EUROPEAN FIXED UPDATE: Gilts soar post-jobs data which raises the odds of a December BoE cut

USTs: U/C ticks, 112-21+

• US Treasury futures are essentially flat, after being pressured overnight; price action today is exceptionally thin, with volumes light as the US observes Veterans’ Day, where cash bond trading will be shut. Currently in a narrow 112-20 to 112-22+ range, with catalysts seemingly light for the remainder of the day, aside from the US NFIB Business Optimism Index and Weekly Prelim Estimate ADP.


• Focus remains solely on the developments in the Senate and the approval to pass the funding bill to end the longest-ever shutdown. The bill now heads to the House for a final sign-off; a full majority is not likely, nonetheless, the bill is expected to pass. From a market's perspective, finally, some stability can creep back into the region, and will stop being a hindrance to the US economy; the US White House Economic Adviser Hassett suggested that Q4 GDP could be “negative” if the shutdown continues to drag on.


• Traders will also welcome the return of data releases. Private labour market figures have continued to raise concerns on the health of the jobs market – though several Fed policymakers have suggested that whilst there are signs of cooling, it still remains somewhat okay (Musalem & Jefferson, namely).


• On the trade front, some progress between US-India with the POTUS suggesting they “are getting close”. Elsewhere, Bloomberg reported that Switzerland is near a deal to cut the US tariff on its exports to 15% from 39%, with an agreement possible within two weeks.

Bunds: -6 ticks, 129.07

• Bunds are incrementally lower/flat and trade in a 129.97-129.11 range. Specifics are incredibly light heading into the ZEW survey, aside from a few ECB speakers' comments, which ultimately lacked surprises. To recap, Elderson said current rates are appropriate and will continue to take a data-dependent approach. Elsewhere, Vujcic said risks are balanced around inflation and that recent growth and inflation are higher than forecast.


• Price action today has been lacklustre. Initially bid on the release of the UK jobs report (discussed below), before being capped at and trading sideways for the remainder of the morning, awaiting ZEW data. That failed to budge Bunds – German ZEW Current/Economic Conditions were both weaker than expected. The institute added that “although the investment programme is likely to provide economic stimulus, the structural problems continue to exist”.

Gilts: +43 ticks, 93.67

• Gilts are the clear outperformers today, boosted following a poor regional jobs report, which has raised the odds of a December rate cut (-18bps vs -15.5bps pre-release). UK paper is currently trading in a 93.53 to 93.69 range, and with price action fairly lacklustre since the open.


• To recap the latest data, the figures were very poor; Employment Chance contracted by 22k (exp. 0k), whilst the unemployment rate ticked a little higher to 5% - interestingly, the 3M Avg. Earnings printed at 4.8% (exp. 5%). Overall, metrics are conducive to a cut in December, but the focus ultimately remains firmly on inflation developments, highlighted by Governor Bailey at the most recent confab. Following the report, Greene suggested that the “latest unemployment report is not great”, but described the wage data as “good news”. She also highlighted that policy needs to be more restrictive than otherwise, citing worries re. inflation persistence.


• Elsewhere, UK BRC Total Sales and Retail Sales fell from the prior – the Chief said “retailers were looking to Black Friday to revive demand but warned that Budget decisions on business rates risked undermining fragile confidence”.

11 Nov 2025 - 10:20- ForexData- Source: Newsquawk