EU CREDIT SUPPLY: Julius Baer €500m WNG Sr Pref - Books

Latest block trade lodged at 10:04:41 London/05:04:41 NY:

• TUM5 13,932 lots blocked at 103-10.375, looks seller driven, with the contract bid at 103-11.125 at the time the block was lodged.
• DV01 ~506K.

• US Cash Govies are still trading cheaper and the belly underperforms.
• The 2s/10s, 5/30s, 10/30s curves are all flatter following the Tariffs De-escalation between the US and China.
• The 2s/10s is through the initial support seen at ~45.3, and could now target the 43.5 level, this is the very short term 61.8% retracement of the Wide April range.

Little reaction in GBP STIRs to the above comments from BoE’s Lombardell, who didn’t provide much in the way of fresh, meaningful information for markets, positioning herself in the same camp as Governor Bailey i.e. May’s decision was “finely balanced”.

• As such, broader swings in risk appetite continue to dominate.
• 3bp of cuts priced into BoE-dated OIS through June, 21bp through August, 30bp through September, 45bp through November and 51bp through year-end.
• ~50bp of cuts were priced through year-end before Lombardelli started speaking.