POWER: Works Resume at 2.2GW French-Spain Interconnector
Works on the new 2.2GW interconnector between France-Spain has restarted, after having been halted on 14 August by the courts, TSO RTE said, cited by Sud-Ouest.
- Marine Surveys have continued under the condition that different sonar technology that is less harmful to the environment is used.
- The project is expected to be completed in 2027.
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WHITE HOUSE: Sen. Manchin-People Pushing Me In Direction Of Running
Senator Joe Manchin (I-WV) has claimed that "people are pushing me in the direction of running" for the Democratic presidential nomination following President Joe Biden's withdrawal from the contest on 21 July. The likelihood of Manchin (76) winning the nomination is slim to say the least. He is not currently sitting in the US Senate as a Democrat, having registered as an independent earlier in 2024. He is not running for re-election to the Senate, and has seen relations with his former Democratic partners sour amid his efforts to block flagship legislation.
- Speaking to CNN, Manchin says that he would not take up any offer to serve as Kamala Harris' vice-presidential running mate.
- Claims that “A coronation doesn’t always produce the strongest candidate. Very well Kamala could be that person.” Calls for an opern process at the Democratic National Convention to select a candidate.
US TSYS: Modestly Flatter Curves After Biden Withdrawal vs PBOC Rate Cut
- Treasuries have seen two-way trade overnight following President Biden yesterday ending his re-election campaign and the PBOC cutting its seven-day reverse repo rate for the first time in almost a year.
- The net reaction for the curve though is a modest flattening in a mild paring of “Trump trade” steepening and with yields mostly a little lower on the day. The flattening came first with the Asia open before intraday steepening after the PBOC that has since been reversed.
- Cash yields sit between 0.5bp higher (2s) and 2bps lower (20s and 30s). 2s10s at -29.1bp is off Friday’s intraday high of -25.3bps but only back to initial post-CPI levels.
- TYU4 trades at 110-28+ (+ 02) on middling volumes of 305k. It earlier tied with Friday’s low of 110-25 but remains above support at 110-15+ (20-day EMA).
- The pullback therefore persists but a bullish backdrop remains with resistance seen at 111-13+ (Jul 16 high).
- Today’s particularly thin docket should see flow and headlines in the driving seat (and with earnings still in focus), whilst some may look ahead to tomorrow’s 2Y supply. Last month’s 2Y auction came in almost in-line but with the bid-to-cover of 2.75x the highest since Aug 2023.
- Data: Chicago Fed national activity index Jun (0830ET)
- Bill issuance: US Tsy $76B 13W, $70B 26W Bill auctions (1130ET)
STIR: Marginal Increase In Fed Rates After Biden Withdrawal and PBOC Rate Cut
- Fed Funds implied rates are unchanged for July and September meetings and beyond that just 0.5bp higher in an extension of Friday’s increase.
- The PBOC surprisingly cutting its seven-day reverse repo rate is one factor at play whilst investors continue to grapple with implications from Biden ending his re-election campaign.
- Cumulative cuts from 5.33% effective: 1bp Jul, 25bp Sep, 40bp Nov, 62bp Dec and 79bp Jan.
- It follows last week’s almost clean sweep of stronger than expected data but one that was overshadowed by the prior week’s CPI/PPI plus Powell’s comments on greater dual mandate progress.
- Ahead of today’s particularly light docket with the FOMC in media blackout, see the latest macro recap here.
