STIR: EUR Implied Rates Unfazed By Latest Tariff Threats
Little net change in ECB-dated OIS this morning, with one more 25bp cut this cycle still fully priced – in line with the rate path embedded in the ECB’s June projections. Markets have looked through yesterday evenings tariff headlines. Although US President Trump’s threat of a 200% pharma tariff would have significant ramifications for the likes of Ireland, Italy and Germany if implemented, the market impact is dampened by (i) Trump’s history of pulling back from his most extreme threats and (ii) yesterday’s comments already suggesting there would be a 1/1.5-year phase in period.
- The FT reported this morning that EU negotiators are closing in on a framework agreement with the US. This would include the baseline 10% reciprocal tariff but no carve outs for specific sectors (compared with e.g. the UK). Trump said yesterday that the EU's "tariff letter" could come in the next few days.
- The next ECB decision is due in just over 2 weeks (July 24). Markets assign virtually zero chance of a cut. Overnight, ECB’s Vujcic told Handelsblatt that the bank can “wait for further data”, pointing to the September meeting as the next opportunity to properly assess the policy stance.
- Euribor futures are little changed through the blues. The U5/U6 spread remains above the trendline drawn from the April high, after piercing this resistance yesterday.
- Very light regional data calendar today, leaving focus on ECB speakers (Lane, de Guindos, Nagel).
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jul-25 | 1.915 | -0.4 |
| Sep-25 | 1.804 | -11.5 |
| Oct-25 | 1.774 | -14.5 |
| Dec-25 | 1.689 | -23.0 |
| Feb-26 | 1.675 | -24.5 |
| Mar-26 | 1.651 | -26.8 |
| Apr-26 | 1.659 | -26.0 |
| Jun-26 | 1.665 | -25.4 |
| Source: MNI/Bloomberg Finance L.P. | ||
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GILTS: Opening calls
Gilt calls, 91.88/91.97 range.
SWEDEN: In Line May Budget Balance, Performance Of 10Y SGB Sales Eyed This Week
No major surprises in the Swedish May budget balance, which printed a SEK51.1bln surplus broadly in line with the National Debt Office’s (NDO’s) SEK50.1 forecast.
- The primary balance surplus was lower than expected at SEK35.3bln (vs SEK 40.7bln NDO). However, this was offset by lower-than-expected net lending to government agencies (surplus of SEK19.5bln vs SEK12.9bln NDO).
- The NDO launched the new 10-year 2.50% Oct-36 SGB 1067 last week via auction. The auction attracted a 1.82x bid-to-cover ratio for the SEK6bln issued. This was below the 2.63x average cover ratio for auctions of the previous on-the-run 10-year SGB (SGB 1066).
- This may represent an adjustment to the new, larger, SEK6bln nominal auction sizes (following the May ’25 borrowing report, which saw an upward revision to deficit and debt forecasts), but we also note that last week was shortened by the Swedish National Day Public holiday.
- The NDO is due to sell another SEK6bln of the SGB 1067 this Wednesday, followed by three SEK2bln exchange auctions across June 12 – June 16th.
AUDUSD TECHS: Bullish Trend Sequence
- RES 4: 0.6603 High Nov 11 ‘24
- RES 3: 0.6582 High Nov 12 ‘24
- RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 1: 0.6538 High June 5
- PRICE: 0.6519 @ 07:54 BST Jun 9
- SUP 1: 0.6452/6404 20- and 50-day EMA values
- SUP 2: 0.6357 Low May 12
- SUP 3: 0.6275 Low Apr 14
- SUP 4: 0.6181 Low Apr 11
Trend signals in AUDUSD are unchanged, they are bullish and the pair continues to trade closer to its recent highs. Key support lies at 0.6404, the 50-day EMA. A clear break of this average is required to highlight a potential short-term reversal. The pair has recently cleared a key short-term resistance at 0.6515, the May 7 high, confirming a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement.
