ENERGY: EU Unlikely to Heed to Trump’s Call for Tariffs on India and China

Gilts outperformed Bunds Monday ahead of key UK labour market data.

• The session low for yields was set in early trade, with some focus on the potential disinflationary implications of a resolution to the Russia-Ukraine conflict ahead of a Trump-Putin meeting scheduled for end-week.
• That said, the pullback in yields looked corrective in nature, coming after Friday's rise and amid limited macro / data / headline news flow. Yields crept up for most of the remainder of the session.
• That left the German curve relatively unchanged on the day, though Gilts benefited in part from a KPMG-REC report on jobs suggesting weak labour market dynamics / restrained wage growth.
• Periphery/semi-core EGB spreads closed mixed, with Spain outperforming and Greece underperforming. MNI published an exclusive on Greek issuance ("Greek 2026 New Issuance Lower End Of EUR8-10 Bln-Source").
• Tuesday's scheduled highlight is the UK labour market report. MNI's preview is here (PDF): primary focus is on private regular average earnings which are expected at 4.8%Y/Y in the 3-months to June.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.8bps at 1.964%, 5-Yr is up 0.6bps at 2.289%, 10-Yr is up 0.6bps at 2.696%, and 30-Yr is up 2bps at 3.226%.
• UK: The 2-Yr yield is down 3.6bps at 3.863%, 5-Yr is down 3.6bps at 4.001%, 10-Yr is down 3.6bps at 4.565%, and 30-Yr is down 3.6bps at 5.392%.
• Spanish bond spread down 0.3bps at 56.4bps  / Greek up 1.1bps at 65.3bps

• RES 4: 1.1851 High Sep 10 2021
• RES 3: 1.1829 High Jul 01 and the bull trigger 
• RES 2: 1.1789 High Jul 24 
• RES 1: 1.1699 High Aug 7
• PRICE: 1.1608 @ 15:16 BST Aug 11
• SUP 1: 1.1401 Low Jul 30 and a bear trigger
• SUP 2: 1.1373 Low Jun 10
• SUP 3: 1.1313 Low May 30
• SUP 4: 1.1184 38.2% retracement of the Feb 3 - Jul 1 bull cycle  

EUR/USD edged higher to a new recovery high Thursday, before fading into the close. Price has cleared the post-NFP high to keep the recovery off the late July pullback low intact. This works against the bearish backdrop that’s dominated the pullback from 1.1829. The break of firm resistance into 1.1619, the 20-day EMA, is signaling greater odds of a further reversal higher. Major support below rests at 1.1373 next, the Jun 10 low. 

• ESU5 has recently seen a session high of 6431.50, just two points above overnight levels after a twenty-point climb before easing back towards 6425 (+0.2%).
• The move was helped by the largest buy program of the day (TICK index with 1435 names) at 1208ET, before easing a few points.
• Resistance remains at the bull trigger of 6468.50 (Jul 31 high) after which lies 6477.31 (1.618 proj of May 23 – Jun 11 – Jun 23 price swing). Support meanwhile is seen at 6239.50 (Aug 1 low).
• SPX gains are led by consumer discretionary (+0.65%, incl Tesla +4.9%), health care (+0.3%, Elil Lilly +3.0%) and IT (+0.3%, Microsoft +0.9%) whilst losses are led by energy (-0.5%), materials (-0.5%) and utilities (-0.3%).
• Tesla has applied for a license to supply electricity to British homes whilst Morgan Stanley analysts reiterated Tesla as overweight.
• E-mini comparison: Nasdaq 100 +0.3%, S&P 500 +0.2%, Russell 2000 +0.2% and Dow Jones -0.1%.