EU TRANSPORTATION: Air France-KLM: confirms SLB step (x2)

Bailey says on H2 activity: "We're in uncharted territory, really, that increase in uncertainty and predictability is definitely coming through in terms of of activity and growth" and harder to use history as a guide.

• "I think we've been very clear that I think the effect of this uncertainty is seen more on activity at the moment than on inflation. I'm not surprised by that, because the inflation effects could go either way, and they will take longer to come through domestically. To add to that investment uncertainty, I think what we've seen in the last year or so is, you know, a higher saving rate and therefore commensurately somewhat weaker household consumption."
• "Up until at least the figures that came out yesterday, we had rising real household, real household income for some time, couple of years or so. But interestingly, it wasn't passing through into consumption in the way that the sort of history, and therefore the models would tell us, which is another way of saying the saving rate was higher. I think again, that's when people, we do a survey every six months or a year, asking people, you know what's what's behind those decisions. I think precaution, rebuilding the real value of savings after the inflation we had obviously two or three years ago, monetary policy is restrictive, so interest rates are higher, which, of course, makes it more makes saving more attractive. I think those things are featuring it now, because the big question for us is, how long will that go on for?... One figure doesn't make a trend as it was, so let's, let's wait and see where that goes to."
• "the UK is a very open economy. Always has been. It's a very good feature of the UK economy. What that means, though, is that other people's trade deals are as influential as our trade deal in that sense. So they will be looking at what's going on the rest of the world, and they will be studying it very carefully. So while I think it's obviously a good thing that the UK government's got a trade deal, I know they're working very hard to get it, to get it implemented, what the rest of the world does is a sizeable factor in judging decisions made by UK companies and therefore judging activity in the economy."

• Some small demand in US Treasuries led by the longer end, USU5 is bought in 1.5k, but volumes are still fairly subdued, especially in {eu} Europe, the German Bund is quoted two ticks wide at times.
• Although the Tnotes/Bund spread is quoted slightly wider on the open, the price action in Futures and in turn Yields, sees a continued divergence, US Yields are falling, while German Yields have been rising.
• The spread is falling towards 160.00bps, with support seen just below at 159.9bps, the 61.8% retracement of the April/May range.

(Chart source: Bloomberg Finance LP/MNI).

Bailey asked whether he's concerned with yields rising:

• Says that the short-end and 5-year hasn't moved much.
• Says that the long-end has moved globally but notes that the UK's debt is double that of some other countries so debt matters more but WAM is much higher in the UK.
• When asked on QT - says will look at implications of the steepening of the curve when thinking about the year ahead. Says it is a "live decision" re QT.
• On the steepening on the curve he says there's been a high level of uncertainty in the world economy and a change in liquidity.