GERMANY: Incoming VC Does Not Rule Out AfD Ban After 'Extremist' Classification
Speaking to Bild, incoming finance minister and vice chancellor, Social Democratic Party (SPD) co-leader Lars Klingbeil, says that the far-right Alternative for Germany (AfD) is "an attack on Germany", adding "They want a different country, they want to destroy our democracy. And we must take that very seriously." This comes after Germany's domestic intelligence service classified the AfD as a "proven right-wing extremist organisation," in a report published earlier today (see 'GERMANY: AfD Classified Proven Right-Wing Extremists By Intel Services; Risk Ban', 1131BST)
- Bild: "[Klingbeil says] A ban could "now be a possibility, but I'm not interested in creating a quick headline after this report." However, it could be that "at some point there will be a clear mandate from the independent authorities, saying, 'Now you have to act, dear politicians.' And we have to evaluate whether this report provides any indication for that.""
- With the AfD sitting as the main opposition in the new Bundestag, it is demanding to be elected to serve as chair of some parliamentary committees, a call backed by some on the right of the Christian Democratic Union/Christian Social Union (CDU/CSU), who argue excluding the AfD simply emboldens the party's claim of a mainstream stich-up. On the topic, Klingbeil claims there is "a joint approach” between the CDU/CSU and SPD in the incoming coalition gov't.
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BUNDS: Selling Off On Report Of EU Growth Shock Mitigation Action
Bunds sell off as BBG sources suggest that “the European Union is preparing a package of potential emergency measures to support parts of its economy that could be hit the hardest by US President Donald Trump’s sweeping tariffs”.
- The attempted mitigation of at least some of the growth shock that would stem from the U.S. tariffs is the driver here.
- Bund futures now ~40 ticks off session highs.
- Note that key support in 10-Year yields (2.654%) held for a third consecutive day.
STIR: ECB & BoE Pricing Off Dovish Session Extremes As Stocks Rally From Lows
EUR & GBP STIRs off dovish session extremes but still a couple of bp more dovish on the day when it comes to end ’25 implied rate pricing.
- ECB-dated OIS shows ~63bp of cuts through year-end, while BoE-dated OIS shows ~53bp of cuts over the same horizon, comfortably within multi-week ranges.
- The recent rally in equities has removed some of the dovish repricing seen through the London morning & early NY trade, but tariff uncertainty still lingers, limiting the scope of the pullback.
UK: Reeves-Won't Need A Repeat Of Tax-Raising Budget 'On Scale Of Oct 2024'
Chancellor of the Exchequer Rachel Reeves speaking in a House of Commons select committee hearing regarding last week's Spring Statement. Livestream here. Asked by opposition Conservative MP John Glen whether she can rule out raising taxes in the October Budget, Reeves says that she will 'not need to repeat' the scale of tax rises that was seen in the 2024 budget.
- Regarding the upcoming imposition of US 'reciprocal tariffs', Reeves says "I do believe in free trade" and claims "the UK does have balanced trade with the US." Says "We do not want to see trade barriers go up but fall...not just with the US...but the EU, India and other countries..."
- Asked whether the UK will impose retaliatory tariffs, says "Let's first see how other countries respond...Big UK exporters don't want gov't to rush into a response." Regarding the UK's stance on US tariffs, which has been seen as less combative than the EU, says "We do not want to do anything that will undermine an economic agreement with the US...We are not going to rush into action to get a quick headline."
- Reeves: "Specific tariffs on the UK are less relevant than the global demand picture...Even if [a deal] with the US is possible, it does not mean we are out of the woods."
- Says she understands the US' position with regard to its trade balance, but that the UK is not the root cause of this.
