COMMODITIES: Fresh All-Time Highs for Gold Reinforces Current Conditions

• Danske Bank expect decent demand at today’s E5bln 1.90% Sep-27 Schatz auction, given the outright level for yields. They also note that “if we look at the bid-to-cover for the Schatz auctions, then they have been steadily rising since early 2024 and this year the average is 2.6 relative to 2.3 in 2024 and 1.7 in 2023”.
• “This is related to the steady cheapening versus other EGBs as well as SSAs and swaps such that it has become more attractive just to hold Schatz as the supply of SSAs and covered with a maturity of 2 years is modest”.

More comments from an unnamed EU official talking on trade with the US are being reported by Reuters. Says "We are really trying to get as many products as possible into the list of US tariff rate exemptions, at [a] zero-for-zero rate." Official: "We believe [that] medical products should be in the zero-for-zero tariff rate, or at most favoured nation rate, along with some chemicals and wines." 

• The official acknowledges "We are not here to say we have fundamentally solved everything in one go", adding the EU expects some "turbulence", but "we have set up a solid foundation for ourselves."
• In what has become a game of one-upmanship between US trading partners trying to tout the benefits of their own deal, the EU official highlights the 15% tariff facing EU cheese exports to the US, compared to 24.9% for the UK.
• The high-profile meeting between German Finance Minister Lars Klingbeil and US Treasury Secretary Scott Bessent offered little in the way of signs of future trade talks. A brief readout from the US simply acknowledged the deal rather than any discussions of its content.  

SX5E (19th Sep) 5400/5600/5800c fly, bought for 33 in 7.5k vs 1.2k at 5260.