EGB OPTIONS: Large Bund put spread seller
Aug-23 08:47
RXX3 123/120.5ps sold at 7.5 in 10k.
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GILTS: Fresh Bid On Soft Domestic PMI Data
Jul-24 08:41
Gilt futures extend the rally that stemmed from the Eurozone PMI releases as the domestic round of flash PMIs also print at softer than expected levels.
- The details of the report note that “the UK economy has come close to stalling in July which, combined with gloomy forward-looking indicators, reignites recession worries. “July's flash PMI survey data revealed a deepening manufacturing downturn accompanied by a further cooling of the recent resurgence of growth in the service sector… The survey data signal further, potentially marked, falls in consumer price inflation in the months ahead… Manufacturing input costs are falling and supplier performance is improving at the fastest rate we have ever seen.”
- Gilt futures run +75 or so at typing, just shy of post-data bests, while cash Gilts are 5-9bp richer, with 5s leading the rally and the longer end of the curve lagging.
- Technical resistance in futures is seen at the 19 July high/bull trigger (97.84).
- SONIA futures sit as much as 12bp richer through the back end of the reds/front end of the greens, as that area of the strip outperforms.
- BoE-dated OIS comes in further, running 4-11bp softer on the day, with ~35bp of tightening showing for next month’s gathering and terminal policy rate pricing in to ~5.85%.
GBP: Lower Close in GBP/USD Would Seventh Consecutive Session of Declines
Jul-24 08:33
- GBP plumbs new daily lows on that release, with GBP/USD showing just below the Friday low to touch 1.2815.
- Recall lower close today would mark seventh consecutive session of declines, with 1.2801 the next support: the 61.8% retracement for the early July upleg.
SPAIN: Catalan Separatists Issue Demands As Vox Falters In Election
Jul-24 08:32
The hardline Catalan separatist party, Junts, has issued a set of demands to Spanish Prime Minister Pedro Sancho after neither the ruling centre-right PSOE, nor the center right People's Party (PP) secured the votes to form a government in yesterday's election.
- According to Reuters the Junts said, "we need to use the opportunity given by the election to achieve our goal of Catalan independence... we will see what [Sanchez] is ready to do and which guarantees he would offer in a possible investiture vote."
- "The socialists are the ones who need to make concessions if they want their support… political amnesty and a referendum on independence are our main demands."
- Sanchez has alternative, but challenging, pathways to a majority, including winning the support of left-wing separatist party Esquerra Republicana de Catalunya (ERC) but may also require the support of Junts who haven't supported Sanchez in the past four years.
- Any move by Sanchez to secure the support of the Junts risks a reemergence of the political crisis of 2017 when Carles Puigdemont led a unsanctioned bid for Catalan independence.
