EUROPEAN FIXED UPDATE: A firmer start to a week packed with US data, though a gov't shutdown looms

USTs: +8 ticks, 112-17

• A firmer start to a week packed with labour market data, though the NFP release on Friday is subject to some uncertainty owing to the looming government shutdown.


• USTs at the top-end of a 112-08+ to 112-17 band, extending above Friday’s 112-15 best but shy of 112-22 and 113-00 from the two preceding sessions.


• While this week is packed with data, today is somewhat devoid and instead we look to Fed officials including Bostic, Hammack, Musaelm, Waller and Williams for insight. Alongside that, funding talks between the Democrats, Republicans and potentially President Trump are in focus.


• Hammack (2026) was on CNBC this morning, stuck to her language from last week in outlining a need to maintain restrictive policy, describing the current level as mildly restrictive and that the Fed is a short distance from neutral. As a reminder, prior to the September meeting Hammack said her neutral view was one of the highest.


• Trump said he will be discussing the shutdown, effective midnight ET on Tuesday, with congressional leaders today. He believes Democrats may want to come to a deal, but if they refuse to do so then the shutdown will occur.


• On the point of the Fed, Trump posted an image of himself firing Chair Powell on Truth Social - we await an update from the administration and/or Fed on this.

Bunds: +20 ticks, 128.47

• Also kicking the week off on the front foot, at the top end of a 128.29 to 128.57 band. The magnitude of the move is a touch more pronounced than that outlined in USTs, with Bunds surpassing last week’s 128.41 peak and looking to 129.02 from September 18th.


• Specifics for Germany light, though France continues to digest Friday’s initial fiscal comments from PM Lecornu, OAT-Bund 10yr yield a spread is modestly wider today, up to 83bps at most.


• Elsewhere, Spain was subject to two favourable sovereign reviews on Friday. Since, the region's flash inflation data for September came in as expected for the Y/Y HICP while the other major metrics were all cooler than expected and spurred some modest upside in EGBs at the time. Likely explaining the relative outperformance seen vs USTs.

Gilts: +24 ticks, 90.74

• Again, a firmer start to the week for Gilts. Opened alongside the Spanish inflation metrics and potentially caught a bit of a tailwind from that. Began the day firmer by 14 ticks before extending another 18 to a 90.82 peak, taking out Friday’s 90.74 best in the process. Resistance ahead at 91.11, 91.12 and 91.28 from last week.


• Specifics light in hours for the UK, however that will change shortly as Chancellor Reeves speaks at the Labour Party Conference around 12:00BST, a speech that will focus on the welfare system and Reform among other points. We have already heard from her this morning, agreeing with the IMF that there should only be one fiscal event per year, while this line is nothing new from Reeves it is notable in the context of Bloomberg reports that she is looking at removing the OBR’s March outlook to strengthen that commitment.


• Most recent remarks on Bloomberg have seen her outline commitment to the fiscal rules, a desire to bring inflation down and said that she is not looking to impose a specific wealth tax (asked in the context of the French situation) and her commitments to not increasing the tax burden via VAT, Income Tax or NI stand. Remarks that, if held to, limit the Chancellor's revenue generating sources with the general view being that she will need to raise at least GBP 20bln via taxes during the Autumn Budget.


• No significant move to the interviews with Reeves thus far, into her main 12:00BST speech the UK 10yr yield trades around 4.71% and the 30yr at 5.52%, both within recent parameters.


• Into main 12:00BST speech, the UK 10yr yield trades around 4.71%

29 Sep 2025 - 10:05- ForexEU Research- Source: Newsquawk