BONDS: EGBs-GILTS CASH CLOSE: Core FI Finally Catches A Bid
European yields fell Thursday, with cash core FI ending a 5-session losing streak, including 10Y Bund yields falling the most since Jan 15.
- Yields fell in almost uninterrupted fashion through the session, with the biggest fall of the day coming in early afternoon after a slew of US data which pointed overall to both softer inflationary pressures and weaker growth than anticipated.
- The German finance ministry announced a more modest downward revision to expected tax revenue over the next 5 years than had been speculated, helping underpin Bunds.
- UK Q1 GDP and monthly economic activity data was noisy and had little market read-through. Meanwhile Eurozone Q1 GDP was revised slightly downward, while industrial production beat expectations in March (largely on a volatile Irish print).
- The UK and German curves each bull flattened on the day, though German belly outperformance was notable.
- Periphery / semi-core EGB spreads mostly narrowed, with Greece the outlier with some modest widening. BTPs briefly dipped through 100bp vs Bund for the first time since 2021 but weakened after a Bloomberg sources piece saying Italian PMI Meloni wants to reduce payroll taxes in next year's budget.
- Friday's calendar includes French labour market data and Italian and Eurozone trade figures, with appearances by ECB's Lane and Vujcic and BOE's Lombardelli.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 6bps at 1.88%, 5-Yr is down 7.9bps at 2.19%, 10-Yr is down 7.7bps at 2.622%, and 30-Yr is down 8bps at 3.066%.
- UK: The 2-Yr yield is down 3.6bps at 3.988%, 5-Yr is down 4.3bps at 4.141%, 10-Yr is down 5.3bps at 4.66%, and 30-Yr is down 5.9bps at 5.41%.
- Italian BTP spread down 0.7bps at 100.5bps /Greek up 1.5bps at 78bps
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PIPELINE: Corporate Bond Update: $6B GS 3Pt Launched, Wells & MUFG Updated
- Date $MM Issuer (Priced *, Launch #)
- 04/15 $6B #Goldman Sachs $2.5B 3NC2 +110, $500M 3NC2 SOFR+129, $3B 6NC5 +125
- 04/15 $Benchmark Wells Fargo 4NC3 +113a, 4NC3 SOFR, 6NC5 +118, 11NC10+128
- 04/15 $Benchmark MUFG 6NC5 +117, 6NC5 SOFR, 11NC10 +127
- 04/15 $Benchmark Colombia 5Y 7.875%a, 10Y 9%a
US: Dimon Says Trump Administration Should Re-Engage With China - FT Interview
Speaking in a wide-ranging interview with The Financial Times, JPMorgan Chase CEO Jamie Dimon has urged the Trump administration to re-engage with China. Dimon’s comments may carry additional weight as President Donald Trump acknowledged that Dimon's remarks influenced his decision to rein in his tariff agenda last week.
- Dimon: “I don't think we have any engagement right now, and so - but that can start tomorrow. So, it doesn't have to wait a year. It could start tomorrow. You start with a phone call.”
- Dimon also urged the Trump administration to bolster its alliances to better address China: “I would want to negotiate eventually with Europe, with the UK, with Japan, Korea, Australia, Philippines, and … then face off with China and say, we want to trade with you, but here are the terms of trade that we all think are fair and reasonable.”
- On Treasury markets: “…there clearly was hedge fund deleveraging, which caused some of this. I think the real issue is, there's ongoing uncertainty around tariffs…”
- On Treasury Secretary Scott Bessent: “I think he's an adult… I think he's the guy who should probably be negotiating these trade agreements.”
- Bloomberg notes that ahead of his tariff reversal, Dimon piqued Trump's interest, "particularly when he said it was “perfectly reasonable” to conclude that global trade was unfair. Dimon encouraged foreign policymakers to take a calm approach and “negotiate some trade deals.”"
US 10YR FUTURE TECHS: (M5) Pressuring 20-day EMA
- RES 4: 114-10 High Apr 7 and the bull trigger
- RES 3: 113-00 Round number support
- RES 2: 112-08 High Apr 8
- RES 1: 111-00+/111-20 20-day EMA / High Apr 9
- PRICE: 110-31 @ 17:10 BST Apr 15
- SUP 1: 109-08 Low Apr 11
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
The recovery for Treasury futures extended into a second session Tuesday, with prices pressuring the 20-day EMA on the upside. This levels market initial resistance and a close above could signal that start of a stronger correction higher. For now, the technical trend remains lower: price traded through an important support last week: a trendline at 110-03+, drawn from the Jan 13 low. A clear break of this trendline would strengthen a bearish threat and signal scope for a deeper retracement. This would open 108-26+, a Fibonacci retracement.
