NATGAS: MNI Gas Weekly - Israel-Iran Remains Key Gas Driver

Just ahead of Moody’s downgrade of the U.S. sovereign credit rating late on Friday Goldman Sachs revised their year-end 2-Year & 10-Year Tsy yield forecasts to 3.90% and 4.50%, respectively (from 3.30% and 4.00% previously).

• They reasoned that “the combination of a smaller mechanical tariff headwind and a meaningful reversal in financial conditions from the early-April peak has trimmed the downside risk around growth. With inflation still likely to reaccelerate meaningfully - albeit to a slightly lower peak than before - the baseline for further Fed cuts has shifted later and slower, with a quarterly cadence of cuts beginning in December reaching an unchanged terminal rate projection of 3.50-3.75% in June 2026”.
• For shorter maturity rates, Goldman think that “the absence of a clear growth catalyst may keep yields trade somewhat range-bound from here, but the vulnerability for now is closer to a carry drag than a clear case for substantial cheapening. The asymmetry is still to a sharp rally on bad news, with the market-implied probability of recession-type cuts having retreated significantly since the end of April”.

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• President Donald Trump has three engagements schedul for his first full day back in Washington. Press Secretary Karoline Leavitt will deliver her first White House presser since May 9.
• The “sell America” trade is back after Moody’s downgraded the US' credit rating, citing concerns over the Republican fiscal package. Treasury Secretary Scott Bessent downplayed the rating change, saying it is a “lagging indicator”.
• Bessent conceded that consumers are likely to pay some of the cost of tariffs after speaking with the Walmart CEO.
• Trump renewed his attack on Fed Chair Jerome Powell, while Bessent indicated the Fed’s position on rates isn’t a determination that tariffs will cause inflation.
• The House Budget Committee advanced the Republican reconciliation bill after four Republican hardliners changed their votes to 'present', signalling they expect alterations to the package in the Rules Committee this week.
• Senate Majority Leader John Thune (R-SD) is slated to hold a procedural vote on a landmark crypto bill today.
• A call between Trump and Russian President Vladimir Putin today could determine if the US joins the EU in punitive new sanctions on Russia.  
• President Trump’s chief negotiator said Iran must cease all enrichment in a new nuclear accord.
• Vice President JD Vance nixed a plan to travel to Israel due to concerns over Israel's military operation in Gaza.
• Poll of the Day: Trump's strategy of 'flooding the zone' may be working. 

Full Article: US DAILY BRIEF

Tsys have underperformed Bunds and 10-Year gilts over the last couple of hours, with European & UK peers seeing a more meaningful rally from lows after European sovereign & EU supply passed.

• Spread moves probably indicate a willingness to deploy cross-market shorts in Tsys vs. some of the major global counterparts given ongoing U.s. fiscal risks and will also reflect early NY reaction to Friday’s U.S. sovereign rating downgrade from Moody’s.
• Macro headline flow remains subdued thus far on Monday.