EUROZONE: Historically Low U/E Rate Not Translating To Consumption [1/3]
Sep-19 13:09
- The ECB has been putting some weight on the historically low unemployment rate in recent months, with President Lagarde last week describing it “a source of strength”.
- It stands at a joint low of 6.2% as of July, even if revisions have been altering its recent trend with regular modest upward revisions. The ECB sees it broadly holding this decline with a 6.1% rate in 2027.
- This of course points to a clearly stronger labor market than ahead of the pandemic, for instance, having ended 2019 at around 7.5%.
- Whilst not quite at recent series lows, the unemployment rate for those 25 years and older also shows a significant improvement. It held at 5.5% in July for a seventh consecutive month after lows of 5.4% through Aug-Dec 2024, also down from the 6.6% in late 2019.
- However, this labor market strength doesn’t tally with a still unusually cautious European consumer as we’ll seen in part two.
- Some of this could be down to the hours worked lagging the post-pandemic recovery, suggesting possibly greater slack in the labour market than the unemployment rate alone would imply. ECB’s De Guindos has also pointed to broader uncertainty and expectations of a future tightening of fiscal policy.
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SOFR OPTIONS: Mixed Sep'25 SOFR Trade
Aug-20 13:08
- -20,000 SFRU5 95.81/SFRZ5 95.87 put spds, 0.75 net/Sep over
- +4,000 SFRU5 95.62/96.31 call over risk reversals, 0.25 ref 95.9025
CROSS ASSET: Lower Yields are helping some USD Downside
Aug-20 13:06
- A new session high for US Tnotes, now testing Yesterday's high of 111.27, just ahead of the small initial resistance at 111.30+.
- Outright Order flows are still fairly subdued, with all the volumes going through in Desks rolling their September Position into the December Expiry.
- Nonetheless and since Trump's post on Fed Cook, the USD is now on the backfoot, DXY tests session low, and EUR, CHF, and Gold are all testing their respective new intraday high.
EGB SYNDICATION: Finland New 7-year Apr-32 RFGB: Priced
Aug-20 12:42
- Re-offer: 99.254 to yield 2.751%
From market source
More details to follow - Spread set earlier at MS + 29bp (guidance was MS + 31bps area)
- Size: E4bln (MNI expected E3bln but noted upsizing to E4bln was possible)
- Books in excess of E33bln (inc E2.25bln JLM interest)
- Maturity: 15 April 2032
- Coupon: 2.625%. Short first
- Settlement: 28 August 2025 (T+6)
- Hedge ratio: 110% vs 0% Feb-32 Bund. Spot ref: 85.71 / +34.5bp
- ISIN: FI4000591862
- Bookrunners: Barclays (DM/B&D) / Bofa Securities / Danske Bank / Deutsche Bank / J.P. Morgan
- Timing: TOE 13:29BST / 14:29CET. FTT immediately
From market source / MNI colour
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