EUROPEAN FIXED UPDATE: Similar action to this time on Tuesday, benchmarks await supply & Fed speak

USTs: +5 ticks, 110-05

• A similar setup to Tuesday morning as USTs find themselves marginally in the green while peers across the pond are a touch in the red.


• Updates for the US limited after the plethora of deals and reporting around the Saudi conference on Tuesday. Updates aided the risk tone through much of yesterday’s session before a modest pullback from best occurred into the close.


• The docket ahead is set to pick up and do so very imminently with a text and Q&A from Waller due before Jefferson and Daly later in the session. As a reminder, prior to the last meeting, Waller was out on the dovish side, warning that if the Fed waits until the new policies are seen in the hard data, they may be too late.


• Into the remarks, which will be scrutinised for anything that differs from the data-dependent and want-and-see approach of Powell, USTs find themselves at the upper-end of a very thin 110-01 to 110-06+ band.

Bunds: -9 ticks, 129.47

• In-fitting with action at this time on Tuesday, a touch softer in narrow parameters with specifics for the bloc fairly light. No move to a handful of final data points from Germany and Spain.


• The European docket is quite light today, Germany has dual-Bund supply but that should be received without issue.


• The magnitude of downside in EGBs trimmed around an hour after the European cash equity open, while modest in nature for fixed income the move occurred alongside and seemingly spurred by substantial likely technical/stops-driven price action in forex (see FX).


• In a 129.29-51 band, upside stalled ahead of Tuesday’s 129.71 best and Monday’s 130.50 peak thereafter.


• Ahead, ECB’s Cipollone due though the topic is not necessarily on monetary policy. As such, fortunes for EGBs will likely be dictated by broader price action, with particular reference to upcoming Fed speak and any tariff/trade developments.

Gilts: -16 ticks, 91.50

• Again, echoes of the dynamic on Tuesday as Gilts find themselves the modest fixed underperformer. Specifics for the UK are a touch light, remarks from BoE’s Breeden this morning largely stayed clear of monetary policy.


• Before Breeden, “activist” Mann was on the wires and expressed concern that the labour market has been more resilient than forecast and that household inflation expectations have increased; overall, her commentary was hawkish and may be factoring into the bearish bias for Gilts, but nothing overly surprising from the dissenter.


• Another factor behind the underperformance may be looming supply, with the DMO tapping its 2035 benchmark this morning. In short, the outing should pass without issue. Factors which may have contributed to Gilts opening lower by a handful of ticks and slipping to a new WTD base at 91.44.


• Docket ahead devoid of Tier 1 events and impetus likely to be taken from events stateside, as outlined above.

14 May 2025 - 09:55- Fixed IncomeEU Research- Source: Newsquawk