BOBL: Large Calendar spread goes through

• Since the Gilt contract continues to see some demand and outperforms EGB futures, some will start to look at the 4.558% Yield, this was the low print on the 15th July.

Rate and Swap Desks will likely look at more rounded numbers, and today, reference 92.04:

• 4.55% = 92.32.
• 4.50% = 92.76.

• MNI: US MBA: MARKET COMPOSITE -3.8% SA THRU JUL 25 WK

EURGBP continues to inch below support at the 20-day EMA at 0.8649 (-0.15% today), which was pierced yesterday. We have noted that Monday’s price pattern - a bearish engulfing candle - signals scope for a potential short-term reversal. Clearance of the 20-day EMA would reinforce this view, exposing the 50-day EMA at 0.8584.

• For bulls, a move through 0.8769, the Jul 27 high, would confirm a resumption of the uptrend.
• G10 trends have been relatively subdued through the European morning, with EUR and GBP volumes below recent averages ahead of today’s heavy North American calendar (covered elsewhere). Sterling is nonetheless second in the G10 leaderboard today behind JPY.
• Although Eurozone Q2 GDP was a touch stronger-than-expected at 0.1% Q/Q (vs 0.0% cons), it’s worth remembering that the EU-US agreement struck over the weekend will still exert a toll on regional growth going forward. This has likely been a headwind for the single currency this week, despite the reduction in near-term trade policy uncertainty.