SECURITY: RU/UKR Negotiators Speak Amid Pressure On Trump To Endorse Sanctions

The 10-Year gilt/Bund spread is unable to trade meaningfully lower after breaking below 200bp, with the early narrowing impetus fading after the spread based at ~198bp (last ~1bp tighter at ~200bp).

• Gilt bulls are trying to force the first close below 200bp since April 8.
• Looser German fiscal policy is weighed against the constrained UK public finance position, with the readthrough for broader global trade another factor that is impacting the spread.
• A more activist approach from the DMO re: the gilt remit has helped limit spread widening episodes in recent weeks, with the agency tilting issuance away from the long end.
• Initial support in the spread is located at the April 8 closing level (197.4bp), with the next major support below there at the April 3 close (184.3bp).
• Respect of the 4.460% yield level in 10-Year gilts has helped prevent further tightening in the spread.

ECB Vice President De Guindos' speech here, presenting the ECB's 2024 Annual Report. Some highlights:

• Unsurprising: "Especially given current uncertainty, we will continue to follow a data-dependent and meeting-by-meeting approach to setting the appropriate monetary policy stance, and we are not pre-committing to a particular rate path."
• "Risks have intensified amid exceptional uncertainty, largely related to trade. Euro area exporters are now facing new barriers, and tensions in financial markets and geopolitical uncertainty will likely weigh on business investment. In this environment, consumers may become cautious about the future and hold back spending".
• "The recent trade policy upheaval has triggered the most significant financial market turmoil since the pandemic. While euro area banks’ valuations have also been affected, their fundamentals remain robust and they are well positioned to withstand potential shocks thanks to their sizeable capital and liquidity buffers".
• "Despite the resilience of our financial sector, these developments warrant careful monitoring. Sharp adjustments in financial markets could become disorderly, particularly if they are amplified by the growing size and influence of non-bank financial institutions".

• FRBNY EFFR for prior session:
  • Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
  • Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $298B
• Repo Reference Rates from earlier
  • Secured Overnight Financing Rate (SOFR): 4.33% (+0.04), volume: $2.565T
  • Broad General Collateral Rate (BGCR): 4.32% (+0.04), volume: $1.055T
  • Tri-Party General Collateral Rate (TCR): 4.32% (+0.04), volume: $1.023T
  • (rate, volume levels reflect prior session)