Notes/Observations
- Snippets of Trump CNBC interview provides volatility; full interview set to be released during NY morning
- Political drama back in Italian politics as key political leaders said to have challenged the Fin Min Tria over state lender state lender Cassa Depositi e Prestiti (CDP)
- China stocks recover on reports that govt could ‘soon’ loosen rules related to wealth management; CNY currency offer worst levels on speculation officials were seeking to stem the drop
- Various emerging central banks said to intervene in FX market to stem currency weakness (India, Indonesia cited)
Asia:
- China PBoC set the Yuan currency midpoint at weakest level since July 2017
- Japan Jun National CPI data registered a slight miss (YoY: 0.7% v 0.8%e); Japan Government Official reiterated stance that consumer prices were rising ‘moderately’
- Philippines Central Bank (BSP) Chief Espenilla: Considering ‘strong’ monetary adjustment at Aug meeting; elevated CPI views highlight second round effect
Europe:
- Italy League party official Borghi (budget committee): too soon to say who Italy will back as candidate for next ECB President. Germany’s Weidman’s hawkish ideas that could lead to European disintegration
Americas
- President Trump: Not happy about interest rates going up at the Fed; Strong dollar put the US at a disadvantage – CNBC taped interview excerpts
- White House Sanders: President Trump respected the independence of the Federal Reserve and was not interfering in monetary policy decisions
Economic Data:
- (NL) Netherlands July Consumer Confidence: 23 v 23 prior
- (NL) Netherlands May Consumer Spending Y/Y: 2.9 v 3.0% prior
- (DE) Germany Jun PPI M/M: 0.3% v 0.3%e; Y/Y: 3.0% v 3.0%e
- (NL) Netherlands Jun House Price Index M/M: 0.7% v 0.9% prior; Y/Y: 8.9% v 8.9% prior
- (HU) Hungary May Average Gross Wages Y/Y: 10.9% v 11.2%e
- (JP) Japan Jun Convenience Store Sales Y/Y: +1.1% v -1.2% prior
- (MY) Malaysia Mid-July Foreign Reserves: $104.6B v $104.7B prior
- (ES) Spain May Trade Balance: -€2.2B v -€3.1B prior
- (CN) Weekly Shanghai copper inventories (SHFE): 211.3K v 234.7K tons prior
- (TW) Taiwan Jun Export Orders Y/Y: -0.1% v +7.4%e
- (EU) Euro Zone May Current Account (Seasonally Adj): €22.4B v €29.6B prior; Current Account NSA (unadj): €4.6B v €27.3B prior
- (IT) Italy May Current Account Balance: ?2.2B v €3.0B prior
- (PL) Poland Jun Retail Sales M/M: 3.4% v 1.5%e; Y/Y: 10.3% v 8.1%e; Real Retail Sales Y/Y: 8.2% v 6.8%e
- (RU) Russia Narrow Money Supply w/e July 13th: 10.35T v 10.21T prior
- (UK) Jun Public Finances (PSNCR): £13.3B v £4.7B prior; Public Sector Net Borrowing: £4.5B v £3.6Be, Central Government NCR: £13.6B v £6.9B prior, PSNB ex Banking Groups: £5.4B v £5.0Be
Fixed Income Issuance:
- (IN) India sold total INR120B vs. INR120B indicated in 2020, 2026, 2031, 2033 and 2055 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 flat at 3,470, FTSE +0.1% at 7,693, DAX -0.1% at 12,676, CAC-40 -0.3% at 5,404; IBEX-35 -0.2% at 9,703, FTSE MIB -0.7% at 21,728, SMI +0.3% at 8,962, S&P 500 Futures -0.05%]
- Market Focal Points/Key Themes: European stocks open slightly lower and traded largely sideways as the session progressed towards being slightly positive; consumer discretionary sector supported; automotives stocks underperforming; focus on upcoming interview of US President Trump; risk sentiment muted going into weekend; Colombia closed for holiday; earnings expected in the upcoming US session include Regions Financial, General Electric and Honeywell
Equities
- Consumer discretionary: Hays HAS.UK -4.9%(block sale), Stora Enso STERV.FI -10.7% (results), Wessanen WES.NL -21.6% (results), XXL ASA XXL.NO -18.3% (results)
- Energy: Scatec Solar SSO.NO +4.1% (rsults)
- Financials: Beazley BEZ.UK -5.7% (results)
- Healthcare: Mithra Pharmaceuticals MITRA.BE +3.2% (marketing authorization), Recordati REC.IT +2.9% (analyst action)
- Industrials: Faurecia EO.FR -4.1% (results), Huhtamaki HUH1V.FI -8.2%(results), Skanska SKAB.SE -5.5% (results), SSAB SSABA.SE -5.8%(results), Thales HO.FR +1.0% (results)
- Technology: Tieto TIE.1V.FI -4.7%(results)
Speakers
- Italy key political leaders said to have challenged the Fin Min Tria (Italy PM Conte summoned key party officials for meeting regarding appointments and met with 5-Star leader Di Maio, League Leader Salvini and Fin Min Tria)
- Italy’s Dep PM DI Maio (5-Star party leader) stated that he has no clash with Fin Min Tria, never asked him to resign
- Ireland Fin Min Donohoe: backstop must be retained; could only be replaced by something better
- Hungary Fin Min Varga: Period of calm for HUF currency (Forint) was over; looking for new equilibrium level in changed global environment. No need to rewrite the 2019 budget due to weaker HUF currency (Forint). Rise in bond yield required no immediate measures from the AKK debt agency
- India Fin Min Official: Not considering ‘immediate’ measures to check INR currency (Rupee) decline (**Reminder: RBI was suspected of FX currency intervention to support INR currency (Rupee) at the 69.10 area)
Currencies
- USD was softer for the 1st time this trading week after President Trump commented that the greenback’s strength put the US at a disadvantage. Dealers seemed concern that US might prevent the dollar from strengthening amid the trade row.
