HYBRIDS: Hybrids: Week in Review

Gilts hold the bulk of the rally detailed earlier, backing away from session highs over the last couple of hours after the post-auction momentum stalled.

• Futures have traded as high as 93.32, well shy of next resistance at the May 2 high (93.93). Last 93.24.
• Yields 2-5bp lower on the day, ~1bp off session lows, flattening bias maintained, last week’s yield lows intact/unchallenged across the curve.
• 2s10s ~13bp below closing cycle highs, 5s30s ~8bp below closing cycle highs.
• Spread vs. Bunds continues to oscillate in the 195-200bp closing range witnessed over the last 3 sessions
• Domestic headline flow remains limited, with external cues set to dominate between now and tomorrow’s BoE decision.

• Bund is still probing Monday's high of 131.24 (circa 2.5% in Yield), all very gradual, but Volumes have picked up a little, Schatz was bought in 10k, Bobl 5k.
• While extreme moves should still be limited ahead of the Fed, further upside traction opens to 131.71, followed by Friday's gap, up to 131.90 and the big one at 132.03.
• In Yield terms, next support comes at 2.43%, which equates to 132.01, close to that 132.03 level.

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• President Donald Trump will receive an intelligence briefing in the morning before meeting Vice President JD Vance for lunch in the afternoon. Asian markets will be watching for a signal on how the White House will approach escalating hostilities between India and Pakistan.
• After upending transatlantic ties at the Munich Security Conference in February, Vance will speak at an event today hosted by the same organisation.  
• Markets will be monitoring Trump’s Truth Social account for his response to the Fed's rate decision.
• Treasury Secretary Scott Bessent is on Capitol Hill again today to give his 'Annual Testimony' to the House Financial Services Committee. Bessent and USTR Jamieson Greer are aiming to dial down tensions with Beijing at their first official talks with Chinese counterparts this weekend.
• The US trade deficit rose in March as US businesses stockpiled goods.
• Trump struck a conciliatory tone with Canadian Prime Minister Mark Carney but downplayed the prospect of a trade deal.
• The budget ‘Big Six’ will meet at Treasury today as Republican leaders struggle to get moderates and conservatives on the same page on reconciliation spending cuts.
• Senate Majority Leader John Thune (R-SD) is expected to hold a Thursday vote on a landmark crypto bill.
• Trump announced a truce with the Houthis and teased a "very big announcement" ahead of his Middle East trip.
• Poll of the Day: The economy is a “liability” for Trump despite a stabilisation of his approval. 

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