POWER: Italy January Opens Higher

GBP weakness does coincide with Streeting's comments being more widely circulated in UK media e.g. Here: https://www.telegraph.co.uk/politics/2025/11/12/politics-latest-news-keir-starmer-leadership-challenge-pmqs/ but nothing particularly new after his appearance on the BBC this morning.

• No real standout volumes on the move: GBP futures activity has picked up, but not notably - suggesting price action here may not be tied to sizeable flow. The more gradual nature of the move in spot also supports this.
• Move in GBP may instead be fix related into 9am - or tied to the underperformance in Gilt markets relative to broader European bonds.
• GBPUSD has stabilised just above the new daily low of 1.3115.

Gilts lead the sell off in core global FI markets this morning.

• A reminder that this comes after Tuesday’s outperformance in the wake of weak UK labour market data and key resistance holding in futures.
• Rumours surrounding a potential leadership challenge within the ruling Labour Party, presence of syndicated gilt supply (albeit I/L) and the bid in equities (gilts having a higher beta than Bunds) seem to be the driving factors.

EUR 10s30s is nearly 7bp steeper since October 30 and is on track for a fresh cycle closing high at ~29bp.

• Confirmation of/reiterations surrounding the transition plans of large Dutch pension funds (as the sector moves to a defined contribution system from defined benefit, lessening the need for long end receiver flow) has reignited steepener interest, albeit with positioning in these trades already deemed to be somewhat heavy.
• Multi-year sell-side targets that we have seen generally point to further extension of the steepening, driven by speculation surrounding and the delivery of Dutch pension reallocations.
• 30bp presents the next obvious area of upside interest, followed by the Oct 7 ’21 closing level (35.03bp).