EM CEEMEA CREDIT: Rep of Angola: CB leaves rate unch

The Assembly of the Republic has approved the programme for gov't of PM Luis Montenegro by voting down a motion from the far-left Portuguese Communist Party (PCP) opposing the plans. In the event, as well as Montenegro's centre-right Social Democratic Party (PSD) and its conservative CDS-People's Party allies, the main opposition right-wing Chega, the centre-left Socialist Party (PS), the libertarian Liberal Initiative and Madeiran regionalist Together for the People voted against the motion (totalling 219 of the 230 members). Only the PCP, the far-left populist Left Bloc and environmentalist LIVRE voted for the motion. 

• Speaking in the Assembly frontrunner to lead the PS, José Luís Carneiro, stated that the Socialists will not be willing supporters of gov't policy. Carneiro: "Make no mistake, our role is not to assist you. It is to monitor you and legislate in the right direction. It is you who are accountable to Parliament and not Parliament that is accountable to you. Don't forget that there are 230 representatives of the people here. Not advisors to your government ,"
• Chega leader Andre Ventura also criticised Montenegro, accusing him of 'playing within the same system' as former PS PM Antonio Costa.
• While the gov't has more lawmakers than prior to the May election (91 vs 80), this still falls well short of the 116 required for an overall majority. As such, it will, as was the case prior to the election, rely on the support/abstention of the PS or Chega on key votes to pass legislation, making for an unstable policy-making environment. 

• In the FI space, Bund futures are unchanged and the contract continues to trade below last Friday’s high. For now, the latest move down is considered corrective and key short-term support to watch lies at 130.12, the Jun 5 low. A break of this level would highlight a stronger reversal and undermine the bullish theme. Key short-term resistance and the bull trigger, has been defined at 131.95, the Jun 13 high.
• A bullish condition in Gilt futures remains intact and last Friday’s steep sell-off from the session high is - for now - considered corrective. The move higher last week marks an extension of the recent breach of resistance at 91.87, the May 20 high. This signals scope for a test of 93.73, a 1.764 projection of the May 22 - 27 - 29 price swing. Note the uptrend is in overbought territory, a deeper pullback would unwind this position. Initial firm support lies at 92.17, the 20-day EMA.

• MBA composite mortgage applications fell -2.6% (sa) last week for only a modest pullback from a strong 12.5% increase the week prior.
• The lack of reaction to a 9bp decline in the 30Y conforming mortgage rate wasn’t too surprising considering the outsized strength of that prior increase on a 1bp increase previously.
• New purchase applications led the decline (-3.0% after 10.3%) although refis saw a broadly similar pattern (-2.1% after 15.6%).
• Composite applications are at 52.5% of 2019 levels, with new purchases at 64% and refis at 40%.
• The 9bp decline in the 30Y mortgage rate came despite no change in the average 10Y swap rate over the week.
• That saw the mortgage-swap rate narrow to 294bps for its tightest since late March having widened to 315bp in early May (widest since Feb 2024) in fallout from trade policy. It’s still above the 285bp averaged through Q1 before the reciprocal tariff announcements of Apr 2.