OUTLOOK: Price Signal Summary -Bull Cycle In Bunds Remains Intact

• Treasuries trade twist steeper, with the longer end having more firmly pared gains seen after the open following President Trump yesterday pushing ahead with previously one-month delayed tariffs on Canada and Mexico plus an additional 10% tariffs on China. They have been met by retaliation from Canada and China.
• The long end could also be seeing some intraday spillover from larger than expected potential EU defense spending (touted by EC’s Von Der Leyen as potentially a EUR 800bn increase) plus a weak JGB 10Y auction.
• Cash yields are 2bp lower (2s) to 2.8bp higher (30s) with the pivot after 5s.
• 2Y yields at 3.93% have reinforced Friday’s brief push to a 3 handle, back at mid-October levels.
• TYM5 trades at 111-17 (+04) having pulled back off latest recent highs of 111-28+, and has seen huge cumulative volumes of 940k (roughly double recent averages).
• The earlier climb pierced resistance at 111-12+ (Dec 3, 2024 high) and paves the way for an extension to 112-02 and 112-13 (Fribo projection points). To the downside, support is seen at 110-00 (Feb 28 low).
• Politics: Pres Trump addresses joint session of Congress (2100ET)
• Data: No notable releases
• Fedspeak: NY Fed’s Williams (1420ET) – see STIR bullet
• Bill issuance: US Tsy $70B 6W, $40B 12D CMB bill auctions (1130ET)

• In FX, EURUSD is trading higher this week. The latest recovery undermines a recent bear theme and exposes 1.0529, the Feb 26 high, and more importantly, resistance at 1.0533, the Jan 27 high. A clear break of 1.0533 would highlight a stronger bullish short-term theme. This would open 1.0630, the Dec 6 ‘24 high. A key near-term support has been defined at 1.0360, the Feb 28 low. A break of it would be bearish.
• The trend condition in GBPUSD remains bullish - for now - and this week’s gains reinforce this theme. Note that moving average studies have recently crossed into a bull-mode position, highlighting a potentially stronger bull cycle. The pair has pierced 1.2716, the Feb 26 high. Sights are on 1.2767, the 50.0% retracement of the Sep 26 ‘24 - Jan 13 bear leg. Initial firm support to watch is 1.2545, the 50-day EMA.
• USDJPY is trading lower today. The move down has resulted in a print below support at 148.57, the Feb 25 low, to confirm a resumption of the downtrend. The break lower has also resulted in a clear breach of 148.65, the Dec 3 ‘24 low. This paves the way for an extension towards 146.95, a Fibonacci retracement. On the upside, key short-term resistance has been defined at 151.30, the Mar 3 high. Clearance of this level is required to signal a base.

"The FEDERAL REPUBLIC OF GERMANY has mandated Barclays, BofA Securities, Commerzbank, Deutsche Bank, Morgan Stanley and NatWest as joint lead managers for an upcoming syndicated new 30yr benchmark, due 15 August 2056.
The transaction will be launched and priced in the near future, subject to market conditions." From market source

• This has been on the cards for some time, but we had little conviction over the timing. We expect a similar size transaction to last year (E6bln with E1bln retained).