The French services PMI rose back into expansionary territory in the July flash round, at 50.7 (vs 49.7 cons, 49.6 prior). In contrast, manufacturing was weaker-than-expected at 44.1 (vs 45.9 cons, 45.4 prior). These dynamics add strength to the ongoing narrative that services activity is driving the Eurozone’s (gradual) economic recovery, while industry remains weak.
EGB futures have moved away from highs as a result of the services beat and worrying prices paid components (see below), with Bunds last +3 at 132.33 (vs a pre-data high of 132.47).
Key notes from the release:
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SFIZ4 95.75/95.85cs vs 95.05/94.95ps, bought the ps for 1 in 10k.
Citi note that “a “finely balanced” BoE decision feels like a strong signal for a first cut in August, but the market seems wary.”
ERU4 96.50/96.62/96.75c fly Bought for 1.75 in 5k.