NATO: BBG-Alliance Proposes 3.5%-1.5% Of GDP Split On Defence Spending
Bloomberg News reports that NATO has proposed including spending on cybersecurity in its calculations of the percentage of GDP that its members spend on defence and security. There has long been speculation that at the upcoming NATO summit in the Netherlands in late June, the alliance's leadership will propose an overall 5% of GDP target for defence spending, with a sum of at least 3.5% of GDP going on front-line military equipment and personnel, with an additional 1.5% of GDP going on defence related expenditure. This could include cybersecurity, border protection, coastal defences, critical infrastructure, non-defence-related intelligence, or space-related activities.
- US President Donald Trump has pressured other NATO states to significantly increase their level of defence spending in order to pay their own way and reduce the burden on the US of providing European defence, or risk an American drawback from the continent.
- The 3.5%-1.5% split has been welcomed by a number of NATO member state gov'ts. Earlier in May, German Chancellor Friedrich Merz voiced his backing for such a proposal.
- BBG: "Talks are expected to continue in NATO’s policy and planning committee Wednesday, according to the document. The proposal is subject to change and will form the basis for discussion among alliance members,"
- There remain questions over Trump's possible no-show at the NATO Summit. The 2024 NATO annual report, published in Apri,l showed nine of 32 members falling short of the current 2% of GDP spending floor, although all are expected to reach this figure by the summer.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
SPAIN: Widespread Blackouts Having Limited Market Impact
While the impacts of the Spanish & Portuguese energy blackout continue to be felt across both countries - the ramifications for markets have been pretty limited so far beyond some modest weakness in both the IBEX-35 and the PSI-20.
- We're monitoring headlines that all trains have been stopped with no departures, subways and traffic lights have been impacted and the effects are pretty nationwide. That said, Spain's network operator has activated emergency plans to restore supply - but there's no indication on when the blackout will be fully reversed.
- Spanish bond markets and the EUR are broadly unaffected, but are off the better levels of the European morning - a swift resolution here would have very limited read-through for the economy, however protracted problems here could begin to cause issues for markets should industry and transport suffer prolonged or repeat blackouts.
US TSY OPTIONS: Early SOFR/Treasury Option Roundup, June'25 Tsy Puts
Option desks report better low delta Jun'25 Treasury puts overnight, extremely light SOFR options at the moment. Underlying futures weaker, near recent lows (TYM5 at 111-13, -3.5). Projected rate cut pricing looks softer vs. late Friday levels (*) as follows: May'25 at -1.9bp (-2.7bp), Jun'25 at -15.4bp (-16.6bp), Jul'25 at -35.6bp (-37.1bp), Sep'25 -54.6bp (-56.1bp).
- Treasury Options:
- 10,000 TYM5 107 puts, 2 ref 111-13
- 15,000 TYM5 106/107 put spds
- over 5,800 TYM5 109 puts 8 last
- over 5,000 TYM5 109.5/110.5 put spds, 14 ref 111-16
- 5,900 TYM5 113 calls, 20 ref 111-15.5
OUTLOOK: Price Signal Summary - Bear Threat In WTI Remains Present
- On the commodity front, Gold continues to trade below its recent highs. The trend needle points north and the latest move down appears corrective. The retracement is allowing an overbought condition to unwind. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, the 1.764 projection of the Feb 28 - Apr 3 - Apr 7 price swing. Initial firm support to watch lies at 3219.4, the 20-day EMA.
- In the oil space, a bearish theme in WTI futures remains intact and the recovery that started on Apr 9 appears corrective. The move higher has allowed an oversold trend condition to unwind. Recent weakness resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open; $58.29, the Apr 10 low, and $53.72, the 2.236 projection of the Feb 20 - Mar 5 - Apr 2 price swing. Resistance to watch is $65.73, the 50-day EMA.
