PORTUGAL T-BILL AUCTION RESULT: BT Results

Swiss wage growth expectations stand at 1.3% for the next year according to a KOF survey, vs 1.6% in a previous survey from July 2024. This would mean real wage growth of "less than 1%" on KOF inflation assumptions or just 0.2% on firms’ inflation expectations, but it would help avoid an outright deflationary environment even if the release notes a tariff-related caveat. 

• Those real wage growth expectations are based on KOF’s inflation forecast of 0.5% and firms’ inflation expectations of around 1%.
• Remember that the SNB highlighted a "high bar" to further cuts in its policy rate into negative territory at their June meeting. They would have to see inflation threatening to fall below its 0% lower target threshold in the medium term to back such a move.
• KOF comments on the survey: "On the one hand, this decline [relative to last year's result] is likely to reflect the easing of the shortage of skilled workers on the Swiss labour market. On the other hand, it is likely to reflect the sharp drop in consumer price inflation in Switzerland in recent months. If inflation falls during the year, there is less need to adjust wages next year in line with past inflation. However, as these figures were collected before 1 August, the decline is not attributable to the high industrial tariffs that the US has recently imposed on Swiss companies. The tariffs are likely to have further reduced wage growth expectations, particularly in US-oriented companies in the industrial sector".
• Around 4500 Swiss companies took part in the KOF survey. Swiss Q2 employment data is scheduled for release tomorrow.

Gilts are off session highs, with equity futures off session lows and crude oil regaining some poise.

• Cross-market moves drove the early bid, with a lack of definitive progress in the Trump-Putin meeting (particularly when it comes to a palatable proposal for Ukraine) noted.
• Elsewhere, others pointed to the market fading some of Friday’s bear steepening (which similarly lacked a clear headline trigger, with ongoing European focus on fiscal matters/issuance outlooks and Dutch pension reform noted back then).
• Futures as high as 91.32 after trading 90.91 on Friday. Last ~91.10.
• Still, bears remain in technical control. Fresh extension lower would target the May 29 low (90.59).
• Conversely, bulls need to clear the 50-day EMA (92.05).
• Yields 1-2bp lower, curve flatter.
• The early June high in 10-Year yields (4.702%) remains intact.
• A reminder that 50s registered a fresh cycle high on Friday, but bears failed to force a test of 5.00%.
• The 5s30s curve continues to hover just below Friday’s multi-year highs (last 146.5bp), 150bp is the next upside target.
• BoE-dated OIS prices 13.5bp of easing through December and 24bp of cuts through February, little changed on the day.
• Wednesday’s CPI data headlines the domestic calendar this week, see our morning STIR bullet/global week ahead publication for more colour on that front and expect our usual detailed preview in due course.