AMERICAS OIL: Natural Gas Could Get Priority Over Renewable Energy

• More stable equity markets since the European open have helped curtail the Japanese yen bid on Monday, with the push below 157.00 for USDJPY seeing a decent 60 pip reversal across the US session.
• In similar vein, the likes of EURUSD rising back above 1.02 and GBPUSD extending its bounce from the 1.21 handle have assisted a strong recovery for both EURJPY and GBPJPY.
• The trend condition in EURUSD remains bearish and recent short-term gains have proved to be a correction. The recent break of 1.0226 confirms a resumption of the downtrend and marks an extension of the price sequence of lower lows and lower highs. Sights are on 1.0138 next, a Fibonacci projection.
• For GBPJPY, early price action saw the cross briefly extend losses since Dec 30 to 4.5%, before 190.00 acted as decent support. We have seen the cross retrace the best part of 1% to levels around 191.75, despite remaining down on the session.
• Overall, the USD index is still holding on to moderate gains, with the post-NFP greenback impetus still present. The DXY printed a fresh cycle high at 110.17 before slipping back just below the 110 mark. Commodity currencies have traded with relatively contained ranges, whereas USDCHF had its first print above 0.9200 since May last year as the pair approaches key medium-term resistance at 0.9224/44.
• US PPI on Tuesday provides a warm-up for the main CPI data on Wednesday, when UK inflation data is also due.

Gilts underperformed Bunds and broader EGBs Monday, with pronounced bear flattening in the UK curve.

• Bonds remained under pressure overnight to start the week's trade, with Gilt and Bund yields nearing lastweek's multi-month and in some cases multi-year highs as the hawkish implications of Friday's solid US employment report continued to reverberate.
• The sell-off partially unwound over the course of the session, as dollar gains and equity losses consolidated with an eye on US and UK CPI Wednesday.
• The UK curve bear flattened, with Germany's bear steepening.
• Periphery EGB spreads to Bunds widened, with GGBs weakest as Greece announced a 10Y mandate likely to take place Tuesday (expectations had been it would occur next week).
• Tuesday's data calendar is largely second tier (Italian industrial production), though we get multiple central bank speakers including ECB's Lane and Holzmann, and BOE's Breeden.
• Also of note given fiscal considerations, new French PM Bayrou gives a key policy speech Tuesday afternoon.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.9bps at 2.293%, 5-Yr is up 1.7bps at 2.396%, 10-Yr is up 1.8bps at 2.613%, and 30-Yr is up 2bps at 2.81%.
• UK: The 2-Yr yield is up 6.2bps at 4.601%, 5-Yr is up 5.5bps at 4.602%, 10-Yr is up 4.7bps at 4.885%, and 30-Yr is up 3.2bps at 5.438%.
• Italian BTP spread up 3.6bps at 121bps / Greek up 4.1bps at 86bps 

The Jerusalem Post reporting that a Gaza hostage-for-ceasefire deal, "will likely be announced Monday night or Tuesday morning" following an agreement for the exchange of 33 hostages held by Hamas in Gaza, accompanied with a "staged withdrawal of IDF forces from Gaza." Sources told JP that the IDF "would not fully withdraw from Gaza until every single hostage was released."

• The JP notes that negotiations for the latter stages of a withdrawal, and completion of hostage exchanges, will take place on the 16th day of the ceasefire. JP adds that, "Diplomatic sources said a cabinet vote and an expected High Court of Justice ruling on petitions to block the deal would also be necessary."
• The White House confirmed a short time ago that US President Joe Biden spoke today with Amir Sheikh Tamim bin Hamad Al Thani of Qatar to discuss the ceasefire release deal based on the framework Biden outlined in a speech on May 27, 2024.
• Amichai Stein at Kan reports on X: "Qatari Emir now meets with Hamas delegation to discuss deal."
• White House National Security Advisor Jake Sullivan is due to appear at the White House press podium in next few moments. He is likely to discuss the deal along with preparation for Biden's final foreign policy speech of his presidency at 14:00 ET 19:00 GMT today. LIVESTREAM