IRAN: Foreign Minister Says There Are No Talks With U.S.

EGBs and Gilts gained further ground Monday in a largely risk-off session.

• Multiple factors led to early gains, including the US's imposition of a 15% global tariffs (announced after Friday's European cash close, and replacing the IEEPA tariffs struck down Friday by the US Supreme Court), as well US-Iran tensions.
• Tech companies and other AI-impacted industries took a further leg lower in the afternoon, bringing core European yields to session lows into the close.
• In data, Germany's IFO survey beat expectations  in February, with manufacturing, services and construction sentiment improving.
• BoE's Taylor reaffirmed his well-defined dovish view, bringing little market impact.
• On the day, Gilts outperformed Bunds across most of the curve with a slight bull-flattening lean across both. 10Y Gilt yields saw their lowest close of the year (4.314%); 2Y saw the lowest yield close since April 2023.
• Periphery/semi-core EGB spreads were little changed on the day.
• Tuesday's schedule includes French confidence surveys and UK CBI, with numerous speakers including BOE's Bailey, Pill, Greene, and Taylor in Treasury Select Committee testimony.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.9bps at 2.035%, 5-Yr is down 3bps at 2.307%, 10-Yr is down 2.6bps at 2.711%, and 30-Yr is down 1.6bps at 3.384%.
• UK: The 2-Yr yield is down 1.5bps at 3.563%, 5-Yr is down 3.1bps at 3.748%, 10-Yr is down 3.9bps at 4.314%, and 30-Yr is down 3.7bps at 5.12%.
• Italian BTP spread up 0.5bps at 60.8bps / French OAT down 0.1bps at 56.4bps  

Elsewhere in European bond futures positioning:

• OAT: OAT structural positioning remains short, same as in our bi-weekly update. However, last week's trade was indicative of long-setting.
• GILT: Gilt structural "very long" positioning has pared  back to "flat". However, the signal is tricky to discern as the quarterly roll has started (March contract goes first notice on Thursday).
• BTP: BTP structural positioning remains in very long territory. Trade indicative of long-setting was seen last week.    

G. Elliot Morris at Strength in Numbers reports, “In our Strength In Numbers/Verasight polling, Americans say by a margin of 19 points that they disapprove rather than approve of how he’s handling trade and tariffs. President Trump gets a worse grade on tariffs than he does on handling foreign policy, jobs and the economy, or his job overall.”

• Morris notes, “A -20 margin nationally is pretty devastating electorally. My MRP analysis showed Trump underwater on trade in 40 out of 50 states. These 40 states are worth 80 votes in the Senate and 483 votes in the Electoral College (486 when you count Washington, D.C.)”
• Morris adds, “And it’s not just my polling showing this. A new survey from ABC News/Washington Post/Ipsos found 64% of Americans disapprove of Trump’s tariff handling. CNN/SSRS found 62% disapproval in January.”
• Silver Bulletin notes that Trump's disapproval rating on trade and tariffs ticked up last week to close to a second-term high of 57.7%.

Figure 1: Estimated % of US Adults who Approve of Trump’s Handling of Trade

Source: G. Elliot Morris