NBP: Latest Rate Cut Was 'Prudent, Cautious' Adjustment
The Governor describes yesterday's 25bp rate cut as a 'prudent' and 'cautious' adjustment, without any pre-commitment to a specific rate path going forward. He adds that the MPC asked him to stress that it sees risks to the inflation outlook.
- Glapinski notes that the MPC's readiness to cut rates has not increased or decreased relative to July. The panel is biased towards continued rate cuts, but can only do it if projections show that inflation will keep cooling in the coming quarters.
- The Governor says that if an extension to electricity price cap becomes law, this would 'change a lot' and encourage the MPC to cut rates. Similar if the government took decisive measures towards fiscal consolidation.
- Glapinski notes that the MPC could deliver no more cuts, one cut or two cuts this year and all three options are on the table for the remainder of the year, but the amount of outstanding easing has not been decided yet.
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US DATA: Final PMIs For July Revised Up Further With Robust Services
The S&P Global final PMIs for July were stronger than first thought, with the services PMI further confirming a fresh high since December. The soon to be released ISM Services will provide a useful alternative indicator for services activity in July after undershooting by 2.1pts back in June.
- Services PMI: 55.7 (cons & prelim 55.2) in July after 52.9 in June
- Composite PMI: 55.1 (cons & prelim 54.6) in July after 52.9 in June.
The press release overview was similar to the flash release a few weeks ago. Some highlights more generally are stronger new orders along with tariffs having a clear impact on price pressures.
- “Where business activity rose, service providers often linked this to higher new orders, with anecdotal evidence also highlighting improvements in customer demand, the securing of new clients and work on new products.
- New orders expanded for the fifteenth consecutive month in July. As was the case with activity, the rate of expansion in new business picked up from June. The latest rise was solid and the fastest since January.
- New export orders have now decreased in each of the past four months, although the latest reduction was only marginal and the slowest in this sequence.”
- Price pressures: “Tariffs also had a clear impact on price pressures, according to anecdotal evidence. Companies widely linked the latest increase in input costs to the effects of tariffs, while also mentioning higher salaries. Input prices rose sharply, with the pace of inflation accelerating from June and coming in above the series average.
- Similarly, the pace of output price inflation quickened over the month and was steep. Panelists reported passing on tariff related rises in input costs to their customers. Here too, the increase was marked in the context of historical data.”
US TSYS: Post-Services/Composite PMIs React
- Treasury futures holding near recent session lows after slightly higher than expected S&P Global US Services & Composite PMI data.
- Tsy Sep'25 10Y futures currently trades -6 at 112-06 vs. 112-05 low. Initial technical support well below at 110-19+, the Jul 24 low. Key support is 110-08+, the Jul 14 and 16 low.
- Initial resistance above at 112-15.5 (Aug 5 high) followed by 112-23 (May 1 high).
- Curves bear flatten: 2s10s -1.148 at 50.360, 5s30s -1.898 at 103.337.
- Next up: ISM Services at 1000ET.
MNI EXCLUSIVE: MNI interviews ex-BLS commissioner
MNI interviews ex-BLS commissioner on firing of BLS commissioner, data quality concerns -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
