EUROPEAN FIXED UPDATE: USTs firmer after China data and ahead of their own metrics, EGBs slightly softer

USTs: +7 ticks, 108-31

• In the green as the region awaits its own data prints which include weekly jobless claims before the Final Manufacturing PMI for December and then the US Treasury will announce sizes for next week's 3yr, 10yr reopening, and 30yr reopening sales; no changes to the auction sizes are anticipated


• At the top-end of a 108-18+ to 109-00+ band, though it remains shy of 109-01+ and 109-06 from the last two trading days of 2024. Benchmarks are perhaps deriving impetus from the soft China data (more below) and the relatively tepid European tone.


• Overnight, the main update was the PMI release from China where the Manufacturing number came in shy of consensus at 50.5 (exp. 51.7); while disappointing, the likes of CapEco wrote that wider economic momentum still looks to have improved thanks to faster growth in services and construction, and that increased fiscal support should continue to lift growth in the near-term.

Bunds: -10 ticks, 133.35

• A slightly softer start to the session with modest two-way action seen around the morning’s Final Manufacturing PMIs which saw the EZ revised down slightly, Germany and France unrevised and Italy revised higher.


• While in the red, the bias for the benchmark has been higher throughout the session, perhaps given China data and the European risk tone, with Bunds towards a 133.43 peak having recovered some way from opening lows of 132.90. If the move continues, resistance comes into play at 133.48 from 30th December.

Gilts: -3 ticks, 92.38

• In-fitting with EGBs into their own PMI release. A final figure which was revised down a touch but spurred no real reaction in Gilts.


• Docket ahead for the UK is sparse and as such direction will likely come from the broader tone and USTs on their upcoming data prints. Similarly to Bunds, Gilts are in the red but at the upper-end of 92.18-43 parameters, resistance at 92.64 from the last trading day of 2024.

02 Jan 2025 - 09:55- Fixed IncomeData- Source: Newsquawk