STIR: Over 50bp Of BoE Cuts Priced Tthrough Dec After U.S. Data

The space seems to have found a base for now, with little in the way of fresh information since PM Starmer expressed his “full support” for Chancellor Reeves.

• Still, that didn’t prevent a sell off in UK paper after his comments surrounding her future (and her tears) in the Commons generated notable selling as speculation surrounding her departure and the potential for a loosening of the fiscal rules intensified.
• Futures based at 91.63, but have retaken 92.00 in recent trade,
• The recovery from lows could represent some profit taking amongst shorter-term market participants, or it could reflect the lack of new news surrounding Reeves’ future since Starmer’s attempted reassurances.
• Yields are 1.5-15.5bp higher on the day, 5-8bp off session highs, although much of the curve steepening remains intact.
• 140bp capped the steepening move in 5s30s, with limited moves above that level lacking any real momentum.
• Long end swap spreads have also recovered from lows alongside gilts but remain lower on the day.

• Stocks are mixed in early Wednesday trade, unwinding a portion of Tuesday's moves - Dow Jones Industrials are mildly weaker vs. decent gains in Nasdaq with tech stocks bouncing. Currently, the DJIA trades down 30.09 points (-0.07%) at 44466.49, S&P E-Minis up 13.25 points (0.21%) at 6262, Nasdaq up 160.4 points (0.8%) at 20362.9.
• Pres Trump announced a trade deal with Vietnam midmorning, helping support equities in general but tech stocks in particular. "The Terms are that Vietnam will pay the United States a 20% Tariff on any and all goods sent into our Territory, and a 40% Tariff on any Transshipping. In return, Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade. In other words, they will “OPEN THEIR MARKET TO THE UNITED STATES,” meaning that, we will be able to sell our product into Vietnam at ZERO Tariff."
• Leading gainers in the Information Technology sector included: First Solar +4.07%, NXP Semiconductors +3.17%, Apple +2.17% and NVIDIA +2.00%. The Materials sector followed with miners, chemicals and steel producers leading in the first half: Freeport-McMoRan +5.18%, Albemarle +3.93%, Nucor +1.61% and Newmont +1.28%.
• Health Care and Energy sectors underperformed in the first half, care and services providers weighed on the former with Centene hammered -39.89% after withdrawing earnings guidance for 2025. Following suit, Molina Healthcare fell -20.06%, Elevance Health -9.00% and Humana -3.21%.
• The Wall Street Journal reported “Centene's move comes after industry bellwether UnitedHealth pulled its guidance for the year and replaced its chief executive. It is likely to add to investors' nervousness about the entire insurance sector, which has felt the effect of higher-than-expected medical costs. Humana and CVS Health's Aetna struggled last year, with CVS also bringing on a new CEO."

Wards Automotive reports that light vehicle sales came in at 15.34mln (SAAR) in June, a 2% M/M drop from 15.65mln prior and the third consecutive sequential fall. 

• This was the worst month of sales in 10 months, after nearing 18mln sales in March in what was clearly demand pulled forward ahead of anticipated tariff impacts.
• It suggests continued sluggishness in vehicle retail sales, which are the largest category in the monthly Census Bureau retail report.
• In May's retail sales report, vehicle sales dropped the fastest in 11 months at 3.9% M/M (-0.6% prior), driving the overall 0.9% drop in retail sales. However note that they are not included in the Control Group category, which printed a solid +0.4% in May.
• There's no consensus yet for the June retail sales print (due July 17), though the Wards data will probably keep expectations subdued.