US-RUSSIA: Trump-Putin Summit Possible "In The Coming Days"-Kremlin Aide
Tass reporting comments from Kremlin aide Yuri Ushakov claiming that an agreement has been reached on holding a summit between Russian President Vladimir Putin and US President Donald Trump "in the coming days", with both sides working out the details. Adds that next week was designated as the target date, but that "it is difficult to say how many days preparations will take." Ushakov claims a venue has been agreed upon. Acknowledges that US Middle East envoy Steve Witkoff touched on the idea of a trilateral meeting involving Ukrainian President Volodymyr Zelensky, but Moscow has not responded.
- Trump posted on Truth Social, "My Special Envoy, Steve Witkoff, just had a highly productive meeting with Russian President Vladimir Putin. Great progress was made! Afterwards, I updated some of our European Allies. Everyone agrees this War must come to a close, and we will work towards that in the days and weeks to come...." Speaking later in the Oval Office, Trump was more circumspect, saying, “I don’t call it a breakthrough, I mean, we’ve been working on this a long time.”
- The First Deputy Chair of the Foreign Affairs Committee of the Federation Council (the upper house of the Russian Parliament) praised Witkoff, saying he had "earned significant support in Russia due to his transparency and realistic approach."
- Zelenskyy held a call with Trump after Witkoff's meeting, with European leaders including UK PM Sir Keir Starmer and German Chancellor Friedrich Merz on the line. Zelenskyy said that he would hold calls with the leaders of Germany, France, and Italy to discuss the prospect of a ceasefire, a leaders' summit, and security guarantees.
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SWAPS: Schatz ASWs To Lowest Level Since Early June
German ASWs extend on yesterday’s move lower as this week’s sell off in outright bonds extends.
- Front end spreads under the most pressure on the day, as Schatz ASWs register the lowest level seen since early June.
- Longer-dated spreads a little more resilient.
- The issuance outlook continues to point to downward pressure for long end spreads over the medium-term, but there are risks to that view, as evidenced by the recent widening and ongoing presence of heightened macro uncertainty.
FOREX: FX OPTION EXPIRY
Of Note:
EURUSD 1.73bn at 1.1700.
USDJPY ~1bn at 146.60.
EURUSD 1.68bn at 1.1700 (wed).
EURUSD 2.16bn at 1.1770 (fri).
- EURUSD: 1.1700 (1.73bn), 1.1725 (343mln), 1.1775 (435mln), 1.1790 (230mln), 1.1810 (710mln).
- USDJPY: 146.60 (949mln).
- AUDUSD: 0.6545 (399mln).
- NZDUSD: 0.6025 (274mln).
SWAPS: ING: No Immediate Jump In Longer-Dated EUR Rates On A Trade Deal
ING write “whilst we see room for longer-dated EUR rates to drift higher upon the signing of a trade deal, the initial market reaction may be limited. The 5y5y real rate shows that markets have remained positioned for an improved long-term economic outlook ever since the German spending announcements. Trump’s trade tantrum thereafter did little to move that pricing. A trade deal should therefore not necessarily warrant an immediate repricing of the back end of the curve”.
- “The transition towards higher rates on the back of the EU spending ambitions will take time, also because investors may remain sceptical about the form and pace of implementation. In any case, the spending plans should reduce the chance of returning to a world of secular stagnation, one in which inflation and policy rates are forced close to zero. So even though we don’t pencil in stellar growth numbers on the back of the fiscal expansion, we do think the 10-Year swap rate can continue to drift higher”.
- “The added bond supply should also push up rates from the back end, a theme we have seen develop in many markets of late. Whilst Germany is in a much better fiscal position, we can expect Bunds yields to feel increased upward pressure in the coming years, especially versus swaps”.
