The NZD is the strongest and the EUR is the weakest of the major currencies to start the new trading week. The GBP is also weaker. Both the EUR and the GBP’s declines were impacted by weaker flash PMI estimates for July.

The reported Purchasing Managers’ Index (PMI) values for the French, German, and broader Eurozone economies and the UK came in mostly lower vs expectations. The softer PMI readings and continued high inflation are causing concerns about an economic downturn, increasing recession risks, and adding to the difficulties faced by central banks. This, in turn, is denting confidence in the economic outlook for the months ahead.

As bond yields have dropped, the Japanese yen has benefited, with the USDJPY falling 0.61% to 141.00.

Overall, the reported PMI values indicate a generally softer performance than anticipated across the manufacturing and service sectors:

• The French Flash Manufacturing PMI for July 2023 stood at 44.5, below the expected figure of 46.1 and also lower than the last month’s number of 46.0. The reading was the lowest since May 2020. Similarly, the French Flash Services PMI reported at 47.4, again lower than the anticipated 48.5 and the previous month’s value of 48.0 (lowest since Feb 2021).
• In Germany, the Flash Manufacturing PMI was reported at 38.8, falling short of the forecasted 40.9 and the preceding month’s 40.6 (lowest since May 2020). However, the German Flash Services PMI demonstrated a better outcome, with a result of 52.0 – above the 50.0 level indicating expansion – though it was still below the forecasted 53.2 and last month’s 54.1.
• For the broader Eurozone, the Flash Manufacturing PMI came in at 42.7, below the expected 43.5 and the previous month’s 43.4. It too was the lowest since May 2020. The Flash Services PMI reported at 51.1, which again missed the forecast of 51.7 and was also lower than the prior month’s figure of 52.0 (it is the lowest since Jan 2023).
• In the UK, the Flash Manufacturing PMI was 45.0, falling short of the expected 46.1 and also lower than the prior figure of 46.5. It was the lowest since December 2022 when it came in at 44.7. However, the Flash Services PMI reported at 51.5, below the forecast of 53.1, and the previous month’s number of 53.7.

Bond yields are trending lower following the disappointing PMI data from the Eurozone and the UK. Specifically, the

• 10-year German bond yields is down -5.7 basis points to 2.371%,
• 10-year French bond yields is down -5.5 basis points to 2.931%,
• 10-year UK gilt yields is down -9.2 basis points to 4.187%,

The 10-year US Treasury yields is down -4.7 basis points to 3.791%.

A snapshot of the markets as the NA session gets underway shows:

• Crude oil is trading up up $0.34 or 0.44% to $77.42. Technically the prices are trading back above its 200 day moving average at $77.14. That is the 1st time since August 2022
• Spot gold is trading up $4.24 or 0.21% $1965
• Silver is trading unchanged at $24.56
• Bitcoin is trading at $29,230. The low price today reached $28,978

In the premarket for US stocks, the major indices are trading mostly higher.

• Dow Industrial Average is trading up 24 points after inching out a gain of 2.51 points on Friday
• S&P index is trading up 7.41 points after Friday’s modest gain of 1.49 points
• NASDAQ index is trading up 38 points after falling for the 2nd consecutive day. On Friday the index fell by -30.50 points

In the European equity markets, the major indices are lower:

• German DAX, -0.12%
• France’s CAC, -0.4%
• UK’s FTSE 100, -0.22%
• Spain’s Ibex, -0.83%
• Italy’s FTSE MIB, -0.13% (delayed).

In the Asian Pacific market today, markets closed mixed:

• Japan’s Nikkei 225, +1.23%

• China’s Shanghai Composite, -0.11%

• Hong Kong’s Hang Seng, -2.13%

• Australia’s S&P/ASX 200, -0.10%

In the US debt market, yields are lower in early US trading

• 2-year yield, 4.824% -2.3 basis points
• 5-year yield 4.050%, -4.2 basis points
• 10-year yield 3.793% -4.5 basis points
• 30-year yield 3.887% -4.0 basis points

In the European debt market, benchmark 10-year yields are mostly lower:

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