[MARKET ANALYSIS]: USTs edge a little higher, whilst Bunds and Gilts hold within narrow ranges amidst light newsflow

Fixed benchmarks are trading mixed this morning, with USTs (+5 ticks) around recent lows, whilst Bunds (-7 ticks) move a touch lower. As it stands, USTs hold towards the upper end of a 108-16+ to 108-24+ range. Macro newsflow was lacklustre over the weekend, with focus ultimately on the expiration of the US-Iran MoU, which is set to occur today. Whether there is a fresh round of hostilities remains to be seen, but the risk remains. A full piece and scenario analysis can be found on the board at 07:05 BST. As it stands, US yields are lower across the curve, with mild underperformance in the front-end/belly of the curve; a continuation of the action seen last week following the soft US data. ING opines that the 10yr yield could be subject to upward pressure for some time, citing fiscal deterioration and continued focus on the JPY intervention story. The Dutch bank concludes by writing that “we see yields still gravitating more toward the upper end of the recent range”. For reference, the 10yr hit a high of 4.73% on 11 August vs current 4.67%. Key US data is lacking for the remainder of the day, and in fact for the remainder of the week. The FOMC Minutes of the July meeting will provide a better understanding of how policymakers are thinking about the policy rate ahead of the September meeting; as it stands, money markets assign a 26% chance of a hike next month. Bunds are trading with very mild losses this morning, whilst Gilts are flat. The lack of macro newsflow and pertinent European/UK data has led to tentative action so far, but a slew of UK data is dotted throughout the week, which will be key in determining BoE pricing. As it stands, money markets assign a 24% chance of a hike in Sept, and fully price in a 25bps hike by year-end. On the fiscal side of things, JPMorgan’s Dimon warned the UK Chancellor against raising bank taxes and creating a more hostile tax environment for banks.