NETHERLANDS: Legislative Election To Be Set For 29 October
Interior Minister Judith Uitermark has confirmed that snap legislative elections will be set for 29 October, in line with recommendations from the electoral council. This follows the collapse of the governing coalition earlier this week, sparked by the withdrawal of Geert Wilders' right-wing nationalist Party for Freedom (PVV). Wilders claims that he withdrew his party due to the other coalition members' refusal to accept his 10-point plan for asylum reform, claims denied by the other parties.
- The election is too far away to make any concrete predictions, and indeed the plethora of parties means the political landscape will only become clear well after the 29 Oct vote as coalition negotiations take place.
- One of the main forces set to contest the election is the centre-left environmentalist GL-PvdA, an alliance between the GroenLinks (GreenLeft) and Labour (PvdA) parties, but it remains to be seen in what format. Members of both parties are currently voting on whether to formally merge or remain as an electoral alliance, with the result to be announced before a members' congress on 12 June. The merger is expected to pass, but there remains some unease.
- On the left of GL, there are concerns that joining with Labour will mean losing their 'radical' edge, while on the moderate wing of the PvdA some have argued joining with the environmentalists will turn off centrist voters and limit the party's prospects.
Chart 1. Legislative Election Opinion Polling, Projected Seats and 4-Poll Moving Average
Source: Peil.nl, Verian, Ipsos I&O, MNI
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EU: Germany's Merz To Meet w/EU & NATO Leaders 9 May
New German Chancellor Friedrich Merz is set to travel to Brussels on Friday, 9 May, to mark Europe Day. He will meet with European Commission President Ursula von der Leyen, and the two will hold a joint press conference at 1100CET (0500ET, 1000BST). Merz will also hold talks with European Council President Antonio Costa and NATO Secretary-General Mark Rutte.
- Much has been made of Merz's intention to take a much more active role on the foreign policy stage compared to his predecessor Olaf Scholz. This is exemplified by his visit to the two other Weimar Triangle nations on his first full day in office, with a clear attempt to put the three largest defence contributors in the EU front and centre of the Union's security and defence decision-making process.
- As Politico noted in February, this shift could put him if not at odds then at least in some form of competition with VdL, despite both hailing from the centre-right Christian Democratic Union. Politico: "What may look like paper-thin policy differences between the two could well turn into a full-blown power struggle as von der Leyen grapples with Merz’s increasing interest in the EU scene. Von der Leyen hews to the political center, championing green reforms, gender parity and keeping Europe’s internal borders open. Merz, by contrast, is a classic West German conservative who wants deregulation, has spoken out against parity in government, and has no problem shutting Germany’s borders to its neighbors."
US 10YR FUTURE TECHS: (M5) Trading Closer To Its Recent Lows
- RES 4: 113-22 1.382 proj of the Apr 11 - 16 - 22 price swing
- RES 3: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 2: 112-20+ High May 1 and key new-term resistance
- RES 1: 112-01+ High May 2
- PRICE: 111-08+ @ 11:25 BST May 7
- SUP 1: 110-27+ Low May 6
- SUP 2: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 3: 110-00 100-dma
- SUP 4: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
Treasury futures are trading closer to their recent lows and the latest pullback undermines the recent bull cycle. The contract has breached the 20-day EMA, and pierced support at the 50-day EMA, at 110-31. A clear break of this average would strengthen a bearish threat and expose 110-16+, Apr 22 low. For bulls, price needs to trade above key short-term resistance at 112-20+, the May 1 high, to reinstate a bullish theme.
US OUTLOOK/OPINION: MNI Fed Preview and Summary Of Analyst Fed Views
In addition to the MNI Fed Preview published on Friday (found here: https://media.marketnews.com/Fed_Prev_May20251_3b6325bf75.pdf), we’re re-upping a summary of analyst views ahead of today’s decision.
- Of the 23 analysts below, the median looks for 75bp of cuts in 2025 before 25bp in 2026.
- After the hawkish readjustment since late last week, the market is similar for this year with Fed Funds futures pricing 78bp of cuts for 2025 although is a little more dovish still in 2026 with close to another 50bp priced.
- Analyst views for 2025 range from zero cuts (Berenberg and Morgan Stanley) to 125bp of cuts (Citi, JPMorgan, TD Securities and Wells Fargo).
- Next cut timing: 9 expect June, 3 in July, 8 in Sept (with SEP meetings still carrying weight), 1 in Dec, 1 in 2026 and 1 seeing no cuts at all.
- A few views stand out, including Morgan Stanley who switch from one of the most hawkish to dovish from end-2025 to end-2026.
