US: Trump's Approval Rating Stabilises But Economy Remains Liability

• Headlines surrounding China and further retaliatory tariffs have kept AUD under pressure Monday, and the general US dollar strength through the session has deepened the significant AUDUSD selloff.
• Price action has confirmed a resumption of the downtrend that started late September. Today’s fresh cycle low and extension below the 0.60 mark reinforces a bear theme, which has paved the way for an extension towards 0.5931 next, a Fibonacci projection. Levels of note on the downside include:
  • SUP 1: 0.5900 Round number support
  • SUP 2: 0.5830 2.000 proj of the Sep 30 - Nov 6 - 7 price swing
  • SUP 3: 0.5729 2.236 proj of the Sep 30 - Nov 6 - 7 price swing

European yields rose Monday despite another sharp drop in equities, with Gilts badly underperforming Bunds.

• Price action picked up more or less where it left off at the end of last week, with a flight to safety on continued concerns over the fallout from large US tariffs due to come into effect this week.
• However, yields reversed higher as equities found a base. UK long end yields saw their biggest one-day rise since October 2022, and one of the few biggest in the last decade, with 30Ys up 20+bp. There was no clear driver for this underperformance, though the APF operation from the BoE saw poor reception.
• Data was largely shrugged off: German industrial production came in on the soft side.
• The German curve twist steepened - Schatz and Bobl being some of the few instruments to strengthen across the European space - with the UK's bear steepening.
• Periphery/semi-core EGBs widened across the board, though closed off the early wides as equities closed off their lows.
• Tuesday's schedule is on the light side in terms of data, though there will be multiple central banker appearances including BOE's Lombardelli and ECB's Holzmann and de Guindos.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 5bps at 1.777%, 5-Yr is down 1.8bps at 2.11%, 10-Yr is up 3.5bps at 2.613%, and 30-Yr is up 3.7bps at 3.016%.
• UK: The 2-Yr yield is up 6.5bps at 3.999%, 5-Yr is up 11.6bps at 4.134%, 10-Yr is up 16.7bps at 4.615%, and 30-Yr is up 20.5bps at 5.321%.
• Italian BTP spread up 6.3bps at 125.3bps  / Greek up 3.8bps at 92.9bps 

Monday's Europe rates/bond options flow included:

• RXM5 126/125/124 put fly, sold out at 3-4 in 10k
• ERK5 98.125/98.25 call spread, bought for 1.25 in 15k
• ERM5 98.125/98.25 call spread has traded in 30k at 1.25. Paper has both bought and sold this structure
• ERZ5 98.0625/98.25 call spread 14.8K given at 10.25
• ERZ5 99.25/99.75 call spread, now trading at 2.25. 20k sold all day at 2.5  down to 2.25
• 0RK5 98.00/98.125 cs, sold at 9 in 52k
• SFIZ5 97.50/98.00 call spread, bought for 3.25-3.5 in 10k