EUROPEAN FIXED UPDATE: EGBs bid with OATs leading after Fitch while Bunds await fiscal updates

USTs: +4 ticks, 110-25

• A touch firmer but yet to deviate significantly from the unchanged mark in a 110-19 to 110-26 band. Amidst this yields are mixed with the short end bid while the long-end slips, with the curve flatter overall.


• Awaiting data updates with Retail Sales, Business Inventories and NY Fed due before the latest Atlanta Fed GDPnow for Q1, a tracker which is currently running at -2.4% though the gold adjusted figure is -0.4%.


• Data aside, Tuesday’s call between Presidents Putin and Trump looms large and may well drive the week’s narrative depending on how it goes. Ahead of it, Trump has said he thinks “we have a very good chance” of ending the war in Ukraine.

Bunds: +64 ticks, 127.86

• A morning of modest gains for the EGB complex after Bunds were essentially flat overnight. No specific fresh driver behind the move this morning, with perhaps some relief factoring after Fitch left France’s rating alone on Friday (OATs currently modestly outperform), Greece was lifted at Moody’s and as a function of progress towards ending the Ukraine conflict weighs on yields; a view corroborated by European gas benchmarks.


• Elsewhere, the week’s focus is firmly on German fiscal reform with votes in the Bundestag on Tuesday and Bundesrat on Friday to pass Merz’s Green-adjusted fiscal reform.


• Parliamentary groups are set to meet this afternoon/evening ahead of tomorrow’s Bundestag vote. The breakthrough between CDU/CSU, SPD and Greens means a two-thirds majority is possible, though the margin is slim and Politico has been told they expect a “handful” of dissenters. Merz has said the vote is set to be “closer, but it will work”.


• Further to this, yet more political groups have filed objects with the Constitutional Court ahead of the vote on Tuesday, with the most high profile coming from AfD who say the vote should be suspended to allow for a Budget Committee to debate updates to the reform; objections which also serve as another potential bullish factor for Bunds. As a reminder, on Friday the Constitutional Court rejected some attempts to block the vote.


• As it stands, EGBs are in the green across the board with OATs modestly outperforming and posting gains of 81 ticks at best while Bunds are not too far behind with upside of 70 ticks at best and find themselves at the top end of a 127.20 to 127.90 band.

Gilts: +17 ticks, 92.07

• Newsflow relatively light as we await a welfare reform release later in the week ahead of next week’s OBR updates, numerous outlets over the weekend reported that some of the expected changes won’t be occurring which brings into question where the Treasury will be raising the shortfall from.


• As such, Gilts are taking the lead from EGBs and are in the green but with upside a much more modest 20 ticks at best. Currently, holding just off best levels in a 91.76-92.11 band.

17 Mar 2025 - 09:55- ForexEU Research- Source: Newsquawk