US TSYS: Trump Cabinet Meeting, War Talk Did Little to Improve Sentiment

CNN reports, “When Trump addressed Congress last year for the first time since returning to the White House, his approval rating stood at a career-high 48% in CNN’s pre-speech polling. Since then, he has lost ground across all major demographic groups, with Republicans, conservatives and White Americans without college degrees among the few groups to hold a net-positive view of Trump.”

• CNN continues, “Some of the steepest declines include a 19-point drop in approval among Latino Americans and an 18-point drop among Americans younger than 45. Among political independents, Trump’s approval rating has dropped 15 points over the past year to 26%, the lowest it’s been in either of his terms.”
• Politico reports, “A new poll from Marist University finds 57 percent who said the state of the union is “not very strong” or “not strong at all.” The new numbers follow WaPo/ABC/Ipsos polling released over the weekend, which put Trump at 39 percent approval and 60 percent disapproval.”

Figure 1: Trump's approval rating among each group

Source: CNN

European curves twist flattened Tuesday.

• Bunds and Gilts gained in early trade, with European equity indices moving lower and in the wake of dovish JGB developments overnight (a report pointing to the Japanese PM voicing apprehension on rate hikes in a meeting with BoJ Governor Ueda).
• The move faded and reversed by mid-afternoon, with equities finding their feet and supply dynamics looming in the background (US corporate and 30Y Spanish syndication pricing).
• BOE testimony before the Treasury Select Committee brought no new revelations and no discernable market reaction.
• In data, French manufacturing and services sector confidence fell in February, with expected employment at a 5-year low.
• Gilts underperformed Bunds at the short end but outperformed further down the curve, with the 10Y UK yield seeing a fresh post-2024 closing low.
• Periphery/semi-core EGB spreads tightened modestly but were little changed overall.
• Wednesday's schedule includes German GDP and French and German consumer sentiment data, along with final January Eurozone inflation.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.1bps at 2.046%, 5-Yr is unchanged at 2.307%, 10-Yr is down 0.4bps at 2.707%, and 30-Yr is down 0.6bps at 3.378%.
• UK: The 2-Yr yield is up 1.6bps at 3.579%, 5-Yr is unchanged at 3.748%, 10-Yr is down 0.8bps at 4.306%, and 30-Yr is down 1bps at 5.11%.
• Italian BTP spread down 0.1bps at 60.7bps / French OAT down 0.2bps at 56.2bps

• Tsy futures hold modest losses after the $69B 2Y note auction (91282CQB0) tails with high yield of 3.455% vs. 3.453% WI; 2.63x bid-to-cover vs. 2.75x prior.
• Peripheral stats: Indirect take-up retreats to 55.91% from 64.40% prior, directs rise to 34.28% vs. 28.27% prior, primary dealer take-up to 9.81% vs. 7.33% prior.
• The next 2Y auction is tentatively scheduled for March 25.