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RBC: Time For The Doves To Spread Their Wings

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US TSYS
Tsys futures trading steady to mixed, flatter curves (2s10s -5.349 at 24.581) rotating around steady 10s w/ long end back to early overnight lvls.
  • Weaker data supportive of more moderate rate hikes later in the year:
  • Little initial reaction after slight gain in June reading of Personal Income is +0.6% MoM vs. +0.5 est, PCE Deflator is +1.0% MoM vs. +0.9% est, and ECI +1.3% vs. +1.2% est. Rates and stocks moved higher after the Chicago Business BarometerTM, produced with MNI, slid further in July, extending June's decline. The indicator fell 3.9-points to 52.1, the lowest level since August 2020.
  • Exogenous factors: Tsys had come under pressure in early London hours after higher than expected French, Italian and Spanish GDP economic data triggered selling in EGBs w/ brief pause after weaker than expected German GDP.
  • Meanwhile with data out of the way, attentive of unscheduled Fed speakers as they are out of media blackout now. Atlanta Fed Bostic broke the seal earlier, reiterating Chair Powell's talking point: we are not in a recession, but inflation needs to be addressed w/ "more work needs to be done on bringing demand and supply into balance".
  • Little react to Fed Chair Waller/Andrew Figura write-up on potential for soft landing (Fed note release). More unscheduled speakers likely to pop up as the day progresses.
  • Next Monday data: S&P Global Mfg data (52.4 est), ISMs (mfg 52.0 est; prices paid 73.5 est), JOLTS job openings (10.994M).
  • Current cross assets: spot Gold +6.25 at 1762.08, Crude climbing higher WTI +5.35 at 101.77, stocks near high ESU2 +37.0 at 4110.50.
  • Currently, 2-Yr yield is up 4.7bps at 2.9087%, 5-Yr is up 1.3bps at 2.7113%, 10-Yr is down 1.3bps at 2.6631%, and 30-Yr is down 2.1bps at 3.0016%.

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