Notes/Observations
European June CPI nudges lower month on month but in line with forecasts, whilst French CPI was flat
German Unemployment rises for the first time in 8 months
Germany 10 year Bund trades at 6 week lows before retracing sharply on short covering flows.
Overnight
Asia:
China official PMIs hit 3-month high
Japan core CPI reaches 2-year high and recorded the fifth monthly increase, Industrial Output fell at fastest pace since Mar 2011.
South Korea President Moon and US President Trump promise to make joint efforts to denuclearize North Korea
Europe:
Eurozone Flash CPI comes in line with forecasts but dips slightly from the prior month, French prelim CPI flat y/y.
German unemployment recorded first rise in 8 months and 2nd rise in the past 14 months while unemployment rate remained unchanged.
Bayer shares fall sharply after announcing it expects negative earnings impact from Its Brazilian Crop Science Business
BoE Haldane noted policy makers are watching for signs of wage growth pickup, reiterates any policy tightening will be limited & gradual
UK consumer confidence hits 11 month low with higher inflation and weaker wage growth cited
Americas:
Fed’s Bullard (non-voter, dovish): Sees more sympathy at the Fed for view that inflation is not coming back to target as quick as first thought
Economic Data
(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.1% V 1.0%E
(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +7K V -10KE; UNEMPLOYMENT RATE: 5.7%E V 5.7%E (First rise in unemployment in 8 months)
(DE) GERMANY MAY RETAIL SALES M/M: 0.5% V 0.3%E; Y/Y: 4.8% V 2.8%E
(FR) FRANCE JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E
(UK) JUNE GFK CONSUMER CONFIDENCE: -10 V -7E (11-month low)
(UK) Q1 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 2.0% V 2.0%E
(UK) Q1 FINAL TOTAL BUSINESS INVESTMENT Q/Q: 0.6% V 0.6% PRELIM; Y/Y: 0.7% V 0.8% PRELIM
(CH) SWISS JUN KOF LEADING INDICATOR: 105.5 V 102.2E
(NO) NORWAY JUN UNEMPLOYMENT RATE: 2.6% V 2.6%E
(AT) Austria May PPI M/M: -0.4% v 0.2% prior; Y/Y: 2.0% v 2.8% prior
(NO) Norway May Retail Sales W/Auto Fuel M/M: 1.3% v 0.0%e
Fixed Income Issuance:
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL OF €6.35B V €5.5-6.5B INDICATED IN 5-YEAR AND 10-YEAR BTP BONDS
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.3% at 3,479, FTSE -0.1% at 7,343, DAX +0.2% at 12,438, CAC-40 +0.4% at 5,178, IBEX-35 +0.3% at 10,559, FTSE MIB +0.3% at 20,766, SMI +0.3% at 8,975, S&P 500 Futures +0.1%]
Market Focal Points/Key Themes: European stocks opened down in line with Asia, but rebounded during the session; more hawkish tone from central bankers kept sentiment depressed; oil continued to support energy stocks; German healthcare sector dragged down by Bayer; UK stocks weighed down by strong pound; Delivery Hero debuts at €26.90/shr; attention shifting to core PCE deflator out later today; few companies reporting in US session with Kingtone and Terraform
Equities
Consumer discretionary [Technicolor TCH.FR -8.4% (cuts outlook), Trinity Mirror (TNI.UK) +5.8% (trading update), Adidas ADS.DE +3.3% (Nike reported)]
Energy [Vopak VPK.NL -2.3% (analyst action)]
Healthcare [Bayer BAYN.DE -3.9%, (cuts outlook)]
Financials [Uniplol UNI.IT +2.9% (restructuring)]
Industrials [Subsea 7 SUBC.NO +2.5% (acquisition)]
Materials [Polyus Gold PGIL.UK -1.3% (placement)
Technology [Soitec SOIT.FR +0.3% (placement)]
Speakers
Non seen
Currencies
EURUSD trades below 1.14 giving back some ground after the recent strong run up this week as prelim Eurozone CPI came in line with forecasts, EURYEN slips to new daily low trading below 127.50.
