GILTS: Holding Near Lows, Cross-Market Cues Dominate, BoE Speak Eyed

Handelsblatt reports that "According to Friedrich Merz, there will be no tax increases in the future coalition . [...] However, as Handelsblatt further learned, the solidarity surcharge will not be abolished.[...] Corporate tax is to be reduced, but not until January 1, 2028, while the right to choose how companies are taxed is to be expanded."

• Handelsblatt: "the parties have agreed on points that were already included in the exploratory paper. These include a reform of the citizen's income, the introduction of a maximum weekly working time, and tax-free overtime pay. A tax-free active pension is also to be introduced."
• As noted earlier (see 'GERMANY: Coalition Agreement Likely Today-Reports', 0911BST) the conservative Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) and the centre-left Social Democrats (SPD) are on the verge of agreeing a coalition deal that is set to see CDU leader Merz installed as chancellor in early May.
• In the last hour, Ipsos has published its latest opinion poll. For the first time, the far-right Alternative for Germany (AfD) leads in a nationwide opinion poll. Ipsos, Fieldwork 4-5 April: AfD: 25% (+3), Union: 24% (-5), SPD: 15% (=), Green: 11% (-1), Die Linke: 11% (+2), BSW: 5% (=), FDP: 4% (=). chgs w/28 Feb-1 Mar.  
• The AfD topping a poll for the first time is notable as a political event in itself, but with a coalition agreement set to be announced and no more state elections scheduled for 2025, the concrete political impact may prove limited. 

Recent history suggests President Trump and Speaker Johnson are well-positioned as they have overcome similar rebellions on three occasions: A December spending showdown, the January speaker vote, and the House budget vote last month. But this week’s dispute appears more intractable.

• Speaker Johnson has teed up a Rules Committee hearing today at 08:45 ET 13:45 BST - the first step to bringing the budget to the floor. If the budget is discharged to the floor, it is likely Johnson will find sufficient support to pass the resolution.
• If the House doesn’t pass the blueprint this week, Congress will go into the Easter recess without unlocking the reconciliation process to start writing the text for Trump’s agenda.
• The worst-case scenario for Johnson: House Republicans reject the blueprint outright or send an amended text back to the Senate, requiring the upper chamber to start writing the reconciliation text without a budget in place or re-run the entire procedural gamut, adding potentially weeks of negotiations to Trump’s agenda.
• The growing unease among Hill Republicans over Trump’s trade agenda could also translate into a greater appetite for dissent. Axios notes that at least a dozen House Republicans are considering signing onto Rep. Don Bacon's (R-NE) bill to rein in Trump’s tariff powers.
• Seven Republican Senators have signed onto the original Grassley-Cantwell Senate bill. It is likely there is a sizable group of Republicans waiting in the wings who could be persuaded to co-sign the bill if market turbulence continues.  

President Donald Trump yesterday ratcheted up pressure on House Republicans to back a Senate-approved budget blueprint that conservatives believe falls short on deficit reduction. Trump said in a speech at the NRCC dinner that conservatives should “stop grandstanding” and “close your eyes and get there.”

• Trump’s speech came after a White House meeting with wavering House Republicans. House Speaker Mike Johnson (R-LA) told reporters he thought Trump did enough, saying: “I think we’ll be moving forward this week.”
• However, Johnson is facing the most serious rebellion to Trump's tax and spending agenda so far, with conservatives unconvinced by a promise from Republican leadership they will pursue deeper spending cuts after the budget resolution is adopted by both chambers.
• Trump said in a message on Truth Social: “I let [conservatives] know that, I AM FOR MAJOR SPENDING CUTS! WE ARE GOING TO DO REDUCTIONS, hopefully in excess of $1 Trillion Dollars, all of which will go into “The One, Big, Beautiful Bill.”
• Rep Ralph Norman (R-SC) said, reflecting conservative scepticism: “The Senate's got to put the math in writing, like we did ... and let us look at it. We've got a solid group that's a no on this."
• Reminder: The House budget called for around USD$1.5 trillion in spending cuts, across a range of government departments. The Senate budget, concerned that the House cuts would likely fall heavily on safety net programmes like Medicare and SNAP – called for only USD$4 billion in cuts.