WHEAT: TASS-Russia's Lavrov, UN Sec-Gen To Discuss Black Sea Grain Deal Today

King Felipe VI has begun meetings with leaders of political parties following the inconclusive July election. The consultations will allow the parties to present their arguments to the monarch of why their supported candidate should be offered the opportunity of a prime ministerial investiture vote. The Gibraltar Chronicle reports that the King's decision on who could be offered the first chance of an investiture vote could come as early as this afternoon.

• The centre-right Popular Party (PP) is looking for its leader Alberto Nunez Feijoo to be offered the first chance of an investiture vote, arguing that as the head of the largest party it is his prerogative to seek a majority coalition first.
• The centre-left Spanish Socialist Workers' Party (PSOE) of acting PM Pedro Sanchez argues that Feijoo does not have the requisite support to win an investiture vote. The PSOE's success in getting its candidate elected as parliamentary speaker could provide impetus to the argument to have Sanchez offered the first investiture vote.
• Gibraltar Chronicle: "...the decision [on nominating a candidate] would trigger a two-month countdown in which an investiture must succeed before new elections are automatically called [...].These would be held 47 days after those two months end. [...] If the king takes a decision on Tuesday — he might take a few days to reflect or redo the consultation round — the investiture session could be held in the last week of August..."

RBC think the “new 2034 gilt will be launched on 11th October - implying the 3Q33s (the current 10y ‘on-the-run’) tap scheduled for 13th September will be its last.”

• “Historically the outgoing ‘on-the-run’ 10y gilts on average begin to outperform from 8 weeks prior to a new 10y gilt being launched. 8 weeks prior to 11 October is the 16 August (last Wednesday) hence we are in the territory from where we could expect to see the 3Q33s start to structurally richen.”
• “The most liquid RV structure, which is also curve neutral, is the 4Q32-3Q33-4H34 fly. Whilst the bond trades towards the richer end of its historical range, the structural outperformance we are expecting should richen the bond beyond its historical trading range and hence we still like being long the bond.”
• “We therefore add a medium conviction structural long in the 3Q33s on the 4Q32-3Q33-4H34 fly to our portfolio, setting a take profit target of 1.5bp and stop loss of 5bp.”

BoE-dated OIS moves back from softest levels of the day as core global FI markets move off richest levels.

• The liquid contracts are now 1-6bp softer on the day, with the strip flattening.
• That leaves ~31.5bp of tightening showing for next month’s meeting, while terminal policy rate pricing sits in the 6.05-6.10% window.
• Flash PMI data (due tomorrow) presents the major scheduled domestic reference point for participants this week.