Notes/Observations
- Q3 begins with trade war concerns, German political risk and divergence in monetary policy across the world
- Major European manufacturing PMI readings come in mixed but remain in expansion Germany confirmed a decline, France revised lower and UK had a small beat.
- Italy’s unemployment rate fell in May to its lowest in almost six years
- German Chancellor Merkel’s ruling coalition meets in last-ditch talks over the migration dispute that is threatening her leadership
Asia:
- China’s manufacturing activity slips amid trade war with US
Europe:
- Germany’s CDU and CSU are said to meet again later this evening
- EU makes written submission to US Commerce Dept warning that EU and others will likely respond to tariffs on foreign autos, by targeting $300B in US goods in retaliation
Americas:
- (CA) Canada began imposing retaliatory tariffs on US goods following the Trump administration’s new tariffs on Canadian steel and aluminum
Energy:
- White House corrects Trump tweet on Saudi Arabia oil boost (Trump asked Saudi King to increase production by 2M bpd and that he agreed)
- Iran official: change to OPEC output levels require an emergency meeting
Economic Data:
- (IN) India Jun Manufacturing PMI: 53.1 V 51.2 PRIOR
- (IE) Ireland Jun Manufacturing PMI: 56.6 v 55.4 prior (61st month of expansion)
- (RU) Russia Jun Manufacturing PMI: 49.5 v 50.5e (2nd consecutive contraction)
- (SE) Sweden Jun Manufacturing PMI: 54.2 v 55.2e
- (AU) Australia Jun Commodity Index (AUD): 108.6 v 109.2 prior; Commodity Index SDR Y/Y: 6.6% v 3.5% prior
- (NL) Netherlands Jun Manufacturing PMI: 60.1 v 60.0e (58th month of expansion, 9-month low)
- (HU) Hungary Jun Manufacturing PMI: 53.0 v 55.2 prior (31st month of expansion)
- (TR) Turkey Jun Manufacturing PMI: 46.8 v 46.4 prior (3rd straight contraction)
- (PL) Poland Jun Manufacturing PMI: 54.2 v 53.0e (43rd month of expansion)
- (ES) SPAIN JUN Manufacturing PMI: 53.4 V 53.6E (56th month of expansion)
- (CH) Swiss Jun Manufacturing PMI: 61.6 v 61.0e
- (CZ) Czech Jun Manufacturing PMI: 56.8 v 55.8e (23rd month of expansion)
- (IT) ITALY JUN Manufacturing PMI: 53.3 V 52.5E (22nd month of expansion)
- (FR) FRANCE JUN FINAL Manufacturing PMI: 52.5 V 53.1E (revised lower but still confirms its 21st month of expansion)
- (DE) GERMANY JUN FINAL Manufacturing PMI: 55.9 V 55.9E (confirms 42nd month of expansion)
- (EU) EURO ZONE JUN FINAL Manufacturing PMI: 54.9 V 55.0E (revised lower)
- (IT) ITALY MAY PRELIMINARY UNEMPLOYMENT RATE: 10.7% V 11.1%E (near 6-year low)
- (GR) Greece Jun Manufacturing PMI: 53.5 v 54.2 prior (13th month of expansion)
- (UK) Jun Manufacturing PMI: 54.4 V 54.0E (23rd month of expansion)
- (EU) EURO ZONE MAY UNEMPLOYMENT RATE: 8.4% V 8.5%E
- (BE) Belgium May Unemployment Rate: 6.0% v 6.0% prior
- (DK) Denmark Jun PMI Survey: 49.7 v 47.8 prior
- (ZA) South Africa Jun Manufacturing PMI: 47.9 v 49.8 prior
Fixed Income Issuance:
Norway sells NOK4.0B vs. NOK4.0B indicated in 6-month bills; Avg Yield: 0.71% v 0.71% prior; Bid-to-cover: 2.58x v 2.63x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 -1.1% at 3,365, FTSE -0.9% at 7,566, DAX -0.4% at 12,255, CAC-40 -1.0% at 5,273; IBEX-35 -1.3% at 9,503, FTSE MIB -1.5% at 21,299, SMI -1.0% at 8,525, S&P 500 Futures -0.5%]
- Market Focal Points/Key Themes: European stocks open lower across the board and maintained trend as session advanced; light corporate news flow keeps focus on raft of macro data; concern still over immigration issue discord in German parliament; consumer discretionary one of few sectors performing positively; materials stocks and financials lead to the downside; Tesco enters talks with Carrefour for strategic alliance; Airbus reportedly fails to meet delivery for A320neo due to Pratt & Whitney engine troubles; Candada, Chile, Colombia and Venezuela closed for holiday
Equities
- Consumer discretionary: Carrefour CA.FR +0.3% (talks with Tesco) Tesco TSCO.UK +0.4% (talks with Carrefour)
- Energy: Fred Olsen Energy FOE.NO -15.2% (fails to secure debt extension), REC Silicon REC.NO -14.4% (lay-offs)
- Industrials: Airbus AIR.FR -2.1% (reportedly misses delivery), ThyssenKrupp TKA.DE -1.6% (deal with Tata)
Speakers
- (UK) Gov’t official confirms cabinet to debate 3rd customs option
Currencies
- EUR/USD rocked after CSU party leader Seehofer offered to resign over the migration dispute, pared losses after CDU said they will pursue migrant pacts with partners
- USD/MXP (peso) initially rallied as Mexican Leftist wins Presidential Election (majority of move took place last week). Peso eventually weakened as investors weigh a leftist presidency.
Fixed Income
- Bund Futures trade 26 ticks higher at 162.68 as trade tensions heighten. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.
- Gilt futures trade at 123.26 higher by 22 ticks as PM May’s Brexit moment of truth approaches at the “body bag summit”. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.
- Monday’s liquidity report showed Friday’s excess liquidity declined from €1.793T to €1.781T. Use of the marginal lending facility rose from €30M to €59M.
- Corporate issuance saw just $3.2B priced last week
Looking Ahead
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -23.1B prior
- 08:05 (UK) Baltic Dry Bulk Index
- 09:00 (BR) Brazil Jun Manufacturing PMI: No est v 50.7 prior
- 09:00 (SG) Singapore Jun Purchasing Managers Index (PMI): 52.5e v 52.7 prior; Electronic Sector: No est v 52.3 prior
- 09:45 (US) Jun Final Markit Manufacturing PMI: 54.6e v 54.6 prelim
- 10:00 (US) May Construction Spending M/M: 0.5%e v 1.8% prior
- 10:00 (US) Jun ISM Manufacturing: 58.2e v 58.7 prior; Prices Paid: 74.3e v 79.5 prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:00 (MX) Mexico May Total Remittances: No est v $2.7B prior
- 10:30 (MX) Mexico Jun Manufacturing PMI: No est v 51.0 prior
- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v -2.8% prior
- 13:00 (MX) Mexico Jun IMEF Manufacturing Index: No est v 51.0 prior; Non-Manufacturing Index: No est v 51.1 prior
- 16:00 (US) Weekly Crop Progress Report
