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• High yield 3.795%
• WI level at the time of the auction 3.789%
• Tail 0.6 basis points vs six-month averages -0.4 basis points
• Bid to cover 2.52X versus six-month average of 2.65X
• Directs 30.1% versus six-month average of 15.4%
• Indirects 56.2% versus six-month averages 73.0%
• Dealers 13.7% versus six-month average of 11.6%

Auction grade: C-

A shift of buying from international to domestic. The tail 0.6 basis points implies yields needed to move higher to attract enough demand for the liquid two year. Dealers were saddled with more than usual. The bid to cover was less than the six-month average.

With the US auctions, you have to be careful with regard to international demand given the trade tariffs situation. In theory, if the US runs a trade deficit, the USDs need to put to work somewhere. If not into US debt, yields could move higher.

However, if flow of funds is not into the US debt, where is it to go. A positive may be if the funds are going into US capital investment.

This article was written by Greg Michalowski at www.forexlive.com.

Ahead of meetings in London on Wednesday, Ukraine’s president Ukraine Pres. Zelenskyy says that the Ukraine delegation as the mandate to discuss full or partial cease-fire. He adds:

• Once a cease-fire is in place, Ukraine is ready for talks with Russia in any format
• It’s impossible to agree all terms of peace deal quickly.
• Ukraine will not recognize Russian occupation of Crimea De Jure, it would be unconstitutional.
• Russia forces motor plant on Tuesday.
• There is no official US proposal regarding status of Zaporizhzhia nuclear plant
• Ukraine ready to partner with US for plants recovery
• Chinese citizens work at troll production sites in Russia.
• Is ready to meet trend during his visit to Vatican

This article was written by Greg Michalowski at www.forexlive.com.

The major European indices are closing the day with gains. The one exception is Italy’s FTSE MIB which was down marginally.

A snapshot of the closing levels shows:

• German DAX, +91.04 points or 0.43% at 21,296.91.
• France’s CAC rose 40.60 points or 0.56% at 7326.47.
• UK’s FTSE 100 rose 52.96 points or 0.64% at 8328.61.
• Spain’s Ibex rose 92.61 points or 0.72% at 13010.60
• Italy’s FTSE MIB fell -32.55 points or -0.09% at 35,947.89

US stocks are currently trading near highs with the NASDAQ now 3.3%. The S&P index is up 2.84% and the Dow industrial average is up 2.8% as investors cover shorts after the Treasury Secretary Bessent comments on China. Both the S&P and the NASDAQ indices are testing their 50 and 100 hour moving averages at session highs.

The S&P index has is 100 hour moving average at 5299 and its 50 hour moving average at 5303. The price is currently just above that level at 5305.38.

The NASDAQ index 100 hour moving averages at 16,388.56 and is 50 hour moving averages at 16,427.81. Its current prices trading between those levels at 16,397.

This article was written by Greg Michalowski at www.forexlive.com.

US Treasury Secretary Scott Bessent made significant comments about the ongoing tariff tensions with China at a closed-door investor summit on Tuesday in Washington.

According to Bloomberg, Bessent told attendees that the standoff with China — which he said was essentially an embargo — is unsustainable and that he expects it to de-escalate.

He said that while formal negotiations haven’t commenced, a deal remains possible.

Risk assets have rallied on this, with the S&P 500 rallying 35 points to a session high after a conspicuous bid all morning.

Once again we see high-ranking officials making market-moving comments behind closed doors. Bessent’s remarks about China trade de-escalation being shared exclusively with select JPMorgan clients represents exactly the kind of two-tier information system that undermines market fairness.

This article was written by Adam Button at www.forexlive.com.

US Treasury Secretary Scott Bessent made significant comments about the ongoing tariff tensions with China at a closed-door investor summit on Tuesday in Washington.

According to Bloomberg, Bessent told attendees that the standoff with China — which he said was essentially an embargo — is unsustainable and that he expects it to de-escalate.

He said that while formal negotiations haven’t commenced, a deal remains possible.

Risk assets have rallied on this, with the S&P 500 rallying 35 points to a session high after a conspicuous bid all morning.

Once again we see high-ranking officials making market-moving comments behind closed doors. Bessent’s remarks about China trade de-escalation being shared exclusively with select JPMorgan clients represents exactly the kind of two-tier information system that undermines market fairness.

