[MARKET ANALYSIS] Fixed income benchmarks rotate in narrow ranges; ECB's Lagarde fails to rule out stepping down early from her role

Fixed income benchmarks are softer across the board, with very light volume, as US traders are away celebrating Independence Day.
Bunds (-22 ticks) rotate in a 126.75-126.92 range. Ahead of a conference in France, ECB President Lagarde gave an interview to Les Echos. She maintained the view that the GC made the right choice to hike rates in June, with more recent data confirming their analysis. However, second-round effects have not yet materialised but remains vigilant. Lagarde also made comments about the current French fiscal and political situation (see more below). On the data front, EZ PMIs came in broadly revised higher, outside of France, with comments highlighting cooling cost pressures.
OATs (-17 ticks) trade in tandem with their German counterpart. Continuing on the Lagarde interview, when asked about France's fiscal situation, she said the main challenge is the inability to carry out structural reforms, which would improve the fiscal outlook if they were implemented successfully. Lagarde also failed to rule out stepping down early from her role at the ECB to take part in the French political debate, with the presidential election dates now set.
Gilts (-5 ticks) trade in a narrow 88.85-88.96 range, with BoE Governor Bailey set to speak on the wires later today. UK PMIs were relatively unchanged, with the services revised a tick higher while the composite was revised a tick lower. In contrast to the EZ figure, S&P commentary stated that strong cost pressures were a prominent theme. In addition, the BoE DMP was released, in which the year-ahead CPI shifted lower to 3.3% from 3.7% while 3-year CPI ticked higher to 2.9% from 2.8%.
USTs (+2+ ticks) oscillate in a narrow range in the absence of cash trade as the US are away for Independence Day.