US-RUSSIA: Kremlin-Trump/Putin Meeting "Necessary" But "Must Be Well Prepared"
Jul-04 10:14
Kremlin spox Dmitry Peskov, speaking to reporters, says that a meeting between Presidents Putin and Trump is "necessary", but only with the right preparation and timing. Peskov: "...such a meeting is necessary, there is such an understanding, there is readiness if necessary, and both President Putin and President Trump have spoken about this readiness. But such a meeting must be well prepared,"
- Peskov confirms that President Vladimir Putin said to US President Donald Trump that Moscow is still awaiting the timing of a third round of talks with Ukraine, presumably intended to take place in Istanbul. Peskov: "The President informed his American counterpart that we are now waiting for the dates of the third round of direct negotiations to be agreed upon,"
- Peskov: "During the conversation, President Putin repeated that we are interested in achieving our goals during a special military operation, and it is preferable to do this through political and diplomatic means. But while this is not possible, we are continuing our special military operation."
- Following Trump's expression of disappointment with the outcome of the call, Peskov said Russia "pays close attention to all of Trump's statements".
- Peskov says that the date of Putin's annual address to the Federal Assembly has not yet been determined.
- Separately, the Russian Ministry of Defence confirms the latest prisoner exchange has taken place between Russia and Ukraine.
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CROSS ASSET: JGBs Tick Higher On Latest BoJ Taper Speculation
Jun-04 10:12
RTRS sources suggest that “the Bank of Japan is considering slowing the pace of tapering in its bond purchases from next fiscal year onward, a move that would signal its focus on avoiding big bond market disruptions”.
- The piece went on to suggest that “the volatility seen in the super-long JGB market has heightened awareness within the BoJ of the need to ensure its bond tapering plans do not destabilise markets. The BoJ won't react directly to the rise in super-long yields, but is mindful of the risk the move could affect the entire yield curve”.
- JGB futures rally ~20 ticks on those headlines, trading through the Tokyo session high.
- While the idea of a slower/reduced BoJ taper is not new, more weight behind it promotes some demand for JGB futures and very modest weakness in JPY. USD/JPY adds 10 ticks, moving to ~144.20, shy of session highs at 144.38.
EU-BILL AUCTION RESULTS: 3/6/12-Month EU-Bills
Jun-04 10:08
| Type | 3-month EU-bill | 6-month EU-bill | 12-month EU-bill |
| Maturity | Sep 5, 2025 | Dec 5, 2025 | Jun 5, 2026 |
| Amount | E847mln | E1.248bln | E1.217bln |
| Target | E1.0bln | E1.5bln | E1.5bln |
| Previous | E749mln | E752mln | E956mln |
| Avg yield | 1.942% | 1.943% | 1.899% |
| Previous | 2.010% | 2.002% | 1.963% |
| Bid-to-cover | 3.18x | 2.09x | 2.22x |
| Previous | 2.37x | 2.87x | 2.44x |
| Previous date | May 21, 2025 | May 21, 2025 | May 21, 2025 |
FOREX: Global Carry Trades See Threat From Crowded Positioning, Return of Vol
Jun-04 09:51
- The sustained fade in G10 FX implied vol off the post-Liberation Day highs is helping provide a supportive backdrop for FX carry, and while the long-held status of JPY as a funding currency has ebbed since last year's intervention, other currencies have stepped in to take advantage of regional dislocations (most recently HKD and CNY), which are compensating for falling policy rates among traditional carry targets such as the MXN, AUD and others.
- BNY Mellon write that while there is little sign of market volatility picking up (meaning better risk-reward on carry trades) they believe conviction in these carry trades is not strong - and markets need to exercise greater caution amid an increasingly crowded strategy. They flag CHF, CNY and SEK low-yielding, funder currencies, all of which have large current account surpluses (which support a home investment bias in the context of US trade rebalancing), meaning the risk-reward profile for carry trades is likely to become structurally less attractive, tempering expectations around future returns.
- We see the sharp pull lower in local Hong Kong rates (both HIBOR and HKD funding rates) and the TWD spot rally has boosted the currency's status as an APAC funding currency, however persistent pressure on the weak-side of the FX trading band, a building 2025 IPO pipeline and improved corporate activity (bond sales, dividends) may mean pressured local rates are short-lived through the rest of 2025.
