STIR: Front-Loaded Gains On FOMC Hold

EGBs and Gilts traded within the prior session's ranges Monday, with curves resolving slightly flatter.

• A weekend of back-and-forth developments on the US-Iran front culminated in a renewed halt of strike action, allowing energy prices and European yields to remain contained a Monday got underway.
• An early rise in yields came as energy prices ticked up from lows; ahead of likely next UK PM Burnham's speech (ultimately he said little new); and with Spanish inflation readings firmer than expected.
• BOE's Pill maintained that he thought rates may not have been sufficiently restrictive before the Iran war.
• In data, Eurozone economic sentiment was a little better than expected, while selling price expectations cooled for a second month in June.
• The German curve bear flattened, with the UK's twist flattening as Gilts outperformed Bunds. Periphery/semi-core EGB spreads traded mixed but little changed overall.
• Tuesday's docket is highlighted by French, German, and Italian flash June inflation (MNI's Eurozone inflation preview is here) as well as UK GDP data. Among multiple central bank speakers this week at the ECB's Sintra event, we get BOE's Breeden on Tuesday (Bailey speaks later this week) as well as several ECB Governing Council members.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.3bps at 2.54%, 5-Yr is up 1.3bps at 2.599%, 10-Yr is up 0.6bps at 2.857%, and 30-Yr is up 0.4bps at 3.412%.
• UK: The 2-Yr yield is up 0.1bps at 4.126%, 5-Yr is down 1.3bps at 4.267%, 10-Yr is down 1.5bps at 4.716%, and 30-Yr is down 2.3bps at 5.425%.
• Italian BTP spread down 1bps at 72.5bps / French OAT up 0.4bps at 78.6bps  
   

• RES 4: 0.8747 76.4% retracement of the Feb 27 - Mar 16 bear leg
• RES 3: 0.8742 High Mar 31 and Apr 1 and a bull trigger
• RES 2: 0.8731 High May 18 
• RES 1: 0.8652/94 50-day EMA / High Jun 22
• PRICE: 0.8622 @ 16:35 BST Jun 29
• SUP 1: 0.8610/03 Low Mar 16 and the bear trigger / Low Jun 24
• SUP 2: 0.8597 Low Aug 14 ‘25
• SUP 3: 0.8577 Low Jul 2 ‘25
• SUP 4: 0.8544 50.0% retrace of the Dec 19 ‘24 - Nov 14 ‘25 bull leg   

A bearish threat in EURGBP remains present and this is highlighted by moving average studies that are in a bear-mode position. The cross continues to trade closer to its recent lows and sights are on the key support and bear trigger at 0.8610 (pierced), the Mar 16 low. A clear break of this level would highlight an important medium-term bearish development. Key short-term resistance is 0.8694, the Jun 22 high.        

The New York Times reports that Democratic candidate Graham Platner holds a slight polling edge over incumbent Republican Senator Susan Collins (R-ME) in the first high-quality survey of the crucial Maine Senate race since Platner won the Democratic nomination. 

• The Times notes, “It is a slight advantage, but one that is considered too small for polls to measure reliably, and which could easily grow or shrink as campaigning ramps up.”
• The Times notes, “the poll found that he is failing to attract some voters who otherwise want to see Democrats take power in Washington. Fifty-four percent of voters said they would like to see Democrats control the Senate next year, a notably higher percentage than the percent of respondents who said they supported Mr. Platner. In fact, Ms. Collins, the Republican, is winning 10 percent of voters who prefer Democratic control.”
• The poll findings appear to support Senate Majority Leader Chuck Schumer's (D-NY) thoery that a moderate candidate like Governor Janet Mills (D-ME) may have been better placed to flip the seat than Platner, who has a chequered personal history.  

Figure 1: “If this November’s general election for U.S. Senate were held today, who would you vote for if the candidates were Graham Platner and Susan Collins?”

Source: New York Times