EUROPEAN FIXED INCOME UPDATE: Paper broadly higher as markets await a deluge of Fed speakers

USTs: +3 ticks, 112-27

• Miran’s formal dissent speech is scheduled to be published today. On Friday, he spoke on multiple occasions, making clear he sees monetary policy as restrictive and will be attempting to convince other Fed members to ease policy faster. Concluding that individuals will eventually come to the view that tariffs will not drive inflation higher.


• Elsewhere, Barkin, Hammack, Musalem and Williams on the docket. Williams of course of note given his role at the Fed. Muaselm (2025) will be interesting given his typically hawkish stance, though pre-blackout he said he had marked up his labour market risk. Potentially more pertinently is hawkish member Hammack (2026), who in August said she did not see a case for cutting at that point; reminder, Chair Powell in his presser said support for a cut was broad but not unanimous.


• Marginally firmer, though very much at the low-end of the post-Powell range, which modest support gleaned from the weak start to the European week. However, as sentiment has picked up off worst this morning, fixed income has remained robust and continues to gradually inch higher. USTs at the upper-end of a 112-22 to 112-27+ band.

Bunds: +6 ticks, 128.24

• A contained start to the day. Underpressure in APAC trade despite the numerous geopolitical updates and mixed tone, with benchmarks continuing the downward trajectory that has been in play since the latter half of last week post-Powell.


• Specifics for the bloc thus far a little light. Largely awaiting PMI data later in the week. A few points of note in an ECB bulletin this morning, writing that “consumers who view tariffs as inflationary have adjusted their inflation expectations upward" and consumers are altering spending habits due to tariff concern, pivoting from the US and reducing spending.


• Bunds marginally firmer in a 128.01 to 128.22 band, taking out last week’s 128.16 base and looking to 127.82 from the last week of August for support.


• Elsewhere, France was downgraded at DBRS to AA from AA+, citing “growing domestic political fragmentation and reduced policy consensus”. On the flip side, Fitch upgraded Italy to BBB+ from BBB, justified by improved fiscal resilience, fiscal outperformance and spending restraint. Acknowledging this, the OAT-BTP 10yr yield spread briefly went below -1bp, but is yet to extend further into negative territory.


• Supply from the EU due shortly, EUR 6bln to be sold across three lines.

Gilts: +7 ticks, 90.78

• Domestic press remains focussed on the deputy contest and the mood music around PM Starmer, as the US state visit moved into the rear view and focus more generally returns to the Autumn Budget.


• Today, a contained to slightly firmer start which is very much in-fitting with the above peers. Gilts are just about in the green in 90.60 to 90.78 parameters; the low point takes out last week’s 90.65 base and we now look to 90.31 and 90.22 before the 89.36 contract low from the first week of September.

22 Sep 2025 - 09:55- Fixed IncomeGeopolitical- Source: Newsquawk