POLAND: Wibor Rates

CIBC sees the BoC are still remaining on track for a 75bp hike in September after today’s retail report showing resilience in June but a weaker July.

• They note stronger than expected resilience in retail sales with a 1.1% M/M gain “given high inflation, rising interest rates and a shift to service consumption”.
• Q2 posting strong volume growth of 3.5% annualized supports their call “for robust consumption growth in the quarter”.
• The advance estimate for a significant 2% decline in July provides “some evidence that the expected shift away from goods consumption might finally materialize more meaningfully”.

Tsy futures holding narrow range near lows by the close, 30YY tapped 3.2339% high earlier - highest since July 11, currently 3.2213%. Yield curves bear steepened w/2s10s +4.141 at -28.004 - August 1 level.

• Initial cross-over weakness from EGBs followed higher than expected German PPI overnight (+5.3%, +37.2% YoY due to surge in energy prices); UK retail sale up 0.3% last month, but the cost of those sales increased more rapidly by 1.3%.
• Little react to Richmond Fed Barkin this morning as he reiterates the Fed is "very seriously" focused on inflation and will do "what it takes" to lower it to 2% despite "risk of recession on path to 2%". No new ground there, trading desks set sights on next Fri's annual eco-summit in Jackson Hole, Fed Chair Powell scheduled at 1000ET.
• After a decent start, trade volume thinned out in the second half (TYU2 just over 1M), no Tsy or corporate supply, though Tsy Sep/Dec rolls generating some volume (Dec takes lead Wed, Aug 31). Sep options also expire next week Friday could start to generate some two-way hedging on the day.
• Technicals for TYU2 currently trading 118-03 (-24.0), Treasuries maintain a softer tone and the contract has traded lower today. 118-05, 50.0% of the Jun 14 - Aug 2 bull cycle, has been cleared and this signals scope for an extension towards 117-14+ next, the Jul 21 low. Price has recently cleared a trendline support drawn from the Jun 14 low and this reinforces the current bearish theme. Initial firm resistance is at 119-31, the Aug 15 high.
• Currently, 6.2bps at 3.259%, 5-Yr is up 8bps at 3.1071%, 10-Yr is up 9.9bps at 2.9813%, and 30-Yr is up 8.2bps at 3.2188%.

Stocks continue to drift around session - and week lows in late Friday trade, SPX eminis back to last Fri morning lvls at the moment, lead by Consumer Discretionary, Financial and Communication Services sectors. Currently, SPX eminis trade -56.5 (-1.32%) at 4230.5; DJIA -299.53 (-0.88%) at 33699.01; Nasdaq -255 (-2%) at 12710.46.

• SPX leading/lagging sectors: Health Care sector outperforms (+0.30%), followed by Energy (+0.15%) as petroleum shares trade mixed after strong gains this week: Halliburton (HAL) -0.80% after gaining near 4% Thu, Marathon (MRO) -0.14 vs. +3.72% Thu; Utilities (-0.17%) and Consumer Staples slip to -0.41%. Laggers: As noted, Consumer Discretionary (-2.14%), Financials (-2.11) and Communication Services (-1.98%) sectors underperformed. Real rates weighed on Tech Sector -1.75% in late trade.
• Dow Industrials Leaders/Laggers: United Health (UNH) +4.71 at 549.93, JNJ +2.70 at 169.47 and Merck (MRK +1.03 at 92.43. Laggers: Goldman Sachs (GS) -6.24 at 348.28, Salesforce (CRM) -5.04 at 182.89 and Boeing (BA) -5.59 at 163.10.
• Equity earnings cycle nearly complete, still some notable announcements next week: Nvidia (NVDA) late Wednesday $508 est, Dell late Thursday $1.636 est