EU FINANCIALS: Mediobanca Banca di Credito: Fitch Ratings Watch Negative

This morning’s services PMI was weak, falling 5.5 points to 48.8 – the largest one month drop since April 2020. While less closely followed than the Economic Tendency Indicator, the PMI has still contributed to a 1.6bp fall in 2-year SEK swap rates today. 

• Thursday’s flash July CPI report will be key in determining the likelihood of a Riksbank August rate cut. Markets currently price just a 20% implied probability of such a move, but we have noted for several weeks that a cut cannot be ruled out before seeing the inflation data, particularly with activity signals still weak.
• Although new orders (51.5 vs 59.5 prior) and production (50.1 vs 57.3 prior) PMI components remained in expansionary territory in July, the falls relative to June were sharp.
• More alarmingly, the employment component fell to a 5-year low of 37.8 (vs 36.7 prior). The downward trend is more volatile than, but still broadly consistent with, the signal from the Economic Tendency Indicator’s services employment series. 

• Date $MM Issuer (Priced *, Launch #)
• 08/05 $500M CNA Financial WNG 10Y +125a
• 08/05 $500M Freedom Mortgage 7.75NC3
• 08/06 $500M Travel + Leisure 8NC3
• 08/05 $Benchmark MSCI 10Y +140a
• 08/05 $Benchmark Essential Utiites 10Y +130a
• 08/05 $Benchmark Macquarie Bank 11NC10 +170a
• 08/05 $Benchmark Standard Chartered 11NC10 +145a
• 08/05 $Benchmark Tennessee Valley Authority 5Y +25a
• 08/05 $Benchmark Daimler Truck 2Y +90a, +5Y +115a, +7Y +130a
• 08/06 $Benchmark PetSmart 7NC3, 8NC3 investor calls

• EUR/USD: Aug07 $1.1500(E1.1bln), $1.1600(E957mln); Aug08 $1.1500(E1.5bln); Aug11 $1.1550(E1.2bln)
• USD/JPY: Aug07 Y147.65($1.1bln), Y148.00-15($1.8bln), Y148.50($1.2bln)
• EUR/GBP: Aug08 Gbp0.8675(E1.3bln), Gbp0.8700(E1.2bln)
• AUD/USD: Aug07 $0.6500(A$1.1bln), $0.6600(A$2.0bln); Aug08 $0.6500(A$4.3bln)
• NZD/USD: Aug11 $0.5920-30(N$1.1bln)