EU CONSUMER CYCLICALS: VF Corp: Bracken interview

• Regional Fed CPI metrics support the earlier notion that core CPI was weighed down by some large items, such as used cars -0.7% on the core goods side and lodging away from home -2.9% on the core services side. See our bullet on the acceleration in median core goods inflation at 0915ET for an example of underlying pressures building.
• Core CPI inflation stood at 0.23% M/M in June after 0.13% in May. In comparison, across the entire CPI basket the Cleveland Fed median lifted from 0.22% to 0.33% M/M (back to Mar/Apr rates) and the 16% trimmed mean accelerated from 0.18% to 0.32% M/M (fastest since Jan 2025).
• There’s a similar story in the Atlanta Fed’s sticky CPI series, with ex-shelter measures on both a headline and core basis accelerating to 0.40% M/M for their fastest since January.
• Taking a step back, Y/Y rates appear to have bottomed in the spring, at least for now, at levels above pre-pandemic averages.
• The Cleveland Fed median increased to 3.6% Y/Y in June after three months averaging 3.47% in a tight range and the trimmed mean increased to 3.17% having touched 2.97% in April. The Atlanta Fed’s sticky core CPI ex shelter series meanwhile increased to 2.46% Y/Y to continue an acceleration from 2.09% in April – see charts. 

Major EGB futures continue to follow TYs lower post-US CPI, with Bunds now just +14 ticks on the session at 129.32, off earlier highs of 129.83. However, EGBs continue to outperform Gilts and USTs intraday.

• Resistance at the 20-day EMA (130.06) was untested during this morning’s Bund rally, which kept a bearish technical theme intact. A reminder that there wasn’t much in the way of headline flow to explain the early strength.
• Initial support to monitor in Bunds remains the July 14 low at 129.08  Clearance of this level would expose the bear trigger at 128.97, the May 14 low.
• OAT futures are +21 ticks at 122.53, with PM Bayrou’s 2026 budget outline not promoting any meaningful divergence from Bunds. Notably, far-right RN leader Bardella suggested a censure motion was likely if Bayrou was to follow through with the removal of two public holidays.
• Gilt futures are off session lows, but remain -27 ticks at 91.56. UK June inflation headlines tomorrow’s calendar, with labour market data also due on Thursday. A reminder that Chancellor Reeves and Governor Bailey speak at Mansion House later this evening. See our preview here for more.

• +7,000 TUU5 103-17, buy through 103-16.88 post time offer at 1131:00ET, DV01 $270,200.
• The 2Y contract trades 103-16.88 last (-3.75)