EUROPEAN INFLATION: MNI Eurozone Inflation Preview – August 2025

Our estimates made last week for borrowing requirements ($950-1,000B in Jul-Sep aka FYQ3, $600B for Oct-Dec aka FY Q4) appear to chime with several estimates we've seen since then (note it's almost unanimous that a $850B end-September cash target will be included in today's estimates). These include: 

• Deutsche: Q3 borrowing requirement $960B, Q4 $680B
• Jeffries: Q3 borrowing requirement $957B, Q4 $575B
• Wrightson ICAP: Q3 borrowing requirement $980B, Q4 $650B

Estimates that we included in our refunding preview:

• CIBC: Marketable borrowing requirement of $942B in Jul-Sep on $471B financing need, Oct-Dec $726B marketable borrowing on $649B financing need
• JPMorgan: $1,087B and $572B borrowing requirements this quarter/next quarter respectively
• TD: $1,051B Jul-Sep quarter, $534B Oct-Dec. Tariffs could mean cash flows more positive.
• Wells Fargo: Marketable borrowing in Q3 $946B ($393B cash balance, $413B budget deficit); Q4 $592B

Persistent EUR/USD sales are pressing the rate lower still well after the London close, with EUR/USD now south of 1.1600 for the first time since mid-July's show below the handle (which proved to be short-lived, and may have cleared out S/T EUR positioning). The pair's ~180 pip losses are the largest one-day decline since November last year - the session capturing Trump's election results.

• The scale of today's reversal signals the markets' surprise at the terms of the EU-US trade deal. The 15% export tariff, minimal industry carve-outs and reduction of many tariffs to zero for EU-bound US products have opened the deal up for criticism - particularly in France. This leaves risks to growth larger than the ECB had anticipated, even as the worst case scenario has been avoided.
• As a result of today's price action, the 14-day RSI has slipped hard, below 50 for the lowest reading of the month and third-lowest of Trump's Presidential term so far. While medium-term trend indicators continue to highlight a dominant uptrend, today's price action shows the potential for near-term corrections lower.
• The pair has revisited the 50-dma - a level which has helped contain weakness on several occasions this year - and a containment of losses above 1.1565 will mean the M/T uptrend is still intact. Conversely, a break below this mark would signal a stronger reversal - making 1.1431 the initial downside target.

• Date $MM Issuer (Priced *, Launch #)
• 07/28 $12B #Mexico 5Y +170 (last time Mexico issued: $4.5B on June 23: $2.5B 7Y +175, $2B +12Y +230)
• 07/28 $2B #Deutsche Bank $1.7B 6NC5 +98, $300M 6NC5 SOFR
• 07/28 $1.5B Community Health Systems 8.5NC3 9.5%a
• 07/28 $Benchmark RBC 4NC3 +62.5, 4NC3 SOFR, 6NC5 +73, 6NC5 SOFR 
• 07/28 $600M #Ally Financial 8NC7 +137
• 07/28 $Benchmark M&T Bank 10NC5 +145
• 07/28 $650M EW Scripps 5NC2 investor calls (expected to launch 7/29)