EUROPEAN FIXED UPDATE: JGBs lag with stimulus in focus, USTs bearish as the data fog continues

JGBs -30 ticks, 134.97

• Pressured overnight as Japanese yields continue to climb. JGBs themselves to a 134.56 trough, marking a new contract low. As such, the 10yr yield has risen to a 1.85% peak, taking us back to levels from early 2008.


• Action that has been driven by ongoing speculation and reporting around the upcoming stimulus. The latest reporting suggests an outlay of around JPY 17tln, far exceeding the JPY 13.9tln figure from the last package. Updates that have pressured JGBs given an expectation for it to necessitate greater issuance than the JPY 6.7tln figure outlined last time.

USTs: -2 ticks, 112-20

• Under pressure, but only modestly so. Downside comes given the upbeat risk tone after NVIDIA numbers (see Equities). Additionally, the latest FOMC minutes showed a somewhat divided board but the undertones were hawkish.


• Potentially more pertinently, the BLS has confirmed the October payrolls release will not print in full (no unemployment rate) while the November series has been delayed until after the December meeting. Factors that are both hawkish/bearish. As the lack of data visibility gives the Fed theoretical scope to wait-and-see how the economy is faring before easing further; reminder, in October, Powell remarked, “when there is fog, you could slow down”.


• Given all this, USTs are in the red and down to a 112-18 base. Support comes into play at 112-17 from Tuesday before Monday’s 112-15+ WTD low.


• The docket ahead features numerous Fed officials, texts are expected from Cook (voter), Hammack (2026) and Paulson (2026). Additionally, we get the September BLS series, while heavily dated, a lack of visibility into October and November from the BLS could increase the interest in/reaction to an otherwise somewhat stale print. For September, payrolls are expected to rise +50k after August’s +22k, though there is a wide range from -20k to +120k. The unemployment rate is seen steady at 4.3% (range: 4.2–4.5%).

Bunds: -10 ticks, 128.57

• Softer, following the risk tone lower and posting downside of just under 20 ticks at most. Holding around a 128.48 low, if the move continues, we look to 128.25 from early October before the figure and then touted support at 127.88.


• Specifics for the bloc are somewhat light thus far. No move to ECB’s Makhlouf this morning, remarks that chimed with the market view that the ECB is at a terminal. Interestingly, Makhlouf said he does not think the new projections are likely to change; a remark in reference to the December forecast round which will include the first look at 2028, a period in focus and of particular note for those looking for further ECB easing.


• Supply from Spain passed without incident, though the amount sold was in the bottom-half of the indicative range and the cover for the longer-dated 2054 line came in a shade softer than the prior.


• Thereafter, France was a little mixed vs the last outing. Overall though, no move seen and OATs trade in-line with Bunds as we approach the tail-end of the week where attention returns back to French budget deliberations.

Gilts: +4 ticks, 91.74

• Marginally outperforming after the underperformance on Wednesday. Underperformance that was seemingly due to concerns around the stability of Labour leadership amid mounting challenges to PM Starmer in the background. A challenge that would be a knock to the relatively, market-favourable pairing of Starmer and Reeves.


• This morning, Gilts are holding in the green by a handful of ticks. Initially opened lower acknowledging the bearish bias seen in peers but then swiftly pared to post gains of 15 ticks at best. Overall though, the benchmark has settled just above the unchanged mark in a 91.51-85 band.


• Scheduled speakers today include Dhingra and Mann. While pertinent, their views are well known and they are firmly in the dove and hawk camps respectively; nonetheless, insight on the recent inflation print, particularly from Mann, will be of interest.

20 Nov 2025 - 10:15- Fixed IncomeEU Research- Source: Newsquawk