BONDS: SWAPS: Notable Divergence In U.S. & German Long End Swap Spreads

US President-elect Donald Trump delivered a wide-ranging press conference at his Mar-a-Lago resort in Florida on January 7, touching on various issues from energy to his foreign policy ambition of carving out a new US sphere of influence from Panama to Greenland.   

• Please find below a full summary of the presser with analysis of the key comments related to foreign policy, tariffs, energy, and legislation.

Full article: Trump Press Conference Review

Elsewhere, a reminder that our latest positioning indicator update (published yesterday) pointed to long positioning in gilt futures. That could be adding further fuel to the sell off.

Further weakness in gilts accompanies pressure for GBP in FX trade, with the market in price discovery mode after finding fresh multi-decade highs in 30-Year yields and registering the highest level seen since ’23 in 10-year yields.

• Yields now 2.5-5.0bp higher across the curve, while futures trade as low as 90.75.
• Technicals for 10s & futures outlined in the prior post.
• No fresh UK headline triggers, but continued erosion of already limited fiscal headroom adds to wider pressure stemming from a reassessment of global term premium, hawkish U.S. data and a heavy start to ’25 IG supply, as well as medium-term structural headwinds for gilts.
• SONIA futures +0.5 to -9.0. Dec low in SFIZ5 untested. Nov low in SFIZ6 broken.