EU CONSUMER STAPLES: Carrefour Spain Consumer Financing arm: LAUNCH

• Fed Funds implied rates consolidate last week’s shift to not quite fully pricing a 25bp cut next month, primarily after strong PPI but also helped by Friday’s retail sales. They sit up to 1bp softer from Friday’s close for the December meeting onwards.  
• It’s ahead of a quiet docket and a quiet week more generally, with Powell’s Jackson Hole speech on Friday at 1000ET firmly in focus.
• Cumulative cuts from 4.33% effective: 21.5bp Sep, 35.5bp Oct, 55.5bp Dec, 67bp Jan and 79bp Mar.
• The SOFR implied terminal yield of 3.07% (SFRH7) is 3bp lower on the day as it continues to roughly hold the +/-5bp of 125bp of cuts priced from current levels seen since the Aug 1 payrolls report.
• Fed VC Supervision Bowman (permanent voter, dove) speaks on Bloomberg TV at 1245ET in her first remarks since last week’s mixed inflation data. She said on Aug 9 that she favors three cuts this year (unsurprising having dissented in July) and saw recent labor data as reinforcing this view.
• SF Fed’s Daly (non-voter) reiterated late Friday that two cuts this year remains a good projection. It’s clear the economy is slower but it’s not slow. 

"GERMAN GOVERNMENT SPOKESPERSON: TALKS ONGOING ON 2027 FEDERAL BUDGET, ONE OF THE GOALS IS TO LOWER TAXES ON LOW AND MEDIUM INCOMES" - Reuters

"GERMAN GOVERNMENT SPOKESMAN: U.S. TARIFFS ON EU CAR INDUSTRY NEED TO BE CUT AS AGREED BEFORE WIDER TARIFF AGREEMENT CAN BE CLARIFIED IN WRITING" - Reuters

The comments from the government spokesperson on the federal budget and income tax reform stick to previous themes and do not break new ground.

• From the coalition agreement: "We will reduce income tax for small and medium incomes in the middle of the legislative period."
• Note that the financing gap for the German federal budget totals EUR172bln through 2029. The government has remained vague on how it plans to plug that.

• US Data/Speaker Calendar (prior, estimate)
• 08/18 0830 NY Fed Services Business Activity (-9.3, --)
• 08/18 1000 NAHB Housing Market Index (33, 34)
• 08/18 1130 US Tsy $82B 13W & $73B 26W bill auctions
• 08/18 1245 Fed VC Bowman interview on Bbg TV
• Source: Bloomberg Finance L.P. / MNI