EUROPEAN FIXED UPDATE: EGBs and Gilts soft into supply and after the White House meeting

USTs: +1 tick, 111-16

• A contained start to the day after the pressure that began towards the end of the European day and intensified into the mid-US morning.


• The pullback occurred as the White House meetings got underway and, ultimately, as the tone from the meeting was a positive one with progress made towards a trilateral summit and then security guarantees.


• On the guarantees, they are seemingly set to be formed of a coalition of the willing, which will be coordinated by the US.


• Geopols aside, newsflow has been light with participants keeping one eye on the week’s upcoming data and the Jackson Hole symposium. Ahead of this, Fed’s Bowman (voter) is set to make two media appearances today; Bowman has not spoken since she explained her dissent and noted that additional weight should begin to be placed on risks to the employment mandate.


• A topic that is of course of particular interest ahead of Powell’s Jackson Hole speech, particularly as the symposium itself is focused on the labour market.


• Currently, USTs are at a 111-15 trough, near enough unchanged on the session. If USTs conform to the bearish bias in EGBs, then yesterday’s 111-13+ base is the first focal point before a bit of a gap until 110-23+ from the first week of August.

Bunds: -2 ticks, 128.80

• As mentioned above, EGBs are slightly softer at this moment in time. Lower by as much as 10 ticks at worst.


• Pressure is seemingly a function of two bearish supply-side factors: 1) upcoming issuance, with Germany selling EUR 4.5bln of 2030 debt; 2) the funding security guarantees for Ukraine.


• 1) Bobl outings have, since April, seen relatively low levels of demand. However, despite some fairly pronounced reactions in that early-Q2 period the soft results have not sparked much movement in recent weeks for the broader benchmark.


• 2) As part of the security guarantees for Ukraine, the FT reports that the plan the US has offered would result in Ukraine spending EUR 100bln on US weapons, spending that will be financed by the European coalition of the willing, in exchange for security guarantees that are crucial for Ukraine.


• Currently, the low point is 128.73. If we return to and move below this, Monday’s 128.70 base and then last week’s 128.64 trough comes into view.

Gilts: -5 ticks, 90.53

• Similar to Bunds but modestly underperforming. The UK market also has to contend with supply, though the imminent I/L tap is not likely to be exerting significant weight on Gilts.


• Thus far, to a 90.43 base with downside of just over 15 ticks at most. Taking out Monday’s 90.52 base and bringing levels from May into view. Given this, the UK 10yr yield is at a fresh WTD peak of 4.76%, approaching 4.69% from end-May. For the 30yr, action is more pronounced as the UK curve continues to steepen; at a 5.63% peak and the highest since early April when the YTD high of 5.65% printed.


• In terms of the pressure seen on Monday, and perhaps factoring into the underperformance this morning, ING highlights that syndication announcements for September and October alongside apprehension into Fitch on Friday.

19 Aug 2025 - 10:00- Fixed IncomeEU Research- Source: Newsquawk