[MARKET ANALYSIS] Fixed income relatively contained & awaiting further tariff updates

• A relatively contained start for fixed income as markets continue to digest the latest tariff measures, and with APAC conditions thin on account of Japan's holiday for the Emperor's Birthday.
• USTs are firmer by a few ticks in thin 112-27+ to 113-02+ parameters, within but at the top end of Friday's 112-23+ to 112-03+ confine; as a reminder, last week's peak was 113-14. Focus is primarily on the tariff situation, as the latest POTUS measures in response to the SCOTUS ruling have effectively lowered the global rate by a pp or two. However, we of course remain attentive to any further updates by President Trump and/or his administration in the near term.
• The uncertainty generated by the quickfire policy updates could spark a sell-US move, with USTs a particular one to watch, given the potential fiscal uncertainty generated by the changes to the tariff revenue stream and as refund appeals will begin moving through the courts. As such, the bias for yields is a steeper one.
• Additionally, we await remarks from Fed's Waller (voter), commentary that will be scrutinised for his tariff take. Thus far, Logan (2026) said the SCOTUS decision has led to more uncertainty and upside inflation risks remain, but noted that policy is well-positioned. Musalem (2028) stated that if the new tariffs are one-for-one, the outlook would be unchanged, but added that the ruling could introduce uncertainty. Note, the remarks were made before the weekend's move to 15%.
• Bunds are contained, but at the lower end of c. 20 ticks parameters. The benchmark has found itself under modest pressure this morning as European cash bourses trade mixed and with futures attempting a move into the green. Ahead, supply from the bloc is scheduled, but the main focus will be on how the Hungarian block on Ukraine-related policies/sanctions by the EU shakes out.
• Gilts gapped higher by 11 ticks and then climbed a handful further to a 92.51 peak. Upside that comes as the 15% global effective tariff lifts the UK above the 10% it used to be subject to, and thus skews the bias towards a March vs April cut by the BoE. The main input into that debate this week will be the appearance of Governor Bailey at the TSC.

Today's fixed income market is relatively stable while awaiting further developments on tariffs, which have created uncertainty in fiscal policy and potential yield movements. USTs are slightly firmer, but any new tariff updates from the administration could trigger volatility, especially as investor sentiment shifts ahead of upcoming remarks from Fed officials. Bunds and Gilts are also reacting to mixed signals from European markets, with particular attention on the UK's shifting tariff landscape impacting BoE policy expectations.