This article was written by Adam Button at www.forexlive.com.

Watching the shared press conference with Trump and Netanyahu earlier this month, it was easy to believe reports there was a rift between the sides, particularly on Iran policy.

Today though, Trump wrote:

I’ve just spoken to Prime Minister of Israel, Bibi Netanyahu, relative
to numerous subjects including Trade, Iran, etc. The call went very
well—We are on the same side of every issue.

That came after some fresh Iran sanctions today. The market is contemplating the US stepping up enforcement of Iran sanctions or an attack on the country’s nuclear facilities. WTI crude oil is at the highs of day in the aftermath, though it still has some work to do to recover from yesterday’s selloff.

This article was written by Adam Button at www.forexlive.com.

Trump has been quiet on the tariff front today and with that it’s no surprise that equities have a bid. The S&P 500 has extended its gain to 2% and the gap lower at yesterday’s open is now almost closed.

It can all change with a tweet so beware.

Some people were pointing out that late yesterday there were bids in Vietnam-related equities like Nike (which has huge factories there). The speculation is that that there could be progress towards a deal there, though there are no real headlines along those lines.

This article was written by Adam Button at www.forexlive.com.

• Prior was -14.5

This is the lowest since Oct 2023.

This article was written by Adam Button at www.forexlive.com.

• Lowest since November
• Prior was -4
• Services index -7 vs -4 prior
• Manufacturing shipments -17 vs -7 prior

At some point all this deterioration in sentiment has to lead to worsening economic performance.

This article was written by Adam Button at www.forexlive.com.

Consumer goods giant Kimberly-Clark reported Q1 earnings today that reveal several macro themes worth watching and the dynamic of a weakening USD and how that will hurt equities.

The maker of Kleenex and Huggies posted a 6% drop in net sales to $4.8 billion, with currency translation accounting for a significant 2.4% of that decline. More concerning for macro watchers is the company’s revised outlook, citing “greater costs across our global supply chain” than anticipated at the beginning of 2025.

They’ve significantly reduced their outlook from “high single-digit growth” to “flat to positive” for operating profit on a constant-currency basis, indicating a notable slowdown in business expectations.

Share of KMB are down 3.5%.

If the US dollar continues to fall, we could see a reversal in some of this commentary as a weak dollar boosts foreign profits in USD terms.

The good news is company reported a 1.5% decrease in price, with volume and mix flat year-over-year. That’s some good news on inflation but suggests challenges in maintaining pricing power in a slowing consumer environment.

This article was written by Adam Button at www.forexlive.com.

• Sees 2025 at 2.8% vs 3.3% in January
• Sees 2026 at 3.0% vs 3.3% prior
• 2025 US GDP seen at 1.8% vs 2.7% prior
• 2026 US GDP seen at 1.7% vs 2.1% prior
• 2025 China GDP seen at 4.0% vs 4.6% prior
• 2026 China GDP seen at 4.0% vs 4.5% prior
• 2025 Germany GDP seen at 0.0% vs +0.3% prior

The IMF cited US tariffs for the cut. The lone economy where negative GDP is forecast is Mexico but it has been one of the stronger equity markets this year.

“Intensifying downside risks dominate the outlook, amid escalating trade
tensions and financial market adjustments. Divergent and swiftly
changing policy positions or deteriorating sentiment could lead to even
tighter global financial conditions. Ratcheting up a trade war and
heightened trade policy uncertainty may further hinder both short-term
and long-term growth prospects. Scaling back international cooperation
could jeopardize progress toward a more resilient global economy,” the IMF said.

This article was written by Adam Button at www.forexlive.com.

The main tariff news of the Asian session was a press release from the US Trade Representative highlighting progress on a trade deal with India as JD Vance visited.

“I am pleased to confirm that USTR and India’s Ministry of Commerce and
Industry have finalized the Terms of Reference to lay down a roadmap for
the negotiations on reciprocal trade,” said Ambassador Greer.

Is this what we’re doing?

After touting 90 days in 90 days we get a press release to announce that after extensive negotiations, officials are proud to announce they have successfully agreed… to begin discussing how they might eventually start negotiating a trade deal.

Hardly confidence inspiring.

This article was written by Adam Button at www.forexlive.com.