EMISSIONS: EUAs Rangebound On TTF Movements

No tangible impact in the 10-year Gilt/Bund spread to the expected confirmation of the Winter Fuel payment U-turn. The spread remains just over 2bps wider today at 209bps, with the latest upward pressure in Gilt yields (now unch today at 4.645%) seemingly led by movements in the EGB space.

• Our Political Risk team notes that with regards to impact on future policy, there is the prospect that backbenchers and ministers on the left of PM Sir Keir Starmer's Labour party see the U-turn as a signal that the gov't will not keep to hard-lines on welfare cutting measures. Given Reeves' almost non-existent fiscal headroom, this could bolster the chances of tax hikes coming further down the line rather than spending reductions.
• Domestic fiscal focus remains on Wednesday's spending review.

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• President Donald Trump returns to the White House today after huddling with military leaders in Camp David to discuss protests in Los Angeles.
• Trump ordered at least 2,000 National Guard troops to be deployed in Los Angeles to quell protests against Trump’s deportation programme. White House policy advisor Stephen Miller characterised the protests as “an insurrection against the laws and sovereignty of the United States.”
• US and Chinese trade teams will resume negotiations in London today, after the tariff deal agreed in Geneva last month derailed amid accusations from both sides that supply chain controls were in contravention of the agreement.
• The US team in London includes the two principals from previous talks in Geneva - Treasury Secretary Scott Bessent and USTR Jamieson Greer - and has been expanded to include Commerce Secretary Howard Lutnick, whose Commerce Department has purview over export controls.
• Senate Finance Committee Chair Mike Crapo (R-ID) is expected to brief Republican Senators midweek on his plans for the stickiest items in the GOP’s “One Big Beautiful” reconciliation bill.
• The House Rules Committee is expected to meet on Tuesday to vote on discharging the White House’s first rescissions package to the House floor.
• Iran is expected to present a nuclear proposal to the US in the coming days.
• Poll of the Day: Elon Musk has “already lost his war against Trump,” according to polling data.

Full Article: US DAILY BRIEF

The gov't has confirmed a U-turn on ending universal Winter Fuel Payments for pensioners this morning. The gov't had been under significant pressure to change course from its own backbenchers and the opposition, with the U-turn widely expected but, until today, not confirmed. 

• Hygo Gye at The I Paper posts on X: "Govt confirms U-turn on cuts to winter fuel payment. Every pensioner earning less than £35,000 in taxable income will receive the payment this winter. Decision will cost £1.25bn - a black hole to be filled in at the Budget". Beth Rigby at Sky News: "That’s 9m - 3/4 - of all pensioners at cost of £1.25bn. Govt will save £450m on means testing > Size of reversal reflective of the scale of misstep".
• Chancellor of the Exchequer Rachel Reeves: “Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government. It is also right that we continue to means-test this payment so that it is targeted and fair, rather than restoring eligibility to everyone including the wealthiest."
• With regards to impact on future policy, there is the prospect that backbenchers and ministers on the left of PM Sir Keir Starmer's Labour party see the U-turn as a signal that the gov't will not keep to hard-lines on welfare cutting measures. Given Reeves' almost non-existant fiscal headroom, this could bolster the chances of tax hikes coming further down the line rather than spending reductions.