THAILAND: Opposition Parties Agree To Hold Off On Censure Motion

Gilts rally at the open.

• Part of this is cues from global peers (well-received 10-Year JGB auction and soft Dutch CPI data), although 10-Year gilts outperform Bunds by ~2bp.
• Equity weakness also factors in.
• Gilt futures through a resistance cluster (91.87/89 & 92.00), posing a deeper threat to bears. Bulls now look to the May 8 low (92.40), after printing as high as 92.01 this morning.
• Yields 4.5-6.5bp lower, curve flatter.
• Note that the OECD has warned that the UK’s very thin fiscal buffer is not enough to safeguard against “adverse shocks”, as well as cutting UK GDP growth estimates for ’25 & ’26, warning that the strengthening of public financing remains a priority.
• While none of this is particularly groundbreaking, it underscores the delicate fiscal situation that the UK faces at present.
• This will maintain speculation surrounding fiscal tightening.
• SONIA futures & BoE-dated OIS adjust alongside the gilt rally.
• The former trades flat to +4.0, while BoE-dated shows 39bp of cuts through year- end vs. ~37.5bp pre-open.
• Late on Monday BoE hawkish dissenter Mann noted that it is not possible to simply offset the impact of QT on financial conditions by cutting Bank Rate.
• Note that BoE Governor Bailey, along with Deputy Governor Breeden & fellow MPC members Mann & Dhingra, will appear in front of a Treasury Select Committee this morning (10:15 London).
• On the supply front, the DMO will sell GBP1.25bln of 4.00% Oct-63 gilts this morning.

• Some of the selling in European Equities started some 8 minutes before that Netherlands Political headline, which has clearly helped the momentum it seems.
• "Netherlands right wing leader pulls out of Government triggering collapse", " Geert Wilders exits coalition"
• Looking across assets though, Govies and the EUR are steady.

ECB-dated OIS price 57bps of easing through year-end, ~1bp more dovish than yesterday’s close. The Eurozone-wide flash inflation print at 1000BST today is the last major data release before Thursday’s ECB decision. The data is unlikely to change the narrative for the June meeting though, with a 25bp cut fully priced and the June macroeconomic projections already set in stone. MNI’s full ECB preview will be released this afternoon.

• Following this morning’s soft Dutch data (3.0% Y/Y vs 3.8% cons, 4.1% prior), there appear downside risks to consensus of a 2.0% Y/Y headline Eurozone print (as we noted last week). However, analyst tracking of the core reading suggests possible upside risks to the 2.4% Y/Y consensus.
• Euribor futures are +0.5 to +3.5 ticks through the blues, with the strip lightly bull flattening. Euribor markets begin pricing rate hikes from Q2 2026 (ER H6/M6 spread is +1.5 ticks), as initial growth-negative tariff impacts fade and EU/German fiscal impulses begin to kick in.
• Today’s calendar also features the April unemployment rate, which is expected to remain at 6.2%.