SWEDEN: Q2 BoP Data Suggests Domestic Portfolio Repatriation Was Only A Q1 Theme

• Treasuries are modestly lower across the curve but continue to hold a relatively narrow range seen since Friday’s nonfarm payrolls and less so ISM manufacturing reports were digested.
• Moves have been aided by equity futures consolidating yesterday's strong gains.
• Today’s focus should be on ISM services with sensitivity to further downside surprises whilst 3Y supply will be watched closely. There’s little scheduled for President Trump today, signing an executive order at 1600ET, but markets will be on watch for any potential contenders for Fed Governor Kugler’s position and the new BLS commissioner.
• Cash yields are 1.5-2.5bp higher on the day, with increases led by the front end.
• 2Y yields, currently at 3.6996%, appear to have found some support at 3.65% in the post-payrolls period, with a low of 3.655% with Monday’s Asia open. They last traded below this level in late April/very early May.
• TYU5 trades at 112-09 (-03), easing back from an overnight high for a second day running albeit at a slower pace today. Cumulative volumes are low at 230k.
• The latest high of 112-15+ more comfortably cleared resistance at a bull trigger of 112-12+ (Jul 1 high) and briefly 112-15 (61.8% retrace of Apr 7-11 sell-off). A firmer break could open 112-23 (May 1 high).
• Data: Trade balance Jun (0830ET), S&P Global US serv/comp PMI Jul final (0945ET), ISM services Jul (1000ET)
• Fedspeak: None scheduled
• Coupon issuance: US Tsy $58B 3Y Note auction - 91282CNU1 (1300ET)
• Bill issuance: US Tsy $85B 6W & $50B 52W bill auctions (1130ET)

The Swiss gov't has confirmed president of the Swiss Confederation, Karin Keller-Sutter, will travel to Washington, D.C., today (5 August) to discuss the 39% tariff rate imposed as part of US President Donald Trump's 'reciprocal' tariffs. Says the "aim is to present the US with [a] more attractive offer to reduce the level of additional tariffs on Swiss exports". 

• Keller-Sutter has come in for significant domestic criticism for her percieved failures in negotiating a trade deal with the US. The FT reports that the President of the Swiss Confederation, "is accused of grossly miscalculating the trade deal she thought she was able to secure with the Trump administration. [...] “It’s knives out,” a former Swiss diplomat said. Late on Thursday, Keller-Sutter held a “disastrous” phone call with Donald Trump, according to multiple people familiar with the situation."
• Keller-Sutter is one of seven on the Federal Council, which sits as the cabinet and a collective head of government and state. The president does not hold any more powers than the other councillors, only chairing meetings and is a 'first among equals'. This means that she will not travel to the US as the head of the Swiss gov't or state, but as the Federal Councillor responsible for the Federal Department of Finance.
• Inter-industry spats have developed, with exporters hit by tariffs criticising the sizeable pharmaceutical industry (not currently subject to tariffs). FT reports "watchmaker Breitling’s chief executive Georges Kern said his country was being “held hostage” by the pharmaceutical industry".