OPTIONS: Expiries for Jun26 NY cut 1000ET (Source DTCC)

Tsy futures have closed the gap lower seen at the Asia open, with the contract last flat at 110-02+.

• This comes with e-minis and crude oil futures moving away from session highs, helping counter the sell off that was driven by Trump delaying the imposition of the 50% tariff on the EU.
• The contract’s technical bear cycle that started in early May remains intact.
• Initial support and resistance located at 109-13 & 110-21+, respectively.
• A reminder that activity ahs been limited by the presence of the Memorial Day holiday in the U.S., with cash Tsys closed and futures set to close early (13:00 NY/18:00 London).
• Roll activity has synthetically boosted volumes, latest completion estimates provided below:
• TU: 56.2%
• FV: 54.5%
• TY: 56.2%
• UXY: 44.3%
• US: 57.9%
• WN: 59.9%
• Minneapolis Fed President Kashkari underscored the need for the central bank to remain on hold for “a while” over the weekend, given the macro uncertainty evident at present.
• Fed Funds futures show ~46.5bp of cuts through December vs. ~48bp late on Friday.
• Durable goods and consumer confidence data headline the U.S. calendar on Tuesday, with comments from Fed’s Kashkari & Barkin also slated. Elsewhere, the Treasury will sell 2-Year paper.

Euro Stoxx 50 futures hold onto the bulk of the gains that came after U.S. President Trump delayed the imposition of 50% tariffs on the EU over the weekend, with the market now familiar with Trump pushing back tariff deadlines/moderating tariff sizes as a deadline nears.

• A recent BBG report noted that “the European Union said it agreed to accelerate negotiations with the US to avoid a transatlantic trade war, signalling a more amicable approach just days after President Donald Trump criticized the bloc for taking advantage of the US and slow-walking talks.”
• Euro Stoxx 50 futures closed the gap lower that followed Trump’s 50% tariff threat on Friday, last +1.35% or 72 points.
• Our technical analyst notes that a bullish theme in Euro Stoxx 50 futures remains intact and suggests that the recent pullback appears corrective. Moving average studies are in a bull-mode setup, highlighting a clear uptrend and recent gains maintain the sequence of higher highs and higher lows. Sights are on 5,516.00, the Mar 3 high and key bull trigger. Key support to watch lies at 5,223.87, the 50-day EMA.
• Sector-wise, industrials, IT and materials outperform, while utilities lag, a setup you would probably expect on trade-positive news.
• In terms of stock-specific moves, Thyssenkrupp has rallied over 7% after Bild pointed to a restructuring for the name as it looks to cut overheads and divest units.

Reports that the EU has agreed to accelerate trade negotiations with the US were worth a few ticks of upside in major EGB futures, but it’s hard to read too much into the moves with activity still very muted. EGBs have been happy to grind higher throughout the session.

• BTP and OAT futures still lead the rally intraday. BTPs are now +34 at 120.57, through Friday’s 120.40 high. Key resistance and the bull trigger is at 120.72, the May 8 high. Clearance of this level would solidify the recent uptrend, and expose the Feb 7 high at 121.00 on the continuation chart.
• Bunds have also closed the opening gap, now +9 at 130.74. The technical outlook is bullish, with Friday’s high at 130.94 presenting initial resistance.
• German long-end yields have turned lower on the session, helping the curve twist flatten (versus earlier bear flattening).  Schatz yields are still almost 3bps higher, with year-end ECB implied rates somewhat more hawkish than Friday’s close.
• The 10-year BTP/Bund spread is now 2.5bps tighter at 99.5bps.
• French flash May inflation headlines tomorrow’s regional calendar, with the EC’s May consumer and business survey also set to garner interest.
• EGB supply is due from Italy (BTP Short Term/BTPei auction and the launch of the new 7-year BTP Italia) and the Netherlands, while ECBspeak comes from Villeroy and Nagel.