EUROPEAN FIXED UPDATE: Benchmarks pressured by the constructive risk tone after NVIDIA & the CIT ruling

USTs: -8 ticks, 109-30

• A softer start to the day with fixed losing out due to its usual haven properties amid the constructive risk tone. In brief, the tone is buoyed by well-received NVIDIA earnings and the US CIT ruling that Trump’s Liberation Day tariffs are unlawful.


• Both events weighed on USTs, though the CIT ruling did the heavy lifting for fixed income. Across the morning, this has sent USTs to a 109-26+ base, taking out Wednesday’s trough but stalling just shy of the WTD base at 109-24+.


• Ahead, aside from awaiting more details on the timing of the appeals process for the CIT ruling, the docket features weekly claims, Q1 PCE/GDP (2nd), 7yr supply and Fed speak. Supply follows on from a decent 5yr, the sale of which didn’t really spark any followthrough as the auction was overall somewhat unremarkable.


• Fed speak includes Barkin and Daly, no text expected, in addition to Goolsbee and Kugler where a text is expected.


• Elsewhere, following the CIT ruling, HSBC has cut its exposure to US Treasurys, remains underweight Japan and overweight on non-core EZ debt.

Bunds: -20 ticks, 130.64

• In-fitting with the above.


• A bearish narrative that has pushed Bunds to a 130.39 base, which as is the case for USTs, has stopped just before the 130.15 WTD low.


• Specifics for the bloc are a little light so far, we await the first of a regular series of calls between EU Trade Commissioner Sefcovic, US Commerce Secretary Lutnick and USTR Greer later on today. A call which will perhaps draw even greater interest after the referenced CIT ruling.


• A handful of ECB speakers overnight, but nothing that has fundamentally changed the picture at this stage.


• As the morning progresses the risk tone has faded a touch from best, more so in Europe than in US futures, and as such EGBs have lifted off worst by around 20 ticks for Bunds but the benchmark remains a similar margin from Wednesday’s close.

Gilts: -8 ticks, 90.88

• Again, following the risk tone and as such in the red. Down to a 90.70 base but has since bounced off worst, the move is slightly more pronounced than the discussed one in EGBs, owing to the UK tone pulling back the hardest and particularly an easing in energy benchmarks from highs, of particular note for the FTSE 100 given its exposure to the sector.


• As such, the benchmark is around 15 ticks off the low and only ~10 from Wednesday’s close.


• UK specific newsflow has been light aside from the Chancellor outlining the details of a plan to overhaul the domestic pension space. BoE's Bailey and Breeden are set to speak later in the day.

29 May 2025 - 10:00- Fixed IncomeEU Research- Source: Newsquawk