EM CEEMEA CREDIT: VAKBN: 1Q25 results: decent profit, but capitalisation weaker

• In the FI space, Bund futures traded in a volatile manner Monday and remain below their recent highs. A bull cycle remains in play and a pullback is considered corrective. A fresh short-term cycle high Monday signals scope for a continuation of the uptrend. The contract has cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support lies at 129.22, the 20-day EMA.
• A sharp sell-off in the Gilt futures this week highlights a strong reversal of the bull cycle between Mar 27 - Apr 7. A continuation down exposes the next key support located at 90.55, the Mar 27 low. Clearance of this level would confirm a full reversal of the Mar 27 - Apr 7 rally. On the upside, a resumption of gains would initially refocus attention on resistance at 92.63, yesterday’s high. A break would potentially highlight an early bullish reversal signal.

• NZDUSD takes a knock on the China tariff retaliatory measures but remains relatively resilient as greenback sentiment has soured on Wednesday. The pair remains solidly off the overnight lows, having printed a fresh 5 year low (0.5486) shortly before the RBNZ rate decision.
• The MPC acknowledged risks to global growth following Wednesday's decision to lower the OCR a further 25bps to 3.5%, but some board members were less sure over the effectiveness of monetary policy to address a supply-side shock.
• Although NZDUSD breached the 2022 low below 0.55, the selloff fell short of the pandemic induced lows from 2020 at 0.5470. A break below here would place the pair at the lowest level since 2009.
• HSBC remain bearish on NZD particularly against low-yielding safe havens, and also the USD. They note there is a structural debate over USD and US investments, but the NZD is unlikely to benefit much. HSBC see Asian EM FX and EM equities as the key anchor for NZDUSD – close correlations within the past month are evidence of this. HSBC do not see the recent decline in NZDUSD as excessive in the context of extreme risk aversion.

Robert Peston at ITV posts on X: "The prime minister has just told me that the chancellor’s fiscal rules are “iron clad and here to stay”, that “they won’t be changed”. This is his response to contagion from the shocking Trump-induced fall in US government bond prices, which has seen the interest rate for UK 30-year sovereign debt rise to levels not seen since 1998. He is explicitly trying to reassure lenders to the UK"

• There has been speculation in recent weeks that the fiscal rules could be altered amid the prospect of another tax raising/spending cutting budget to come in the autumn. Speaking on Monday, PM Sir Keir Starmer said the rules 'won't be ignored'.
• Chancellor of the Exchequer Rachel Reves said earlier, when asked if the fiscal rules would remain unchanged for the whole parliament "Yes. Those fiscal rules ... are non-negotiable because they are the bedrock of the stability and security that families and businesses need."
• Nevertheless, this marks the first time the PM has committed to them remaining as-is.