BONDS: EGBs-GILTS CASH CLOSE: Rallying Into Month-End
May-29 17:48
European core FI recovered from early weakness to close stronger Thursday.
- Core instruments were under some pressure in an early risk-on move, after a surprise US court decision overnight striking down (at least temporarily) the bulk of the White House's previously-announced tariffs.
- But Bunds and Gilts rallied almost continuously throughout the rest of the session.
- Multiple factors drove the rally: softer-than-expected US GDP and jobless claims data in the early European afternoon; softening equities as the impact of the US tariff court order was reconsidered; and, potentially, month-end dynamics helping boost core instruments led by Treasuries.
- UK yields fell around 8bp across the curve, outperforming bull flattening German instruments.
- Periphery / semi-core EGBs traded mixed but basically flat on the day vs Bunds; OATs outperformed.
- Friday brings flash May inflation data from Spain, Italy and Germany - MNI’s preview is here. We also hear from ECB's Muller, Panetta and Vujcic.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 2.8bps at 1.769%, 5-Yr is down 3.9bps at 2.068%, 10-Yr is down 4.6bps at 2.508%, and 30-Yr is down 4.4bps at 2.987%.
- UK: The 2-Yr yield is down 8bps at 3.995%, 5-Yr is down 7.8bps at 4.128%, 10-Yr is down 7.9bps at 4.648%, and 30-Yr is down 8.4bps at 5.396%.
- Italian BTP spread unchanged at 98.1bps /French down 0.6bps at 66.7bps
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US: Trump Gets Poor Grades From Voters Ahead Of 100 Days Speech
Apr-29 17:39
Marist notes in a new survey: “At the 100-day mark of President Donald Trump’s second term in office, a plurality of Americans give his performance a failing grade.”
- Marist adds: “While Trump’s “F” rating is due mainly to the perceptions of most Democrats and a plurality of independents, a majority of Americans, overall, disapprove of the president’s job performance.”
- The report continues: “On the specific issues of the economy, tariffs, foreign policy, and immigration, President Trump’s approval ratings are upside down. To compound matters for the president, a slim majority of Americans describe the direction in which he is moving the nation as change for the worse; six in ten say the nation’s current economic conditions are a result of President Trump’s policies, and a majority of Americans think that placing tariffs on imports will hurt the U.S. economy.”
- A new survey from NBC News shows that inflation is the most concerning economic issue for voters. The White House is likely to take note of the findings considering inflation’s role as ‘incumbent killer’ in a series of 2024 international elections.
- Trump’s activity on Truth Social suggests he is taking note of a recent surge of negative polling data: “The Polls from the Fake News are, like the News itself, FAKE! We are doing GREAT, better than ever before.”
Figure 1: President Trump’s Grade at 100 Days
Source: Marist
STIR: US Terminal More Firmly At Pre-Tariff Pause Levels On Lack Of Trade Deals
Apr-29 17:33
- Fed Funds implied rates are close to the day’s dovish extremes, with the Dec 2025 having pushed through Apr 21 lows for lows seen early Apr 11.
- Implied rates have been on a mostly one-way trip lower since a lack of meaningful progress announced at Bessent’s White House press conference shortly after 0830ET. Data meanwhile saw a mixed JOLTS report (lower openings vs lower layoffs and slightly higher quit rates) but a sour Conference Board consumer survey.
- Cumulative cuts from 5.33% effective: 2.5bp May, 17bp Jun, 40bp Jul, 61bp Sep and 98bp Dec.
- SOFR implied terminal yields are lower still on a relative basis having yesterday pushed back to pre-Apr 9 tariff pause levels.
- SFRU6 trades at session highs of 97.03 (+4.5) for highs since Apr 7 having yesterday cleared 96.97 (Apr 21 high). The yield of 2.975% is some 42bp lower than pre Apr 2 “Liberation Day” tariff announcement levels.
GBPUSD TECHS: Fresh Cycle High
Apr-29 17:30
- RES 4: 1.3605 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 3: 1.3550 High Feb 24 ‘22
- RES 2: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 1: 1.3444 High Apr 28
- PRICE: 1.3397 @ 16:22 BST Apr 29
- SUP 1: 1.3234 Low Apr 23
- SUP 2: 1.3180 20-day EMA
- SUP 3: 1.3041/2985 Low Apr 14 / 50-day EMA
- SUP 4: 1.2807 Low Apr 10
Bullish trend conditions in GBPUSD remain intact and Monday’s positive start to the week reinforces current conditions. A fresh cycle high yesterday highlights a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position too, signalling a dominant uptrend. Sights are on 1.3510, a Fibonacci projection. Support to watch lies at 1.3180, the 20-day EMA.
