FRANCE DATA: Weak June Manufacturing Sentiment Bodes Ill For Monday's PMIs
Jun-20 07:41
French manufacturing sentiment slipped to 95.9 in June, down from 97.1 prior for the second consecutive increase. The index is at its lowest since January, and printed below the 98.0 (rounded consensus). The details of the release were soft, and do not bode well for the June flash manufacturing PMI due on Monday. There is no BBG consensus for that release yet. The May PMI was 49.8 (vs 48.7 prior), the highest since January 2023.
- Looking at the details of the INSEE report: Although general production expectations rose slightly to -12.6, personal production expectations fell to a 6-month low of -1.1 (vs -0.4 prior).
- New orders fell to -23.8 (vs -23.4 prior), while inventories climbed to 15.4 (vs 9.5 prior), indicative of subdued demand.
- The backward-looking employment component fell 2.0 points to -3.7, while the employment expectations component remains negative (as it has been for 8 of the last 9 months) at -1.5 (vs -1.8 prior).
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
SWAPS: Citi Cautious On Idea Of Further EUR Steepening In Immediate Term
May-21 07:41
Citi identify several risks to existing steepener positioning on the EUR swaps curve (with a particular focus on 30s50s):
- “While originally around half of the total €1600bn assets (at end-2024) were targeted to transition each on 1 January 2026 and 1 January 2027, the DNB’s Q4 survey showed a shift later. Recently PME has shifted its transition from 1 January 2026 to 1 January 2027 and PostNL to April 2026, due to administrative difficulties. This could delay/stagger these unwinds”.
- “Any delay in transition could also be an incentive for funds with policy funding ratio under 120%. They could wait for a recovery in funding ratios from fiscal pressure on global long-end swaps to then add interest rate hedges at cheap levels”.
- Overall, they “suspect that any further 30s50s steepening due to this transition might only happen later in the year when more clarity emerges, for instance, from the next DNB survey, potentially published in July”.
- However, they stress that “the asymmetric long-end exposure to front-end swings has become more compelling over the last six months - which we believe supports 30s50s steepeners from a broader macro standpoint”.
GILTS: 2-Year Yields Through Next Resistance
May-21 07:36
2-Year yields move above the April 10 high (4.078%) following the CPI data, peaking at 4.088%.
- The next upside level of note comes in at the downtrend line drawn off the January high (4.119% today).
- April 9/10 highs are unchallenged across the rest of the curve.
GILTS: Next Support Breached In Futures
May-21 07:27
Gilts sell off following the CPI data.
- Futures through next support at the May 19 low (90.86), printing as low as 90.72 before recovering from lows.
- Bearish technical trend remains intact, with next support at the April 11 low (90.47).
- Yields see a parallel ~3bp shift higher.
- SONIA futures tick further away from lows as gilts stabilise, last 0.25-3.0 lower.
- BoE-dated OIS shows 37bp of cuts through December vs. 35bp ahead of the gilt open.
- On the supply front, the DMO will sell GBP4.25bln of the 4.00% Oct-31 gilt today.
- Little else of note on the UK calendar for the remainder of the day, which will leave focus on macro inputs and continued digestion of the CPI data.
