EU CONSUMER STAPLES: General Mills | 4Q (to May) results

Seeing a little leg higher in BTP and OAT futures, the former now positive on the day (+8 ticks to 120.31) and the latter closing the opening gap that provided resistance a little earlier (-3 ticks at 124.76).

• Haven’t seen an obvious trigger for the moves, with headline flow and broader activity muted. Expect that to continue through the European afternoon with the US out today.
• The 10-year BTP/Bund spread once again inches below the 100bps handle, now 2bps narrower today. As with the last few weeks, focus will be on whether the spread can sustain a move below the psychological handle. 

EUR traded inflation swaps are little changed relative to a month ago. The 5y5y HICP ex-tobacco inflation swap remains close to 2% at 2.09%, while 1-, 2- and 5-year swaps are comfortably below the 2% handle. 

• The trade agreement between the US and China in early May saw market-implied EUR inflation expectations rise, as it implied a reduced risk of disinflationary trade diversion from China into the Euro-area compared to when tariffs were at triple-digit levels.
• However, the combination of soft Eurozone data (May flash PMIs and Q1 negotiated wages) and US President Trump’s latest threats of tariffs as high as 50% on the EU has prompted a renewed softening of traded inflation metrics.
• The May 2025 HICP ex-tobacco inflation swap fixing is currently 189bps. 

Memorial Day operating hours for the major U.S. exchanges and asset classes can be found below.

• CME
• ICE
• NASDAQ
• NYSE
• SIFMA
• Note that U.S. cash Treasury and equity markets are closed today.