USD: Overnight Bid In USD Fades As Desks Reassess Tariff Block Implications

Gilts initially firm given the continued move lower in crude oil futures, although moves away from session highs in core global FI peers limit the rally.

• Futures stick within yesterday’s range, trading as high as 93.25 before fading back to 93.10 last.
• Initial support and resistance located at 92.20/93.34, recent bullish technical theme remains intact.
• Yields ~1.5bp lower across the curve.
• 10s below 4.50%, with yield support located at 4.460% still untested.
• Spread to Bunds remain pinned around 200bp after the pullback from April highs (218.8bp), the April 8 closing level (197.4bp) remains intact.
• GBP STIRs still around levels flagged ahead of the gilt open, showing ~90bp of cuts through year end.
• On the supply front, the DMO will come to market with GBP900mln of the 1.25% Nov-54 I/L line this morning.
• The only previous auction of the line came in January, with a slightly larger auction size of GBP1.0bln. A decent bid-to-cover of 3.06x was seen at the prior auction. Demand will be watched closely at this auction as it is the first long-dated linker auction since the U.S. tariffs were implemented.

• The Banking sector (SX7E) leads in Europe, its best level since the 2nd April, and immediate resistance comes at 190.12, the April high.
• Estoxx futures (VGM5) is in turn underpinned, but trades in a small range and still short of the 5150.00 level, this was Yesterday's high, and best print since the 4th April.

• EUR Benchmark Long 10Y Fixed (Sept. 15, 2035) MS+54 Area
  • Coupon: Annual, act/act ICMA, short first
• Issuer: Finland Government Bond (RFGB)
• Ratings: Aa1/AA+ (Moody's/Fitch)
• Format: Reg S CAT1, registered, senior unsecured, 144a eligible, CAC, 0% rw
• Settlement: May 7, 2025
• Timing: May price today
• ISIN: FI4000587415
• Bookrunners: BNPP (B&D), Citi, CA-CIB, GS, Nordea

Details as per Bloomberg