FED: US TSY 4W AUCTION: NON-COMP BIDS $6.437 BLN FROM $85.000 BLN TOTAL

The 10-year OAT/Bund spread has consolidated at ~77bps following this afternoon’s BBG sources piece, 0.5bps wider on the session. 

• While President Macron is “exploring the possibility of dissolving parliament and holding snap elections as soon as this fall”, the fact that “the discussions are merely consultative and no decision has been made” allowed the spread to moderate from knee-jerk extremes of 78bps.
• The April 7 high of 82bps and late 2024 extremes of ~85bps present near-term targets if French political risk re-asserts itself in the coming months.
• OAT futures are +6 ticks at 125.13, up from a post-headline low of 124.94.
• The April 15 low at 124.19 provides initial support, shielding the 20-day EMA at 123.70.
• On the topside, focus turns to the March 3 high at 125.67 and the Feb 28 high at 126.12.
• The French April flash PMIs are due at 0815BST/0915CET tomorrow. Consensus expects the composite PMI at 47.8 (vs 48.0 prior), with services seen at 47.6 (vs 47.9 prior) and manufacturing at 47.9 (vs 48.5 prior).

• US stocks are recovering from Monday's rout, S&P eminis nearing Friday's close as markets assess tariff-tied risks to global trader and the Trump Admin's efforts to meddle with the Federal Reserve's independent policy making.
• Currently, the DJIA trades up 809.93 points (2.12%) at 38976.21 (vs. Monday's low of 37830.66), S&P E-Minis up 112.5 points (2.17%) at 5296.5 (Monday low of 5127.25), Nasdaq up 378.7 points (2.4%) at 16246.53 (Monday low of 15685.33).
• A mix of IT, Financial Services, Health Care and Interactive Media sector stocks led gainers in the first half: First Solar +12.66%, 3M Co +7.76%, Pentair +8.69%, Equifax +12.40%, Invesco +11.00%, PulteGroup +6.06%, Quest Diagnostics +7.42% and Netflix +7.07%.
• On the flipside, aerospace and defense stocks underperformed: Northrop Grumman -11.24%, RTX -8.37% and Lockheed Martin -2.46%. Other laggers include Halliburton -7.62%, NVR -3.98% and Kimberly-Clark -2.31%.
• Earnings after the close: Capital One Financial, Baker Hughes, Tesla, Manhattan Associates, EQT Corp, Steel Dynamics Inc, Intuitive Surgical Inc, Enphase Energy Inc and Range Resources Co.

The uptick in US equities following the opening bell persists here, with the e-mini S&P now more than erasing the late sell-off across Monday trade. Consumer discretionary and utilities names are leading the bounce, supported by corporate earnings: 3M and General Electric are among the S&P 500's top performers on the back of their pre-market reports, while Tesla is higher by near 4% ahead of their after-hours report.

• No specific headlines or newsflow to trigger the sharp recovery in stocks here, but markets may be fading the concerns surrounding both Fed independence and the policy cycle across the second half of this year.
• Trade remains a key focus for markets - negotiation teams from South Korea, India and Thailand are due in Washington this week, leaving markets on watch for confirmation of any progress from the Oval Office.
• Tesla are due after-market, with Boeing, Alphabet, P&G and Philip Morris due later this week: https://media.marketnews.com/MNIUSEARNINGS_210425_3ed710b2f3.pdf