BOJ: Ueda Discharged From Hospital

• "*FRANCE'S MOULIN: TOO SOON TO SAY IF ECB SHOULD ACT IN JUNE" Bloomberg
• "*MOULIN: ECB DECISIONS MUST ALSO ACCOUNT FOR GROWTH IMPACT" Bloomberg
• "*MOULIN: BANK OF FRANCE SURVEYS SHOW COSTS STARTING TO SPREAD" Bloomberg

Banque de France nominee Moulin speaking at the Senate Finance Committee. These initial dovish-leaning comments suggest that if he is admitted to the role, he may share similar monetary policy views to outgoing Governor Villeroy.

Yesterday, the French Socialists said they would oppose Moulin’s nomination, citing independence concerns. This makes ascension to the Governor role more uncertain. 

Reuters wrote last week that: “The votes in both houses will be added up and Moulin will be approved if the nays do not surpass 60% of the combined total."... "The composition of the committees, with 72 members in the lower house committee and 49 in the Senate, mirrors that of the two chambers. Macron and his allies do not hold a majority in either chamber”

Gilts rally on the softer-than-expected CPI data, although we think that there's probably less impact on the MPC than the headline numbers would suggest given that package holidays drove a lot of the surprise. A reminder that we will get another round of inflation data before the BoE’s June decision.

• Food inflation was also softer, which will buy the BoE some additional time.
• Gilt futures trade as high as 86.22. Bears remain in control.
• Initial resistance located at the 20- & 50-day EMAs (86.73 & 87.88).
• Initial support located at the May 18 low (84.96).
• Yields 4-6bp lower, bull steepening.
• While the relief rally stemming from the CPI data takes immediate focus, longer run attention will remain on the domestic political picture and wider geopolitics.
• On the former, Mayor of Manchester Burnham’s potential return to parliament and any ensuing Leadership challenge within the Labour Party presents the risk of increased fiscal spending. While Burnham has suggested that he will respect the existing fiscal rules, tail risk remains as markets will want to judge his actual policy mix if he is successful in any such challenge.
• Meanwhile, there is no end in sight when it comes to the situation surrounding Iran and the Strait of Hormuz, which puts a bit of a floor in oil prices and continues to limit recovery rallies in gilts (sensitivity to any weakness in long end Tsys also remains in focus).
• This week’s cycle highs in benchmark long end yields (5.189% in 10s, 5.864% in 30s & 5.376% in 50s) present the initial bearish targets.
• BoE’s Bailey, Breeden, Dhingra & Mann will appear in front of the Treasury Select Committee later today (14:15 London).

• RES 4: $107.341 - 76.4% retracement of the Jan 29 - Mar 23 sell-off
• RES 3: $100.000 - Round number resistance
• RES 2: $99.331 - 61.8% retracement of the Jan 29 - Mar 23 sell-off 
• RES 1: $89.374 - High May 13        
• PRICE: $75.182 @ 08:17 BST May 20
• SUP 1: $70.869/61.007 - Low Apr 29 / Low Mar 23 and bear trigger
• SUP 2: $60.000 - Round number support 
• SUP 3: $56.496 - Low Dec 4 ‘25
• SUP 4: $53.345 - Low Nov 28 ‘25 

The recovery in Silver since Mar 23, appears to have been corrective and the pullback from last week’s high highlights a possible reversal. A continuation lower would open $70.869, the Apr 29 low. Clearance of this support would expose $61.007, the Mar 23 low and bear trigger. Key short-term resistance has been defined at $89.374, the May 13 high. Clearance of this hurdle would reinstate the recent corrective cycle.