FED: Waller Continues To Advocate Measured Easing Approach (1/2)

FFX5 paper paid 96.125 on ~4.7K. Comes after FFV5 saw paper pay 95.945 on ~6.7K.

• GBP750mln have been on offer.
• This leaves GBP34.113bln of the gilt in issue.

Euro area industrial production increased in July despite a return of a heavy drag from energy, with M/M readings on balance surprising positively but the Y/Y as expected. IP growth of 1.8% Y/Y is within some wide recent ranges owing in part to energy volatility. 

• Euro area IP modestly undershot expectations in July with 0.3% M/M (cons 0.4) but that was easily more than offset by a large upward revision to -0.6% M/M in June (initially -1.3%).
• That was a ‘genuine’ upward revision with the Y/Y also lifted from 0.2% to 0.7%. Interestingly though, despite this upward revision the Y/Y in July was as expected at 1.8% (although note 27 replies for the M/M vs 12 for Y/Y in the Bloomberg survey).
• This 1.8% Y/Y is the only the highest since March, with the series oscillating between rates a little above 0% and below 4% in recent months.
• Broadly speaking, Germany and Italy’s growth (+1.5% and +0.4% M/M respectively) were partly offset by declines in France and Spain (-1.2% and -0.7% M/M respectively).
• Ireland’s usual volatility, which had driven previous M/M moves, calmed this month (+0.6% M/M vs -11.9% prior).
• Swings in energy IP have also had an increasingly large contribution to the headline number in recent months, with euro area energy IP contracting -2.9% M/M (vs +1.4% June). One ex-energy measure increased 0.8% M/M in July after -1.0% in June.
• Highlighting this volatility, Italy’s energy IP fell -7.8% M/M (vs +0.2% prior), Germany’s -4.5% M/M (vs -3.3% prior), and Spain’s -3.3% M/M (vs +5.3% prior). France saw an increase of +1.9% M/M (vs +6.5% prior).

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