BTP: BTP/Bunds Back To Unchanged, '21 Low Intact
BTP/Bunds now ~3bp off opening lows, with higher core global FI yields, a shallower ECB cutting cycle and weakness in equities reversing the early tightening, spread last 97.1bp. The next major downside level of interest (’21 low at 90.4bp) remains untouched and intact.
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US TSY OPTIONS: Jul'25 10Y Puts, Block & Screen
- Block, 10,000 TYN5 108.5 puts, 15 vs. 111-04/0.19%
- 7,300 TYN5 109 puts, 22 ref 111-07
EQUITIES: US Cash Opening calls
SPX: 5,597.8 (-0.9%); DJIA: 40,863 (-0.9%/-356pts); NDX: 19,706.9 (-1.3%).
GERMANY: Merz Faces Second Chancellor Confirmation Vote Shortly
Freidrich Merz faces a second vote in the Bundestag shortly at 1515CET (0915ET, 1415BST) as he seeks the required absolute majority to be confirmed as Germany's new chancellor. In a day of high political drama, in an earlier vote Merz won the backing of just 310 lawmakers, short of the 316 required. Should he prove unsuccessful in the second vote a third vote will take place immediately afterwards, in which a simple majority will suffice to see him elected.
- FAZ reports "SPD party leader Lars Klingbeil was the first to speak: "It is important that Germany gets a reliable government." He expected "that the necessary majority will be achieved in the second round of voting for Friedrich Merz to be our country's next Chancellor.""
- The unprecedented nature of the unsuccessful vote (none of Germany's post-war chancellors have ever failed to win a first-round absolute majority) has meant a significant amount of speculation regarding the timing of the second vote, with initial expectations that it could take place this coming Friday proved wrong as Merz's centre-right Christian Democratic Union/Christian Social Union and the centre-left Social Democrats secured support from opposition groups for an expedited election process.
- Even if Merz wins in the second round, the initial failure to secure a majority will cast a shadow over the new gov't and highlights divisions within both participating groups. Some on the left of the SPD remain opposed to a deal with the conservatives, while Merz also has pockets of opposition within his own party.
