[MARKET ANALYSIS] Fixed follows JGBs lower, yields bid and curves steeper globally

• See the 08:50GMT update for a discussion on OATs and the 09:50GMT update for a discussion on JGBs.
• JGBs, see above, driving the direction this morning with the bearish fiscal-driven action spilling over into global markets. Further pressure is also coming from the inflationary impact of Trump's latest tariffs and perhaps a modest removal of some haven allure as Bessent attempts to lower the temperature on EU-US relations. But, to be clear, the primary driver is JGBs.
• For USTs, this has pushed the benchmark to a 111-14 base, lower by 10 ticks on the day. Lifting the 10yr to 4.29% (+6bps), the 20yr and 30yr lead with gains of c. 9bps as the curve steepens. Note, action isn't entirely uniform, with short-end yields slightly softer; 2yr holding below 3.6% and lower by a bp or two. Greenland, and subsequent tariffs aside, the session looks ahead to weekly ADP.
• Bunds are similar, down to a 127.72 base with losses of 50 ticks at most. Yields firmer across the German curve, which itself is steeper. Only a very minimal bearish reaction to a set of much better than expected ZEW data for January, with the move perhaps muted given the magnitude of downside already seen in Bunds at the time (a similar argument can be made for the lack of EUR reaction, given the current strength the Single Currency posts).
• Gilts, again, in-fitting. Gapped lower by 21 ticks before falling further to a 91.48 low with losses of 71 ticks on the session. Pressure that comes despite the morning's jobs data pointing to an ongoing weak labour market; though, the wage metrics remain at elevated levels and the incl. bonus figure was hotter-than-expected. No real reaction in BoE pricing, a move still not priced until June where c. 31bps is implied; for reference, April has 22.8bps implied.

Today, we see global yields moving lower, primarily driven by bearish sentiment from Japanese Government Bonds (JGBs), which is affecting fixed income markets worldwide. Despite some inflation concerns from recent tariffs, the JGB influence is paramount, prompting steepening in curves particularly in USTs and Bunds, while short-end yields show slight softness. This action indicates that broader market expectations may be adjusting in response to fiscal pressures and a mixed outlook on economic resilience, reflected in the labor data and ongoing geopolitical tensions.