MEXICO: USDMXN Holds Below 50-day EMA After Mixed Domestic Demand Data

EGB and Gilt yields finished up from their intraday highs Tuesday to trade mixed overall.

• Early trade was constructive, with Friday's poor US employment report continuing to buoy core instruments. At the onset of the session, the 10Y Bund yield hit its lowest intraday levels since Jul 23; for Gilts, Jul 2.
• However yields would mostly drift higher from there despite few evident catalysts, as equities and the US dollar pulled back.
• Data was relatively non-impactful. We saw above-expected Spanish and French industrial production alongside slight downward revisions to Eurozone final July services/composite PMIs, with UK services PMI seeing an upward revision. Eurozone June PPI was a touch lower than expected.
• A soft US ISM Services reading saw bonds rally, though a higher prices paid component muted the impact.
• For the session, both the UK and German curves leaned slightly flatter, with Gilts underperforming despite a solid 10Y UK auction. Periphery/semi-core EGB spreads were mostly tighter on the day, with 10Y BTPs failing to close below the 80bp mark to Bund.
• German factory orders highlight Tuesday's docket, with Italian industrial production and Eurozone retail sales also due. Thursday's BOE decision remains the calendar highlight of the week - MNI's preview is here.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.7bps at 1.908%, 5-Yr is down 0.2bps at 2.215%, 10-Yr is unchanged at 2.624%, and 30-Yr is up 0.3bps at 3.138%.
• UK: The 2-Yr yield is up 2bps at 3.826%, 5-Yr is up 1.8bps at 3.956%, 10-Yr is up 0.7bps at 4.516%, and 30-Yr is up 1.2bps at 5.339%.
• Italian BTP spread down 0.1bps at 80.2bps / French OAT down 0.3bps at 65.9bps  

The Kremlin is weighing options for a concession to US President Donald Trump that could include an air truce with Ukraine to try and prevent secondary sanctions, even as Russia remains determined to continue the war, Bloomberg reported.

• While US envoy Steve Witkoff is visiting Moscow, expectations for success in talks are low, sources familiar with the matter told Bloomberg.
• A pause on air strikes involving drones and missiles as a de-escalation gesture may be one potential proposal provided that Ukraine also signed up, a source told Bloomberg.
• Vladimir Putin will not agree to a general ceasefire as Russian forces continue a summer offensive before weather changes later in the year.
• It is not clear if offer of air restraints would also include conditions that would make it unacceptable to Ukraine and its allies.
• Trump has threatened to impose secondary sanctions including 100% tariffs on buyers of Russian oil, singling out India and China.

• US TSY 3Y AUCTION: NON-COMP BIDS $153 MLN FROM $58.000 BLN TOTAL