ECB: Lagarde: In A Good Position To Navigate Outlook; One Dissenter To Rate Cut

German paper is wider vs. Tsys across the curve, despite this morning’s political headlines out of Germany.

• German yields 0.5bp lower to 2.5bp higher, curve twist steepens.
• Bund futures around the middle of their 39-tick session range after respecting yesterday’s low, last 130.90.
• There hasn’t been much reaction to news that there will be a second vote in CDU leader Merz’s bid to become Chancellor later today (15:15 CET/14:15 BST)..
• A reminder that the move away from session lows that came after Merz’s failure to win enough support in the first vote was only shallow, signalling that the market either believed that he would still become Chancellor at some point or that the most viable alternatives wouldn’t have much of a downside impact on German fiscal spending.
• Looking at the voting backdrop, J.P.Morgan note that “one theory is that a few members of the CDU/CSU (and possibly SPD) were disgruntled by either the coalition treaty itself or because they missed out on some government/parliamentary roles. Perhaps such individual decisions by a few members of the parties exceeded the coalition’s majority in an unintentional way. Having sent that signal, they may now support Merz in a second vote. However, this is only speculation making the rounds in the German press”.
• They note that “this matters for the government’s stability in future. If this morning’s opponents are more structural in nature, rather than a protest vote to send a signal, they may also oppose the government in votes on general government policy. That would be a more significant problem”.

• MNI: US REDBOOK: APR STORE SALES +6.7% V YR AGO MO
• US REDBOOK: STORE SALES +6.9% WK ENDED MAY 03 V YR AGO WK

SX5E (17th Apr) 3500/3400ps, bought for 5 in 5k.