EUROPEAN FIXED UPDATE: Bid, in-fitting with the apprehensive risk tone into an evening of US meetings

USTs: +7 ticks, 111-26

• A morning of modest gains for the complex. Driven higher by the apprehensive risk tone after the fallout of the Alaska summit. In brief, no ceasefire was agreed upon, but we did see Russian President Putin say that they would be willing to freeze the southern front lines in exchange for Ukraine withdrawing from certain regions.


• The above being a potential positive point from the meeting as a starting point for talks between Russia and Ukraine; however, it comes with conditions around not joining NATO and Ukraine accepting the loss of land, the latter something Zelensky has already pointed out has happened before, but to no lasting avail.


• Ahead, the docket is entirely focussed on Trump meeting firstly with Zelensky and then European leaders (see Bunds for more on this point).


• USTs firmer by a handful of ticks so far, at a 111-26+ peak. If the move continues, then we look to the 111-30+ peak from last Friday before the figure and then last week’s peak at 112-14.


• Geopolitics aside, the week is focussed on the Jackson Hole Symposium. The full schedule will, as usual, be released early on Friday UK time before Chair Powell gives his speech at 15:00BST. The theme of the 2025 symposium is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy”, a topic of interest given the recent BLS reports and POTUS’ shakeup of its leadership.


• Before the speech, we get the minutes from the last Fed meeting. While these will be deemed stale, particularly so close to Powell, they will nonetheless be scrutinised for insight into the discussion on the policy path ahead.

Bunds: +32 ticks, 129.12

• Firmer, in-fitting with USTs. Reacting to the risk tone and more so than USTs at this moment in time, perhaps as the geopolitical equation directly adds in European leaders today.


• The delegation going to Washington includes NATO SecGen Rutte, Commission President von der Leyen, UK PM Starmer, French President Macron, Italian PM Meloni, German Chancellor Scholz and Finnish President Stubb. On this, Politico highlights that other leaders offered to join, but the list is intentionally short.


• Politico also adds, citing a diplomat, that the main reason for the above delegation is to ensure Trump sticks to points already agreed with the EU and does not blindside Zelensky; however, today’s docket begins with Trump and Zelensky meeting and speaking to the White House press pool. A start point that is unsurprisingly under significant focus and may well be the source of much of this morning’s apprehensive tone, with participants reminded of the heated bilateral briefing undertaken between the two in the White House in February.


• As it stands, Bunds have notched a 129.18 peak with upside of almost 40 ticks at most. While relatively pronounced, we remain some way shy of 129.62 from last Friday and then the 130.06 peak from last week.

Gilts: +13 ticks, 91.23

• Again, echoes of the above, but caught between USTs and Bunds in terms of magnitude. The UK is also exposed to the evening’s meetings as PM Starmer is in attendance.


• In a similar vein to Europe, we wait to see what guarantees or commitments the UK may have to make in order to help Ukraine and Russia get towards a deal. On this, we look for any insight into or details around what the commitments will be and, particularly for the UK, what the fiscal cost could be.


• Into the meeting, Gilts have eased ever so slightly from a 91.32 peak where they notched gains of just over 20 ticks. As is the case with peers, this has stalled before Friday’s 91.68 peak before the figure and then last week’s 92.37 best.

18 Aug 2025 - 09:55- ForexGeopolitical- Source: Newswires