OUTLOOK: Price Signal Summary - Support In Gilts Remains Intact For Now

Iran is expected to reject a US nuclear proposal, according to a senior Iranian diplomat quoted by Reuters who cited hardline US demands on Iran’s enrichment as a ‘red line’. The proposal was presented to Iran on Saturday by Oman's Foreign Minister, who has been acting as a mediator in five rounds of talks. 

• The diplomat said: "Iran is drafting a negative response to the U.S. proposal, which could be interpreted as a rejection… the US stance on enrichment on Iranian soil remains unchanged, and there is no clear explanation regarding the lifting of sanctions." 
• The IAEA said in a confidential report on Saturday that Iran has grown its stockpile of 60%-enriched uranium, despite the ongoing talks with the US, per WSJ.
• IAEA Director General Rafael Grossi said: “The significantly increased production and accumulation of highly enriched uranium by Iran, the only non-nuclear-weapon State to produce such nuclear material, is of serious concern.”
• The findings of the reports, and likely Iranian rejection of the US proposal, raises the prospect that the European signatories of the 2015 JCPOA nuclear accord could trigger a ‘snapback’ of punitive sanctions on Tehran. A European decision on the ‘snapback’ is expected to come before October, when the option of reimposing sanctions expires under the JCPOA terms.
• Israeli Prime Minister Benjamin Netanyahu cited the IAEA report as evidence “Iran is totally determined to complete its nuclear weapons program,” a comment hinting that Israel may be prepared for unilateral action against Iran’s nuclear infrastructure. 

• Another attempt at the intraday low for the USDJPY, the Dollar is still the worst performer against the JPY within G10 Currencies.
• As already noted during the European Govie open, the next support is still seen some way out, down to the 141.97 area.
• The Pound is also through the low versus the Yen, and targets a break through the 193.00 figure.
• Next support for the EURJPY is seen below the figure at 162.50, the 50 day EMA.

• Treasuries are off lows although still sit bear steeper from Friday’s close in a “sell the US” theme following Trump’s doubling of steel and aluminum tariffs to 50% late Friday.
• It’s with a backdrop of the Trump administration’s higher growth rather than spending cuts approach to debt stabilization.
• Bloomberg earlier today on some major investment firms’ policies linked to long end woes: “For DoubleLine Capital, there are two approaches to consider when it comes to 30-year US Treasuries: either avoid them, to the degree they can, or outright short them.”
• Today sees manufacturing surveys in focus, with heightened sensitivity as markets assess the sector's ongoing handling of tariff policy changes and heightened uncertainty.
• Cash yields are 1.5-3.5bp higher on the day, with increases led by 10s through to 30s.
• 2s10s sits at 52.4bp (+1.5bp) whilst 5s30s at 98.0bps (+1.0bp) earlier touched a high of 100.23bps (ask price) to return close to ytd highs of 101.4bp on May 22.
• TYU5 trades at 110-21+ (-02+) off a low of 110-18 that equalled Friday’s low, on moderate volumes of 315k.
• Whilst a bear cycle remains in play, with support at 109-26 (May 29 low), last week saw a piercing of key resistance at 110-23 (May 16 high). Friday’s high of 110-30 now marks initial resistance before 111-05+ (May 9 high).
• Data: S&P Global US PMI mfg May final (0945ET), ISM mfg May (1000ET), Construction spending (1000ET)
• Fedspeak: Logan Q&A (1015ET), Goolsbee Q&A (1245ET), Powell opening remarks (1300ET, text only)
• Bill issuance: US Tsy to sell $76bn 13-W, $68bn 26-W bills