CAPITAL GOODS: Leonardo (LDOIM Baa3/BBB/BBB-[P]): S&P Upgrade

GBP STIRs also adjust to the risk-off price action stemming from tariffs.

• BoE-dated 1.5-4.0bp more dovish across ’25 meetings.
• ~20bp of easing now priced for May, ~24bp through June, ~36.5bp through August and ~55.5bp through year-end.
• SONIA futures 0.5-8.0bp firmer.
• Expect macro cues to dominate on Monday, with BoE lending data providing the most meaningful UK data release.
• The first major UK event risk of the week for the short end to digest will be tomorrow’s appearance from BoE’s Greene. She will speak on UK policy and macro conjecture.
• Further out, final PMIs and the BoE DMP round off this week’s UK data calendar.

• Latest reports suggest that the US have been tightening the screws on South Africa on several fronts amid escalating bilateral tensions. The US cut all military assistance and co-operation with the South African Defence Force (SADF), according to an internal memo seen by the Sunday Times. In addition, according to a piece in Afrikaans-language outlet Rapport, the US told South Africa’s military attaché Brigadier Gen. Richard Maponyane that he was no longer welcome in the country. Freedom Front Plus (FF+) party revealed South African companies were among those targeted by US export restrictions for allegedly providing support and training to Chinese fighter pilots.
  • This comes amid an escalation in tensions between the US and South Africa, which recently resulted in the expulsion of the South African ambassador. The spillover into military cooperation may generate further problems as Pretoria is struggling to maintain its military capabilities amid a failed stabilisation mission in the DRC and reports suggesting that much of its air force is effectively grounded.
  • South Africa is reportedly still looking to mend ties with the US but made it clear that it won't back down on its International Court of Justice (ICJ) case against Israel. Furthermore, the ANC said that its "leaders are not accountable to Washington" amid reports that the US could roll out personal sanctions against South African officials.
• Elsewhere, South Africa's M3 money supply growth slowed to +6.05% Y/Y in February from +7.10% prior, while private sector credit growth fell to +4.68% Y/Y from +4.59%. Monthly trade balance for the month of February will cross the wires at 13:00BST/14:00SAST.

• The rand received a boost from the news that last-ditch negotiations between the African National Congress (ANC) and Democratic Alliance (DA) on the 2025 National Budget seemingly brought some progress. The DA's spokesperson said that there was a "good chance" of an agreement between the two largest parties in the Government of National Unity (GNU), while President Cyril Ramaphosa said that he was confident that coalition partners would be able to "develop a shared approach." Separately, News24 reported that the ANC and DA were "close" to a deal on the future of the economy, following their revived talks held on Sunday afternoon.
  • This takes the edge off earlier reports suggesting that the GNU moved closer to the brink of collapse on Friday, when the African National Congress (ANC) refused to bow to the pressure from the Democratic Alliance (DA) and give it more say over economic matters. This resulted in a temporary collapse of negotiations, before they resumed on Sunday.
  • The National Assembly's finance committees will consider the 2025 Fiscal Framework on Tuesday, before it is submitted for a plenary session on Wednesday. The vote on the first in a series of bills needed to adopt the Budget will be the first major test of support for the outcome of negotiations between GNU partners.
  • USD/ZAR now trades at 18.2681, 0.9% lower on the session, erasing an upswing registered on Friday when ANC-DA talks stalled.