S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Danske Research Team notes that EUR/USD jumped after the US Treasury increased buyback volumes of longer-dated US Treasuries, flattening the bond curve and pulling the 10-year yield below Tuesday’s peak. The move in US yields only partially transmitted to Europe, where primary issuance remains active.
Treasury buybacks lift Euro against Dollar
“EUR/USD spiked higher after the US Treasury announced an increase in the buyback volumes of longer-dated Treasury bonds and the bond curve flattened. At 4.64% currently, the 10Y UST is now 10bp below the peak on Tuesday. The move in US yields only partly spilled over to Europe, where the primary market has opened with plenty of SSA and covered bond deals.”
“In the US, the FOMC minutes from the July meeting contained no major surprises. Views on inflation diverged, with ‘many’ participants assessing that “policy tightening would likely be necessary if inflation did not decline”. Some also noted that financial conditions might not be sufficiently restrictive to return inflation to 2%, consistent with hold-voters signalling openness to future hikes following the meeting.”
“In the euro area, final inflation data confirmed the flash estimate of 2.9% y/y, with core inflation at 2.5% y/y. Underlying inflation measures were broadly unchanged, with only small increases, suggesting it remains quite sticky, but price pressures have not risen significantly following the energy shock.”
“Separately, the Q2 Labour Cost Index eased to 3.1% y/y from 3.2% y/y in Q1, suggesting that wage pressures continue to moderate and should remain a disinflationary force. We therefore continue to expect only one further 25bp rate hike from the ECB.”
“In the euro area, the ECB publishes the minutes from its July meeting, at which policy rates were left unchanged. We expect the minutes to show a bias towards a rate hike in September, which is also fully priced in by markets. Guidance beyond September is likely to remain limited.”
