SILVER TECHS: Recovers Off Support

European equity index futures point to negative cash opens after U.S. President Trump upped his tariff threats against both the EU & Mexico over the weekend.

• Euro Stoxx 50 futures: -0.83%
• DAX futures: -0.96%
• CAC 40 futures: -0.80%
• FTSE MIB futures: -1.04%
• SMI futures: -0.39%
• FTSE 100 futures: -0.14%
• This morning’s move lower in Euro Stoxx 50 futures is still deemed corrective at this stage, with bulls remaining in technical control. Support at the 50-day EMA (5,328.83).

Dovish repricing in EUR STIRs following US President Trump’s tariff letter to the EU is contributing to this morning’s twist steepening in core EGB curves. ECB-dated OIS are up to 2.5bps more dovish through the next 12 months. Pricing is still consistent with one more 25bp ECB cut this cycle, but a continuation would see markets once again entertain the idea of a terminal rate as low as 1.50%.

• US President Trump announced a 30% reciprocal tariff on EU exports from August 1. To assist with negotiations, the EU has said its E21bln package of retaliatory measures will also be delayed to this date. Meanwhile, Bloomberg sources suggest the EU is preparing to engage more with other nations (e.g. Canada, Japan) to coordinate responses to the US.
• OIS still assign virtually no implied probability of a cut in July. This is likely a combination of (i) previous ECB guidance that policy is in a “good place”, suggesting there is time to wait until the September decision where updated forecasts are presented, and (ii) the risk that Trump’s announcement is just a negotiating tactic and the actual outcome of negotiations will be less onerous than the 30% announced rate.
• Euribor futures are +0.5 to +3.0 ticks through the blues, with the whites/reds outperforming. ERH6 is +3.0 ticks at 98.20, but remains below last Friday’s 98.215 high.
• Today’s regional data calendar is light. ECB speakers include Cipollone and Vujcic. 

Modest dovish adjustments in GBP STIRs after the dovish comments from BoE Governor Bailey re: the potential for a softer labour market to feed through into BoE action and a weak REC labour market report (both detailed in previous bullets).

• Still, SONIA futures (flat to +3.0) and BoE-dated OIS (53bp of cuts priced through Dec) stick within recent ranges.
• Looking ahead, it's another packed week for the UK with Mansion House speeches, inflation and labour market data all due.
• The Mansion House speeches will see both Chancellor Reeves and Governor Bailey speak. Bailey has spoken a fair amount recently so not much new on monetary policy is expected from him, while Reeves had been expected to outline a consultation on ISA reform (tax free savings accounts) but the latest media reports suggest that this plan has been shelved.
• An early consensus sees both headline and core CPI expected to remain unchanged from May levels at 3.4%Y/Y and 3.5%Y/Y respectively - which would be a little above the BOE's forecast for headline and a little below for core. At a more granular level food prices are expected to remain much stronger than the BOE's forecast - and to offset slightly softer core prices.
• Labour market data will be watched to see whether wage growth slows as much as expected - and HMRC payrolls data will continue to be watched after being mentioned in the June MPC Minutes. These will be the last inflation and labour market readings ahead of the August MPC meeting.