INDIA: HSBC Doubts Credit Rating Upgrade Will Help INR For Now

Bund futures are off session lows following a downtick in Brent crude futures, but remain -6 ticks at 129.40. A bearish technical theme remains intact, with initial support the July 14 low at 129.08, clearance of which would expose the key support at 128.97 (May 14 low).

• German yields are off earlier highs, now up to 0.5bps lower across the curve. Germany will sell E1.0bln of the 1.25% Aug-48 Bund alongside E1.5bln of the 2.90% Aug-56 Bund at 1030BST.
• In France, opposition politicians have been lining up to criticise the budget proposals announced by PM Francois Bayrou on 15 July. There is a strong likelihood that, given the gov'ts minority status, Bayrou will have to push the budget through using Article 49.3 of the French constitution in order to avoid a vote.
• The 10-year OAT/Bund spread remains fairly insulated though, currently 0.5bps tighter at 69bps.
• Broader EGB spreads to Bunds are also little changed, with European equity futures off earlier lows.
• The Eurozone May trade surplus was larger than expected at E16.2bln (vs E14.0bln prior).
• Broader global focus will be on the US PPI report at 1330BST following yesterday’s CPI reading, which started to show some tariff impact in core goods categories. 

TYU5 109.50/108.50 put spread 20K was also blocked at 0-16 vs. 3K TYU5 110-10. Suggest a buyer of the put spread via the block, with the previous screen flow perhaps representing a market maker covering the position before the block was lodged (at 0-17, not 0-16).