POWER: Italy Up on Energy Complex, Stronger Hydro Reserves Limit Gains
The Italian October base-load power contract is trading slightly higher to be supported by revised h...
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BONDS: From session high to session lows for Gilt and wider Bonds
- From session high to session low for Gilt and now EGBs.
- The 4.50% Yield level provided good support for the UK 10yr Yield, printed a 4.496% low, and as noted, Gilt and Schatz are seeing heavy supply in early trade.
- As such, Gilt keeps the pressure in long end Govies, and Schatz underperforms within German Govies.
EUROZONE DATA: July Composite PMI Consistent With Weakly Positive Growth
The Eurozone July services PMI was revised down two tenths to 51.0, but that still marks a second consecutive increase from 49.7 in May and 50.5 in June.
- We estimate the France/Germany services PMI at 49.7 (vs 49.9 flash), with a notable 1.2 point downward revision in France to 48.5 partially offset by a 0.5 point upward revision in Germany to 50.6.
- The ex-France/Germany PMI is estimated at 53.2 (vs 53.4 flash). Spanish data this morning was much stronger-than-expected, while Italy was a little softer.
The composite PMI was 50.9 (vs 51.0 flash, 50.6 prior), the seventh consecutive month above the neutral 50 handle. Overall, the PMI continues to point to only weakly positive growth. The release notes that “the rate of increase in business activity remained sluggish and was weaker than the survey average as stagnant demand held back output.”
- The release also states “as was the case in June, new orders were down by a fraction at the beginning of the third quarter. The last time a rise in new business intakes was signalled was May 2024. Export sales remained a drag, stretching the current sequence of deteriorating international client demand to 41 months.”
“After a brief run of strengthening optimism across the eurozone private sector, July survey data indicated a drop in confidence for the first time since April”.
FOREX: FX OPTION EXPIRY - Large AUD on Friday
- Large AUD on Friday down to 4.27bn vs 4.32bn Yesterday.
Of note:
EURUSD 2.32bn at 1.1550.
EURUSD ~1bn at 1.1550 (wed).
USDJPY 1.37bn at 147.00 (wed).
USDJPY 1.14bn at 147.65 (thu).
AUDUSD 4.27bn at 0.6500 (fri).
EURGBP 2.4bn at 0.8675/0.8700 (fri).
EURUSD 1.23bn at 1.1550 (mon).
- EURUSD: 1.1500 (1.4bn), 1.1550 (2.32bn), 1.1585 (1.44bn), 1.1600 (1.77bn).
- USDJPY: 148.00 (558mln).
- USDCNY: 7.1490 (500mln), 7.1500 (565mln).
