STIR: Renewed Trump Tariff Threats Extend Day's Euribor Outperformance

Monday's Europe rates/bond options flow included: 

• OEH5 117/116.75ps, sold at 11 in 13k.
• RXH5 132.5/134/135/136.5c condor, bought for 35 in 10k.
• ERM5 97.75/97.93cs, sold at 6.25 in 15k (ref 97.745).
• ERM5 97.6875/97.75cs vs ERJ5 97.75/97.8125cs, bought for 0.75 and 1 in 68k since Friday, 65k on Friday and 3k now.
• ERU5 97.62/97.75/97.87c fly, bought for 1.75 in 7k.
• 0NM5 96.10/96.30/96.50c fly, sold at 2 in 16k.

The probability of former House Rep Tulsi Gabbard receiving Senate confirmation as President Donald Trump's Director of National Intelligence has dropped amid reports that several Republicans on the Senate Intelligence Committee may not vote to approve her nomination. Polymarket notes the implied probability of Gabbard's confirmation has dipped to 56%, the lowest of any nominee since December.   

• Gabbard and the two other at-risk Trump nominees, Robert F. Kennedy Jr. for Health Secretary and Kash Patel for FBI Director all have Senate nomination hearings teed up for Thursday.
• Punchbowl News reported this morning: “Gabbard’s path to Senate confirmation remains fraught with trouble. At least two GOP members of the Intelligence Committee — Sens. Susan Collins (Maine) and Todd Young (Ind.) — are on the fence about Gabbard. Republicans have a one-seat majority on the panel, so it would be exceedingly difficult to advance her nomination to the floor if just one Republican defects.”
• Trump's Treasury Secretary nominee, Scott Bessent, is expected to be confirmed in a bipartisan vote today. Sean Duffy is also expected to be confirmed as Trump’s Transportation Secretary later today.
• Trump’s Commerce Secretary pick, Howard Lutnick, has his Senate nomination hearing scheduled for Wednesday.

Figure 1: Trump Cabinet Nominees, % Implied Probability of Confirmation

Source: Polymarket

• WI is currently running at 4.337%, down from 4.347% earlier and 14.1bp rich to last month's stop: 4.478% high yield vs. 4.480% WI.