Remarks / Observations
– Sparse macroeconomic calendar in session.
– Global markets are trying to shake off an initial sense of risk aversion that has swept through Asian markets.
Asia:
– A Ugandan Olympian in Tokyo tested positive for coronavirus when entering the Olympics (Note: athlete had received the AstraZeneca vaccine).
– China’s PBoC monthly loan prime rate (LPR) setting left 1-year and 5-year rates unchanged (14th consecutive month of stable rates).
– Australia Trade Min Tehan has said he will appeal to the WTO over Chinese anti-dumping duties on wine.
– Guangdong Province, China (accounts for 10% of China’s economic output) is experiencing power shortages and has asked factories to reduce their electricity consumption.
– Speculation that Chinese counterintelligence chief Dong Jingwei defected to the United States in February (if true, it would be the biggest defection on record).
Europe:
– ECB Chief Lagarde noted that the weekend retreat of ECB members made good progress in shaping the strategy on inflation and climate targets.
– Holzmann (Austria) from the ECB reiterates the Council’s position that projections of a deceleration in inflation beyond 2021 suggest that there is no need to raise interest rates.
– ECB’s Panetta (Italy) noted that a digital euro would protect consumer privacy, a key objective was to combat the spread of digital coins created by other countries and businesses.
– UK Jun Rightmove House Prices recorded its biggest increase for this period of the year since 2015 (M / M: 0.8% vs. 1.8% previously).
– The far-right French party of Marine Le Pen scored weaker than expected in the first round of the regional elections, leaving the other parties in a strong position in the vote next weekend.
– Fitch confirmed the UK sovereign rating at AA-; outlook revised from Negative to Stable.
Energy:
– Iran and Western officials have temporarily halted talks on the abandoned nuclear deal after Raisi was elected president (harsh criticism of the West). Parties said they took a break to allow participants to meet with their capitals. No specific time when talks would resume.
Speakers / Fixed income / FX / Commodities / Erratum
Actions
Indices [Stoxx600 -0.05% at 451.82, FTSE -0.02% at 7,015.85, DAX +0.20% at 15,479.20, CAC-40 -0.05% at 6,565.59, IBEX-35 -0.22% at 9,011.00, FTSE MIB -0.07% at 25,201.50 , SMI -0.12% at 11,926.49, S&P 500 Futures +0.36%].
Market focal points / Key themes: European indices open lower in all areas, but then recovered to trade in a mixed manner; the best performing sectors include healthcare and real estate; sectors leading to the decline include materials and financials; Greece and Ukraine closed for holidays; Auto1 changed to MDax; Siltronic switched to SDax; CNH to acquire Raven Industries; UK retailers are on the rise following speculation from investment firms looking to take over Morrison’s Kerry to acquire major Niacetno earnings expected in the next US session.
Actions
– Consumer Discretionary: WM Morrison Supermarkets [MRW.UK] + 30% (rejection of the offer; Amazon, Apollo is about to tender), Vivendi [VIV.FR] + 1% (confirms to sell 10% of its stake in Universal Music Group), Head plc [CPI.UK] + 6% (divestment; trading update), Prosus [PRX.NL] -2% (gains).
– Industrials: CNH Industrial [CNH.IT] -1.5% (acquisition of Raven Industries).
Loudspeakers
– UK Business Sec Kwarteng noted that covid restrictions are unlikely to be relaxed until July 19.
– Sweden PM Lofven loses the vote of confidence in parliament.
– Member of the Central Bank of Poland Kochalski said he sees the 2021 CPI slightly above the 4.0% level.
– Lon of the central bank of Poland said he should see signs of easing inflationary pressures in the second half of the year.
– Tokyo Olympics said to allow up to 10,000 Japanese spectators at each event.
– BOJ said it bought 70.1 billion yen of ETFs (1st such ETF purchase since April 21) following a 3.3% drop in the Nikkei.
– Iranian Foreign Ministry spokesperson said the next round of nuclear talks in Vienna would likely be the last.
Currency / Fixed Income
– USD started the week continued to benefit from the divergent views between the Fed and the ECB. Some weakness in Far Eastern equities led to safe haven flows towards the greenback.
