European prices down again
European gas prices weakened again yesterday, still more sensitive to warmer weather and negative clean spark spreads on the spot and the month-ahead than to…
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Over the last two days, the German 10 year bond yield has increased by 7bp while the US 10 year is only up 3bp and turned down yesterday. This is the main reason why the EUR/USD exchange rate has risen from 1.18 to 1.1850.
ECB hawks have been calling for an immediate reduction in ECB asset purchases, especially after the release of August’s 10-year high inflation figures. They may well win their case at next week’s meeting.
In the US, the spread of the delta variant seems to be starting to ease and the purchasing managers’ indices (PMI and ISM) reassured us about growth yesterday, but they concerned industry, which we know is not very affected anyway. On the other hand, ADP’s estimate of private sector job creation in August came in well below expectations for the third consecutive month at 374k. Does this mean that the pandemic has hit services hiring hard again? The answer will come tomorrow with the employment report and today with the weekly jobless claims figures which have resumed their downward trend in August.