[MARKET ANALYSIS] Yields pull back from extremes, Gilts benefit from cooler-than-expected Retail Sales, whilst Bunds weight Ifo

Global benchmarks are firmer this morning, albeit modestly so. Action throughout the week has been at the whim of mixed geopolitical newsflow, which has led to choppy trade across the energy space. Today, oil prices are firmer (Brent Jul +3%), but reside towards WTD lows. As such, fixed benchmarks trade with tentative gains this morning as negotiation efforts continue.
USTs are firmer by a handful of ticks, though the bias throughout the European morning has been choppy. Nonetheless, US paper remains in the green and within a 109-08 to 109-14+ range. From a geopolitical front, Al Arabiya obtained the text of the anticipated agreement between the US and Iran. All key details can be found on the board at 09:16 BST, but the next sticking points incl. the exchanging of text, and then the beginning of negotiation, which the text suggested should begin within 7 days. Ahead, focus will be on speak from Fed’s Waller, where he will touch on the economic outlook, whilst the final US Michigan Consumer Sentiment is also scheduled. Yields have been of great attention this week, with the US 10yr printing multi-month highs (4.68%), whilst the 30yr soared to levels not seen since 2007 (5.2%). As for today, the 10yr is hovering towards WTD lows (4.56%) as markets remain focused on continued negotiations.
Bunds are firmer by c. 35 ticks, and trade within a 125.06 to 125.30 range. German paper has ultimately followed peers, but has had some domestic data to digest. Early this morning Final German GDP (Q/Q) was unrevised, whilst the Y/Y metric was revised slightly firmer. Overall, indicative of a resilient economy, though external leads (PMIs) suggest that this may be short-lived. This theme is also seen in the latest Ifo survey, which has stabilised since the last month, though still does not indicate any material improvement in sentiment.
Gilts started with slight outperformance, but now trade alongside peers. Strength followed peers, with outperformance stemming from a cooler-than-expected Retail Sales report. ONS noted the poor figure was driven lower by fuel purchases, suggesting motorists had full tanks, or had stopped stockpiling as fuel prices stabilised higher, given the length of the energy disruption. The PSNB was also published, which rose to 24.3bln (prev. 12.6bln, exp. 24.3bln). Gilts trade within an 87.56 to 87.86 range.