EU REAL ESTATE: Vonovia: Mandate + Tender (ANNGR; Baa1/BBB+/BBB+)

• Despite the Dollar Bid, Gold is still acting as a much better Safer Haven, at a new all time record high, next projection comes at $3987.3 - 2.236 proj of the May 15 - Jun 16 - 30 price swing.
• But the Globe will be fixated on the big Psychological $4000.00 round number.

Highlights from Lane:

• "Striking the balance between the baseline assessment and the risk assessment in determining the monetary policy decision at any given meeting is not straightforward"...."it is highly context-specific as to: (i) whether the risk assessment should call for a “wait and see” approach or, alternatively, trigger an immediate response due to insurance-type risk management considerations; and (ii) whether a rate move should be attenuated or amplified by risk considerations."
• "In the coming weeks and months, it makes sense to follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance"
• "In addition to the evolution of the baseline inflation outlook, shifts in the risk distribution will also matter for our rate decisions: an increase in the likelihood or intensity of downside risk factors would strengthen the case that a slightly-lower policy rate might better protect the medium-term inflation target; alternatively, an increase in the likelihood or intensity of upside risk factors would indicate that maintaining the current policy rate would be appropriate in the near term"

On the Euro, Lane notes that: "a persistent movement in the euro on average has a multi-year impact on economic activity and inflation"

• "However, these effects will be larger than the average if euro appreciation is more due to external factors (such as weakness in main trading partners or portfolio rebalancing due to an increase in the risk premium in overseas financial markets) and smaller than the average if more due to domestic factors (such as a surge in domestic demand or a decline in the domestic risk premium)."

Gilts open lower on global cues, after the JGB curve steepened as a new PM was elected and with OATs struggling as French political risks deepen.

• Futures pierce Thursday’s low, basing at 90.51.
• Bears remain in technical control at this stage, particularly with UK fiscal risks lingering. Initial support and resistance in futures still located at 90.26 & 91.28, respectively.
• Yields 2-6bp higher.
• 10s still comfortably within their recent 4.60-4.80% range, last 4.73%.
• 2s10s and 5s30s stick within their respective multi-week ranges, trading ~7bp and ~10bp below their cycle closing highs. Steepening trends intact.
• BoE-dated OIS still shows ~5bp of easing through year-end and is not discounting the next 25bp cut until the end of the April MPC.
• We continue to believe that markets underprice the odds of a Q4 rate cut.
• Comments from BoE Governor Bailey are due today.
• They will be closely scrutinised (even though he spoke as recently as Friday), particularly after Deputy Governors Ramsden & Breeden failed to push back against the idea of rate cuts last week.
• We have previously suggested that Bailey and those two Deputies would probably have to join dovish dissenters Dhingra & Taylor if we were to see a cut in Q4.
• Lower tier construction PMI data is due today.
• Elsewhere, the BoE will sell GBP775mln of short bucket gilts from its APF (3- to 7-Year).