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Overall, European Fixed Income markets continue to face headwinds from geopolitical and global event risks, namely the U.S./China trade tensions. This has helped suppress volumes across European Fixed Income, with weaker data weighing on yields and sentiment, albeit moves in futures being more of a slow grind higher in price terms. This has helped to cap any short-term spikes in volatility, with moves higher faded by real money. Bund volatility remains well within its 3.5-6% corridor with 1x2 spreads being the theme to express directional views. The French and Italian segments have outperformed the core German benchmark products as end investors search for yield, supporting both futures and options volumes. The main theme of H1 has been the focus on adding to carry positions. This in part has been helped by weaker than expected economic data. On a macro level one of the main beneficiaries of this has been Yen on safe haven flows. Looking at volumes across cash, IRS and derivatives space, the front end has been repricing the potential for further QE and tiering from the ECB. Lee Bartholomew, Head of Fixed Income Product R&D, Eurex |