RUSSIA: "Major Statement" on Russia Due From Trump
Jul-11 07:33
- US President Trump is set to make a "major" Russia statement on Monday, according to comments overnight. The President is likely to reiterate his criticism of Putin amid his continued strikes on Ukraine, including key infrastructure. The comments follow the President's interjection to prevent US assets including missile batteries being shipped to Kyiv after an interruption in flows last week.
- In the comments to NBC News, the President also stated that he expects the Senate to proceed with the passage of a tougher sanctions bill on Moscow, which would leave the President with greater authority to push ahead with more aggressive sanctions.
- Following a meeting between US Secretary of State Rubio and Russian foreign minister Lavrov yesterday, Rubio said that the two countries are discussing a new path for peace in Ukraine, while also conveying the US' "disappointment and frustration" at the intensification of the war.
- Expectations for domestic investment activity are falling sharply, according to a survey of businesses conducted by the Institute of Economic Forecasting, with most respondents believing the CBR's tight policy stance is becoming a constraint for economic growth.
- Lavrov remains in attendance of the ASEAN foreign ministers meeting, and then will travel to North Korea for meetings over the weekend.
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GILT AUCTION PREVIEW: 4.50% Mar-35 gilt
Jun-11 07:33
- The DMO will return to the market this morning to hold a 10-year gilt auction of the 4.50% Mar-35 gilt for GBP4.25bln.
- This will be the fourth auction of the gilt (following its syndicated launch in February).
- The size on offer matches that seen in the 14 May auction but is slightly larger than the GBP4.00bln on offer in both March and April.
- 10-year demand has remained relatively strong with bid-to-covers ranging from 2.85x-3.13x across the three auctions and tails have been between 0.3-0.5bp. However, the lowest accepted price at the May auction saw a lower price than the pre-auction secondary mid-price.
- The 4.50% Mar-35 gilt is scheduled to be reopened again on 9 July and 5 August before a medium-dated syndication will be held in September (we pencil in 2/3 September with a new 10-year gilt likely).
- Timing: Results will be available shortly after the bidding window closes at 10:00BST with a further GBP1.0625bln availble to successful bidders via the PAOF.
GILTS: Bear Steepening, Supply & Spending Review Eyed
Jun-11 07:30
Gilts trade lower, weakness in peers factors in, as does the presence of this morning’s 10-Year supply.
- Futures stick within yesterday’s range after bulls forced the contract through a cluster of resistance levels on Tuesday, as the bullish cycle extended.
- Lows of 92.45 seen so far.
- Yesterday’s high (92.87) presents the initial resistance point.
- To the downside, bears will want to close yesterday’s opening gap higher (92.00).
- Yields 2-3bp higher, bear steepening after yesterday’s labour market data-driven bull steepening.
- 10-Year yields remain above long-term uptrend support drawn of the Dec ’21 lows (4.522% today).
- 30-Year yields closed below long-term uptrend support drawn off their own Dec ’21 lows yesterday (a redrawn support line to account for yesterday’s move comes in at 5.242% today).
- The aforementioned 10-Year gilt supply (GBP4.25bln of the 4.50% Mar-35 gilt) will be eyed this morning, before Chancellor Reeves present’s the government’s spending review this afternoon.
- The spending review will not set any new overall fiscal spending limits
- Our comments on the matter are available in our latest Gilt Week Ahead piece.
- We have highlighted political risks for both Chancellor Reeves and PM Starmer. Our political risk team’s preview is available here.
BONDS: Tnotes/Bund spread is eyeing the decent resistance
Jun-11 07:28
- Some early small widening in the spreads versus the German 10yr, most of the developed countries sits wider, the BTP/Bund spread is still finding support ahead of the big initial 90.00bps level.
- But worth Watching how the Tnotes/Bund spread develops from here, the ~195.73bps level has provided some decent resistance, which also coincide with the 76.4% retracement of the February/April range at ~196.3bps.
(Chart source: Bloomberg Finance LP/MNI).
