MEXICO: MEXICO FINANCE MINISTER EDGAR AMADOR SPEAKS IN INTERVIEW

Gilts continued to sell off Wednesday, badly underperforming Bunds.

• Bunds remained relatively steady vs global counterparts during most of the session's trade, which was dominated by risk on / risk off considerations with regard to US tariffs.
• Gilts remained under extreme pressure, especially at the long end with no particular driver on the day for outperformance, though long-term UK fiscal concerns appeared to remain front-of-mind.
• But there was a sharp sell-off in Bund futures after the European cash close as US President Trump announced that all countries except China would be subject to a 10% universal tariff amid a 90 day pause on the higher "Liberation Day" reciprocal tariffs.
• For Thursday's cash session, the German curve bull steepened sharply, with the UK's bear steepening.
• Periphery/semi-core EGB spreads widened sharply - though this move looks likely to reverse upon Thursday's open if the equity rebound holds.
• Thursday's schedule includes an MNI event with BOE's Breeden, and Italian industrial production data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 11bps at 1.725%, 5-Yr is down 7.2bps at 2.102%, 10-Yr is down 4bps at 2.591%, and 30-Yr is down 5.7bps at 2.965%.
• UK: The 2-Yr yield is up 2.7bps at 3.991%, 5-Yr is up 9.4bps at 4.221%, 10-Yr is up 17.4bps at 4.779%, and 30-Yr is up 23.3bps at 5.58%.
• Italian BTP spread up 6.5bps at 129.1bps / Greek up 6.5bps at 97.6bps

• We include apparel in the summary section of the MNI US CPI Preview (here) as around 30% of end-use US imports are from China and apparel forms about 2.5% of the total CPI basket.
• Analysts expect a moderation to 0.3% M/M after 0.6% M/M. It’s a noisy category and so should be taken with caution but we’ll nevertheless watch it closely.
• Other areas to watch for initial passthrough before potentially much larger increases feedthrough in months ahead after a lurch higher in tariff rates include cell phones, computers and related accessories and electrical apparatus.  
• The below table is a useful guide of what areas to watch, with the US tariff on China jumping from 20% in March to an announced 104% earlier this week (after China retaliation) and now 125% after today's latest announcement from US President Trump. 

• 30,000 TYK5 108.5 puts, 11 vs. 110-11/0.02% at 1502:29ET