BONDS: Core Curves Still Trade Steeper, Bund and Gilts Following USTs
Bund and Gilt futures have following TY counterparts lower this afternoon, but earlier session lows remain intact for now. Headline flow has been light, with today’s US manufacturing PMI data not a market mover.
- The ongoing pullback in crude futures has not provided a tailwind to bonds.
- Curves have bear steepened, with 30-year Bund and Gilt yields each up almost 5bps on the session.
- 30-year Bund yields are currently 3.524% (+4.8bps), with the December 22 high of 3.556% presenting the main topside area of interest. Note that 30-year EUR swap rates are only up 2.5bps today, allowing the 30-year swap spread to move away from multi-month highs of -22bps.
- One area of focus for EUR markets in the first half of 2026 will be any direct impacts of the Dutch pension transition. As of yesterday, several funds have formally transitioned to a defined contribution scheme, and are expected to start unwinding hedges long-end EUR swaps through the course of this year. Markets have been positioning for this transition for some time, but there remains uncertainty around the timing and impact of actual pension fund flows.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Post ISM Services React
- Treasuries scale back support after ISM services data - prices paid and new orders lower than expected while the Services index and employ component rise slightly.
- Currently, TYH6 trades 113-01.5 (+5) vs. 113-07 high, initial technical resistance at 113-11/22+ High Dec 1 / High Nov 25. Support below at 112-22 Low Dec 02
- Curves mildly steeper: 2s10s +.312 at 57.753, 5s30s +1.424 at 110.291.
MNI: US ISM NOV SERVICES COMPOSITE INDEX 52.6
- MNI: US ISM NOV SERVICES COMPOSITE INDEX 52.6
- US ISM NOV SERVICES PRICES 65.4
US DATA: Services PMI Revised Lower But Still Solid In Final November Release
The S&P Global US services PMI was revised lower in the final November release, dipping to its lowest since June rather than confirming what had been its highest since July. Along with this downward revision, input cost inflation was also trimmed from the highest since Jan 2023 in the flash to today’s six-month high, but as you can see in the chart below that's a close call having still seen a solid acceleration in November.
- US Services PMI: 54.1 (flash & cons 55.0) in Nov final after 54.8 in Oct
- US Composite PMI: 54.2 (flash 54.8) in Nov final after 54.6 in Oct
S&P Global US PMI press release opening highlights (release in full, here):
- “The US private sector services economy continued to expand at a solid pace in November, despite growth softening to a five-month low, according to the latest PMI® survey data from S&P Global.”
- “Activity was supported by the firmest rise in new work of 2025 so far, whilst confidence in the outlook strengthened following the end of the government shutdown and expectations of improved economic growth in the year ahead.”
- “Firms also took on additional staff to a stronger degree amid some evidence of capacity pressures, but with reports of higher labor costs and tariffs continuing to push up prices in general, input cost inflation accelerated to a six-month high.”
