EU CONSUMER STAPLES: Consumer & Transport: Week in Review

• US EIA: CRUDE OIL STOCKS EX SPR +7.7M TO 426.7M JUL 25 WK
• US EIA: DISTILLATE STOCKS +3.64M TO 113.5M IN JUL 25 WK
• US EIA: GASOLINE STOCKS -2.72M TO 228.4M IN JUL 25 WK
• US EIA: CUSHING STOCKS +0.69M TO 22.6M BARRELS IN JUL 25 WK
• US EIA: SPR +0.24M TO 402.7M BARRELS IN JUL 25 WK
• US EIA: REFINERY UTILIZATION WEEK CHANGE -0.1% TO 95.4% IN JUL 25 WK

• GBP breaking down further in recent trade - evident in both the GBP/USD slippage to new lows as well as the sharp intraday bounce in EUR/GBP. As such, the slippage in GBP/USD through support (namely at 1.3365-70) isn't just a USD story, and shows the correction in GBP may have legs into next week's BoE decision.
• The 15-min candle chart shows the downtick accelerating on the break of the trendline drawn off the Jul18 low, exposing the more major of 1.3140 in the near-term.
• A renewed phase of USD strength could provide the next catalyst here - particularly with the FOMC and NFP risks due today and Friday. Today's market moves show the happiness with which FX will react to positive data surprises, and the break and close above the 50-dma this week in the USD Index has cleared the major technical hurdle to a constructive recovery. That level helped characterize the downtrend this year - adding to the importance of this week's break.

Post-U.S. data weakness in Tsys weighs on gilts, leaving the July 22 high in futures (92.15) intact, back to 91.75 from session highs of 92.11.

• The contract remains in a bit of a holding pattern between that resistance point and the bear trigger (91.08).
• Yields 1-2bp lower on the day, 10s outperform on the curve.
• 10s trade around the middle of the rough 4.40-4.80% range in play since early February.
• Spillover from Tuesday’s extension higher in Tsys, solid demand at this morning’s long end gilt tender and some focus on comfortably larger than average month-end extension projections had provided support for gilts ahead of the U.S. data.
• Gilts still outperform Bunds by ~2.5bp on the day and are also 7bp stronger vs. Tsys at the 10-Year point.
• Short end pricing little changed on the day, showing ~47bp of cuts through year-end.
• Lower tier Lloyd’s business barometer data is due overnight, but that won’t be a market mover.