Daily Brief Macro: Global Rates: Euro area and UK rate markets into the end of summer and more

• Market pricing is not expecting a rate cut at the ECB September meeting, but further easing may still be on the table later in the year.
• Swap spreads typically narrow in August, but this year they have been stable, potentially due to French political developments.
• Seasonality and potential volatility could still drive narrowing in swap spreads in the near term, despite weakening relationships with German swap spreads.

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• From July’s recent peak of US$17.3bn, onshore investors’ net Southbound buying declined to US$14.3 bn in August. Average daily turnover continued to climb, reaching an all-time high of US$19.8bn.
• Buying in Tencent, Xiaomi and Alibaba re-commenced, after selling for 3-4 months. The semiconductor giants – SMIC and Hua Hong – are being bought as well. 
• Investors’ long-standing preferences for e-commerce, food delivery, biotech and dividends continue. Meituan and Kuaishou continue to be bought, despite the recent losses. Akeso, XTALPI and Innovent occupy the biotech space.

• Market Structure Signals Stability: Gold futures have remained range-bound near technical resistance, with intraday volatility compressing—suggesting a market more likely to drift than break.
• ETF and Vault Flows Show Steady Demand: Sustained inflows into the SPDR Gold Trust and consistent London vault holdings point to underlying investor interest, even without aggressive price action.
• Positioning Data Reveals Divergence: Commercial hedgers are easing short exposure while speculative players show mixed sentiment, hinting at a market caught between caution and latent bullishness.

• Private assets, gold, and real estate are recommended for investment to recreate what our parents had financially
• Private credit is reshaping wealth portfolios, with a shift towards insurance companies funding the majority of assets in private credit
• The role of private credit has grown significantly post-financial crisis, with a focus on higher quality, lower risk assets and loans to hard assets such as infrastructure.

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• Copper Bull Case: Electrification and constrained supply support a bullish $10k/t copper outlook, positioning Japan Inc. as a strategic beneficiary of the energy transition.
• Japan Inc. Exposure: ~0.95 Mt attributable output (~63–66% demand) drives ~$6bn EBITDA; SMM and JX Advanced Metals are most leveraged, trading houses offer diversified exposure.
• Growth Optionality: Nittetsu’s Chile projects add near-term growth (2026–28), while Quechua provides long-dated optionality into the 2030s, enhancing Japan’s copper security.

• Legacy systems can’t handle usage-based billing, slowing down product launches
• Metronome allows for quick roll out of new pricing models in minutes
• Guest interview with Liz Truss discussing economic challenges and the need for policy shifts

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• The current and expected deterioration of the underlying fiscal trend is troubling
• But the empirical and theoretical relationships between fiscal variables and longer-term interest rates are complex
• My decomposition of longer-term rates and econometric estimates can potentially add to the available research on this

• Fenix Resources (FEX AU) has secured an exclusive 30-year mining right to the Weld Range Project, which has 290 million tons of resource and will significantly extend Fenix’s mine life.
• Initial plans are to increase production from the Weld Range to 6 million tons, taking Fenix Resources (FEX AU) to a 10-12 million ton production profile. 
• Fenix Resources (FEX AU) has already nearly tripled its production from 1.5 million tonnes to 4.4 million tonnes and trades at a 1.7x price-to-OCF (at a $100/tonne iron ore price). 

• Persistent inflationary pressures pared dovish guidance and pricing for the BoE and ECB, but Fed pricing is stuck.
• Blocking a rare resumption of Fed easing looks unlikely, but history suggests cuts would be shallow and reversed.
• Peer pressure is weak during a policy mistake. The BoE faces domestic problems that prevent further easing.