US: Democrats Hold Slight Lead On Generic Congressional Ballot

• -30,000 SFRU5 95.37/95.62/95.75 put flys 9.0 vs. 95.83/0.46%

EGBs outperformed Gilts Monday as the implications of the EU-US trade pact agreed over the weekend were digested.

• Yields headed lower in early trade on the growth concerns implied by an increased tariff on EU exports to the US and the diminished prospects for EU retaliation on US imports, but the rest of the session saw a pronounced divergence between Gilts and Bunds.
• An MNI Policy sources piece ("MNI SOURCES: Markets Overplaying ECB's Hawkish Shift") boosted EGBs, led by the short end.
• German yields spiked briefly on defence spending headlines, but the move faded as there was nothing new (previously reported in June).
• The German curve bull steepened, with the UK's bear flattening.
• Periphery/semi-core EGB spreads were mostly lower.
• Tuesday's calendar includes UK money supply/consumer credit data, ECB CPI expectations, and Spanish retail sales.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 3bps at 1.918%, 5-Yr is down 3.1bps at 2.267%, 10-Yr is down 2.9bps at 2.689%, and 30-Yr is down 1.1bps at 3.196%.
• UK: The 2-Yr yield is up 2.2bps at 3.906%, 5-Yr is up 1.7bps at 4.075%, 10-Yr is up 1.2bps at 4.647%, and 30-Yr is up 0.5bps at 5.454%.
• Italian BTP spread down 1.7bps at 81.7bps / Spanish down 1.1bps at 58.5bps 

The below report offers a succinct look at the main macroeconomic developments across inflation, the labor market and activity indicators since the last FOMC meeting on June 17-18. It’s part of the full MNI US Fed Preview (here). 

Download Full Report Here