EM CEEMEA CREDIT: Romania: to give vouchers as px cap ends

• Treasuries are bear steeper, with the long end seeing some downward pressure following a weak 40Y JGB auction that pared some of yesterday’s gains on Reuters reporting around potential issuance plan tweaks.
• Today sees some attention on 5Y supply at 1400ET after yesterday’s 2Y was solid, trading through by 1bp. Last month’s 5Y traded through by 1bp and the bid-to-cover ticked up after what had previously been the lowest in nine auctions.
• Cash yields are 0.4-2.6bp lower on the day.
• Some steepening is mechanically boosted by the new 2Y benchmark after yesterday’s auction.
• 2s10s for instance is 4.3bp higher on the day at 51bps vs 5s30s just 0.8bp higher at 92.8bp as it continues to hold off last week’s multi-year highs of 101bps.
• TYU5 trades at 110-10 (-08), taking the front contract but with volumes of only 195k despite the ongoing roll.
• Resistance is seen at 110-21+ (50-day EMA) before a key 110-23 (May 16 high) but the bear cycle remains in play with support at 109-12+ (May 22 low).
• Data: MBA mortgage applications (0700ET), Richmond Fed mfg May (1000ET), Dallas Fed services May (1030ET)
• Fedspeak: FOMC minutes (1400ET)
• Coupon issuance: US to sell $28bn 2Y FRN re-open (1130ET), US to sell $70bn 5Y notes - 91282CNG2 (1300ET)
• Bill issuance: US to sell $60bn 17W bills (1130ET)
• WH Economic Council Chair Miran late yesterday stated that whilst it is uncertain where final tariff rates will end up, a 10% rate isn't large enough to have adverse effects on the economy. He compared the tariff move to a 10% shift in the exchange rate (although noted that they aren't the exactly the same), while stating that revenue inflow from the tariffs will help alleviate fiscal deficit concerns (per BBG).

BTP Block trade, suggest Buyer:

• IKM5 1.15k at 120.67.

• EUR/GBP remains well within range of recent lows as the cross holds close the entirety of the tick lower off the late May high at 0.8459. This keeps short-term momentum measures pointed lower, despite the price finding support into the 0.8383 200-dma.
• We wrote a few weeks ago that a UK-US trade deal is unlikely so shift the near-term narrative for GBP, meaning any post-deal announcement strength could prove short-lived. Since then, GBP has proved more resilient than expected - so much so that the currency remains the most stretched in developed markets on a REER basis, still ahead of EUR.
• It's BoE pricing that's backing up this stretched valuation, with the Dec-25 SONIA-EURIBOR spread still in focus. However this pricing may also suggest the room for EUR/GBP to fall further here may be limited. We see that the spread may struggle to meaningfully push through resistance at 213.5bps (Jan 14 close) without a fresh re-escalation of trade tensions - which has prevented EUR/GBP from further follow-through sales, keeping EUR/GBP above this week's lows for now.