POLAND: Trzaskowski Continues to Lead in Presidential Polling

Bund futures have more than reversed the sell-off attributed to an erroneous rumour that US President Trump was considering 3-month delay to tariffs on countries excluding China. That leaves futures -27 ticks lower today at 130.25, having briefly traded as low as 129.11.

• Price action over the past ~45 minutes underscores the highly sensitive nature of global markets to ongoing US tariff developments. Where the tariffs themselves and any retaliation from trading partners ultimately land will be key to central bank and fiscal policy outlooks.
• The 20-day EMA at 129.02 has contained downside in Bund futures intraday, and this level remains a key short-term support.
• On the topside, Friday’s high at 131.48 presents initial resistance.
• The German curve has twist steepened on the session, with Schatz yields down 5.5bps owing to dovish repricing in ECB rate cut expectations. 30-year Bund yields are up 3.5bps, dragged higher by long-end USTs.
• 10-year EGB spreads to Bunds have moved away from earlier highs during the course of the session. The BTP/Bund spread is 5.5bps wider at 124.5bps, dow from a high of over 130bps earlier). 

There has been a sharp shift toward long structural positioning territory for nearer-dated German bond futures contracts in the last two weeks, per the latest MNI Pi.

• That contrasts with the longer-end contracts, as well as some non-German contracts (especially Gilts).
• Last week saw trade consistent with long-setting and short covering across the European FI space.
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• TYM5 has now fully retraced its slide seen originally on the unsubstantiated headlines around a 90-day pause in tariffs, that have since been refuted by CNBC and most recently called "fake news" by the White House's Leavitt.
• Back to 112-21+ vs ~112-22 pre-speculation via 111-15+.
• Cumulative volumes up to 3.4mln.
• It earlier cleared support at 112-01 (Mar 4 high and breakout level).
• Resistance still seen at the overnight 114-10.