TARIFFS: US Tariff Reactions Home & Abroad

Modest upside pressure in 30-year Bund yields following the syndication mandate, helping the 5s30s curve reach its steepest level since July 2022, now up 6.0bps today at 64.7bps.

• The long-end German syndication has been on the cards for some time, but we had little conviction over the timing. The previously uncertain timing is what’s driving the immediate market reaction.
• Buxl ASW (vs 3-month Euribor) remains within this morning’s range at -43.7bps. The contained reaction probably reflects already short positioning in spreads, particularly given existing week-to-date tightening on the back of increased German defence spending prospects.

• On the commodity front, the latest pullback in Gold appears to be a correction. The move through the 20-day EMA does signal scope for an extension towards the next important support around the 50-day EMA, at $2808.1. However, Monday’s gains are a positive development and potentially an early reversal signal. A stronger rally would refocus attention on the next objective at $2962.2, a 2.00 projection of the Nov 14 - Dec 12 - 19 price swing. This would also open the $3000.0 handle.
• In the oil space, the current bearish condition in WTI futures remains intact and this week’s fresh short-term cycle low reinforces current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and paves the way for an extension towards $66.41 next, the Dec 6 ‘24 low. Key short-term resistance is at $73.33, the Feb 11 high. Initial resistance is at $71.16, the 50-day EMA.

• Size: E5bln (MNI had expected E4-6bln)
• Books in excess of E37bln (ex JLM interest)
• Maturity: June 22, 2042
• Spread set earlier at 0.40% Jun-40 OLO +8bp (guidance was +10bp area)
  • Books above EU37b (excluding JLM interest): Leads
• Coupon: Short first
• Settlement: March 11 2025 (T+5)
• ISIN: BE0000364738
• Bookrunners: BNPP, CA-CIB, DB, HSBC (B&D), MS

From market source, Bbg, DJ