– EUR / USD tested 1.1850 as the prospect of a move towards tightening monetary policy in the United States while the Eurozone maintained its ultra-accommodative policy.
– GBP / USD broke off its Asian session lows of 1.3787. The focus was on Thursday’s BOE rate decision. Markets believe the MPC could take a more hawkish view with inflation now above target level.
– USD / JPY fell to 109.71 after reports a Ugandan Olympian in Tokyo tested positive for coronavirus when entering the Olympics despite receiving the AstraZeneca vaccine.
Economic data
– (HU) Hungary Q1 current account balance € 0.5bn v: € 0.5m.
– (CH) Swiss M3 money supply Y / Y: 4.1% against 4.9% previously.
– (TW) Taiwan May Export Orders Y / Y: 34.5% vs. 42.1% e.
– (CH) Total Swiss weekly sight deposits (CHF): 712.2B against 711.0B previously; National sight deposits: 631.4 billion against 630.8 billion previously.
– (PL) Poland can sell industrial production M / M: -0.8% v -1.5% e; Y / Y: 29.8% vs. 30.4% e.
– (PL) Poland May PPI M / M: 0.8% vs. 0.5% e; Y / Y: 6.5% vs. 5.9% e.
– (BE) Consumer confidence index in Belgium in June: 8 against 4 previously (the highest since March 2001).
Issue of fixed income securities
– None seen.
Look ahead
– (EU) Daily liquidity statistics from the ECB.
– 5:30 am ((DE) Germany will sell a total of 6.0 billion euros in 6 and 12 month BuBills.
– 5:30 am (NL) The Dutch Debt Agency (DSTA) will sell € 2.0 to 4.0 billion in 3- and 6-month bills.
– 5:30 am (ZA) South Africa announces details of upcoming I / L Bond sale (held on Friday).
– 06:00 (IL) Israel May Unemployment rate: No is v 5.4% previously; Unemployment rate (including the Covid effect): No is v 10.6% before.
– 6:00 a.m. (IL) Israel will sell 2024, 2026, 2031, 2037 and 2047 bonds.
– 06:30 (PT) Centeno of the ECB (Portugal).
– 6:45 am (US) Correction of the daily Libor.
– 07:25 (BR) Weekly survey of economists at the Central Bank of Brazil.
– 08h00 (UK) Daily Baltic Dry Bulk Index.
– 08:00 (IN) India announces details of upcoming bond sale (held on Friday).
– 8:30 am (US) May Chicago Fed National Activity Index: 0.70ev 0.24 before.
– 8:30 am (EU) The head of the ECB Lagarde.
– 9 a.m. (FR) The French Debt Agency (AFT) will sell € 5.3 to 6.5 billion in 3-month, 6-month and 12-month bonds.
– 9:30 am (US) Fed bullard on economic outlook.
– 9.45am (EU) Weekly update of the ECB’s QE bond purchases.
– 9.45 a.m. (UK) BOE purchases £ 1.147 billion as part of the Gilt APF (3-7 year) deal.
– 11:30 am (US) The Treasury will sell 13 and 26 week bills.
– 10.15 a.m. (EU) ECB President Lagarde at the European Parliament.
– 3:00 p.m. (US) Fed Williams at a banking conference.
– 4:00 p.m. (United States) Weekly crop progress report.
– 17:00 (KR) South Korea May PPI Y / Y: No est v 5.6% before.
– 5:00 p.m. (NZ) New Zealand consumer confidence in Q2: no estimate of version 105.2 before.
– 18:01 (NL) Netherlands House price index in May H / M: No est v 0.9% before; Y / Y: No is v 11.5% before.
– 19:01 (IE) Ireland June Consumer confidence index: is not v 85.8 before.
– 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No is v 111.0 before.
– 10:30 p.m. (KR) South Korea will sell KRW800B in 20-year bonds.
– 23:00 (NZ) New Zealand Credit card spending in May M / M: No est v 2.7% before; Y / Y: No is against 87.4% before.
– 11:00 p.m. (TH Thailand Central Bank will sell THB60B in 3 month notes.
– 11:30 p.m. (HK) Hong Kong to sell 3 month and 6 month tickets.
– 11:35 p.m. (JP) Japan will sell 5-year JGB bonds.