GBPUSD falls after the UK current account widened in the first quarter, falling to 1.2984 with immediate support seen at 1.2975.
Fixed Income
Bund futures trade at 162.51 up 34 ticks bouncing sharply of 161.88 which marked new 6 week lows as the downward momentum continued. The bounce higher has been put down to short covering with continued upside eyeing 162.58, a move lower looks to retest 161.88.
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.612T a fall of €22B from €1.634T prior. Use of the marginal lending facility rose to €126M from €100M prior.
Corporate issuance was quiet entering into the US holidays. Issuance for the first 6 months of the year posted a record high of 718.7B slightly ahead of the $718.2B posted in 2015. January was the biggest month with over $176B.
For the week ending June 28th, Lipper US Fund flows reported IG funds net inflows of $724.3M bringing YTD inflows to $66.6B, High Yield funds reported outflows of $1.74B bringing YTD outflows to $6.57B.
Looking Ahead
05:30 (SL) Sri Lanka Jun CPI Y/Y: No est v 6.0% prior
06:00 (PT) Portugal May Retail sales M/M: No est v 1.5% prior; Y/Y: No est v 4.9% prior
06:00 (PT) Portugal May Industrial Production M/M: No est v 0.2% prior; Y/Y: No est v -1.2% prior
07:30 (IN) India Weekly Forex Reserves
08:00 (PL) Poland Jun Preliminary CPI M/M: 0.1%e v 0.0% prior; Y/Y: 1.9%e v 1.9% prior
08:00 (BR) Brazil May National Unemployment Rate: 13.7%e v 13.6% prior
08:00 (ZA) South Africa May Trade Balance (ZAR): No est v 5.1B prior
08:00 (ZA) South Africa May Budget Balance (ZAR): No est v -30.7B prior
08:15 (UK) Baltic Dry Bulk Index
08:30 (US) May Personal Income: 0.3%e v 0.4% prior; Personal Spending: 0.1%e v 0.4% prior, Real Personal Spending (PCE): 0.2%e v 0.2% prior
08:30 (US) May PCE Deflator M/M: -0.1%e v 0.2% prior; Y/Y: 1.5%e v 1.7% prior
08:30 (US) May PCE Core M/M: 0.0%e v 0.2% prior; Y/Y: 1.4%e v 1.5% prior
08:30 (CA) Canada Apr GDP M/M: No est v 0.5% prior; Y/Y: No est v 3.2% prior
08:30 (CA) Canada May Industrial Product Price M/M: No est v 0.6% prior; Raw Materials Price Index M/M: No est v 1.6% prior
09:00 (RU) Russia Q1 Final Current Account: No est v $22.8B prior
09:00 (CL) Chile May Unemployment Rate: No est v 6.7% prior
09:00 (CL) Chile May Manufacturing Production Y/Y: No est v -7.5% prior, Industrial Production Y/Y: No est v -4.2% prior
09:00 (CL) Chile May Total Copper Production: No est v 429.2K prior
09:30 (BR) Brazil May Primary Budget Balance (BRL): No est v 13.0B prior; Nominal Budget Balance: NO est v -15.4B prior, Net Debt % GDP: No est v 47.7% prior
09:45 (US) Jun Chicago Purchasing Manager: 58.0e v 59.4 prior
10:00 (MX) Mexico May Net Outstanding Loans (MXN): No est v 3.73T prior
10:00 (US) June Final Michigan Confidence: 94.5e v 94.5 prelim
10:30 (CA) Bank of Canada (BOC) Q2 Senior Loan Officer Survey: No est v -1.9 prior; Business Outlook Future Sales: No est v 21 prior
11:00 (CO) Colombia May Urban Unemployment Rate: 10.2%e v 10.7% prior; National Unemployment: No est v 8.9% prior
13:00 (US) Weekly Baker Hughes Rig Count data
15:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 50bps to 5.75%
