EUROPEAN FIXED UPDATE: Bolstered as Trump ups the ante into Liberation Day; Le Pen found guilty of embezzlement

USTs: +11 ticks, 111-17

• In the green after the latest comments from and reports around the US administration weigh on the risk tone and up the ante into Liberation Day on Wednesday. Full recap of the tariff situation on the headline feed.


• For bonds, this has led to strength across the board. USTs at a 111-22+ peak having ground higher from a 111-09 open which is also the session low. If the move continues, then resistance comes in at 111-25 from 11th March before the figure and then 112-01 from 4th March; the latter is the YTD high.


• Amidst this, yields are lower across the curve and the 10yr is below 4.20% with 4.17%, 4.15% and then the 4.10% YTD low from 4th March. Fed pricing has moved dovishly, the odds of a cut in May over 20% with 80bps of easing seen by end-2025. As a point of comparison, around this time on Friday (pre-PCE) roughly 63bps was implied by end-2025.


• The docket for today is light aside from two executive order signing events by Trump, Chicago PMI and Dallas Fed.

Bunds: +47 ticks, 129.31

• On the front foot, in-fitting with the sullied risk tone, which took Bunds to a 129.59 peak in the early European morning. However, as the risk tone lifted off worst levels, Bunds pulled back by around 35 ticks but remained clear of opening levels and still firmer by over 30 ticks.


• Thereafter, German State CPIs came in initially hotter than the prior/mainland expectation, but as the full series printed a number of states came in cooler and brought the skew back towards roughly a maintained rate vs the prior. To recap, on Friday the prelim. inflation readings from France and Spain were cooler than expected.


• Initial reaction to the State CPIs was hawkish with Bunds printing a 129.04 session low, but this pared as more states released their figures and we reverted back towards pre-release levels of c. 129.20.


• Ahead, we await the mainland figure at 13:00BST. That aside, the European docket is very quiet and as such any fresh insight into Liberation Day and the European response to it will be keenly sought.

OATs: +19 ticks, 123.04

• Trading in-fitting with peers into a key ruling on the domestic political landscape.


• Le Pen has been judged guilty by the Paris Criminal Court in an EU embezzlement case; the ruling has only just occurred, we are awaiting details on the appeal process and length of her ban.


• Le Pen could be banned from running for office for a five-year period which would make her ineligible in 2027’s scheduled presidential election if the order is imposed pre-appeal (precedent for this was set last week); as a reminder, Macron cannot run.


• The 2017 election saw Macron beat Le Pen with 66% and 34% of the vote respectively, in 2022 this was 59-41. Current polling for 2027 has Le Pen in the lead with around 36% of the vote, Édouard Philippe the next contender with 25%.


• If Le Pen is barred, the most likely replacement for RN would be Bardella. However, Politico highlights that not everyone in the party is in favour of this.

Gilts: +45 ticks, 91.94

• Gapped higher by 37 ticks before extending to a 92.10 peak as the risk tone sullied. Specifics for the UK have been light and the docket ahead is devoid of pertinent drivers.


• We remain attentive to any indication that the UK-US special relationship will extend to Liberation Day. On Sunday, PM Starmer spoke with President Trump on negotiations and an economic prosperity deal. However, Home Secretary Cooper refused to rule out retaliation to US tariffs on autos and steel.


• Resistance features at 92.18 from 21st March, and then 92.29, 92.37 and 92.48 from the 18th, 17th and 19th respectively.

JGBs: -6 ticks, 138.35

• Very modest reaction to the BoJ adjusting its JGB purchase plans for the next quarter, with amounts cut across all tranches while the frequency of purchases was maintained. A continuation of the BoJ’s policy normalisation process.


• An update which caused JGBs to slip to a 138.28 low before rebounding and paring essentially all of the move.

31 Mar 2025 - 10:00- ForexEU Research- Source: Newsquawk