EUROPEAN FIXED UPDATE: Benchmarks contained into a packed US session

USTs: +2 ticks, 108-08

• Contained into a front-loaded US session on account of the Federal Holiday for Carter on Thursday. As such, we get ADP, Jobless Claims, FOMC Minutes and 30yr supply in today’s session.
• Into those events, USTs trade within a slim 108-04 to 108-09+ band which is entirely and comfortably within Tuesday’s 108-01 to 108-20 parameters.
• For the data, claims does not coincide with the payroll survey week while ADP comes ahead of Friday’s jobs report, a report which is expected to see NFP print at 160k vs the 140k forecast for ADP.
• The main event today though are perhaps the December Minutes, an account which will be scrutinised to see if any other members were close to dissenting (reminder, the decision saw a 11-1 vote) and then for insight on other pressing topics such as the implications of a Trump administration (i.e. tariffs) and the labour market’s characterisation.
• Additionally, we await 30yr supply which follows a tepid 3yr tap on Monday and a relatively soft 10yr outing last night. Finally, Fed speak from Waller due and we expect both a text release and a Q&A.

Bunds: -4 ticks, 131.97

• Similarly contained but with a slightly larger 131.90-132.14 range thus far with modest but ultimately fleeting action spurred by data this morning.
• A particularly soft Industrial Orders release and a mixed but largely weak Retail Sales report out of Germany sparked upside in Bunds early doors, to a retest of the above overnight peak; however, the move proved fleeting given large-order caveats to the Industrial Orders series.
• The above aside, today’s European docket is light and thus we await the mentioned US events for direction; however, we do have supply to look forward to in the meantime with Germany in the market with a new 2035 tap.
• On the subject of supply, and turning to the periphery, BTPs are the relative outperformers today after lagging yesterday on the announcement of two new syndications; this morning, we have seen marketing commence for a new 10yr BTP and a new 20yr Green BTP with orders in excess of EUR 125bln and EUR 110bln respectively.

Gilts: +7 ticks, 91.47

• Imminently awaiting results of their new 2030 Gilt auction. An outing which should go well; however, the 30yr on Tuesday saw a sub-3x cover which while still robust enough was taken as a disappointment given the multi-year high accompanying yield.
• A result which intensified focus on UK borrowing as yields continue to climb (just off yesterday’s highs thus far today) and erode the Chancellor’s already limited fiscal headroom.
• Aside from the auction UK specifics have been light and the docket ahead is sparse. Therefore, in-fitting with EGBs, Gilts we look to US events for direction.
• Into those events, and the 2030 auction result, Gilts trade just off session highs in a 91.38-58 range. The contract low from Tuesday stands at 91.31 in a session where the 10yr yield peaked at 4.68%.