EUROPEAN FIXED UPDATE: Modest bearish action as we await US data and Trump

USTs: -3 ticks, 108-28

• A slightly softer start to the session. USTs, and the complex generally, are pulling back from yesterday’s 109-01 peak but haven’t fallen significantly thus far with the current low just a handful of ticks below at 108-26.


• In the immediacy, we await US export/import prices which serve as another input into PCE, following the hotter-than-expected PPI print on Thursday though the internals that feed into the Fed’s preferred gauge were not as hot as the headlines suggested.


• Alongside this, Retail Sales are due for January. Ahead of the release, Bank of America said it saw "some chills" in January's consumer spending, but does not see "serious shadows." Its data showed January spending per household was up +1.9% Y/Y, while card spending dropped by around 0.4% M/M, which appears weather related.


• Thereafter, we await Trump’s next batch of executive orders at 18:00GMT, the content isn’t yet known but we are of course attentive to any further tariff updates after the extensive commentary from POTUS on the subject late-Thursday.


• Technically, continued bearish action brings into play support a 108-10 and then 108-04 before the figure. On the flip side, yesterday’s best was 109-01 before highs from the preceding sessions at 109-05, 109-9+ and 109-13+ respectively.

Bunds: -10 ticks, 132.72

• Softer, directionally in-fitting with the above as the macro focus points are broadly the same, but does find itself under slightly more pressure than its US peer. Perhaps on account of some of the well-received earnings from the bloc this morning e.g. Hermes +5% (see equities).


• Pressure which, while over 20 ticks at most, is relatively modest in the context of recent sessions and well within familiar territory as Europe, and the world, waits to see what exactly Trump will do on tariffs and whether deals and/or exemptions can be attained.


• Trump aside, today’s docket is light with the second reading of EZ GDP for Q4 expected to be unrevised and swiftly followed by remarks from ECB’s Panetta; the topic of this isn’t known but he is unlikely to deviate meaningfully from the ECB’s core message in any commentary.


• As such, action for today will likely be dictated by events stateside with data and tariffs the main events before Fed speak much later; while the data will be of note from the US, the executive order(s) signing by Trump will be the focus point given his extensive tariff remarks. It remains to be seen if the EU can sweet talk POTUS into a deal during the implementation period of such measures.

Gilts: -20 ticks, 93.15

• Underperforming modestly, tested the 93.00 mark to the downside vs. a 93.50 peak on Thursday which itself was getting close to Monday’s 93.71 WTD peak.


• The UK specific docket is devoid of any tier 1 events and as such the UK will take the lead from developments stateside; overnight, UK Business Minister said the UK can engage with the US on steel and aluminium tariffs - though, it remains to be seen if POTUS will succumb to any likely charm offensive.


• While Gilts are underperforming, this seems to be more a function of their relative outperformance on Thursday and as the benchmark catches up to the modest pressure seen overnight as Trump’s tariff update didn’t spark a significant haven bid. On that point, it is worth noting that while benchmarks are in the red yields are only marginally higher and as such the move does not appear to be inflation-driven.


• Technically, if the pressure continues then we look to lows from earlier in the week between 92.86-31. On the flip side, after the mentioned WTD peak last Friday’s best was 93.87 and then a gap until 94.35 from the prior day.

14 Feb 2025 - 10:00- Fixed IncomeData- Source: Newsquawk