FRANCE DATA: June Consumer Spending Saved French GDP In Q2
As noted above, the details of the French Q2 GDP print were weak - consistent with much of the hard and soft economic data released through Q2.
- Total household consumption growth was 0.1% Q/Q (vs -0.3% prior). This component was likely saved by a much stronger-than-expected June consumer spending reading (0.6% M/M vs -0.3% cons, 0.1% prior). Prior to June, consumer spending was tracking at a -0.9% 3m/3m clip.
- Government consumption rose 0.2% Q/Q for the second consecutive quarter, a touch below the 0.3% average rate seen through 2024 with the French Government trying to consolidate public finances.
- Gross fixed capital investment fell 0.3% Q/Q. This was the sixth negative sequential investment print in the last eight quarters – not a positive sign for future potential growth.
- Exports were 0.2% Q/Q (vs -1.1% prior), while imports rose a more notable 0.8% (vs 0.3% prior).
- Total production rose 0.2% Q/Q for the second consecutive quarter, with manufacturing rising 0.1% (vs 0.5% in Q1) and services rising 0.6% (vs 0.3% in Q1). Construction stabilised at 0.0% (vs -0.4% prior).
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EUROSTOXX50 TECHS: (U5) Potential Reversal Signal
- RES 4: 5486.00 High May 20 and a key bull trigger
- RES 3: 5456.00 High Jun 11
- RES 2: 5403.00 High Jun 12
- RES 1: 5365.00 Intraday high
- PRICE: 5352.00 @ 06:37 BST Jun 30
- SUP 1: 5194.00 Low Jun 23 and a bear trigger
- SUP 2: 5182.00 Low May 2
- SUP 3: 5100.94 38.2% retracement of the Apr 7 - May 20 bull leg
- SUP 4: 5078.00 Low Apr 30
Trend signals in Eurostoxx 50 futures remain bearish, however, the recovery from last Monday’s low appears to be a reversal and the contract is holding on to its most recent gains. Price has traded through the 20- and 50-day EMAs. A clear break of both averages would strengthen a reversal theme. This would open 5486.00, the May 20 high and bull trigger. On the downside, a breach of 5194.00, the Jun 23 low would reinstate a bearish theme.
EUROZONE ISSUANCE: EGB Supply: W/C 30 June (2/2)
- France, also on Thursday will then look to hold an LT OAT auction with a combined E10-12bln on on-the-run 10/15/30-year OATs on offer: the 10-year 3.20% May-35 OAT (ISIN: FR001400X8V5), the long 15-year 3.60% May-42 OAT (ISIN: FR001400WYO4) and the 30-year 3.75% May-56 OAT (ISIN: FR001400XJJ3).
- This will be the first reopening of the 3.60% May-42 OAT and may well be the last auction of the 3.20% May-35 OAT as an on-the-run issue – we pencil in a new 10-year OAT to be launched in September (and note that the August auction often is shorter in duration, but given the strong 10-year demand there is a decent chance that we do see a final reopening of the 3.20% May-35 OAT in August.
- Belgium will look to conclude issuance for the week by holding an ORI auction on Friday with ORI Facility with details to be confirmed on Thursday.
NOMINAL FLOWS: The upcoming week sees a E40.7bln of redemptions: E16.4bln of a formerly 5- year BTP, E6.3bln of a formerly 15-year RFGB and E18.0bln of a formerly 3-year EU-bond (the first large EU-bond redemption since the EU stepped up issuance). Coupon payments for the week total E9.5bln of which E6.0bln are German, E1.6bln Italian, E1.2bln from the EU and E0.6bln are Finnish. This leaves estimated net flows for the week at negative E25.2bn, versus positive E3.4bln last week.
EURGBP TECHS: Bullish Trend Condition
- RES 4: 0.8648 76.4% retracement of the Apr 11 - May 29 downleg
- RES 3: 0.8624 High Apr 21
- RES 2: 0.8592 61.8% retracement of the Apr 11 - May 29 downleg
- RES 1: 0.8575 High Jun 23
- PRICE: 0.8544 @ 06:45 BST Jun 30
- SUP 1: 0.8507/8478 20- and 50-day EMA values
- SUP 2: 0.8459 Low Jun 11
- SUP 3: 0.8407 Low Jun 4
- SUP 4: 0.8356 Low May 29 and the bear trigger
The trend condition in EURGBP remains bullish and the cross is trading closer to its recent highs. Moving average studies have recently crossed and are currently in a bull-mode position - this reinforces the current uptrend. Scope is seen for a test of 0.8592 next, a Fibonacci retracement. On the downside, support to watch lies at 0.8478, the 50-day EMA. Clearance of this level would highlight a possible reversal.
