EURGBP TECHS: Bullish Structure

The highly-anticipated Jackson Hole speech by Federal Reserve Chair Powell brought a dovish message, spurring a rally across global FI Friday that included EGBs and Gilts.

• Bunds outperformed global peers in early trade, though moves were limited as markets awaited Powell's comments. German Q2 GDP was revised downward, with ECB Q2 negotiated wages broadly in line with tracking estimates.
• Yields dropped sharply in mid-afternoon trade as Powell signaled openness to a September Fed cut in more overt fashion than had been expected, noting a "shifting balance of risks may warrant adjusting our policy stance".
• Bund yields finished a little higher than the levels seen in the immediate aftermath of Powell's speech, but Gilt yields continued to fall, closing near session lows.
• A Bloomberg sources piece pointed to a September ECB hold, but markets took little impact with rate markets already pricing that in.
• The German and UK curves both bull flattened on the day, while periphery/semi-core EGB spreads tightened in a broader risk rally.
• For the week, the German curve bull flattened with the UK's twist flattening: UK 2Y +1.1bp, 10Y -0.3bp; German 2Y -2.5bp, 10Y -6.6bp.
• Saturday includes a panel at Jackson Hole with BOE's Bailey and ECB's Lagarde, with next week's calendar highlight being August flash Eurozone inflation data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 2.4bps at 1.948%, 5-Yr is down 3.8bps at 2.277%, 10-Yr is down 3.5bps at 2.722%, and 30-Yr is down 1.8bps at 3.309%.
• UK: The 2-Yr yield is down 2.6bps at 3.944%, 5-Yr is down 2.3bps at 4.101%, 10-Yr is down 3.6bps at 4.693%, and 30-Yr is down 3bps at 5.548%.
• Italian BTP spread down 2bps at 80.4bps / French OAT down 1.2bps at 69.5bps  

RRP usage rises to $36.275B this afternoon from $25.358B yesterday -- compares to $22.344B on Tuesday, Aug 19 - lowest since April 5, 2021. Total number of counterparties at 16. This week's retreat compares this year's high usage of $460.731B on June 30.

An extensive study by the Pew Research Center has found that, “After more than 50 years of rapid growth, the nation’s immigrant population is now in decline.”

• Pew notes: “In January 2025, 53.3 million immigrants lived in the United States – the largest number ever recorded. In the ensuing months, however, more immigrants left the country or were deported than arrived. By June, the country’s foreign-born population had shrunk by more than a million people, marking its first decline since the 1960s.”
• Axios notes: “The U.S. Census Bureau's Current Population Survey finds that in June, the foreign-born population was 51.9 million — down from the peak in January (53.3 million), when immigrants were a record 16% of the population. Most of the drop "is likely due to a fall in the unauthorized immigrant population," according to Pew.
• Jeffrey Passel, the Pew Research Center's senior demographer, said: "The U.S. population of working-age people isn't growing. That means the only way the workforce can grow is from new immigrants coming in. If the workforce isn't growing, it's harder for the economy."

Figure 1: % of the US Population that is Foreign Born

Source: Pew Research Center