US: Trump's Approval Rating Continues To Trend Upwards

The questions that we have selected for this meeting are as follows (due to be released at 1400ET):
• Federal Funds Rate Range Maximum
• Number of dissenters on size of rate move
• Does the Fed say economic activity has slowed?

Headlines crossing from Germany Chancellor Merz: 

• "*MERZ: EU FISCAL RULES COULD BE SOFTENED FOR DEFENSE" - bbg
• "*MERZ SAYS REMAINS SKEPTICAL ABOUT NEW EU DEBT INSTRUMENTS" - bbg
• "GERMAN CHANCELLOR MERZ: WE CAN IMAGINE SOMETHING SIMILAR TO OUR DEFENCE BORROWING CONSTITUTIONAL AMENDMENT ON A EUROPEAN LEVEL" - Reuters

Note that Germany is one of the 14 EU members that has applied for the defence spending escape clause. From our policy team yesterday:

• "The final count of European Union states applying for national escape clauses from fiscal rules is only likely to be clear after trade talks with the U.S. and a NATO summit on June 24-25, with major capitals likely to delay decisions on whether and how much to boost military spending in order to maximise negotiating leverage, EU sources told MNI"
• "While 14 out of 27 EU members, including Germany and Poland. have applied for the escape clause from the bloc's fiscal rules, this tally does not include large economies such as France, Italy, Spain and The Netherlands"

A reminder that there are three strands to the ReArm Europe plan:

• The first is up to E150bln of EU-bond borrowing which would be loaned to individual states for use on additional defence spending.
• The second strand is an easing of the Excessive Deficit Procedure for defence spending. The easing of the EDP is said to account for a potential E650bln increase (but current expectations are for lower takeup).
• The third is using the power of the EU Budget, shared procurement (and hopefully lower associated costs) and mobilising private capital.

• Treasury futures are holding near midmorning highs ahead of the FOMC policy announcement at the top of the hour, curves running flatter with 2s underperforming: 2s10s -2.819 at 47.954.
• Tsy Jun'25 10Y futures currently +5 at 111-15 vs. 111-15.5 high, still well below initial technical resistance at 112-01.5 (High May 2). Support at 110-27.5 Low May 6 -- a clear break of this average would strengthen a bearish threat and expose 110-16+, Apr 22 low.
• Projected rate cut pricing looks steady to mildly lower vs. morning levels (*) as follows: May'25 steady at -0.5bp, Jun'25 at -7.3bp (-8.2bp), Jul'25 at -22.8bp (-23.8bp), Sep'25 -42.5bp (-43.8bp). That said, markets are still pricing in three 25bp cuts by year end.
• Stocks are off lows, the DJIA still outperforming (+375.0 at 41,204.2) after trading weaker the last couple sessions, SPX eminis +24.50 at 5650.25, Nasdaq has pared losses trades +1.30 at 17,690.96.
• Bbg US$ index firmer, inside session range (BBDXY +3.54 at 1219.88), Gold weaker (-46.16 at 3385.62), Crude weaker (WTI -0.70 at 58.39).