POWER: EdF Reduces St Alban 1 Output on Saturday

The NY Fed's monthly survey of regional service firms (the Business Leaders Survey) was greatly improved in July vs prior months, with the headline general activity index rising to a 6-month high -9.3 from -13.2 prior. The business climate reading likewise hit a 6-month best -34.6 (-48.3 prior).

• While the current measures are still in negative territory, suggesting that activity continues to weaken, the 6-month outlook for general activity turned positive (3.7  after -9.3) for the first time in 5 months, with improvements across business climate and capex expectations as well.
• Per the survey, "Employment edged slightly higher, and wage growth picked up. Supply availability worsened, but less so than last month."
• And there was a little easing in prices paid, falling 2 points to 64.5 (after June's 2+ year high). Prices received conversely rose 9.1 points to a fresh 2-year high 30.1.
• There are no anecdotal comments included in the NY Fed's surveys but it's safe to say that a decline in pessimism and uncertainty over the tariff policy outlook suggests the worst readings in this survey are in the past, though there likewise is little sign of a pickup in activity vs the start of the year.
• This has been a decent proxy for national ISM Services which solely based on this report is set to venture slightly further into 50+ (ie expansionary) territory in July.

• +100,000 2QH6 98.00/98.25 call spds .87 (adds to +50k on Monday for 1.0)

The squeeze higher in EGBS continues, with a ~1.5K lot block buy in OAT futures underpinning in recent trade.

• The pullback from UK CPI-driven lows in gilts, feedthrough from U.S. PPI and weakness in crude oil have also factored into the recovery that has been in play since the middle of the London morning.
• Bund futures have breached their early London high but remain within yesterday’s range.
• The technical setup in the contract remains bearish, with the 20-day EMA (130.01) providing first resistance.
• German yields 2.5-3.5bp lower, 20-Year zone outperforms on the curve.
• EGB spreads to Bunds within 1bp of yesterday’s close, marginal outperformance for BTPs. BTP/Bund spread moves back to ~85bp.