ISRAEL: Foreign Minister Indicates IDF Ground Operations In Gaza Could Resume
Amichai Stein at Israel's i24 posts on X: "Reports: IDF armored forces are reoccupying areas they had previously abandoned along the Natzrim corridor.[...] Israeli Defense Minister Israel Katz, in a message to the residents of Gaza: The evacuation of civilians from the battle zones will soon begin again, and the situation will become much more difficult, with you bearing the full consequences. Katz added: Return the hostages and remove Hamas – the alternative is total destruction and devastation."
- Delivering a statement on 18 March PM Benjamin Netanyahu said the IDF "has resumed combat in full force", warning that "negotiations will continue only under fire" and that "this is just the beginning".
- Initially, it was unclear whether the escalation would be limited to airstrikes, but it appears from Katz's comments that a renewed ground assault on Gaza is on the way.
- Some commentators have intimated the actions are an effort by Netanyahu to prolong his gov'ts tenure. The Knesset must pass a budget by month-end or the gov't will fall and snap elections take place. The Ashkenazi ultra-Orthodox United Torah Judaism (UTJ), despite sitting in gov't, had threatened to withhold support unless the gov't made progress in passing a bill exempting young Haredim from military service. The loss of the UTJ's seven votes would have seen the gov't lose its majority.
- However, with the resumption of the war the ultranationalist Otzma Yehudit of former Security Minisiter Itamar Ben-Gvir has rejoined the gov't, with its seven seats meaning the UTJ threat is removed.
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BONDS: BTP/Bund spread is testing support
- The Italian BTP helps some of the recovery in EGB futures, the contract look to close the opening gap up to 120.02, while better resistance will be seen at 120.47 initially.
- The 2.50% Yield level in Bund held perfectly so far today, after it printed 2.501% high earlier.
- Despite the US out for a Bank Holiday, Volumes in Europe are quite elevated when we consider that we didn't have any notable data release for the session.
- BTP/Bund spread is now 2.7bps tighter vs ~1.9bp earlier, the spread is making another attempt at that ~106.16bps level, where it found support in December, January and also this Month.
EURIBOR: Mix Of Net Short Setting And Net Long Cover Seen On Friday
OI data points to a mix of net short setting and net long cover in Euribor futures on Friday. Futures settled -0.5 to -3.0 ticks through the blues, partially due to prospects of a less-onerous-than-expected US reciprocal tariff regime (announced late Thursday).
- The largest net pack OI swing was seen in the reds (-14.3k), driven by ~18.5k of net long cover in the H6 contract.
- Meanwhile, there was 20.2k of indicative net long cover seen in the M5 contract.
| 14/02/2025 | 13/02/2025 | Daily OI Change | Daily OI Change In Packs | ||
| ERH5 | 576,160 | 567,935 | +8,225 | Whites | -7,782 |
| ERM5 | 712,236 | 732,470 | -20,234 | Reds | -14,349 |
| ERU5 | 560,303 | 554,445 | +5,858 | Greens | -2,948 |
| ERZ5 | 622,006 | 623,637 | -1,631 | Blues | +3,916 |
| ERH6 | 408,117 | 426,620 | -18,503 | ||
| ERM6 | 342,190 | 340,644 | +1,546 | ||
| ERU6 | 264,633 | 266,324 | -1,691 | ||
| ERZ6 | 330,859 | 326,560 | +4,299 | ||
| ERH7 | 168,388 | 169,662 | -1,274 | ||
| ERM7 | 133,844 | 132,031 | +1,813 | ||
| ERU7 | 95,832 | 95,731 | +101 | ||
| ERZ7 | 117,781 | 121,369 | -3,588 | ||
| ERH8 | 59,824 | 59,421 | +403 | ||
| ERM8 | 46,633 | 45,587 | +1,046 | ||
| ERU8 | 33,805 | 32,037 | +1,768 | ||
| ERZ8 | 46,132 | 45,433 | +699 |
US: Senate Could Move First On Adopting Budget Resolution
Senate Majority Leader John Thune (R-SD) could bring the Senate Republican budget resolution to the floor this week, gaining the upper hand on strategy while the House of Representatives is on recess for the week. If adopted, the resolution would put the Senate firmly on its preferred two-bill reconciliation strategy.
- The Senate resolution provides roughly USD$300 billion in new border and defence spending, including funding to complete the US-Mexico border wall, but defers President Donald Trump's tax agenda until later in the year - a move that could risk delaying legislation to extend Trump's 2017 tax cuts until beyond the December 2025 sunset date for some provisions.
- Should Thune choose to begin procedural voting - likely starting Tuesday -, it would entail up to 50 hours of debate and a so-called 'vote-a-rama' on amendments that could drag on for hours over dozens of votes.
- House Speaker Mike Johnson (R-LA) and House Ways and Means Committee Chair Jason (R-MO) have petitioned Trump to oppose the Senate plan, however, Politico notes: "Vice President JD Vance, White House policy chief Stephen Miller and budget chief Russ Vought [are] among those favoring the Senate’s preferred two-bill approach."
- Thune said in an interview on Friday: “The House and the Senate operate differently, clearly, and we have procedural issues we have to deal with in the Senate. But … these efforts are going to, at some point — they’re going to merge.”
