Eurozone economic activity continues to expand

Eurozone economic activity continues to expand at a modest pace, with the manufacturing PMI reaching 52.4 in July.

Italy and Spain PMIs remain in strong expansion, near multi-year historical highs. Spain GDP accelerated in Q2, reaching 3.1% yoy as consumption continues to recover. Stronger economic activity in major peripheral countries and the ECB QE are providing support to peripheral bonds, despite the persistence of geopolitical uncertainty over Greece and upcoming elections in Spain.

"Our economists expect some moderation of economic growth during H2," said Societe Generale in a report on Tuesday.