EU CONSUMER STAPLES: Elo/Auchan; rallying (x2)

"*FRENCH PM TO PROPOSE CUTTING TWO PUBLIC HOLIDAYS: LE PARISIEN" Bloomberg

{FR} From Le Parisien (live blog here)

• "In the final decisions of the last few hours, François Bayrou appears to be leaning toward the elimination of two public holidays, without specifying which ones yet. Barring a last-minute change of heart, which is always possible, the Prime Minister is expected to announce this at his press conference at 4 p.m. regarding the €40 billion savings plan.
• This avenue, already explored by his predecessor at Matignon, was rejected by Michel Barnier. According to a Senate report published last September, canceling a public holiday would generate €2.4 billion annually."

• As noted, USDJPY has broken to fresh two-month highs following the US data as bullish momentum for the pair has been building on a break of 148, reaching an intra-day peak of 148.48 in recent trade. Price action has been underpinned by rising US yields across July, which as well as supporting the dollar recovery has more broadly bolstered the Cross/JPY rally.
• As such, EURJPY has extended its move above 172 handle on Tuesday, with the cross now around 4.85% above the 165.00 break in early June. Moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend.
  • Price action has bridged the gap to the next target of 172.92, the Jul 16 ‘24 high. Above here, 173.43 (High Jul 12 ’24) and 174.86 (1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing) are interim levels of note before the 2024 highs at 175.43.
• AUDJPY has also been edging higher following the break above 95.75 resistance last week. The continued resilience for major equity benchmarks is providing an additional tailwind here, with the cross just recently reaching the February highs, located at 97.33. Above here, the 2025 highs come in at 99.17.
• Another pop higher for CHFJPY has seen the cross extend its impressive recent surge to fresh record highs of 186.04, expanding the rally from the June lows to ~6.8%.

Commerzbank note “the gradual cheapening trend in repo markets remains intact. Virtually all Bunds trade above €STR while most BTPs trade above the DFR. Specialness remains largely absent”.

• Looking ahead, they suggest that “supply prospects, especially in Bunds, and the lack of a structural buyer in the long end should keep the structural cheapening trend in Bund swap spreads intact”.
• Further forwards on the curve, they believe that Schatz cheapening has run its course for now, given CtD repo and prevailing swap spread levels.