OIL: WAF Crude Diffs Steady on Day: Reuters

European long-end instruments remained under pressure Tuesday.

• Fiscal and political concerns were at the forefront globally, starting with Japan overnight pushing long-end JGB yields up, a move that spilled over into European morning trade. Gilts underperformed amid continued UK fiscal uncertainty, which also saw GBP underperform peers.
• Supply was a constant pressure as well. with Bloomberg noting a record one-day corporate/govvy supply total of just under E50B, including UK and Italian sovereign syndications.
• ECB talk was plentiful: Schnabel noted upside inflation risks from tariffs and Muller reiterated his previous patient stance, while Villeroy said that inflation allowed for "favourable" interest rates and Simkus suggested a rate cut toward the end of year is plausible.
• European data was less impactful, with Eurozone flash August inflation slightly above-expected. Somewhat weak US ISM Manufacturing data helped global FI recover from its weakest levels of the day, however.
• The UK and German curves bear steepened. Multiple landmarks were reached, with a 14-year / 27-year highs reached in 30Y German / UK yields, respectively.
• Periphery/semi-core EGB spreads widened, with Portugal outperforming after Friday's ratings upgrade from S&P.
• Wednesday brings BOE TSC testimony, along with August final PMIs.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.9bps at 1.974%, 5-Yr is up 3.4bps at 2.313%, 10-Yr is up 3.8bps at 2.786%, and 30-Yr is up 4.6bps at 3.406%.
• UK: The 2-Yr yield is up 1.7bps at 3.982%, 5-Yr is up 3.9bps at 4.171%, 10-Yr is up 5bps at 4.8%, and 30-Yr is up 5.3bps at 5.693%.
• Italian BTP spread up 2.9bps at 89bps / Portuguese PGB up 0.4bps at 44.8bps

A new survey from the Wall Street Journal/AP-NORC has found that “the share of people who say they have a good chance of improving their standard of living fell to 25%, a record low in surveys dating to 1987. More than three-quarters said they lack confidence that life for the next generation will be better than their own, the poll found.”

• The Journal notes: “Nearly 70% of people said they believe the American dream—that if you work hard, you will get ahead—no longer holds true or never did, the highest level in nearly 15 years of surveys.”
• The poll found “a somewhat brightening view of the current economy. Some 44% rated the economy as excellent or good, up from 38% a year ago, though still a smaller share than the 56% who now view the economy as not good or poor.”

Figure 1: “People like me have a good chance of improving our standard of living”

Source: Wall Street Journal, AP-NORC

• RES 4: 1.3753 High High Jul 2   
• RES 3: 1.3681 High Jul 4 
• RES 2: 1.3636 76.4% retracement of the Jul 1 - Aug1 downleg
• RES 1: 1.3550/3595 High Sep 1 / High Aug 14
• PRICE: 1.3399 @ 16:04 BST Sep 2
• SUP 1: 1.3340 Intraday low  
• SUP 2: 1.3315 61.8% retracement of the Aug 1 - 14 bull leg
• SUP 3: 1.3249 76.4% retracement of the Aug 1 - 14 bull leg 
• SUP 4: 1.3142 Low Aug 1 and a key support      

The outlook in GBPUSD remains bullish and recent gains reinforce this theme. However, Tuesday’s sell-off undermines the bull theme and attention is on key short-term support at 1.3391, the Aug 22 low. It has been pierced, a clear  break of this level would signal scope for a deeper retracement and expose 1.3315, a Fibonacci retracement. For bulls, a breach of 1.3595, the Aug 14 high, is required to signal scope for a stronger rally.