EUROZONE ISSUANCE: EGB Supply (2/2)

• +22,000 TYV6 107 calls, 38 vs. 107-09/0.68% at 0950:49ET
• not long after 16,059 TYV 107 puts trade on screen: 19

The 8.3% Y/Y rise in retail sales in the first week of September (and thus month-to-date) in the Johnson Redbook Index represents a slight slowdown from the 8.7% posted in August but if sustained would mean a 5th consecutive month of a rise of 8+%. That said, the series is in nominal terms, with real goods consumption slowing (fell in July's PCE by the most in 14 months) albeit offset by steady-to-accelerating services spending.

• June's 10.1% Y/Y recorded by Redbook evidently represented the peak though that looks to have been flattered by higher consumer prices. Consensus for August's advance Census Bureau report (out Sept 16, the morning of the Fed decision) eyes a 0.4% M/M control group sales increase which would roughly equate to 4.3% Y/Y, the slowest rate of the year.
• That's roughly in line with the Chicago Fed CARTS prelim estimate of ex-autos sales of +0.5% M/M (actual was =-0.3% prior) which notably would be only flat when inflation adjusted and would translate into the slowest 3M/3M annualized rate of sales since January (2.6% after a 15.1% peak in May though again that's heavily influenced by price effects, mainly gas).
• From the Redbook anecdotes: "Shoppers responded well to sales and promotional offers during Labor Day weekend. Sales are still influenced by two main factors: back-to-school and seasonal clothing. Several retailers faced tough comparisons with Labor Day week the previous year, since the holiday falls a week later in the retail calendar this year. Discount stores saw very strong food sales in the lead-up to the long Labor Day weekend. A few retailers are nearing the end of their back-to-school shopping periods, while others expect the current momentum to carry on throughout the month, as shown by sales of electronics, clothing, and school supplies."

The Times reports that the Metropolitan Police have launched a criminal inquiry into donations made to the right-wing populist Reform UK. The inquiry comes after Channel 4 broadcast an undercover sting investigation into the party's finances last week. 

• The investigation in itself is not a market-moving event. However, prior to the change in leadership at No. 10 Downing Street, Reform UK were seen as favourite to, if not win an outright majority, then at least become the largest party in the House of Commons at the next general election.
• Amid questions regarding donations to Reform UK leader Nigel Farage, and Andy Burnham replacing Sir Keir Starmer as Labour Party leader and PM, Reform UK's polling numbers have declined over the summer.
• With Farage facing a Commons Standards inquiry into the donations (risking another by-election in his Clacton constituency), an active criminal investigation risks more negative coverage that could damage Reform's support further.
• Given Labour's sizeable majority in the Commons and the fact Reform UK are still within the margin of error of Labour in many polls, an early general election (pre-2029) remains unlikely.
• However, should Farage be forced to stand down as Reform UK leader or figures in the party face criminal charges, it could see PM Burnham look to take advantage of any dissarray and call an early election. 

Chart 1. General Election Opinion Polling, % and 6-Poll Moving Average