EU CONSUMER STAPLES: Haleon | CMD

ECB Governing Council member Rehn told POLITICO “if the data verify the baseline and indicate that to reach our goal of 2% symmetric inflation target over the medium term, the right reaction in monetary policy should be to cut in April, we should indeed do so”.

• Ultimately, Rehn didn’t stray from a data-dependent stance, suggesting that rates could also be left unchanged if the data warranted.
• We have previously suggested that the bar to Rehn not voting for an April cut was set quite high.
• We view Rehn as an important barometer of the median Governing Council view, often striking a centrist/dovish leaning tone.
• This morning’s inflation and manufacturing PMI data do not present any meaningful hurdles to further easing.
• Rehn’s GC colleague Escriva has since noted that recent price data confirm the disinflationary trajectory, albeit alongside highlighting uncertainty centred on the U.S. tariffs.
• Demand for wider core global FI ahead of “Liberation Day” has filtered through into the EUR short end, driving a dovish move through Tuesday morning trade.
• The ECB comments flagged above haven’t had much, if any, tangible impact.
• ECB-dated OIS show 19.5bp of cuts for this month, 37bp through June, 44bp through July and 63bp through December.
• Euribor futures +4.0-9.0.
• The hawkish moves following yesterday’s BBG ECB sources report have been reversed.

• In contrast to the earlier bearish views on AUD, SocGen highlight that AUDUSD is almost exactly where it was on January 6, despite a 40bp narrowing in the 5-year yield differential.
• With recent Chinese data improving, and with China accounting for 9 times as much of Australia’s exports as the US does, SG believe the AUD should not be one of the worst-performing currencies against the current backdrop.

• Treasuries have slowly extended gains through both Asia and European hours and continue to probe recent highs.
• Modest gains over the past hour were helped by the Washington Post reporting around White House aides drafting a proposal for tariffs of around 20%.
• Cash yields are 2-4bp lower on the day, with 2s lagging declines ahead of some notable data releases including ISM manufacturing and JOLTS reports at 1000ET.
• 2Y yields at 3.865% for now remain above yesterday’s stabilization either side of the 3.85% level. 10Y yields meanwhile at 4.165% have easily pushed through yesterday’s 4.18-4.20%, with ytd lows seen at 4.104% on Mar 4.  
• TYM5 trades close to a recent session high of 110-24+ ( + 17+) on solid overnight volumes of 455k.
• It has cleared tentative resistance at yesterday’s 111-22+ for another step closer to a bull trigger at 112-01 (Mar 4 high) after which lies 112-13 (Fibo projections).
• Data: S&P Global US mfg PMI Mar final (0945ET), ISM mfg Mar (1000ET), JOLTS Feb (1000ET), Construction spending Feb (1000ET), Dallas Fed services Mar (1030ET)
• Fedspeak: Barkin on policy and economic outlook (0900ET, text tbd)
• Bill issuance: US Tsy $70B 6W bill & $50B 14D CMB auctions (1130ET)