NZD is the strongest and EUR is the weakest of the major currencies to start the new trading week. GBP is also weaker. Both the EUR and GBP fell due to weaker flash PMI estimates for July.

Purchasing Managers’ Index (PMI) readings for France, Germany and the wider eurozone and UK economies were mostly below expectations. Softer PMIs and continued high inflation are raising concerns about an economic downturn, increasing recession risks and adding to the difficulties facing central banks. This in turn erodes confidence in the economic outlook for the coming months.

As bond yields fell, the Japanese yen benefited, with USDJPY down 0.61% to 141.00.

Overall, the reported PMIs indicate a generally weaker-than-expected performance across the manufacturing and services sectors:

• France’s Flash Manufacturing PMI for July 2023 came in at 44.5, below expectations of 46.1 and also down from last month’s reading of 46.0. The reading was the lowest since May 2020. Similarly, France’s Flash Services PMI came in at 47.4, again below expectations of 48.5 and the previous month’s reading of 48.0 (lowest since February 2021).
• In Germany, Flash Manufacturing PMI was reported at 38.8, down from 40.9 expected and 40.6 last month (lowest since May 2020). However, Germany’s PMI Flash Services showed a better result at 52.0 – above the 50.0 level indicating expansion – although still below last month’s forecast of 53.2 and 54.1.
• For the wider Eurozone, the Flash Manufacturing PMI came in at 42.7, below expectations of 43.5 and 43.4 from the previous month. This was also the lowest since May 2020. The Flash Services PMI came in at 51.1, which again missed the forecast of 51.7 and was also lower than the previous month’s reading of 52.0 (the lowest since January 2023).
• In the UK, the Flash Manufacturing PMI was 45.0, below expectations of 46.1 and also lower than the previous reading of 46.5. It was the lowest since December 2022, when it reached 44.7. However, the Flash Services PMI came in at 51.5, down from the forecast of 53.1 and the previous month’s number of 53.7.

Bond yields fall after disappointing Eurozone and UK PMI data. Specifically

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

10-year US Treasury yields fell -4.7 basis points to 3.791%.

A snapshot of the markets during the NA session shows:

• Crude oil is trading up $0.34, or 0.44%, at $77.42. Technically, prices are trading back above their 200-day moving average at $77.14. This is the first time since August 2022
• Spot gold is trading up $4.24 or 0.21% at $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, major indexes are mostly trading higher.

• The Dow Industrial Average is trading up 24 points after edging a gain of 2.51 points on Friday
• The S&P is trading up 7.41 points after Friday’s slight gain of 1.49 points
• The NASDAQ index is trading down 38 points after falling for the second day in a row. On Friday, the index fell by -30.50 points

In European stock markets, the main indices are lower:

• German DAX, -0.12%
• CAC France, -0.4%
• Britain’s FTSE 100, -0.22%
• Spanish Capricorn, -0.83%
• Italy’s FTSE MIB, -0.13% (Late).

In Asia Pacific, markets closed mixed today:

• 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 bond market, yields are lower at the start of trading in the US

• 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 bond market, benchmark 10-year yields are generally lower: