EUROPEAN FIXED UPDATE: Bunds weighed on by continued ECB repricing

USTs: -1 tick, 110-25

• A softer start to the session. However, once again, the magnitude of price action is relatively modest for USTs at this point in time.


• Aside from ongoing trade updates, newsflow has been focused on earnings (see Equities) and the Powell-Trump meeting at the Fed. From this, while Trump was critical of Powell as usual and called for him to cut rates, when the topic moved onto potentially removing Powell the President said it is not necessary to fire him and doing so would be a big move.


• Ahead, the US docket is a light one with Durable Goods and Atlanta Fed’s GDPNow tracker, the data highlights. Amidst this, Trump is in the UK and is set to meet PM Starmer (see Gilts).


• Thus far, USTs are at the low-end of a 110-24+ to 110-31 band, entirely within yesterday’s 110-19+ to 111-02 parameter.

Bunds: -56 ticks, 129.02

• Also in the red but under much more pressure than USTs. At most, lower by over 70 ticks to a 128.84 trough and a fresh low for the week. Overnight action was contained, in-fitting with peers, with selling emerging in the early-European morning, gradually at first but then intensifying into the cash equity open despite the weaker start there.


• Pressure which occurred without a fresh or specific catalyst at the time and, as mentioned, in contrast with the risk tone. As such, it appears the move is a continued repricing of the ECB after the meeting yesterday where Lagarde said they are in a good policy place. Since, source reports via Bloomberg and Reuters outline that the baseline for September is for rates to be maintained.


• Given this, market pricing continues to trim the odds of a September move. Pre/post-ECB announcement, markets implied around 8.5bps of easing in September, a magnitude that trimmed during the press conference and now stands at just 3bps. Alongside the sources, the first ECB speakers have begun to filter through with Kazaks saying there is no urgent need to move; though, he is typically of a hawkish disposition.


• No move to Ifo this morning, the series printed softer than forecast across the board though the metrics lifted across the prior and thus the German recovery narrative remains intact. Ahead, the European docket is light and as such direction will likely be drawn from any ad hoc ECB appearances and/or trade updates.

Gilts: -11 ticks, 91.40

• Softer, between USTs and Bunds in terms of magnitude. Lower by 20 ticks at most in a 91.32-55 band and entirely within Thursday’s 91.18-69 parameters.


• The only update of note so far has been Retail Sales, which saw a bounce in-line with the direction of analyst expectations, though disappointing the strong consensus view. Nonetheless, Pantheon Macro maintains their Q2 GDP growth view of 0.2% Q/Q.


• Ahead, the main point of focus is Trump’s visit to the UK. POTUS will be in Scotland, advisors cited by Politico say Starmer will be pressing Trump to maintain his support for Ukraine, shore up NATO agreements and the AUKUS submarine deal and reduce UK tariffs further.

25 Jul 2025 - 09:55- ForexEU Research- Source: Newsquawk