EM ASIA CREDIT: HONGQI: New Issue: $270m 3.5Y - Priced

Lagarde seemingly suggesting the euro strength has run beyond fundamentals and is "counterintuitive", however she adds that EUR strength reflects Europe's fundamentals. She last commented on the currency as being stronger due to "resilient market sentiment" on April 17th, back when EUR/USD traded ~1.1375.

• We noted earlier that EUR had traded a record high in trade-weighted terms - and while it's unsurprisingly the most stretched DM currency vs historical ranges, GBP, CHF and SEK (just) see a more elevated REER relative to its five-year average. GBP leads on this alternative approach, sitting 6.2% and 7.5% higher than five- and ten-year averages vs 3.9% and 4.7% for the euro.

Eurozone flash April consumer confidence was -16.7, the lowest since November 2023 and well below the -15.1 consensus and last month’s -14.5. The data was collected between April 1 – April 21, and so accounts for the initial fallout and subsequent changes to the US’ April 2 reciprocal tariff announcement.

• Clearly, the pullback in consumer sentiment presents a downside risk to the ECB’s 1.2% 2025 consumption projection. The June monetary policy decision will be presented alongside a fresh round of macroeconomic projections, compiled by Eurosystem (i.e. national central bank) staff.
• From a business perspective, focus turns to tomorrow’s April flash PMIs. 

• The article claims that Macron's inclination towards a snap vote could be down to a boost in his approval ratings (up 7% on the previous month and close to the levels achieved before last year's election). 
• The decision may be taken out of Macron's hands, though. A legislative election cannot take place within one year of the previous vote. Given the Bayrou gov'ts lack of a majority in the Assembly, come the summer, the left-wing New Popular Front alliance and the far-right Rassemblement National (RN, National Rally) could unite to out the Bayrou gov't and force a snap election. 
• The little polling conducted to date on a prospective legislative election shows RN remaining the single most popular political force in the first round, with the pro-Macron centrist Ensemble trailing in a distant third place.