EUROPEAN FIXED UPDATE: Firmer trade but with benchmarks in familiar ranges thus far

USTs: +6 ticks, 112-00

• Contained overnight ahead of a busy and front-loaded week. The main weekend update was the Senate voting 51-49 to open debate on the Reconciliation Bill, a vote that increases the odds of it passing by Trump’s 4th July deadline.


• Elsewhere, trade remains in focus as Trump spoke on relations with Canada, the EU, India and Japan and provided more general remarks in which he outlined that next week letters will be sent out telling nations what they will have to pay.


• While pertinent, the above developments have not changed the macro picture just yet with USTs in the green by just a handful of ticks within a narrow 111-22 to 112-00+ band, a range that is almost a repeat of Friday’s 111-22+ to 112-02 parameter.


• Today’s US docket is headline by speakers, we have already had Fed’s Bostic (2027) on CNBC outlining that the pause could be a more extended period than people think, as a reminder last week Bostic said there is no need to cut now and he expects one 25bps cut “late this year”.


• Ahead, Bostic is due once again before Goolsbee (2025), officials who are intersected by Treasury Secretary Bessent on Bloomberg TV. Thereafter, a press briefing from the White House and executive order signing by Trump, events which will be keenly sought for updates on the discussed trade and Reconciliation Bill updates.

Bunds: +28 ticks, 130.39

• Had a firmer start to the session and then lifted further on the 07:00BST data points. From these, Retail Sales for May saw both the M/M and Y/Y metrics miss, further impetus was derived by cooler than expected Import Prices for May; however, when energy is stripped out the Y/Y figure was 0.4% vs the -1.1% headline print. A point that may have offset some of the bullish move.


• Nonetheless Bunds peaked at 130.39 early on before pulling back a touch into the German State CPIs.


• Overall, the metrics were somewhat mixed with Baden Wurttemberg coming in above the prior as did the lower-Saxony M/M, prints that are in-fitting with the forecast for an uptick in the mainland figures. However, the other metrics came in cooler than the prior with the M/M for Bavaria and North Rhine-Westphalia both negative prints (-0.1%). The state figures lifted Bunds from 130.31 to 130.49, before extending to a 130.52 high.


• While firmer, this leaves Bunds shy of highs at 130.66, 130.80, 131.12, 131.18 and 131.20 from last Friday to Monday respectively. If the selling pressure seen at the tail-end of last week resumes we look to 130.05 from Friday, before the figure and then the 129.92 low from the final week of May.


• Ahead, the docket features ECB’s de Guindos, Schnabel. Afterwards, the main event is the ECB’s Strategy Assessment, results due at 10:30BST before a press conference with Q&A by Lagarde & Lane at 12:00BST.


• The review is to focus on action the ECB has taken over the last 10 years, looking into the use and success of tools such as QE, NIRP and forward guidance. Towards the start of May, Reuters reported that the review is set to largely endorse past action and retain the reference to a need for “especially forceful or persistent” action when rates and inflation are very low. Though, some of the more hawkish contingent have historically argued against the clause, calling for it to be either dropped or tweaked.

Gilts: +22 ticks, 93.15

• Newsflow lighter domestically as the scale of Labour rebellion to PM Starmer’s Welfare Bill appears to have moderated significantly after the u-turn on Friday. Politico reports that the number of Labour MPs who could rebel is down to around 50, from the touted 126 last week. While significant, it leaves the PM with enough margin that his amended bill should pass on Tuesday’s second reading.


• More broadly, attention on UK-US trade ties as the trade deal comes into force today. As such, we remain attentive to any comment on it by Trump or other officials later in the session.


• Gilts are currently firmer and modestly outperforming, gapped higher by a handful of ticks before extending above the 93.00 mark to a 93.24 peak. However, while firmer, Gilts remain shy of the 93.36 peak on Friday and by extension last week’s 93.57 high.

30 Jun 2025 - 10:00- ForexEU Research- Source: Newsquawk