BONDS: EGBs-GILTS CASH CLOSE: Yields Close At/Near Highs In Soft Start To 2026
Jan-02 18:38
Bund and Gilt yields rose to start the 2026 trading year, with periphery EGBs underperforming overall.
- Yields gapped higher in the return from the New Year's cash trading holiday, with the move in Gilts appearing more pronounced by their slight descent in December 31st's abbreviated session (in which EGBs did not trade).
- Yields would fall to session lows in late morning London time on a day light in impactful data and macro headlines, but round-tripped higher as the day progressed. Gilt yields closed above their opening highs, with the 10Y closing at the highest intraday levels since Dec 22.
- While 10Y Bund yields finished off their opening levels, the 2.900% close was the highest since October 2023.
- Data was uneventful from a market perspective: UK and Eurozone PMIs were revised downward in December's final reports, while Eurozone household and NFC lending growth ticked up to the fastest since May 2023 in November.
- The UK and German curves bear steepened on the day, with BTPs leading periphery EGB underperformance.
- No major sovereign credit rating reviews scheduled for after hours on Friday.
- Next week's schedule is highlighted by flash December inflation readings: France and Germany release data on Tuesday, with the Netherlands, Italy and the Eurozone due on Wednesday. MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 1.7bps at 2.139%, 5-Yr is up 2.8bps at 2.476%, 10-Yr is up 4.5bps at 2.9%, and 30-Yr is up 6.4bps at 3.541%.
- UK: The 2-Yr yield is up 2.8bp at 3.720%, 5-Yr is up 3.3bps at 3.961%, 10-Yr is up 5.8bps at 4.537%, and 30-Yr is up 6.5bps at 5.273%.
- Italian BTP spread up 1.7bps at 71.3bps / French OAT spread up 0.5bps at 71bps
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FED: FT Echoes Fox’s Gasparino On Wall Street Warnings Of Hassett As Fed Chair
Dec-03 18:30
- The FT has run a report saying bond investors warned US Treasury over picking Kevin Hassett as Fed chair in November.
- It builds on reporting from Fox Business’ Gasparino earlier saying there has been a last ditch effort by Wall Street and corporate America insiders to caution Trump on Hassett (as we noted in US: Wall Street Cautions Trump Against Hassett As Fed Chair – Gasparino at 1124ET).
- Of course, Trump has since explicitly floated the idea of Hassett as Fed Chair in remarks yesterday which has seen Hassett currently at 81% likelihood of being Trump’s pick on Polymarket.
See the FT report in full, here: https://www.ft.com/content/ad4bfd8b-a0f8-4f9e-a234-eed589e3d0ab
- Two short excerpts: "Bond investors have told the US Treasury they are concerned about Kevin Hassett’s potential appointment as Federal Reserve chair, worrying he will cut interest rates aggressively to please President Donald Trump.
- The Treasury department solicited feedback on Hassett and other candidates in one-on-one conversations with executives at major Wall Street banks, asset management giants and other big players in the US debt market, according to several people familiar with the conversations."
GBPUSD TECHS: Trades Through Resistance
Dec-03 18:30
- RES 4: 1.3452 50.0% retracement of the Sep 17 - Nov 4 bear leg
- RES 3: 1.3416 High Oct 21
- RES 2: 1.3368 50.0% retracement of the Sep 17 - Nov 4 bear leg
- RES 1: 1.3347 Low Dec 3
- PRICE: 1.3339 @ 16:34 GMT Dec 3
- SUP 1: 1.3187 20-day EMA
- SUP 2: 1.3125 Low Nov 26
- SUP 3: 1.3038/10 Low Nov 20 / Low Nov 4 & 5 and the bear trigger
- SUP 4: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
The trend theme in GBPUSD remains bearish and gains are considered corrective - for now. However, price is again trading higher, today. The pair is through the 50-day EMA at 1.3255. A clear break of the EMA would highlight a stronger bull theme and signal scope for a climb towards 1.3368, a Fibonacci retracement. Initial firm support is seen at 1.3187, the 20-day EMA. A move below this average would be a bearish development.
US: Republican Voters Sceptical Of Trump's Peace Plan For Ukraine
Dec-03 18:24
YouGov reports that Americans are “more likely to disapprove than approve of how Trump is handling the Russia-Ukraine war, a gap that widens when Americans learn more about Trump's peace plan.”
- YouGov notes, “As an experiment, the Economist and YouGov showed a random 50% of respondents a description of some elements of Trump's plan… Overall, those shown a description of this plan are slightly less likely to approve of how Trump is handling the situation with Russia and Ukraine than those who not shown the plan.”
- Note: “Just before being asked whether they approve of Trump's handling of the Russia-Ukraine situation, a randomly selected half of respondents were shown this text explaining Trump's plan to end the Russia-Ukraine War: The size of the Ukrainian armed forces would be limited to 600,000 personnel. Ukraine would not be allowed to join NATO and no NATO forces would be stationed in Ukraine. $100 billion in frozen Russian assets would be invested in Ukraine with the U.S. to receive 50% of the profits. Ukraine would withdraw from Donetsk, which would become part of the Russian federation.”
Figure 1: Do you approve or disapprove of the way Donald Trump is handling the situation with Russia and Ukraine? (% of Republicans)
Source: YouGov
