Notes/Observations
- Chancellor Merkel salvages her coalition government with a deal on migration
- Glencore drops the most in 2 years after a DoJ Subpoena regarding Money Laundering
- Swedish Krona rises after the Riksbank forecasts higher inflation in the year ahead
Asia:
- US seeking to block entry for China Mobile Ltd into US telecommunications market on national security concerns
- China released unscheduled US exports data; growth sharply dropped as tariffs approach
- BOJ said to be planing to cut 2018 and 2019 inflation forecasts
- (AU) RBA Leaves Cash Rate Target unchanged at 1.50% (20th straight pause in the current easing cycle)
Europe:
- Chancellor Merkel survives migrant crisis after making clear agreement with Interior Min Seehofer
- Swedish Riksbank keeps rates on hold; signals hike towards the end of the year
Americas:
- President Trump reportedly favoring two people for Supreme Court seat
Energy:
- Oil prices jumped after Libya declared a force majeure on some exports and Canadian production at Syncrude was hit with a power outage
Economic Data:
- (FR) France May YTD Budget Balance: -€55.1B v -€54.3B prior
- (ES) Spain Jun Net Unemployment M/M: -90.0K V -98.1KE
- (TR) Turkey Jun CPI M/M: 2.6% V 1.3%E; Y/Y: 15.4% V 13.9%E (15-year high)
- (SE) Sweden Central Bank (Riksbank) leaves Repo Rate unchanged and sees rate rise towards end of year
- (BR) Brazil Jun FIPE CPI (Sao Paulo): 1.0% v 1.1%e
- (UK) Jun Construction PMI: 53.1 V 52.5E (3rd month of expansion and a seven month high)
- (EU) Euro Zone May Retail Sales M/M: 0.0% v 0.1%e; Y/Y: 1.4% v 1.6%e
- (EU) Euro Zone May PPI M/M: 0.8% v 0.5%e; Y/Y: 3.0% v 2.7%e
Fixed Income Issuance:
- (AT) AUSTRIA DEBT AGENCY (AFFA) SELLS TOTAL €1.15B VS. €1.15B INDICATED IN 2028 AND 2037 RAGB BONDS
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.1% at3,406 , FTSE +0.3% at 7,569, DAX +1.0% at 12,359, CAC-40 -0.8% at 5,318; IBEX-35 +1.0% at 9,650, FTSE MIB +1.0% at 21,641, SMI +0.8% at 8,595, S&P 500 Futures +0.3%]
- Market Focal Points/Key Themes: European stocks open broadly higher and maintained trend as session wore on; German Chancellor Merkel forges immigration deal with coalition partners; risk sentiment supported over diminished geopolitical concerns; technology sector leading performers; materials sector underperforming, dragged down by Glencore following subpoena by US DOJ over alleged money laundering; US markets close early for holiday; corporate events expected in the upcoming US session include earnings from Acuity Brands and monthly car sales data
Equities
- Consumer discretionary: Hermes RMS.FR +0.9%(analyst action), Louis Vuitton MC.FR +1.2% (analyst action), Trigano TRI.FR -11.5% (results, analyst action)
- Energy: SBM Offshore SBMO.NL +6.1% (contract win)
- Financials: Hastings Group HSTG.UK (analyst action), Societe Generale GLE.FR +0.8% (acquisition)
- Healthcare: Abivax ABVX.FR +9.3% (study results), Merck KGaA MRK.DE -0.4% (outlook)
- Materials: Glencore GLEN.UK -10.2% (US subpoena)
- Technology: BE Semiconductor BESI.NL -6.6% (outlook), Osram Licht OSR.DE -2.6% (analyst action)
Speakers
- (CN) China Foreign Ministry: Urges US to provide fair environment for Chinese companies
- (TH) Thailand Central Bank Gov Veerathai: Reiterates FX volatility to continue, Thai baht exchange rate is moving in line with the region
- (FR) French Gov’t Spokesman Griveaux: budget deficit target below 1% in 2022 and GDP growth will be ~2% in 2018
- (UK) BOE’s Saunders (hawk, dissenter): Rates may need to rise faster then markets expect; will be limited and gradual
- UAE Oil Min: Starting July 1st, OPEC will strive to adhere to overall conformity levels for rest of 2018 (in-line with OPEC+pact)
Currencies
- EUR/USD trades on firmer ground on reports of a compromise between the CDU and CSU on immigration policy as the pair sits above 1.1650 with upside resistance seen at 1.1690-1.1720.
- EUR/SEK falls after the Riksbank rate decision, noting that Economic activity is strong and inflation is close to the target of 2%. The Krona dropped to a low of 10.3506 following the rate decision with momentum continuing to the downside, with the pair currently trading at 10.3370.
Fixed Income
- Bund Futures trade 15 ticks lower at 162.31 as Merkel secures a deal preventing the immediate threat of a government breakup. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.
- Gilt futures trade at 123.03 lower 16 ticks as Friday sees crucial Brexit meeting at May’s country estate. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.
- Tuesday’s liquidity report showed Monday’s excess liquidity rose from €1.781T to €1.844T. Use of the marginal lending facility fell from €59M to €0M.
- Corporate issuance saw no deals priced in the primary market
Looking Ahead
- 07:45 (US) Weekly Goldman Economist Chain Store Sales
- 08:00 (BR) Brazil May PPI Manufacturing M/M: No est v 1.4% prior; Y/Y: No est v 7.4% prior
- 08:05 (UK) Baltic Dry Bulk Index – 08:30 (CA) Canada May MLI Leading Indicator M/M: No est v 0.1% prior
- 08:30 (CL) Chile Jun Trade Balance: No est v $0.7B prior; Total Exports: No est v $6.7B prior; Total Imports: No est v 6.0B prior; Copper Exports: No est v $3.4B prior
- 08:30 (CL) Chile Jun International Reserves: No est v $37.3B prior
- 08:30 (CL) Chile Central Bank Traders Survey
- 08:55 (US) Weekly Redbook Sales – 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (CL) Chile May Retail Sales Y/Y: No est v 7.4% prior, Commercial Activity Y/Y: No est v 11.0% prior
- 09:00 (MX) Mexico May Leading Indicators M/M: No est v -0.02 prior – 09:30 (CA) Canada Jun Manufacturing PMI: No est v 56.2 prior
- 09:30 (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index
- 10:00 (US) May Factory Orders: 0.0%e v -0.8% prior
- 10:00 (US) May Final Durable Goods Orders: No est v -0.6% prelim; Durables Ex Transportation: No est v -0.3% prelim, Capital Goods Orders (Non-defense/ex-aircraft): No est v -0.2% prelim
- Capital Goods Shipments (Non-defense/ex-aircraft): No est v -0.1% prelim
- 10:00 (DK) Denmark Jun Foreign Reserves (DKK): No est v 468.1B prior
- 11:00 (CO) Colombia May Exports: No est v $3.7B prior
- 13:00 (NZ) New Zealand Jun QV House Prices Y/Y: No est v 6.9% prior
- 16:30 (US) Weekly API Oil Inventories
