EUROPEAN FIXED UPDATE: Benchmarks bid and approaching Tuesday's highs, focus on geopols

USTs: +7 ticks, 112-01

• A firmer start to the session, but thus far comfortably within Tuesday’s 111-19+ to 112-06 parameters which also mark the WTD high and low, thus far at least.


• Today’s docket is headlined by geopolitics as European leaders and Ukraine’s Zelensky meet virtually and speak with US President Trump and VP Vance ahead of the one-on-one between Trump and Russian President Putin on Friday; a leaders-only event that has already been downplayed as a listening exercise for POTUS.


• After the meeting, we expect a press briefing from German Chancellor Merz and Zelensky at around 15:00BST.


• Before this, we await remarks from Fed’s Barkin (2027) and Treasury Secretary Bessent, the latter in focus after he said the Fed should think about a 50bps move in September, while noting that they are casting a wide net for the Governor position.


• From Barkin, he spoke extensively yesterday, noting that signs consumers with low/moderate income are more stretched than a few years ago, a reality that could curb spending and lessen the inflationary impact of tariffs.


• Into the above, as mentioned, USTs are firmer and holding around a 112-01 session high with yields lower across the curve and flattening with the long-end leading so far. If the above peak is breached, we look to Tuesday’s best before 112-08+, 112-09+, 112-14 and 112-15+ from last week.

Bunds: +49 ticks, 129.65

• Bid, outperforming USTs but also shy of Tuesday’s 129.70 peak with a session best thus far of 129.65. If the strength continues and that peak is breached, we look to 130.00 from Monday before 130.26 from last Friday.


• Strength comes after the ultimately softer session on Tuesday, given the significant turnaround seen after the CPI report.


• No move to final German CPI/HICP (unrevised) or the July Wholesale Price Index which came in cooler than previous.


• Otherwise, specifics so far light, the docket ahead is dominated by the mentioned geopolitical meetings ahead of Friday’s Putin-Trump meeting. That aside, the docket features supply with a 2035 Bund auction due; despite the lack of concession seen today into the tap, the outing should pass without issue.

Gilts: +25 ticks, 91.96

• Firmer, broadly in-fitting with the above. Also awaiting the leaders meeting, UK PM Starmer is part of the virtual event and US VP Vance will also be dialling in from the UK.


• Opened higher by a handful of ticks and has, in-fitting with EGBs/USTs, been extending since to a 91.99 peak but shy of 92.12 from Tuesday. If breached, we look to 92.37 from Monday before 92.66, 92.77 and 92.84 from last week.


• Elsewhere, domestic fiscal updates remain in focus. After recent press reporting around MPs pushing for a wealth tax, the current focus point has turned to inheritance tax; reminder, the Telegraph reported earlier this week that the gov’t was looking to tax pension pots of workers who die before reaching pension age.


• More recently, the Guardian reported yesterday evening that Chancellor Reeves could tweak inheritance tax in order to fill some of the GBP 40bln fiscal hole (plus GBP 10bln to create some headroom) she finds herself in. One potential change being considered is a lifetime cap on pre-death gifting, additionally sources add the Treasury is reviewing the taper rate of relief on such gifts.

13 Aug 2025 - 09:55- ForexEU Research- Source: Newsquawk