[MARKET ANALYSIS] Fixed income benefiting from the selloff in global equities

Fixed income benchmarks are firmer across the board, despite a clear driver; however, debt could be finding some haven flows as equities print deep selloffs globally. Gilts (+44 ticks) outperform, with Andy Burnham to begin his Labour premiership on Monday. Focus will be on who Burnham chooses as Chancellor (widely expected to be Home Secretary Mahmood) and what his plans are for the government. Reporting by Bloomberg stated that he has asked the civil service to prepare plans for new North Sea oil and gas drilling and public control of Thames Water. Regarding the Chancellor position, Mahmood is likely to be named Chancellor, but this has already drawn some backlash. Rachel Maskell told the Times that appointing Mahmood would be a mistake and that Miliband “shines well above Shabana.” Despite this, gilts trade at the top end of its 87.15-87.59 range. JGBs (+37 ticks) have steadily bid higher in the early European trade, after Japanese PM Takaichi said the government will pursue steps that encourage investment in Japanese financial assets, including by households and pension funds. She even specifically named GPIF. Focus on pension fund investments in domestic assets started after FinMin Katayama said she wanted to encourage the GPIF to invest more. Takaichi's more recent comments would likely strengthen the view that the government is keen to have the GPIF consider altering its asset allocations. USTs (+10 ticks) trend higher despite a lack of events on the calendar. Fed's Jefferson gave remarks overnight, stating that it would be appropriate to reconsider the stance in the scenario in which inflation does not start cooling.