to local news.
• Wednesday’s UK speaker and data schedule is empty.
• The only real point of scheduled domestic interest comes via the GBP1.6bln auction of the 1.125% Sep-35 I/L gilt.
• This will leave focus on U.S. tariff decisions and data for much of the session.

• Treasuries are starting to get dragged higher, European Govies lead, as Bund closed its Opening gap earlier.
  The Immediate area of interest for Bund is still at 129.54/129.60.
• For the US Tnotes (TYH5), while the March high is at 112.01, the March and the 2025 low in the 10yr Yield of 4.1040%, would equate today to 112.03+.
• US Emini is starting to tilt to the downside.
• USDJPY is paring some gains taking its cue from the move in Yields.

Tsys supported by the early downtick in European equities, with the impending “Liberation Day” tariff announcements out of the U.S. front of mind.

• Yields back to little changed on the day, with the Asia-Pac weakness, driven by reports pointing to Trump considering some slightly more lenient tariffs, reversed.
• TY futures comfortably within yesterday’s range.
• A screen buying programme across TU, FV & TY futures ahead of the European cash equity open plays into the bid.