FRANCE DATA: July Flash Services PMI Beats, But Inflation Pressures Evident

Jul-24 07:25

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:

  • “Weak sales performances and delays from customers drove the slump in factory production, anecdotal evidence showed. On the other hand, business activity at services companies rose for the first time since April. The Olympic Games, as well as the end of the election period, were given as reasons for higher output”.
  • “The latest survey data showed another month of job creation, extending the current period of rising employment to six months. Hiring was restricted to just the service sector”
  • “July survey data signalled a marked intensification of cost pressures across France, led by a sharp acceleration in input price inflation at manufacturers”.
  • “Higher commodity and raw material prices were commonly linked to the rise. In turn, selling charges were increased at the fastest rate for three months as companies endeavoured to pass on some of the burden of higher costs to their clients”.

Historical bullets

SONIA: Put spread vs call spread

Jun-24 07:24

SFIZ4 95.75/95.85cs vs 95.05/94.95ps, bought the ps for 1 in 10k.

STIR: Citi Recommend Receiving Aug BoE-Dated OIS

Jun-24 07:17

Citi note that “a “finely balanced” BoE decision feels like a strong signal for a first cut in August, but the market seems wary.”

  • “A degree of hesitancy may remain until the price/wage data in mid-July, but it does feel like a forward-looking majority, less sensitive to spot data, is now very close.”
  • “Our inclination is to take the signal at face value and receive August MPC SONIA.”
  • “More broadly, the dovish BoE reinforces our existing preference for bullish medium-term exposure to the GBP front end and long end steepening.”

EURIBOR OPTIONS: Call fly buyer

Jun-24 07:14

ERU4 96.50/96.62/96.75c fly Bought for 1.75 in 5k.