EM CEEMEA CREDIT: ZOREN: FY24 results and disclosure weak.

Light outperformance in 10-year peripheral bonds against Bunds, with European equity futures off Friday’s lows. The rally in European NatGas prices is likely helping to contain upside across core/semi-core EGBs this morning. 

• The BTP/Bund spread is ~1bp tighter at ~108.5bps, after 106bps once again provided a floor to the spread last week. We look for a 2040 BTP to be launched via syndication in February, although with a decent risk of the transaction slipping into March.
• The OAT/Bund spread is a little tighter at ~71.5bps. However, medium-term political risks remain prevalent despite PM Bayrou surviving last week’s censure motions, after he forced the 2025 budget through the National Assembly using Article 49.3.
• Our Political Risk team highlighted last Friday that there is significant uncertainty surrounding the so-called 'spontaneous censure motion' that the PS intends to bring against the gov't this week. With the PS and presumably the rest of the leftist New Popular Front (NFP) alliance parties in favour, if the far-right RN backs the motion it would be enough to oust Bayrou. 

OAT Block trade, suggest buyer.

• OATH5 ~1.1k at 124.37.

The European Commission has released a short statement following the announcement by US President Donald Trump of 25% tariffs on all aluminium and steel imports into the US. The Commission says that it has not yet received and official notification regarding the imposition of tariffs, adding that it will not respond to 'broad announcements' without additional detail. Nevertheless, the statement says: "The EU sees no justification for the imposition of tariffs on its exports. We will react to protect the interests of European businesses, workers and consumers from unjustified measures."

• Commission: "The imposition of tariffs would be unlawful and economically counterproductive, especially given the deeply integrated production chains the EU and US established through Transatlantic trade and investment."
• Commission: "Tariffs are essentially taxes. By imposing tariffs, the US would be taxing its own citizens, raising costs for business, and fuelling inflation. Moreover, tariffs heighten economic uncertainty and disrupt the efficiency and integration of global markets."

The EU and its member states will be bracing for further announcements on tariffs that Trump has trailed on 'Tuesday or Wednesday'. As the FT reported last week, the EU has the option of using its 'anti-coercion instrument', the so-called 'bazooka' to target US firms. This risks bringing services into the burgeoning trade spat, rather than just goods - a risky move some EU countries will be reluctant to back.