LNG: Montoir Outage Extended Again Until August 23
Aug-21 08:11
The return of France's Montoir LNG terminal from maintenance has been delayed once again until Friday.
- Send-out from the terminal is now scheduled to restart on 23 August, according to operator Elengy, compared to the previous expectation for a resumption on Aug 21.
- The facility was originally due to return on 7 July following partial maintenance from May 11 and a full outage since June 15. The reason for the numerous extended outages is unknown.
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FOREX: EUR/JPY leads FX markets, AUD slips with CNH
Jul-22 07:55
- JPY retains its place as the best performing currency in G10 - while some see the JPY strength as a result of uncertainty stemming from Biden handing over the Democratic nomination to Kamala Harris, the move looks more idiosyncratic, particularly with US yields and equity markets largely contained. A pick-up in volumes across the European open (0702BST, 0709BST saw particular pick-ups in activity) helped drive JPY markets, with EUR/JPY re-orienting focus on the 170.00 handle and last week's lows.
- Antipodean currencies are weaker - AUD is now through the 50-dma and has confirmed a fourth session of lower lows and erased the entirety of the early Jul leg higher. AUD is moving in tandem with CNH, as the Chinese currency slips on the cut to the 1-, 5yr LPR - signalling near-term weakness in the Chinese economy.
- European cash markets are trading uniformly higher, mirroring the bounce off lows for US stock futures in Asia-Pac trade. France's CAC-40 is the modest outperformer, with real estate and healthcare names leading in Europe. Energy names are unsurprisingly the laggard, given the $2 sell-off in oil prices off the Friday high.
- The schedule is quiet, with Chicago Fed National Activity Index unlikely to stir interest.
GILTS: Pay concerns push back easing expectations; curve flattens
Jul-22 07:41
- The weekend saw the independent pay review bodies recommend 5.5% increases for some public sector workers including doctors, nurses and teachers. The government had budgeted for around 3% in their plans but Reeves hinted towards an above-inflation pay increase. In an interview on the BBC she said that she would make an announcement on public sector pay by the end of this month (note that also by the end of this month she will report on the public finances to parliament and announce the date of the Budget - we expect 30 October, or possibly 6/13 November).
- Potentially above-expected public sector pay awards would make it harder for a series of cuts from the Bank of England and hence this morning we are seeing aSONIA futures underperform, particularly in the Whites and Reds with 2-year gilt yields also rising by over 3bp this morning leading to a flattening of the curve. 2s10s is around 4.5bp flatter today at writing.
- Around a 40% probability of an August cut is priced with 95bp cumulatively priced by June 2025 (around 2bp less than Friday's close).
GERMAN AUCTION PREVIEW: On offer tomorrow
Jul-22 07:32
THe DFA has announced the coupon size of its Sep-26 Schatz
to be opened at its auction tomorrow, July 23, to be at 2.70%. E5bln of that Schatz will be sold.
