SONIA: SONIA FIX - 27/03/25
Mar-27 12:01
SONIA FIX - Source: BBG/ICE * 1M 4.46570 0.0001 * 3M 4.37320 -0.0056 * 6M 4.30380 -0.0091 * 12M 4.2...
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UK: The Sun-PM To Cut Aid Bill In Order To Increase Def Spend To 2.5% Of GDP
Feb-25 11:57
The Sun reports that PM Sir Keir Starmer "will today set out a path to hike defence spending to 2.5 per cent of GDP." The article claims that the PM will pledge to boost military spending "immediately", with Starmer's pledges on defence expenditure to date having come without a set timeline. As The Sun notes, "Cabinet departments have been bracing for deep spending cuts in order to fund the massive armed forces cash injection." The report claims that Starmer "will today vow to slash Britain's aid budget in order to hike defence spending".
- Starmer is set to deliver a statement to the House of Commons regarding defence and security at 1230GMT (0730ET, 1330CET). Livestream here.
- The statement will come just days ahead of the PM's planned visit to Washington, D.C., for talks with US President Donald Trump. The second senior NATO leader to meet with Trump this week after French President Emmanuel Macron on 24 Feb, Starmer will use the visit in an effort to try to convince Trump that US security guarantees for Ukraine as part of any ceasefire agreement with Russia are a necessity and worthwhile for the US.
- Earlier this morning, leader of the main opposition centre-right Conservatives Kemi Badenoch said that 2.5% of GDP on defence "is now no longer sufficient".
OPTIONS: Expiries for Feb25 NY cut 1000ET (Source DTCC)
Feb-25 11:56
- EUR/USD: $1.0390-00(E1.2bln), $1.0450-55(E560mln)
- USD/JPY: Y149.00($751mln), Y149.75-80($790mln)
- USD/CNY: Cny7.3500($1.1bln)
US TSYS: Bunds Lend Added Support to Tsys, Trade Uncertainty Spreads
Feb-25 11:53
- Treasuries resume climb to highest levels since mid December overnight, gaining additional support in early London trade as Bunds rallied. Bunds reversed weakness to extending highs as Pres Trump trade policy continues to unsettle rates, weigh on equities.
- Currently, Mar'25 10Y futures trades +11.5 at 110-07.5 vs. 110-09 high, focus on initial technical resistance at 110-19 (76.4% retracement of the Dec 6 - Jan 13 bear leg) followed by 110-25 (High Dec 12 ‘24). Initial firm support to monitor is 109-09, the 50-day EMA. A move below this average is required to highlight a potential reversal.
- Tsy 10Y yield has slipped to 4.3328% low (-.0675), curves mixed: 2s10s -.581 at 21.769, 5s30s +1.618 at 43.424. Heavy futures volume (TUH5 1.5M already) tied to Mar/Jun roll with latter taking lead quarterly this Friday.
- Bbg US$ index inching lower (BBDXY -0.46 to 1286.81) paring overnight gains after Pres Trump mention of Canada & Mexico tariffs are "on time, moving forward" late Monday.
- Projected rate cuts through mid-2025 steady to firmer vs. lat eMonday levels (*) as follows: Mar'25 at -0.7bp (-0.5bp), May'25 at -8.2bp (-7.1bp), Jun'25 at -20.7bp (-18bp), Jul'25 at -28.6bp (-25.6bp).
- Focus on regional Fed data (Philly, Richmond, Dallas) & Fed speakers today, House price index at 0900ET, Consumer Confidence at 1000ET. US Treasury auctions $75B 6W Bills at 1130ET, $70B 5Y Notes (91282CMQ1) at 1300ET.
