EUROPEAN FIXED UPDATE: Contained into a session of labour data, awaiting news on the looming shutdown

USTs: +3 ticks, 112-19

• Another firmer start to the day. USTs have extended on Monday’s modest gains and are at a 112-22 high for the week, matching last Thursday's best and now looking to 112-31+ before the figure itself. However, this strength was knocked slightly by a move lower in EGBs on the German state CPI metrics (see Bunds).


• Focus for today is split between the busy data and speakers docket, and the looming midnight ET government shutdown deadline.


• On the data, JOLTS job openings data for August are expected to print 7.125mln from a prior 7.181mln. Last time out, the vacancy rate eased to 4.3% from 4.4%, and the quits rate was unchanged at 2.0%.


• Prior to the print, Fed’s Logan (2026) and Jefferson (Voter) due, post-data we get Goolsbee (2025).


• As mentioned, a government shutdown looms and is looking increasingly likely as the session goes on with no reports of progress emerging just yet. If the government does shutdown, then the BLS survey on Friday will not be released until the government re-opens. As such, today’s JOLTS, the labour indicators within consumer confidence and ADP later in the week might draw even greater attention than they typically do.


• Given that, it is worth benchmarking market pricing ahead of the prints. The odds of a cut in October stand at 89%, with 41bps of easing implied by end-2025 and 105bps by end-2026.

Bunds: +1 tick, 128.61

• Initially, a similar picture to USTs. Got to a 128.79 peak with gains of just under 20 ticks at best. Also notching a WTD high and looking to the figure before 129.13, 129.20 and 129.44 from recent weeks.


• The mentioned high came after slightly cooler than expected French prelim inflation data, following on from the Spanish series on Monday. However, this proved fleeting.


• Germany’s state CPIs saw a larger increase from the prior than consensus for the mainland implies, mainland CPI Y/Y seen at 2.3% (prev. 2.2%), while the likes of Bavaria printed at 2.4% Y/Y (prev. 2.1%). State CPIs sent Bunds down from just below the mentioned peak to a 128.54 trough, lower by six ticks at worst.


• Aside from the German data and mentioned US events, we await potential comments from ECB speakers including Lagarde, Rehn, Cipollone and Elderson; a text expected from just Lagarde at 13:50BST, though she is speaking beforehand with Rehn on geopolitics.

Gilts: -3 ticks, 90.86

• Opened on the frontfoot, got as high as 91.01 with gains of 12 ticks before succumbing to the pullback seen in fixed generally after the German state CPIs. Currently, Gilts reside below opening levels but near enough unchanged vs Monday’s close.


• Specifics so far light, continued digestion of remarks from Chancellor Reeves on Monday including those around potential gambling measures in a subsequent interview. Ahead, it is PM Starmer's turn to speak at the Labour conference, though he is unlikely to deviate from Reeves on the fiscal side of things.


• Starmer is due around 14:00BST, thereafter, BoE’s Mann is scheduled to speak with the FT. Mann hasn’t spoken since the September BoE where she dissented on the APF update, wanting to cut the pace to GBP 62bln from 100bln (decision was for 70bln) as such a pace would maintain the active sales amount at GBP 13bln and reduce the potential for short rate volatility and moderate pressure on the middle tenor, where policy transmission is the strongest.

30 Sep 2025 - 09:55- Fixed IncomeEU Research- Source: Newsquawk