CONSUMER CYCLICALS: Trump threatens tariffs on European alcohol (x2)

• US President Donald Trump adjusted tariffs on all steel and aluminium products entering the United States to a flat 25%. The new tariff rate will go into effect at midnight tonight.
• China may look to target US tech companies to leverage a position ahead of expected negotiations with the US over trade policy.
• Trump indicated he may provide Australia with a tariff exemption.
• Japanese Prime Minister Shigeru Ishiba is confident an FDI pivot from China to the US can help Tokyo avoid tariffs.
• European Commission President Ursula von der Leyen said the action would trigger "firm and proportionate" countermeasures.
• House Speaker Mike Johnson (R-LA) is expected to outline his budget resolution at a Republican Conference meeting this morning.
• Congressional Republicans are willing to turn Elon Musk's DOGE spending cuts into legislation.
• Analysts are divided over whether Democrats are likely to use a government shutdown as leverage to oppose Trump’s agenda.
• The Senate is expected to confirm Tulsi Gabbard as Director of National Intelligence as soon as today.
• Federal Reserve Chair Jerome Powell will appear before the Senate Banking Committee at 10:00 ET 15:00 GMT.
• President Trump will meet with King Abdullah of Jordan at the White House today amid hardline rhetoric from Trump over the future governance and reconstruction of the Gaza Strip.
• Poll of the Day: Republican voters believe GOP lawmakers should push back against Trump when they disagree. 

Full article: US DAILY BRIEF

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Although long-dated UK swap spreads have recovered from cycle lows, they still operate near/below levels that were driven by the initial Budget-induced sell off linked to fiscal and issuance worry.

• This shows that while those risks have moderated from extremes, they still remain elevated when compared to the pre-Budget status quo (all else equal).
• While issuance risks don’t seem to represent a major immediate (intraday) concern for the conventional gilt market, as today’s record-sized syndication and orderbook show, the combination of slowing economic growth and already limited fiscal headroom will result in continued attention on fiscal matters in the coming months and years, as evidenced by current swap spread pricing.

Fig. 1: UK 10- & 30-Year Swap Spreads (bp)

Source: MNI - Market News/Bloomberg