EUROZONE T-BILL ISSUANCE: W/C February 10, 2025

Gilts off lows but recoveries lack momentum at this stage.

• Any bullish short-term theses we have read tend to centre on global matters and/or the degree of the move witnessed so far, as opposed to an purely fundamental gilt-bullish idea.
• This move feels relatively structural and hasn’t been particularly disorderly at any stage, which heightens the risk of it sticking/developing further.
• Bearish fundamental risks are well-defined.
• Futures still -114 at 90.26 vs. lows of 89.88.
• Yields 4.5-10.5bp higher across the curve. 10s under the most pressure.
• Today’s highs (multi-decade for 30s and highest level for 10s since ’08) now present the initial yield targets for bears. 

German Chancellor Olaf Scholz delivered a statement from the Chancellery in Berlin regarding US President-elect Donald Trump's press conference on 7 Jan in which he talked of his preference for Greenland (and the Panama Canal) to come under the control of the US on "national security" grounds. Scholz said that he had discussed Trump's comments with other EU leaders. The chancellor expressed "a certain lack of understanding regarding the current statements from the US”.

• Amid Trump's refusal to rule out using military or economic force to take Greenland or the Canal, Scholz claimed "Borders must not be moved by force,"
• Scholz: “The principle of inviolability of borders applies to every country, regardless whether it is in the East or West...The inviolability of borders is a fundamental international law…[This principle] is a foundation of what we call Western values”.
• Earlier, French Foreign Minister Jean-Noël Barrot said in a radio interview that the EU would not allow an attack on its "sovereign borders". It should be noted that Greenland is not in the EU, as it is an 'Overseas Territory associated with the EU'. The Commission has confirmed that any attack on Greenland would invoke the mutual assistance clause in Article 42(7) of the Treaty on European Union.
• Focus coming into 2025 has been on the prospect of the imposition of significant US tariffs on EU products and the impact that would have on the economy. However, it could be the case that geopolitical and security threats between the two allies could overshadow trade policy.