EMISSIONS: ADBA Urges UK to Set Timetable for Biomethane Inclusion in UK ETS

Block trade, suggest seller:

• TYU5 5.5k at 111.22+.

The DMO has announced it will be looking to sell GBP1.6bln of the 1.125% Sep-35 linker (ISIN: GB00BT7HZZ68) at its auction next Tuesday, August 19.

Richmond Fed President Barkin (non-voter in 2025 and 2026) continues to lean to the hawkish side in a speech released Tuesday called "Why the Consumer Matters" (link). 

• On current monetary policy, as usual he holds back on making any explicit projections. While he says the "the fog" of uncertainty in multiple areas "is lifting", he appears to suggest that more time and data is still needed before making any decisions: "at our July meeting, with the labor market near most estimates of maximum employment and inflation above target, the FOMC continued to hold the fed funds rate at a modestly restrictive level. We may well see pressure on inflation, and we may also see pressure on unemployment, but the balance between the two is still unclear. As the visibility continues to improve, we are well positioned to adjust our policy stance as needed."
• He appears to downplay the recent weakness in nonfarm payrolls when revisions are taken into account: " businesses have been in a low hiring-low firing mode that has created an unusual but stable labor market. Unemployment remains low at 4.2 percent, near most estimates of maximum employment... Job gains have slowed recently, which is certainly worth watching. But I’m hopeful that even as businesses face cost and price pressure, they’ll largely avoid the type of large layoffs that would spike unemployment and lead to consumer pullback. As with consumers, how businesses have come into this moment matters. Firms are already running lean. They’ve been slow-rolling hiring for years in anticipation of a recession that hasn’t come. They’ve been downsizing via attrition. With businesses already light on staff, we should see fewer reductions. So, any coming increase in the unemployment rate may well also be less than many anticipate."
• That said, he doesn't appear too worried about inflationary pressures, due to consumers not having the same purchasing power as they did in the pandemic reopening episode: " this isn’t 2022, when we saw inflation balloon. For one, the Fed’s policy stance is more restrictive now. But beyond that, remember that back then, consumers were flush with cash due to pandemic stimulus, suppressed spending, higher wages, and frothy asset markets. They didn’t let price increases hinder their revenge spending. That fueled inflation. That’s just not where consumers are in 2025. They feel stretched, particularly those with low and moderate incomes. They are more willing to defer purchases if prices go up. Should they feel forced to accept price increases for certain products, I expect they will forego spending for others. I’m sure your procurement teams are thinking the same way. This dynamic may already be playing out: Amid all the talk of tariffs and higher goods prices to come, we’ve seen people stock up on iPhones and cut back on services, such as air travel and lodging. If we see this kind of demand destruction more broadly, the inflationary impact of tariffs would be less than many anticipate."