HAPPY HOLIDAYS… WILL BE BACK IN TOUCH AFTER THE SUMMER BREAK!

Macroeconomic environment Publication of the Strategic daily will be interrupted until the end of August. We wish all our readers happy holiday s ! Eurozone : ECB kept key policy rates o n hold . France : This morning the Q2 GDP was revised down at 1.7% YoY vs. 1.9% previously. US : durable goods orders came in way below expectations at 1% (consensus: 3%). International trade balance in goods was in line with expectations, with a deficit of $68.3bn (consensus: $67bn deficit) . Japan : This morning Tokyo CPI came out sl ightly above expectations at 0.9 % vs. 0.7% expected. Equities Stoxx   600 closed higher, up 0.8% after the meeting between Donald Trump and Jean-Claude Juncker, an agreement having been reached not to impose new tariffs while continuing to hold trade talks. With Facebook crashing 20% when US markets opened , this sent the Nasdaq lower, down 1.01 %. The S&P 500 edged lower, down 0.3 %. Earnings season continued in the US, with publications from Amazon.com, Twitter, Intel, Qualcomm, Advanced Micro Devices. Bond markets / Derivatives Bear steepening by EZ curves in the wake of the ECB meeting, the absence of any announcements concerning reinvestments weighing on swap spreads, notably at the long end. EZ gam ma continued to underperform in the absence of any announcement, premiums reaching extremely low levels for 1-month and 3-month expiries, while the significant issuance of callables weighed on vega . In the US, Treasury yields eased on Thursday after setting 6-week highs in previous sessions. Even so, yields remain relatively high, in particular after the US-EU pull ed back from an all-out trade war, causing tensions to subside . The 10-year and 30-year TNote yields declined by around 2bp whereas the 2-year TNote yield remained rather stable, leading to a flattening of the 10Y-2Y segment of the curve. Money markets / Central banks The US 3-month Libor-OIS spread extended its downtrend to 33.13bp, its lowest level since February, whereas the 3-month TED spread recovered slightly to 35bp. The Eonia bases and Euribor 3s6s 5Y headed lower on Thursday. Eurodollar and Short Sterling contracts were also the back foot, not however Euribor contracts that were relatively stable intraday. FX The EUR/USD shed almost 0.5%. Taking advantage of the euro’s bout of weakness, the US dollar appreciated against nearly all G10 and emerging currencies. Sterling, the Canadian dollar and Japanese yen weakened, but fare d better than the other currencies. Sterling is bolstered by Theresa May’s decision to take charge personally of the Brexit negotiations. The Canadian dollar reacted favourably to Donald Trump’s agreement with the EU over tariffs (other than auto), suggesting that a similar decision could be reached with Canada. Finally, the yen was bolstered by Japanese 10-year rates, at their highest since February, stoking speculation there could be a change in the BoJ’s stance come the end of July. Commodities Crude oil prices rose after Saudi Arabia announced it was halting shipments through the Bab al-Mandeb strait in the Red Sea after an earlier attack on two tankers by Houthi rebels.