GLOBAL: President Trump Confirms Visit to China in May

• Treasuries recently touched fresh session highs as US equity futures remained under pressure although have inched 1-2 ticks lower on Axios reporting Kushner and Witkoff are urging Trump to give diplomacy a chance in US-Iran negotiations.  
• Fresh catalysts for the latest push higher have been limited although it looks to be an extension of moves following President Trump's latest tariffs comments, starting with threats of much higher tariffs and worse for any country that wants to “play games” before the lack of needing congressional approval.
• WTI futures have also pulled back after sizeable gains earlier, with US-Iran tensions firmly in focus ahead of Thursday’s indirect talks in Geneva. Bloomberg Intelligence estimates Brent at $72/bbl has an $8-10bbl premium from US-Iran escalation.
• TYH6 touched 113-14 (+16) in a probe of initial resistance at the same level from the Feb 17 high although unlike Bunds earlier, it's yet to clear a latest key resistance level at 113-22+ (Nov 22 ’25 high).
• Cash yields meanwhile are 3.5-7bp lower, with declines led by 5s.
• 10Y yields have for now bottomed at 4.0175% for just shy of last week’s 4.016% low, with the 5.9bp decline consisting of 3.6bps from real yields and 2.3bp from breakevens.
• Tomorrow sees multiple data releases (likely highlighted by weekly ADP and the Conference Board consumer survey), Fed Governor Cook speaking on AI and 2Y supply. 

• Notably, the softer risk sentiment initially had little impact on the likes of AUD and NZD Monday, with the greater focus on renewed pessimism for the greenback. However, the pressure on major indices after the US cash open has then provided some notable headwinds for higher beta FX. The 20-day EMA held as great support for AUDUSD on Friday, and the average now intersects at 0.7009, roughly 40 pips from current spot levels.
• As a reminder, recent cycle highs at 0.7147 came within 11 pips of the 2023 peak at 0.7158 and the markets will await January CPI data from Australia on Wednesday.
• The Japanese yen has returned to being the best performer in G10, and this dynamic has weighed specifically on AUDJPY, which has now extended session declines to 0.85%. Today’s high print of 110.18 represents a sixth daily test above the psychological 110 mark before faltering.
• Despite the cross exerting some pressure on the 20-day EMA (intersecting at 108.58) in mid-February, the average has provided solid support over the past four months, and a sustained breach would be a meaningful bearish development. This would signal scope for a deeper correction towards the 50-day, at 106.82.

Monday's Europe rates/bond options flow included:

• DUJ6 106.90/107.00/107.10c fly, bought for 2 in 7.5k
• DUK6 106.90/107.00/107.10c fly, bought for 1.75 in 5k
• ERU6 98.4375/98.50/98.5625c fly, bought for 0.25 in 6k
• SFIU6 97.25/97.00ps 1x2, bought for -5.75 (receive) in 5k
• SFIZ6 97.50/98.00cs, bought for 1.25 in 4k