While the market remained thrilled by the US debt agreements, PMI data for July reminded us of the risk of global economic slowdown. Following bullishness in the Asian session, European stocks rallied with bourses rising 0.5-1.5%. In the commodity sector, oil prices strengthened but gains were capped. The front-month contract for Brent crude struck above 120 for the first time since June 14 but then retreated to around 119 on profit-taking. The 120 level is a psychological one which triggered the IEA to announce collective release of SPR on June 23. The equivalent WTI crude contract soared to as high as 97.55 before pulling back to around 97. Gold rebounded after gaining supports above 1600, signaling a significant number of investors remained cautious about the macroeconomic outlook.

The final estimate of Eurozone's manufacturing PMI stayed unchanged at 50.4 in July. However, the reading for Germany was revised down -0.1 point to 52. In peripheral countries, the Spanish PMI declined for the 5th consecutive month to 45.6 from 47.3 while Italian PMI edged higher to 50.1 from 49.9. In the UK, manufacturing PMI plunged to 49.1 in July from an upwardly revised 51.4 in June. This was the first time since September 2009 that UK's manufacturing sector fell in the contraction territory. In the US, the ISM manufacturing index might have eased to 55 in July from 55.3 a month ago.

Commitments of Traders:

Speculators were bullish on the energy complex in the week ended July 26. Net length for crude oil futures rose for a 4th straight week, adding 3 410 to 158767 contracts. Net lengths for heating oil futures and gasoline futures also rose to 32 583 and 67 997 contracts respectively. Net short for natural gas futures dropped to 174 981 contracts during the week.

Speculators were also bullish on the precious metal complex, net length for gold futures soared to 235 617 contracts, the highest level since November 2010, while silver futures rose to 23 943 contracts. For PGMs, net lengths for platinum futures and palladium futures increased to 21 544 contracts and the 8-month high of16 213 contracts, respectively.

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