COMMODITIES: Crude Pares Gains Amid Iran Talk Hopes, Gold Unchanged

Yields closed mostly higher across Europe Tuesday, with Gilts underperforming Bunds ahead of UK CPI data.

• The tone for Gilt weakness was set by BoE hawkish dissenter Pill, who sounded less dovish than we had expected in saying that while there should be cuts, a quarterly 25bp pace is too fast, particularly since the first cut was delivered earlier than he would have preferred.
• Strength in European equities and renewed weakness in Treasuries weighed on the European FI space, though the sell-off stalled a couple of hours before the cash close and yields finished off their highs.
• In data, Eurozone flash May consumer confidence was a little stronger-than-expected.
• The German curve twist steepened, with the UK's leaning bear steeper (with 2s underperforming Schatz, in light of Pill's commentary).
• Periphery/semi-core EGB spreads closed mostly tighter, led by BTPs and OATs.
• Wednesday's highlight is UK CPI which could turn out to be the most important UK data release of 2025. MNI's preview is here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 0.1bps at 1.842%, 5-Yr is up 0.2bps at 2.151%, 10-Yr is up 1.8bps at 2.606%, and 30-Yr is up 5bps at 3.088%.
• UK: The 2-Yr yield is up 3.6bps at 4.043%, 5-Yr is up 3.9bps at 4.196%, 10-Yr is up 3.9bps at 4.703%, and 30-Yr is up 3.9bps at 5.458%.
• Italian BTP spread down 1.3bps at 99.6bps  / French OAT down 1.3bps at 66.3bps  

• RES 4: 0.8768 High Nov 20 ‘23    
• RES 3: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
• RES 2: 0.8541/8557 High May 2 / High Apr 28
• RES 1: 0.8457 50-day EMA
• PRICE: 0.8421 @ 16:37 BST May 20
• SUP 1: 0.8394 Low May 16   
• SUP 2: 0.8359 1.236 proj of the Apr 11 - 16 - 21 price swing
• SUP 3: 0.8316 Low Mar 28 and a key support
• SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing  

EURGBP is trading at its recent lows. A bearish theme remains in play. The cross has recently cleared 0.8457, the 50-day EMA, signalling scope for a continuation lower near-term. The 0.8400 handle has been pierced, a continuation lower would open 0.8359, a Fibonacci projection. Key near-term resistance to watch is 0.8541, the May 2 high. A break of this hurdle is required to signal a potential reversal.     

RRP usage retreats to $136.033B this afternoon from $180.417B yesterday, total number of counterparties at 32. Usage had fallen to $54.772B last Wednesday, April 16 -- lowest level since April 2021. Conversely, usage had surged to the highest level since December 31, 2024 on Monday, March 31: $399.167B.