[MARKET ANALYSIS] Fixed remains at APAC highs after the tech sell-off and energy downside, Gilts react to fiscal updates/reports

Sessions of this kind, where an APAC risk bounce holds but fails to extend into the European morning, typically leave core rates consolidating near overnight peaks rather than building fresh momentum, and the pattern here fits: USTs and Bunds marginally above APAC highs with no idiosyncratic catalyst. Waller's observation that higher yields are doing some of the Fed's work is consistent with his established dovish lean; remarks of this type have historically mattered only insofar as they signal the committee's centre of gravity, and the lack of an immediate market response is the norm for commentary that restates a known bias. The Gilt outperformance is the distinguishing feature, and the drivers are fiscal rather than monetary: prospective changes to capital gains taxation and a potential windfall from seized assets both feed directly into the supply and issuance calculus at the long end of the UK curve, the channel through which UK budget speculation has repeatedly moved Gilts relative to Bunds and USTs in the run-up to fiscal events. The distinction worth drawing is between one-off revenue items, which shift borrowing needs only at the margin, and structural tax changes, which alter the growth and capital-flow assumptions embedded in term premium; reports leaning against full equalisation of CGT with income tax fall into the latter category and on past occasions have relieved a specific premium priced into the UK curve. The unrevised German inflation print passing without reaction is standard for final readings. Worth watching are confirmation or denial of the budget reporting, any official comment on the crypto windfall treatment, and whether the FTQ tone in equities persists into the US session.