Light Bid On Russian Sanction News After Selling Off On Monday

TYU2 incrementally higher at the re-open on the back of the EU unveiling its latest sanctions package re: Russian oil, as was foretold by senior diplomats earlier on Monday. The package will cover more than 2/3 of Russian oil exports to Europe, with RTRS noting that the agreement will cover 90% of such exports by the end of ’22. The package will also cover the de-SWIFTING of Russia’s largest bank, Sberbank, alongside sanctions for some individuals & the banning of 3 more Russian state broadcasters. TYU2 -0-14 at 119-22+ after closing just above worst levels on Monday.

• To recap TYU2 came under pressure in holiday-thinned & shortened trade on Monday, with cash markets closed as the U.S. observed the Memorial Day holiday. Firmer than expected CPI data out of Germany and optimism surrounding the wind back of some COVID-related mobility restrictions in the Chinese cities of Shanghai & Beijing were in the driving seat.
• Elsewhere, Fed Governor Waller reaffirmed his hawkish view, pointing to the need for 50bp rate hikes at the next several meetings (more aggressive than the “couple” touted by Chair Powell & others in recent weeks), while reaffirming a desire to take rates beyond neutral levels, if required, and stressing that noone should doubt the Fed’s commitment to taming inflation.
• Looking ahead, Chinese official PMI data provides the headline risk event during Asia-Pac dealing. Eurozone CPI data then provides the most notable economic release during the European morning, while NY hours will bring several rounds of second tier house price data, the monthly MNI Chicago PMI reading, consumer confidence and Dallas Fed m’fing activity data.