EUROPEAN FIXED UPDATE: Awaiting several major US events; Gilts briefly inflated by CPI

Gilts: -7 ticks, 97.48

• Gilts opened marginally firmer, notching gains of seven ticks and then extending to gains of 13 at most at a 92.46 peak.


• Upside that followed the modest bullish bias in peers at the time and after the morning’s UK October CPI series. The series confirms the BoE's view that inflation peaked at 3.8%; reminder, the BoE's forecast for October was also 3.6%, in-line with the market view. ONS highlights the role of the Ofgem price cap in the moderation, as widely expected.


• Overall, the series factors in favour of the dovish half of the BoE. Governor Bailey, who cast the tie-breaking vote last time around, made clear in the statement & press conference that, in terms of the next cut, the BoE, generally but Bailey in particular, is highly inflation contingent.


• As such, the as-expected moderation will push Bailey towards a December cut; however, it is too soon to say for sure, given the uptick in food inflation and the stickiness of various components. Additionally, we await next week's budget and then the November inflation print just before the December announcement for further insight.


• Caveats that explain the limited upside seen in Gilts and why BoE pricing hasn’t moved significantly or lastingly from the c. 80% chance of a 25bps cut in December.


• More recently, Gilts have fallen into the red by a handful of ticks at most. A deterioration that speaks to the stickiness in components, uncertainty ahead of various upcoming UK factors and the general moderation seen in benchmarks since the European cash equity open, despite the tepid risk tone.


• Supply was robust enough from the UK. Though, the results did spark some modest pressure (but well within earlier ranges) as investors digested another sub-3x b/c for the DMO, with scrutiny around auctions increasing into the budget next week.

Bunds: U/C, 128.71

• Specifics for the bloc are fairly light, no new details on the Ukraine funding package with the December Council meeting less than a month away now. Elsewhere, the supply and speaker docket are devoid of Tier 1 events and Final HICP passed without incident.


• Bunds began on the front foot, and got to gains of eight ticks at most at a 128.79 peak.


• Thereafter, the complex saw a modest pullback and fell into the red with downside of just over five ticks at most.

USTs: -3 ticks, 112-24

• Similar to Bunds, essentially in a holding pattern between 112-23+ and 112-27+ into Fed speak, minutes, supply and then NVIDIA earnings afterhours.


• For the minutes, we look for insight into how the FOMC aligns itself to the hawkish tone taken by Powell in the press conference; ahead of that, markets ascribe a c. 40% chance of a December cut.


• NVIDIA after-hours (21:20GMT) is likely the main event for markets today and while not a specific fixed income driver on paper, the broad risk moves the earnings may spark could have influence; not to mention any borrowing/note guidance from the name, in the days and weeks ahead.

19 Nov 2025 - 10:15- Fixed IncomeEU Research- Source: Newsquawk