US NATGAS: Cali Natgas Daily Fundamentals

European yields backed up Wednesday, continuing their rise from Tuesday's lows, with Gilts underperforming Bunds.

• A soft long-end Japanese bond auction overnight set a weaker tone for global core FI early.
• In data, ECB 1-year ahead inflation expectations surprisingly rose but longer-term expectations were steady, muting the impact.
• On the day, the UK curve leaned bear steeper to the 10Y segment, with 30Y outperforming. The German curve more clearly bear steepened.
• BTPs led broader gains in much of the session, with 10Y yields falling to the lowest levels since February. 10-year EGB periphery/semi-core spreads tightened 0.3-1.0bps vs Bunds on the day.
• Thursday's calendar includes an appearance by BOE's Bailey; in data we get Spanish retail sales, and Italian confidence indicators and industrial sales.
• Attention for the week is on Friday's flash May inflation readings from Germany, Italy and Spain.

Closing Yields / 10-Yr EGB Spreads To Germany:

• Germany: The 2-Yr yield is up 0.6bps at 1.797%, 5-Yr is up 1.4bps at 2.107%, 10-Yr is up 2.2bps at 2.554%, and 30-Yr is up 2.9bps at 3.031%.
• UK: The 2-Yr yield is up 5.5bps at 4.075%, 5-Yr is up 5.4bps at 4.206%, 10-Yr is up 6.1bps at 4.727%, and 30-Yr is up 4.5bps at 5.48%.
• Italian BTP spread down 0.4bps at 98.1bps / French OAT down 0.5bps at 67.3bps  

US President Donald Trump has seen his net approval rating on trade, the economy, and inflation all improve from lows seen in late-April, in reaction to a decrease in uncertainty surrounding Trump's trade policy. 

• Silver Bulletin notes that Trump's approval rating on trade and the economy currently sits at roughly net-10%, with his approval on inflation substantially lower at -19.7%.
• The polling suggests that voters have upgraded their assessment of Trump's handling of key economic issues following a series of talks to dial down tensions with trading partners, particularly China.
• The positive reaction to Trump's tariff rapprochement may signal a more moderate trade policy as deadlines for the conclusion of tariff pauses on China and the EU approach. 

Figure 1: Trump's Net Approval on Issues

Source: Silver Bulletin

Takeup of the Fed's overnight reverse repo facility jumped Wednesday, rising $35.6B to $173.6B, the second-highest total of the month ($180.4B May 19).

• ON RRP takeup has been somewhat erratic the last few sessions, though it's not expected to rise much past Wednesday's levels (ie remaining below $200B).
• One exception of course could be at the end of this week, given the typical temporary rise amid month-end dynamics.