US: Trump's Approval Rating Stabilises Amid More Market-Friendly Tone

Bunds underperformed in the European government FI space Wednesday in anticipation of the US tariff announcement after the cash close.

• Global core FI started the session on a positive note, with a risk-off tone with US tariff policy in focus.
• But Bunds and Gilts reversed sharply lower in afternoon trade following a Bloomberg sources piece saying the European Commission is mulling emergency measures to cushion the EU economy from the impact of US tariffs.
• On the day, the UK curve twist steepened, with Germany's bear steepening.
• Periphery/semi-core EGB spreads narrowed slightly, aided by the aforementioned headlines on EU measures.
• The US tariff announcement comes at 2100BST, with any European response closely eyed in the aftermath.
• Thursday's schedule includes Spanish and Italian March Services PMI (and finals elsewhere) and Eurozone PPI, along with appearances by ECB's Guindos and Schnabel and the accounts of the March ECB meeting.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.6bps at 2.038%, 5-Yr is up 2.4bps at 2.328%, 10-Yr is up 3.4bps at 2.721%, and 30-Yr is up 4.2bps at 3.072%.
• UK: The 2-Yr yield is down 0.5bps at 4.169%, 5-Yr is up 0.3bps at 4.257%, 10-Yr is up 0.6bps at 4.64%, and 30-Yr is up 0.3bps at 5.25%.
• Italian BTP spread down 0.7bps at 109.5bps / Spanish down 0.4bps at 62.4bps

Sky News reporting a potential banding of upcoming tariffs by country and industry has helped extend the intraday risk-on seen ahead of planned announcements from 1600ET. 

• "Trump tariffs to be banded by country and industry - White House source
• A source close to the White House has told our economics and data editor Ed Conway there will three separate bands of tariffs - 10%, 15%, and 20%.
• The bands will differ both by country and by industry."

It compares to some recent media reports such as the Washington Post yesterday reporting that “White House aides have drafted a proposal to impose tariffs of about 20 percent on most imports to the United States, three people familiar with the matter said, as President Donald Trump pushes for the most aggressive overhaul of the global economic system in decades.”

• RES 4: 1.1083 High Oct 2 2024  
• RES 3: 1.1040 High Oct 4 2024
• RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
• RES 1: 1.0867/0955 High Apr 2 / Mar 18 and the bull trigger   
• PRICE: 1.0865 @ 16:48 BST Apr 2
• SUP 1: 1.0733 Low Mar 27 and a key short-term support    
• SUP 2: 1.0661 50-day EMA and a short-term pivot level      
• SUP 3: 1.0602 Low Mar 5     
• SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run

EURUSD rallied sharply into the London close. This affirms the bullish theme and underscores recent weakness as corrective. Moving average studies are in a bull-mode position highlighting a dominant uptrend. Key near-term support lies at 1.0733, the Mar 27 low. A move through it would confirm a clear breach of the 20-day EMA and signal scope for a deeper correction towards the 50-day EMA at 1.0661. Key resistance and the bull trigger is 1.0955, the Mar 18 high.