EMISSIONS: UKAs Rise On EUAs, Equities Gains

A more mixed German flash PMI September report than French (which disappointed across the board). Manufacturing disappointed by 1.5 points at 48.5 (50.0 consensus, 49.8 prior) but services surprised by 3.0 points to the upside at 52.5 (49.5 consensus, 49.3 prior) with the composite output index at 52.5, 1.8 points above consensus (50.7 consensus, 50.5 prior). The latter is the highest for 16 months. In contrast to France, where both input and output prices cooled, they picked up in Germany - with output prices increasing at the fastest pace for six months. The market is proabably reacting to this part. The new orders part was very confusing in the press release which seemed to contradict itself a few times. See below from the press release:

• "Input cost inflation ticked up for the second month in a row in September, taking it to its highest since March. The result reflected a stronger increase in service sector operating expenses, with purchase prices faced by goods producers falling at a quicker rate than the month before."
• "The rate of increase in output prices likewise ticked up at the end of the third quarter, bringing it back broadly in line with its long-run average. As with costs, the stronger rate of output price inflation was driven by the service sector, which saw the greatest increase in prices charged for six months."
• "There were, however, signs of fragile demand, with the latest data indicating a broad-based decrease in inflows of new work. Employment also fell in both monitored sectors, amid a general weakening of business expectations for the year ahead."
• But this sentences seems to contradict: "The stronger performance at the end of the third quarter reflected a renewed increase in service sector business activity (index at eight-month high of 52.5) that followed a slight decrease in August. Here, surveyed businesses often commented on the start of new projects."
• And then this one contradicts again: "A lack of new business was a general theme across the private sector in September. Inflows of new work were down in both manufacturing and services, with the former recording its first decrease in four months and one that was the most marked since January."

• The German Bund falls to session low after the German Services and Composite PMIs jump back into expansion.
• Immediate support is still unchanged at 128.04, despite printing a 128.01 low Yesterday.
• EURUSD is back at pre French PMIs level.

From the statement: "Deputy Governor Anna Seim entered a reservation against the decision to cut the policy rate and instead advocated an unchanged policy rate at today’s meeting, together with a policy rate path signalling some probability of a further cut later this year. She argued that a vulnerable supply side, combined with an expansionary fiscal policy in 2026, implies that inflation could surprise on the upside."

Seim was the most hawkish member following the August minutes. It's not a huge surprise that she dissented, but goes against Thedeen's policy as a consensus building Governor amongst the Board.