[MARKET ANALYSIS] Global fixed benchmarks are flat awaiting data, supply and Fed speak

JGBs firmer by around 13 ticks, attempting to pare back some of the pressure seen in the prior session. Overnight action saw the Japanese benchmark trade at the week’s troughs, facilitated by commentary from hawkish BoJ member Takata (dissenter), where he suggested that it's necessary to move the BoJ's focus more to upswing in prices. Thereafter, a bit of a lift in JGBs, after Takata said there is no preset pace for rate hikes.
USTs are flat and currently holding within a 113-04+ to 113-09 range. Really not much driving things for US paper this morning, and this has been reflected by the lacklustre price action. After-market on Wednesday, saw the release of stronger-than-expected NVIDIA earnings, with the name a touch firmer pre-market – but had little follow through from a sentiment perspective. On the data front, the Chicago Fed will release its labour market indicators; weekly jobless claims are seen at 215k from 206k; continuing claims (which coincide with the traditional BLS survey window for the Feb jobs report) are seen at 1.86mln from 1.869mln. From a geopolitical perspective, US-Iran talks have reportedly begun in Geneva. A breakdown in talks could spur some haven inflows in USTs, given the increased likelihood of a US strike on Iran.
Bunds follow the sideways action across global peers, and hold within a 129.57 to 129.69 range. Lack of catalysts for German paper this morning, with commentary from ECB President Lagarde also failing to spur action. She reiterated the usual data-dependent and meeting-by-meeting approach. In the periphery space, there are EUR 5.5-6.5bln worth of BTPs up for sale later today; recent demand for Italian debt has continued to bring in a b/c around 1.6x, but has failed to breach the 2x b/c mark. It is worth highlighting that the 10-year BTP-Bund spread is at its tightest since 2010, as investors aim to benefit from an improving Italian fiscal backdrop.
Gilts ditto peers. Currently flat and within a narrow 92.82-92.90 range. Markets were expecting some remarks via BoE’s Lombardelli, though nothing thus far. UK focus will likely be on the Gorton and Denton by-election, with some analysts suggesting that a Labour loss, in what has been a safe seat for nearly 100 years, could re-ignite speculation regarding UK PM Starmer's leadership. Hence, this could weigh on Gilts in the short-term.