Weak Global PMIs

Tsys finish the week with a risk-off tone after weak PMI services read, Tsy broadly higher, curves initially steeper as hawkish forward rate hike guidance for the latter half of the year cooled -- a 75bps hike is still expected next week Wednesday while a 50bps move at the Sep policy meeting looks more likely.

• Tsys surged in early London trade after France and Germany mfg PMIs both missed expectations overnight, contractionary sub-50 reads at 49.6 and 49.2 respectively (UK mfg PMI bucked trend, coming out at 52.2 vs. 52.0 est).
• Volumes spiked as Tsy futures furthered the rally (30YY 2.9477% low) after preliminary July reading of the SP Global mfg PMI of 52.3 vs. 52.0 exp (52.7 in June), service sector miss at 47.0 vs. 52.7 est (steady to June read).
• Heavy volumes by the close w/ TYU2>1.6M. Yield curves turned mixed amid some profit taking in the short end: 2s10s -0.212 at -21.661 vs. -17.316 high, 5s30s however, +7.060 at 12.689.
• Fed terminal rate now seen at 3.33%, from what had been seen at 3.69% after last week's US CPI beat.
• Cross assets: Spot gold firmer but well off highs +4.78 at 1723.59, crude sold off late: WTI -1.54 to 94.81.