UKRAINE: Low-Level Russian Delegation Dampens Prospect Of Major Breakthrough

Gilts underpinned at the open, even with the overnight bid in Tsys & Bunds fading.

• The softer-than-expected elements of the UK labour market report (detailed elsewhere) promote some cross-market outperformance vs. peers across the curve (10s ~2bp tighter vs. Bunds, ~4bp tighter vs. Tsys).
• Futures trade as high as 91.85 before fading back to ~91.70.
• Initial resistance located at the 20-day EMA (91.81) was pierced. Next resistance located at the April 8 high (92.63). Initial support of note seen at the April 11 low (90.47). The bearish theme remains intact in the contract.
• Yields ~1.5bp lower across the curve.
• GBP STIRS off dovish session extremes as gilts fade from highs.
• SONIA futures flat to +2.0 after some contracts printed +6.0.
• BoE-dated OIS showing ~75bp of cuts through year-end, ~23bp of cuts priced for next month.
• UK CPI data eyed tomorrow, with the median of the sell-side surveys that we read showing downside risks to both the BBG median and BoE expectations. See our pre-gilt open STIR bullet for a little more colour and our full preview.
• Expect macro cues to dominate for much of the period between now and then.
• On the supply front, GBP 4.0bln of the 4.50% Mar-35 gilt will be sold today.

• A few ticks lower in Treasuries is helping EGBs towards their intraday lows, but not seen any standout flows, volumes are subdued on both sides of the Pond.
• Support in TYM5 is back at the 110.00 figure.
• The German Bobl supply could also limit some of the upside in Early trade, equates to 38.3k Bobl.
• Estoxx (VGM5) is testing Yesterday's high, but zooming out in the chart, these are small moves, mostly orders related flows as oppose to new news.
• USDJPY is pushing towards session high on the Yield move, the Japanese Yen also test session lows versus the Pound, EUR and AUD.

The Euribor strip has lightly twist flattened, with whites –1.0 to -2.0 ticks and blues +1.0 ticks. Futures have rolled over to fresh session lows over the past ~90 minutes, weakening a little alongside Bunds. The moves likely represent a degree of profit-taking following yesterday’s steady rally. Tariff concerns remain in focus - although President Trump signalled possible reprieve for auto producers ahead, levies on pharmaceuticals and chips/electronics remain likely in the coming weeks.

• Today’s Eurozone calendar is headlined by the Q1 Bank Lending Survey at 0900BST/1000CET. While it may come too late to impact Thursday’s rate decision (a 25bp cut is firmly expected and essentially fully priced in ECB-dated OIS), it will be an important gauge of the restrictiveness of ECB policy.
• As such, it will feed into discussions around the policy statement wording, after rates were described as “meaningfully less restrictive” back in March.
• OIS price 81bps of cuts priced through December, ~1bp more hawkish than yesterday’s close.
• The German ZEW survey is also due at 1000BST. The expectations component is expected to drop sharply to 10.0 (vs 51.6 prior).