EUROPEAN FIXED UPDATE: Benchmarks benefit from the downbeat risk tone into numerous speakers

USTs: +3 ticks, 109.25+

• A contained start to the day with US-specific drivers somewhat light after the 20yr auction on Wednesday and as we await the latest weekly jobs data before the latest wave of Fed speakers; focus this morning more on geopolitics and NVIDIA numbers, both factors which have been weighing on the risk tone and supporting benchmarks.


• Wednesday’s 20yr auction was weak and sparked some modest pressure in benchmarks though they remained within earlier ranges.


• Since, USTs have remained in a narrow 109-20+ to 109-27 parameters; the high of which printed as Russia described Ukraine’s use of storm shadow missiles as a “new escalation”.


• Ahead, focus on the weekly jobs data and Philly Fed before the mentioned Fed speak, with 2024 voter Hammack on two occasions before Barr & Goolsbee thereafter. A FT article from Fed's Barkin (2024 voter) kept his options open on December though described recent data as "quite prosperous”, no reaction to the article.


• Yields are relatively contained, but with some modest pressure present given the risk tone and after the upside seen on Wednesday; no overt flattening/steepening bias with the belly leading the modest action.

Bunds: +26 ticks, 132.33

• Firmer on the session, at highs given the latest geopolitical updates and specifically commentary from the Russian Kremlin on storm shadow.


• Just off a 132.42 peak, having comfortably reclaimed the 132.00 handle after languishing just below the mark throughout much of the APAC session. Specifics somewhat light so far, though the docket ahead is packed with ECB speak from both sides of the dove-hawk spectrum and as such it remains to be seen what, if any, the overall influence of such remarks on pricing will be.


• The morning has seen supply from Spain and France, which was somewhat tepid vs recent outings for Spain, though not sufficiently so to spark any reaction, and France thereafter was well received.

Gilts: +23 ticks, 93.88

• Bid and the outperformer for much of the morning. Influenced by the above and as the benchmark rebounds from Wednesday’s CPI-induced pressures. However, the odds of a December BoE cut remain stuck at around the 15% mark.


• Action which took Gilts briefly back above the 94.00 handle, surpassing Wednesday’s 93.81 best and Monday’s 93.90 peak with Tuesday’s 94.64 high the next point of resistance/target if the move extends at any point.


• Docket ahead is headlined by BoE’s Mann; though, she has spoken extensively in recent weeks and it remains to be seen what she will add beyond her known stance in the wake of Wednesday’s inflation print. As a reminder, Ramsden said one small miss on inflation does not change his assessment of the outlook.

21 Nov 2024 - 10:20- Fixed IncomeResearch Sheet- Source: Newsquawk