Notes/Observations
- German IFO data mixed; Business Climate beats expectations but still has fallen in 7 of the last 8 months
- Focus on Trump-Juncker/Malmstrom trade talks in Washington later today
Asia:
- BoJ watchers’ the central bank is not likely to make any policy changes until at least Oct 2018
- BoJ maintained its JGB purchase amounts unchanged during regular ops
- Australia Q1 CPI Q/Q: 0.4% v 0.5%e; Y/Y: 2.1% v 2.2%e; data soft despite large rise in fuel prices which left room for RBA to hold rates well into 2019
Europe:
- EU’s Juncker: EU was prepared to retaliate immediately if auto tariffs were introduced; Stressed the EU was not a foe of the US
- EU Trade Min Malmstrom reiterated view of still hoping to find a solution with the US on trade; EU was preparing counter tariffs of $20B on US goods
Americas
- Mexico Incoming Foreign Minister Marcelo Ebrard: Trump disclosed in letter that the 2 countries should increase cooperation. Trump said that he agreed with the four priorities laid out by the President-elect Lopez Obrador in prior letter
- President Trump reportedly to announce billions of dollars in trade aid for farmers with size of aid package said to be ~$12B
Energy:
- Weekly API Oil Inventories: Crude: -3.2M v +0.6M prior
Economic Data:
- (FR) France Jun PPI M/M: 0.1% v 0.7% prior; Y/Y: 3.4% v 3.0% prior
- (AT) Austria May Industrial Production M/M: 1.6% v 1.0% prior; Y/Y: 6.2% v 5.9% prior
- (ES) Spain Jun PPI M/M: 1.0% v 1.3% prior; Y/Y: 4.1% v 3.0% prior
- (SE) Sweden Jun PPI M/M: 0.8% v 1.4% prior; Y/Y: 8.0% v 6.3% prior
- (EU) Euro Zone Jun M3 Money Supply Y/Y: 4.4% v 4.0%e
- (DE) Germany July IFO Business Climate: 101.7 v 101.5e; Current Assessment: 105.3 v 104.9e, Expectations Survey: 98.2 v 98.3e
- (CH) Swiss July Credit Suisse Expectations Survey: -4.0 v +8.0 prior
- (UK) Jun BBA Loans for House Purchases: 40.5K v 39.0Ke (highest since Sept)
Fixed Income Issuance:
- (IN) India sold total INR180B vs. INR180B indicated in 3-month, 6-month and 12-month bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.1% at 388.0, FTSE -0.6% at 7659, DAX -0.2% at 12662, CAC-40 +0.2% at 5444, IBEX-35 -0.3% at 9742, FTSE MIB +0.1% at 21,897, SMI +0.1% at 9016, S&P 500 Futures -0.1%]
- Market Focal Points/Key Themes: European Indices trades mixed in consolidating trade amid another busy day for earnings. Elior, LVMH, Telefonica Deutschland, Lonza among the notble risers this morning after earnings and guidance. Dassault Systems trades lower after results, with Konecranes, Kesko and DWS among other fallers. Indivior trades sharply lower after delaying the guidance following a decline in earnings. In the M&A space Ageas trades higher after Fosun expressed interest in the company. Looking ahead notable earners include DOW components Boeing, Coca Cola alongside General Motors, UPS and General Dynamics among others.
