OIL: Oil Products Summary at European Close: Cracks Climb

European yields were mixed Tuesday, with long-end bonds outperforming.

• Yields dropped in early trade following a large Japanese government bond rally overnight, with longer-end US and German instruments outperforming for the day.
• From the morning lows though, yields edged higher through the session as equities gained.
• In particular, Gilt yields caught up after Monday's holiday with a broader risk-on sentiment coming out of the weekend, following US President Trump's decision to postpone new tariffs on the EU (from an originally announced June 1 date) pending talks.
• French flash May inflation was much softer than expected, helping EGB short-end outperform the UK; the EC's May confidence surveys saw an improvement in May following the US/China tariff de-escalation (but pre-EU/US back-and-forth).
• In ECB-speak, Lane noted the ECB will cut rates further if it sees signs of further falling inflation; Nagel didn't explicitly lean towards a June ECB cut or hold.
• The German and UK curves both curve twist flattened. EGB periphery / semi-core spreads were flat/slightly tighter.
• Wednesday's calendar includes an appearance by BOE's Pill, and the ECB CPI expectations survey.

Closing Yields / 10-Yr EGB Spreads To Germany:

• Germany: The 2-Yr yield is up 0.9bps at 1.791%, 5-Yr is down 0.6bps at 2.093%, 10-Yr is down 2.8bps at 2.532%, and 30-Yr is down 6.3bps at 3.002%.
• UK: The 2-Yr yield is up 3.7bps at 4.02%, 5-Yr is up 2.2bps at 4.152%, 10-Yr is down 1.5bps at 4.666%, and 30-Yr is down 4.5bps at 5.435%.
• Italian BTP spread down 0.9bps at 98.5bps / Portuguese down 0.9bps at 49.4bps

US State Department Spokesperson Tammy Bruce is shortly due to brief reporters at the State Department. The presser will be particularly closely followed, considering limited activity elsewhere in Washington today. LIVESTREAM

• The presser comes amid a tone shift from President Donald Trump towards Russia, just days after Trump reported that he had an “excellent” call with President Vladimir Putin.
• Trump said in a statement on Truth Social: “I’ve always had a very good relationship with Vladimir Putin of Russia, but something has happened to him. He has gone absolutely CRAZY!”
• Asked by reporters on Sunday if he’s considering new sanctions on Russia, Trump said: “Absolutely. [Putin is] killing a lot of people. I don't know what's wrong with him.”
• Politico writes: “Russia’s drone barrage against Ukraine over the last several days is energizing efforts to target the country with fresh sanctions, including in the Senate.”
• Reminder: A bill introduced by Senator Lindsay Graham (R-SC) now has more than 80 co-sponsors in the Senate and the backing of Senate Majority Leader John Thune (R-SD). It would likely sail through both chambers of Congress if endorsed by President Trump.
• The Wall Street Journal reports that Trump is “eyeing new sanctions this week,” but the “restrictions likely wouldn’t include new banking sanctions...”
• White House press secretary Karoline Leavitt said in a statement that Trump "wants to see a negotiated peace deal," but has "smartly kept all options on the table.”

• RES 4: 0.8768 High Nov 20 ‘23    
• RES 3: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
• RES 2: 0.8541/8557 High May 2 / High Apr 28
• RES 1: 0.8449 50-day EMA
• PRICE: 0.8388 @ 16:59 BST May 27
• SUP 1: 0.8373 Low May 27
• SUP 2: 0.8359 1.236 proj of the Apr 11 - 16 - 21 price swing
• SUP 3: 0.8316 Low Mar 28 and a key support
• SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing  

A bear cycle in EURGBP remains in play and last week’s move down reinforces this theme. Resistance at the 50-day EMA at 0.8449, is intact. For bulls, a clear break of the 50-day average is required to highlight a stronger reversal and shift attention to resistance at 0.8541, the May 2 high. A resumption of the downtrend would pave the way for a move towards 0.8359, a Fibonacci projection.