EUROZONE DATA: Week Ahead: Country-level Flash Inflation Data In Focus
Signals from flash PMI data, President Lagarde’s speech and the latest Bloomberg sources piece all but ensure the ECB deposit rate will be held at 2.00% in September. Focus now turns to the August flash inflation round (starting on Friday with country level data), which alongside the final Q2 GDP report on September 5th will be the last major inputs before the ECB’s September decision.
Early consensus based on the previews MNI has seen looks for the Eurozone-wide headline HICP reading to tick up a tenth to 2.1% Y/Y (on higher energy prices), while the core measure is expected to ease a tenth to 2.2% Y/Y (on softer services). Such a dynamic would be in line with the ECB's broader view of the inflation outlook, and shouldn't have a material impact on market pricing. ECB-dated OIS currently price 18bps of cuts through June 2026. The Eurozone-wide data is not released until September 2, but country-level data from Spain, France, Germany and Italy are all due on Friday.
The week ahead also includes the August European Commission sentiment survey, and ECB consumer expectations for July.
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TARIFFS: US And EU Closing In On 15% Tariff Deal - FT
The Financial Times reports that the United States and European Union are closing in on a deal that would impose 15% tariffs on European imports, potentially heading off a threat issued by President Donald Trump earlier this month to hit the EU with a 30% tariff rate on August 1.
- FT notes: "Both sides would waive tariffs on some products, including aircraft, spirits and medical devices... [sources] said they understood the 15 per cent minimum tariff would include those existing duties, so Brussels views the deal as cementing the status quo. Tariffs on cars, which are currently 27.5 per cent, would therefore fall to 15 per cent."
- FT adds: "The bloc will continue to prepare a possible €93bn package of retaliatory tariffs, set at up to 30 per cent, in case they cannot agree a deal by August 1, the people said. A US official said the situation was fluid and subject to change."
- Bloomberg reported earlier that, absent a trade deal by August 1, the EU would "quickly hit the US with 30% tariffs on some €100 billion ($117 billion) worth of goods." The first wave of countermeasures would combine "an already approved list of tariffs on €21 billion of US goods and a previously proposed list on an additional €72 billion of American products into one package".
- Trump said on Truth Social earlier: "I WILL ONLY LOWER TARIFFS IF A COUNTRY AGREES TO OPEN ITS MARKET. IF NOT, MUCH HIGHER TARIFFS!"
US TSYS: Extending Lows on US/EU Trade Chatter
- Bit of classic risk-on at midday, Treasuries are extending lows, stocks climbing to new highs after Financial Times article posits the US & EU "close in on 15% tariff deal".
- Tsy Sep'25 10Y contract trades -12.5 at 111-00.5 (low) - nearing initial technical support at 110-30/08.5 (50-day EMA / Low Jul 14 & 16).
- Curves still mixed: 2s10s +0.353 at 51.204, 5s30s -0.618 at 102.429.
- Cross asset: Bbg US$ index retreats: BBDXY -1.55 at 1194.25; SPX eminis new high of 6385.0; gold down 41.58 at 3390.06.
EGBS: EGBs Slip On FT Report That EU-US Closing In On 15% Tariff Deal
- A swift sell-off in EGBs on the back of that FT report, 2Y German yields 3bp higher for the same increase on the day.
- RXA slides ~35 ticks to a low of 130.17, but still some way off testing support at 129.73 (Jul 21 low).
