AMERICAS OIL PRODUCTS: Traffic via Top US Long-Haul Air Routes Rises on Week

Gilts modestly outperformed Bunds Monday.

• Core European bonds faded slightly in the post-weekend re-open, with EGBs weighed down by higher gas prices, and only a fairly muted reaction to US President Trump's declaration of steel and alluminium tariffs.
• With no Tier 1 data on Monday's schedule, Bund and Gilt yields drifted lower in afternoon trade amid a modest pickup in market bids though no clear headline catalyst - all within last week's ranges.
• ECB's Lagarde reiterated in her remarks to the EU Parliament that inflation remains on track to reach 2% but that "greater friction in global trade would make the euro area inflation outlook more uncertain.”
• The UK and German curves moderately bull steepened on the day. Front-ends were boosted by an extension of central bank cut pricing (ECB end-2025 to 90bp vs 87bp Friday, BoE to 65bp from 60bp).
• Periphery EGB spreads were mostly tighter, with Greece's widening slightly (BTPs saw little reaction to an Italy syndication 15Y syndication announcement, which had been anticipated by MNI).
• Tuesday's agenda includes pricing of the syndication of the new 4.50% Mar-35 gilt and scheduled comments from BoE’s Bailey & Mann (see MNI's Gilt Week Ahead for more, PDF), while ECB's Schnabel speaks on a panel.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.2bps at 2.026%, 5-Yr is down 1.1bps at 2.142%, 10-Yr is down 1bps at 2.362%, and 30-Yr is down 0.6bps at 2.615%.
• UK: The 2-Yr yield is down 2.2bps at 4.146%, 5-Yr is down 2.6bps at 4.147%, 10-Yr is down 1.9bps at 4.457%, and 30-Yr is unchanged at 5.056%.
• Italian BTP spread down 0.6bps at 108.8bps / French OAT up 0.5bps at 72.4bps  

The MEF has announced that it will look to sell:

• E2.75-3.25bln of the on-the-run 3-year 2.70% Oct-27 BTP (ISIN: IT0005622128)
• E1.0-1.25bln of the off-the-run 3.45% Jul-31 BTP (ISIN: IT0005595803)
• E1.0-1.25bln of the on-the-run 7-year 3.15% Nov-31 BTP (ISIN: IT0005619546)
• As announced earlier, the 15+ year BTP line was cancelled to facilitate the Oct-40 BTP syndication (due to take place tomorrow).

Senate Minority Leader Chuck Schumer (D-NY) has signalled in a 'letter to colleagues' that Senate Democrats will use leverage in the upcoming government funding negotiations to push back against President Donald Trump's attempts to reform the federal bureaucracy.

• Schumer: "President Trump has handed the keys of the Presidency to his cronies, sycophants, and radicals who are hell-bent on pursuing a coordinated agenda - mapped out in grave detail in Project 2025 - to hollow out the government and cut off critical services to American communities across the country. This is for one purpose: More power and wealth for the very rich."
• Schumer added that Senate Democrats, "will use our votes to help steady the ship for the American people in these turbulent times. It is incumbent on responsible Republicans to get serious and work in a bipartisan fashion to avoid a Trump Shutdown."
• Schumer's letter comes as Democrat and Republican negotiators appear far from agreeing on a topline number for FY2025 funding, just 32 days from the funding deadline.
• Senator Andy Kim (D-NJ) similarly indicated to NBC yesterday that Democrats may be willing to use a shutdown as leverage to oppose government reforms: “...for the last two years, [Republcians] needed Democratic votes for every single continuing resolution and they should not count on that this time,”
• Punchbowl noted this morning: “We’ve been crystal clear in our view that Washington is drastically underestimating the chance for a government shutdown after March 14.”