EUROPEAN FIXED UPDATE: Initially hit by reopening optimism before lifting on the risk tone sullying; Gilts & OATs driven by domestic factors

USTs: +1 tick, 112-31

• A softer start for USTs as the risk tone bounced overnight on the House voting to end the government shutdown and then Trump signing the necessary legislation.


• Initial action saw USTs down to a 112-27 low with pressure of five ticks at most. A trough that matched the base from Wednesday, and by extension held above the 112-20 and 112-15 bases from earlier in the week.


• However, the pressure has largely pared on account of a drop in the broader risk tone which has assisted fixed income, JPY and XAU to a degree; notably, the USD came under pressure alongside this. Potentially as we now look for the release of delayed US data, ahead of that the bias/pass of least resistance is seemingly a dovish one at this point.


• For today, Daly, Hammock, Kashkari and Musalem make up the speakers docket before a 30yr bond auction. Elsewhere, we await details from data vendors now the shutdown has ended. The individual government agencies should begin to provide timings for releases over the next day or so, and we could potentially start to see those drop as soon as next week.


• Note, there has been suggestion via officials and sources that the October BLS data will not print, but we await guidance from the BLS itself. Data that will help to inform the debate around December, with markets currently ascribing around a 55% chance of a 25bps cut; as such, the short end of the curve may find itself driven by the data, if/when it is released.

Bunds: +1 tick, 129.32

• Directionally similar to the above. Down to a 129.19 low early doors, in fitting with USTs. Thereafter, the benchmark picked up as the tone began to deteriorate as outlined above, lifting Bunds to a fresh WTD high of 129.40.


• For Germany, specifics a little light this morning. Focus on France (see below). Otherwise, we await updates on the funding situation for Ukraine. Commission President von der Leyen suggested the three options are using budget headroom, member states raising capital or loans based on frozen Russian assets. Evidently the latter option is the preference, but if Belgium continues to block it then the prospect of member nations having to issue to fund Ukraine becomes a more likely concept, and would provide a bearish catalyst to EGBs.

OATs: +12 ticks, 123.15

• Welcome news for PM Lecornu as the National Assembly adjourned overnight, at which point over 200 amendments were left to debate, and passed the Social Security Financing Bill onto the Lower House for scrutiny. Politico has comments from Socialist Party (PS) representative Guedj who said that Lecornu was “fair” and “trustworthy”; a description that will be welcome as we now turn back to the other fiscal bill, concerning revenue.


• Currently, the vote on the revenue section is set for November 17th before attention then turns back to the Social component and then targeted passage by November 24th.


• While there is still a long way to go and several key points yet to be debated on, the direction of travel is positive for Lecornu and the French fiscal situation. Reflecting this, the OAT-Bund 10yr yield spread has once again narrowed and is down to 72bps.

Gilts: +3 ticks, 93.68

• Opened higher by five ticks given the dovish read from the morning’s data and the upside seen in peers around that point, as discussed. Thereafter, the benchmark quickly pared to downside of 10 ticks at most, to a 93.60 trough. A reversal that comes as while the morning’s soft growth data is dovish and thus a Gilt positive/yield negative, the implications for the fiscal situation into November’s budget were Gilt bearish.


• However, this proved fleeting and Gilts thereafter picked up to a 93.83 peak, notching gains of 18 ticks at most. Briefly outperforming peers as the implied odds of a cut in December increased by around a bp to c. 21bps.


• As a reminder, the main focus points for the UK, particularly given the split on the board and likely tie-breaking role for Bailey, are the upcoming inflation reports for October and November before the December policy announcement.

13 Nov 2025 - 10:10- ForexEU Research- Source: Newsquawk