ITALY AUCTION PREVIEW: On offer next week

Tsy futures are just off late-morning highs (TYM5 currently +1.5 at 110-27.5 vs. 110-30 high) ahead of the $69B 2Y note auction (91282CMY4) at 1300ET, WI is currently running at 3.787%, 19.7bp rich to last month's in-line sale.

• March auction recap: Tsy futures remain bid (TYM5 +8 at 110-25.5) after the latest $69B 2Y note auction (91282CMV0) came out in-line: 3.984% high yield vs. 3.985% WI; 2.66x bid-to-cover vs. 2.56x prior.
• Peripheral stats: Indirect take-up receded to 75.77% from 85.49% prior, directs climbed to 13.58% vs. 7.64% prior, primary dealer take-up 10.65% vs. 6.87% prior.

MEF has announced it will be looking to sell the following at its auction next Monday, April 28:

• E2.0bln of the 5-month Sep 12, 2025 BOT
• E2.0bln of the 5-month Sep 30, 2025 BOT

Bloomberg reporting that US Treasury Secretary Scott Bessent told investors today that "the tariff standoff with China is unsustainable and that he expects the situation to de-escalate."

• According to Bloomberg, "Bessent added that negotiations haven’t started but that a deal is possible..." Bloomberg adds that, "Bessent also said the world’s top two countries essentially have a trade embargo in place..."
• The report comes amid reports that neither US President Donald Trump nor Chinese President Xi Jinping appear willing to take the first step toward initiating high-level trade talks.
• Politico noted this morning: “Trump is insisting on one-on-one talks with [President Xi] — and this has stifled other diplomatic efforts to halt the worsening trade war...” Politico noted on Sunday that Trump's "refusal to allow informal diplomatic outreach to bridge the gap between the White House and Beijing is slowing progress toward a possible deal."
• Meanwhile, China has extended outreach to Japan, South Korea, the EU, and the UK, to bolster trade ties. The Global Times wrote after a call between UK Foreign Minister David Lammy and Chinese Foreign Minister Wang Yi today: "China and the UK share a responsibility to uphold the post-WWII world order."
• Reuters notes that Chinese Premier Li Qiang sent a letter to Japanese Prime Minister Shigeru Ishiba, "calling for a coordinated response to U.S. President Donald Trump's tariff measures..."
• German outlet SZ reports China's leadership wants to lift the sanctions against current and former members of the European Parliament, seen as part of a broader move to drive a wedge between Washington and Brussels ahead of a potential China trip by EU Commission President Ursula von der Leyen later this year.