- EUR/USD moved off its best levels as some political turbulence in Italy surfaced. Reports circulated that key Italian political leaders had challenged the Fin Min Tria. Dealers also noted commentary from Italy League party official Borghi (budget committee) that expressed his usual euro skeptic views.
- CNY currency recovered from lows amid speculation officials were seeking to stem the drop. Earlier the PBoC set the Yuan reference rate at 6.7671 for its 7th straight weaker yuan fix and the weakest since July 14, 2017.
Fixed Income
- Bund Futures trades at 163.08 flat on the day having hit a high of 163.39, a move back above would target 163.47 then 163.63, with a move below 163 targeting 162.81 then 162.45.
- Gilt futures trades at 124.10 down 5 ticks on the day consolidating the recent run up, with continuing upside targeting 124.18 then 124.44, with a move lower seeing initial support at 123.83 then 123.41.
- Friday’s liquidity report showed Thursday’s excess liquidity fell from €1.824T to €1.802T. Use of the marginal lending facility dropped from €50M to €45M.
- Corporate issuance saw $5.5B come to market via 4 issuers. For the week ended July 18th Lipper fund flows reported IG funds show inflows of $2B, with High Yield fund show inflows of $260M a second straight week of inflows.
Looking Ahead
- (AR) Argentina Jun Budget Balance (ARS): No est v -7.8B prior
- (BE) Belgium Debt Agency (BDA) announces upcoming OLO auction for Monday, July 23rd
- (PT) Portugal Debt Agency (IGCP) announcement on possible bond auction for Wed, July 25th
- (AR) G20 Finance Ministers meet in Argentina
- (UK) BOE’s Tenreyro
- 05:30 (DE) German Chancellor Merkel holds her annual summer press conference
- 05:30 (ZA) South Africa to sell ZAR600M in I/ L 2029, 2033 and 2050 bonds
- 06:00 (IE) Ireland Jun PPI M/M: No est v 0.8% prior; Y/Y: No est v -3.3% prior
- 06:00 (IE) Ireland May Property Prices M/M: No est v 0.7% prior; Y/Y: No est v 13.0% prior
- 06:00 (US) President Trump interviewed on CNBC (pre-recorded)
- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills
- 06:45 (US) Daily Libor Fixing
- 07:30 (IN) India Weekly Forex Reserves
- 08:00 (BR) Brazil mid-July IBGE Inflation IPCA-15 M/M: 0.7%e v 1.1% prior; Y/Y: 4.6%e v 3.7% prior
- 08:00 (UK) Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:20 (US) Fed’s Bullard (dove, non-voter)
- 08:30 (CA) Canada Jun CPI M/M: 0.0%e v 0.1% prior; Y/Y: 2.3%e v 2.2% prior, CPI Core-Common Y/Y: 1.9%e v 1.9% prior; CPI Core- Median Y/Y: No est v 1.9% prior, CPI Core- Trim Y/Y: No est v 1.9% prior, Consumer Price Index: 133.4e v 133.4 prior
- 08:30 (CA) Canada May Retail Sales M/M: +1.0%e v -1.2% prior; Retail Sales (Ex-Auto) M/M: +0.5%e v -0.1% prior
- 09:00 (BE) Belgium July Consumer Confidence: No est v -3 prior
- 11:00 (EU) Potential Sovereign ratings after EU close (Austria and France Sovereign Debt to be rated by Fitch; Greece, Russia and Czech Sovereign Debt to be rated by S&P
- 13:00 (US) Weekly Baker Hughes Rig Count data
- 15:00 (MX) Mexico Citibanamex Survey of Economists
