SECURITY: 'Coalition Of Willing' Meeting In Paris Underway
A hybrid in-person and virtual meeting of the so-called Coalition of the Willing group of Ukraine-backers is underway in Paris. Several European leaders and Ukrainian President Volodymyr Zelenskyy will call US President Donald Trump to discuss the outcome of the meeting at 08:00 ET 13:00 BST 14:00 CET. Details of the call likely to hit wires at around 09:00 ET 14:00 BST 15:00 CET.
- The Elysee said the primary focus of today’s meeting is specific security guarantees that will be provided to Kyiv to ensure a peace agreement with Russia can hold.
- French President Emmanuel Macron announced yesterday, alongside Zelenskyy, that after months of work by military planners, Europe was finally ready to provide the guarantees and would politically endorse their plan at the meeting today, per the Guardian.
- The broad understanding is that any Ukrainian security guarantee will require a US backstop. It is unclear if Trump is willing to put US troops in Ukraine as part of an international peacekeeping force, but has appeared open to providing logistical support.
- Trump told reporters yesterday alongside Polish President Karol Nawrocki that the US will maintain its troop presence in Poland, nixing speculation that Trump could drawdown US force posture in Central and Eastern Europe.
- Trump said he’s ‘not happy’ with Russian President Vladimir Putin, but was ambiguous about pursuing new measures against Moscow. "I’ll be speaking to him over the next few days and we’re going to see... If we are unhappy about [Putin’s response], you will see things happen” he said.
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BONDS: From session high to session lows for Gilt and wider Bonds
- From session high to session low for Gilt and now EGBs.
- The 4.50% Yield level provided good support for the UK 10yr Yield, printed a 4.496% low, and as noted, Gilt and Schatz are seeing heavy supply in early trade.
- As such, Gilt keeps the pressure in long end Govies, and Schatz underperforms within German Govies.
EUROZONE DATA: July Composite PMI Consistent With Weakly Positive Growth
The Eurozone July services PMI was revised down two tenths to 51.0, but that still marks a second consecutive increase from 49.7 in May and 50.5 in June.
- We estimate the France/Germany services PMI at 49.7 (vs 49.9 flash), with a notable 1.2 point downward revision in France to 48.5 partially offset by a 0.5 point upward revision in Germany to 50.6.
- The ex-France/Germany PMI is estimated at 53.2 (vs 53.4 flash). Spanish data this morning was much stronger-than-expected, while Italy was a little softer.
The composite PMI was 50.9 (vs 51.0 flash, 50.6 prior), the seventh consecutive month above the neutral 50 handle. Overall, the PMI continues to point to only weakly positive growth. The release notes that “the rate of increase in business activity remained sluggish and was weaker than the survey average as stagnant demand held back output.”
- The release also states “as was the case in June, new orders were down by a fraction at the beginning of the third quarter. The last time a rise in new business intakes was signalled was May 2024. Export sales remained a drag, stretching the current sequence of deteriorating international client demand to 41 months.”
“After a brief run of strengthening optimism across the eurozone private sector, July survey data indicated a drop in confidence for the first time since April”.
FOREX: FX OPTION EXPIRY - Large AUD on Friday
- Large AUD on Friday down to 4.27bn vs 4.32bn Yesterday.
Of note:
EURUSD 2.32bn at 1.1550.
EURUSD ~1bn at 1.1550 (wed).
USDJPY 1.37bn at 147.00 (wed).
USDJPY 1.14bn at 147.65 (thu).
AUDUSD 4.27bn at 0.6500 (fri).
EURGBP 2.4bn at 0.8675/0.8700 (fri).
EURUSD 1.23bn at 1.1550 (mon).
- EURUSD: 1.1500 (1.4bn), 1.1550 (2.32bn), 1.1585 (1.44bn), 1.1600 (1.77bn).
- USDJPY: 148.00 (558mln).
- USDCNY: 7.1490 (500mln), 7.1500 (565mln).
