RUSSIA: Lavrov-Putin 'Ready To Meet Zelenskyy When Summit Agenda Ready'

• In the FI space, Bund futures traded higher again, on Tuesday. This week’s gains have resulted in a move through resistance around the 50-day EMA, at 130.24. The clear break of the EMA undermines a recent bear theme and highlights a possible reversal. Sights are on 130.85 61.8% of the Jun 13 - Jul 14 bear leg. A break of this level would open 131.33, the Jun 20 high. Key support and the bear trigger has been defined at 129.08, the Jul 14 low.
• Gilt futures traded sharply higher on Tuesday, extending the recovery from the Jul 18 low. The contract has breached the 20-day EMA, strengthening a bullish theme and this undermines the recent bearish condition. A continuation higher would signal scope for a climb towards 92.42 next, a 50.0% retracement of the Jul 1 - 18 bear leg. On the downside, key support and the bear trigger has been defined at 91.08, the Jul 18 low.

• EGBs see the growth negative angle outweighing higher near-term inflation risks on the potential US-EU trade escalation as Bloomberg reports the EU plans to react with 30% tariffs of its own if no deal.
• German 2Y yields are almost 1bp lower post headlines but still +0.4bp on the day. The curve holds its modest steepening with 2s10s at 79.7bp (+1.1bp on the day).
• EUR 1Y CPI ex-tobacco inflation swaps are also holding lower, at 1.63% (-1bp on the day), although the 1Y1Y at 1.82% is at its highest since late June and having last been more clearly higher prior to early April US reciprocal tariff announcements.

Tariff-related excerpts from Bessent's Bloomberg interview. 

On Japan

• Bessent: Japan got the 15% [tariff] rate because they were willing to provide this innovative financing mechanism.
• This is all new capital. It's going to be targeted at strategic industries.

On EU

• Bloomberg TV: Can anyone get below 15%? Is this the new floor? Is the EU still trying for a 10% baseline?
• Bessent: Repeats result of innovative package. Brussel’s hasn’t come up with anything innovate yet. Talks are going better than they had been. I think we are making good progress. Repeats previous line about collective action problem in EU.

On China

• Bessent: We are in a good place with China now. There is the potential for a big beautiful rebalancing between the US and China. […] We believe they should become more of a consumption economy. If they are willing to do down that route we could do it together.
• Bloomberg TV: You told me last week the market does not need to worry about Aug 12. That’s the deadline for this current detente between Washington and Beijing. What’s the new deal?
• Bessent: Again, I think we could roll it forward, maybe on a 90 day increment. The goods news here is that we are back on track with negotiations. I think we can get into a very good cadence of regular meetings.
• A Trump-Xi meeting wouldn't be before Labor Day.