GERMAN DATA: Labour Market Deterioration Tapers in Q1; U/E at 0855BST

Tom Nuttall at The Economist posts on X: "Confirmed by the CDU: [Johann Wadephul] will be Germany's next foreign minister; Katherina Reiche the economy minister. [Thorsten Frei] cements his position as Merz's most important lieutenant by taking over as chancellery head. SPD ministers will be announced after Wednesday." RTRS: "A former lawmaker, Reiche has been CEO of regional energy infrastructure firm Westenergie - a division of E.ON, Europe's largest operator of power grids -- since early 2020. Reiche, 51, served as a member of Germany's parliament from 1998 until 2015 and held roles as parliamentary secretary at the environment and transport ministries."

• Taggespiegel reports that the centre-right Christian Democratic Union (CDU)'s other ministers include Karin Prien in the Education portfolio. The CDU's Bavarian sister party, the Christian Social Union (CSU) will have Alexander Donbrindt at the Interior Ministry (responsible for immigration policy) and Dorothee Baer at the Research and Technology department.
• The announcements come as the CDU holds a party conference of its 160-strong Federal Committee to approve the coalition agreement between the CDU/CSU and the centre-left Social Democrats. FAZ reports Frei as saying that he expects the agreement to gain approval ahead of CDU leader Friedrich Merz's expected election as chancellor on 6 May.
• Previously, it had been reported that Frei would retain his role as CDU parliamentary secretary. However, Merz was seen as keen on bringing a close ally to the heart of the governing system as minister responsible for the federal chancellery. 

Goldman Sachs expect “the BOJ to maintain its modest tightening bias at this week’s meeting”, although caution that “a U.S. recession could delay the timing of the next hike”.

• They also note that “long-end rates have generally outperformed their beta to the U.S. by a smaller extent than other maturities during the recent market moves, with JPY 30s the clear underperformer here”.
• They suggest that “some of this effect may be attributed to global term premium spillovers and liquidity drivers (with the long-end especially under pressure in poor liquidity environments), but the underperformance of 30s in Japan and the extent of 10s30s steepening has been especially stark”.
• They think “this has scope to revert as liquidity conditions stabilize, with the 10s30s JGB curve also vulnerable to any flattening pressure from continued BOJ QT plans should those be discussed more explicitly at this week’s meeting (ahead of its review of bond tapering plans in June)”.
• As a result, they recommend adding 10s30s JGB flatteners. 

While gilts initially trade lower, buyers quickly emerge, leaving the space little changed vs. late Friday levels.

• Broader core global FI markets trade weaker after U.S. Treasury Secretary Bessent pointed to trade talks moving in the right direction, particularly with Asia.
• Impending supply in Europe also weighs on EGBs.
• Futures as low as 93.16 before a bounce to 93.33. Contract last ~93.25.
• The recent bullish technical theme remains intact. Initial resistance located at Friday’s high (93.34), follow by a Fibonacci retracement level at 93.44.
• Initial support still located at the 20-day EMA (92.22 today).
• Yields little changed to 1bp lower, modest flattening bias to start the week.
• Initial support in 10s (4.460%) remains untested.
• GBP STIRs still trading around levels we flagged ahead of the gilt open, with just under 90bp of BoE cuts priced in through year-end.
• Final manufacturing PMI data (Thursday) headlines a limited domestic data calendar this week. BoEspeak from Ramsden (Tuesday) & Lombardelli (Wednesday) will also be eyed.
• On the supply front, the DMO will come to market with 30-Year (Tuesday) & 3-Year (Wednesday) paper this week.