US OUTLOOK/OPINION: Barclays Add A Second Fed Cut For 2025 On Softer Growth
Mar-13 10:20
- Barclays now expect 2x25bp cuts from the FOMC this year (Jun & Sep) vs just once in June previously, and see it cutting three times in 2026 (Mar, Jun & Sep).
- “President Trump has shown more appetite to impose widespread tariffs than we had previously anticipated. We thus raise our baseline assumption of the trade-weighted tariff rate from about 10% to 15%.”
- They have lowered their GDP forecast -0.8pps to 0.7% Q4/Q4 in 2025 and raised their u/e rate forecast +0.4pps to 4.2% in 4Q25.
- They see core PCE inflation ending this year at 3.2% Q4/Q4 (+0.4pp) before moderating to 2.2% Q4/Q4 in 2026 “as the effects of tariffs dissipate”.
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EGBS: Supply Weighing On Major Futures
Feb-11 10:17
Heavy sovereign supply has weighed on major EGB futures this morning, with syndications from Italy and the EU being held alongside conventional auctions from the Netherlands (earlier this morning) and Germany (1030GMT).
- A rally in oil prices and digestion of US President Trump’s steel/aluminium tariff announcements (and the latest EU retaliatory threats) will have also factored in.
- Bund futures are -44 ticks at 133.06, flirting with the 50-day EMA at 133.05. However, better support is seen at the Feb 4 low at 132.72, before the 20-dam EMA at 132.53.
- The German cash curve has bear steepened, with yields 3-4bps higher today.
- Little net change in 10-year EGB spreads to Bunds on the day.
- ECB Executive Board member Schnabel participates in a panel appearance this evening (1700GMT). With a light regional data calendar, tariff-related headline flow and Fed Chair Powell’s Senate testimony will be in focus.
GILTS: Lower On The Day, Outperform Bunds, Sizeable Syndi Demand Seen
Feb-11 10:15
Gilts hold lower on the day.
- Early pressure stemmed from the burden of heighted government bond supply, an uptick in oil and tariff risks.
- Weakness then extended on some hawkish caveats within BoE hawk-turned-dove Mann’s thinking (after her switch to voting for a 50bp cut last week).
- Books have since closed on the syndicated offering of the new 4.50% Mar-35 gilt, orderbooks topped GBP110bln at the latest count (expect a further update on this), with the spread set at the tight end of the initial guidance range.
- Futures as low as 93.13, before a recovery to 93.25.
- Initial support and resistance (92.50 & 94.35) remain untested, with the short-term bullish technical theme intact.
- Yields little changed to 2.5bp higher, ’25 closing highs in both 2s10s and 5s30s remain intact.
- 10-Year spread to Bunds ~2bp tighter at 207.5bp.
- BoE-dated OIS shows 63bp of cuts through year-end vs. 64bp early today.
- SONIA futures flat to -3.0.
- Comments from BoE Governor Bailey due later (12:15 London).
- Also watch for hedging pressure around the pricing of today’s syndication (timing still to be confirmed).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Cut-Adjusted SONIA Rate (bp) |
Mar-25 | 4.401 | -5.3 |
May-25 | 4.197 | -25.7 |
Jun-25 | 4.112 | -34.2 |
Aug-25 | 3.962 | -49.2 |
Sep-25 | 3.923 | -53.1 |
Nov-25 | 3.848 | -60.6 |
Dec-25 | 3.826 | -62.8 |
EURIBOR OPTIONS: EURIBOR FIX - 11/02/25
Feb-11 10:06
EURIBOR FIX - EMMI/Bloomberg
- EUR001W 2.6610 -0.0050
- EUR001M 2.6150 -0.0380
- EUR003M 2.5390 0.0130
- EUR006M 2.4810 0.0130
- EUR012M 2.3740 0.0020
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