US STOCKS: Ignoring Geopol Risks Supporting Crude & Treasury Yields

ECB Governing Council member and Greek central bank chief Stournaras told Bloomberg in an interview Wednesday on the sidelines of the Sintra symposium re further rate hikes that “I don’t think anything will happen in July, unless the situation changes dramatically...as I see things now, it’s perhaps good to stay where we are for some time.” 

• He characterized the Eurozone June flash HICP data out earlier in the day as a “big downside surprise" and said that the latest information suggests that energy supplies will return quickly following the latest de-escalation in the Middle East.
• This is a typically dovish stance from Stournaras who as recently as June 12 sounded somewhat more open-minded about a possible follow-up hike in July (at that time he said "Nothing prevents us from reconsidering our next moves,"…"we are open,"…."There is no commitment either for July or for September, you should know."…."We will see how conditions evolve, we will assess and we will decide".)
• He is among the more dovish members on the Governing Council - see MNI's ECB Hawk-Dove Spectrum.

• RES 4: 0.8694 High Jun 22 and a key resistance 
• RES 3: 0.8649 50-day EMA
• RES 2: 0.8635 20-day EMA 
• RES 1: 0.8618 Intraday high 
• PRICE: 0.8578 @ 19:00 BST Jul 1
• SUP 1: 0.8576 Intraday low 
• SUP 2: 0.8544 50.0% retrace of the Dec 19 ‘24 - Nov 14 ‘25 bull leg
• SUP 3: 0.8508 Low Jun 27‘25 
• SUP 4: 0.8468 61.8% retrace of the Dec 19 ‘24 - Nov 14 ‘25 bull leg  

A  sharp sell-off Wednesday in EURGBP has resulted in a clear break of support at 0.8610, the Mar 16 low. The breach highlights an important medium-term bearish development and paves the way for an extension towards 0.8544, a Fibonacci retracement. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Initial firm resistance is at 0.8635, the 20-day EMA.        

European curves traded mixed Wednesday, with Gilts outperforming EGBs.

• Yields gapped higher on the reopen, reflecting a jump related to Tuesday's month/quarter-end dynamics, as well as UK fiscal concerns centred on defence spending. Further weakness ensued on Iran once again playing down the idea of final negotiations with the US nearing.
• The high in yields for the day was set around 2pm London however and would move lower for the rest of the session.
• The bond rally was triggered in large part by dovishly-received central bank speakers at the ECB's Sintra symposium: BoE Governor Bailey reiterated that the UK economy and labour market are soft, and Fed Chair Warsh and ECB President Lagarde each commented that inflation risks had come down since their respective June meetings.
• Data also contributed to a more constructive tone into the European close, with US manufacturing survey readings on the soft side of expectations.
• In data earlier in the session, final European manufacturing PMIs were mixed vs prelims, while June flash Eurozone HICP was softer-than-expected.
• Thursday's global calendar is highlighted by the US nonfarm payrolls release, while in Europe we get comments by BOE's Mann and ECB's Escriva, and some 2nd tier data including unemployment for Spain/Italy/Eurozone.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is down 1.6bps at 2.512%, 5-Yr is up 0.6bps at 2.601%, 10-Yr is up 1.8bps at 2.878%, and 30-Yr is up 3bps at 3.451%.
• UK: The 2-Yr yield is down 2.7bps at 4.126%, 5-Yr is down 0.8bps at 4.294%, 10-Yr is down 0.1bps at 4.756%, and 30-Yr is up 1.4bps at 5.487%.
• Italian BTP spread up 1.7bps at 78.7bps / Spanish up 1.1bps at 49.5bps