Movers
- Consumer Discretionary Elior [ELIOR.FR] +4.6% (Earnings), TF1 [TFI.FR] +4.1% (Earnings), LVMH [MC.FR] +1.8% (Earnings), Kesko [KESKOB.FI] -6.0% (Earnings), ITV [ITV.UK] +0.8% (Earnings)
- Materials Lonza [LONN.CH] +6.1% (Earnings)
- Healthcare Indivior [INDV.UK] -20% (Delays guidance)
- Financials DWS [DES.DE] -2.2% (Earnings)
- Industrials Sulzer [SUN.CH] -3.9% (Earnings), Victrex [VCT.UK] +2.1% (Earnings), Konecranes [KCR.FI] -5.1% (Earnings)
- Technology Dassault Systems [DSY.FR] -2.7% (Earnings), Ricardo [RCDO.UK] -12% (Earnings)
- Telecom Telefonica Deutschland [O2D.DE] ++8% (Earnings)
Speakers
- Ireland Dep PM Coveney (also foreign Min) reiterated view that a ‘no-deal’ Brexit was unlikely to happen. Ireland would support an extension of Article 50 if UK govt asked
- German IFO Economists maintained its German 2018 GDP growth forecast at 1.8%. It noted that the construction sector was booming with sentiment at strongest level since unification. Export expectations rose for the 1st time in 7 months. US trade policy and recent German govt crisis increased uncertainty among business
- Poland Central Bank Q3 Business Condition Survey noted that domestic companies were less positive as costs could rise, signaled lower wage growth and fewer workers needed in quarter
- Russia Energy Min Novak: Russia estimate for 2018 oil output 551M tons and 2019 oil output at 555M tons
- China State Planner (NDRC): To provide policy support for workers impacted by trade frictions and structural adjustments; will not allow ‘large-scale’ unemployment from ongoing trade frictions with US
Currencies
- FX markets were quiet ahead of the key Trump/Juncker trade talks later Today.
- EUR/USD slightly higher but contained within the July trading range. EU data continued to take the back-stage ahead of the ECB policy decision on Thursday. ECB is widely expected to leave its key policy settings and guidance unchanged at Thursday’s meeting after it announced its plans for monetary policy beyond September last month
- USD/JPY was holding above the 111 level as dealers believed that the BoJ would not likely to make any policy changes until at least Oct.
Fixed Income
- Bund Futures trades at 162.41 up 14 ticks after the latest German orders data showed a stronger than expected recovery and this helped stabilize the Ifo reading. A move back above 162.75 would target 163.47 then 163.63, with a move below 161.75 targeting 161.45 then 160.45.
- Gilt futures trades at 123.33 up 10 ticks as PM May takes control of Brexit negotiations, with continuing upside targeting 124.18 then 124.44, with a move lower seeing initial support at 123.23 then 122.85.
- Wednesday’s liquidity report showed Tuesday’s excess liquidity rose from €1.809T to €1.8093T. Use of the marginal lending facility fall from €100M to €50M.
- Corporate issuance saw 2 high-grade issuers raise $1.7B in the primary market
Looking Ahead
- (GR) Bank of Greece: Jun Bank Deposits: N est v €128.1B prior
- (BR) Brazil July CNI Consumer Confidence: No est v 98.3 prior
- (BR) Brazil Jun Total Federal Debt (BRL): No est v 3.717T prior
- (CO) Colombia Jun Industrial Confidence: No est v 0.5 prior; Retail Confidence: No est v 27.0 prior
- (IT) Italy Debt Agency (Tesoro) announcement on upcoming BTP auction for July 30th
- 05:30 (DE) Germany to sell €4.0B in new 0% Oct 2023 BOBL
- 05:30 (EU) ECB allotment in 3-month LTRO operation
- 06:00 (UK) July CBI Retailing Reported Sales: 15e v 32 prior; Total Distribution: No est v 18 prior
- 06:00 (FR) France Q2 Total Jobseekers: No est v 3.436M prior
- 06:00 (RO) Romania to sell €100M in Feb 2021 bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell combined RUB35.2B in 2024 and 2028 OFZ bonds
- 07:00 (US) MBA Mortgage Applications w/e July 20th: No est v -2.5% prior
- 07:30 (TR) Turkey July Capacity Utilization: No est v 78.3% prior
- 07:30 (TR) Turkey July Real Sector Confidence (Seasonally Adj): No est v 102.5 prior; Real Sector Confidence (NSA): No est v 104.6 prior
- 08:05 (UK) Baltic Dry Bulk Index
- 09:00 (BE) Belgium July Business Confidence: 0.4e v 0.6 prior
- 09:00 (MX) Mexico May Retail Sales M/M: +0.5%e v -1.1% prior; Y/Y: 1.9%e v 3.3% prior
- 09:45 (UK) BOE to buy £955M in in APF Gilt purchase operation (7-10 years+)
- 10:00 (US) Jun New Home Sales: 668Ke v 689K prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:30 (US) Treasury to sell 2-Year Floating Rate Notes Reopening
- 12:00 (CA) Canada to sell 10-year notes
- 13:00 (US) Treasury to sell 5-Year Notes
- 13:30 (US) President Trump’s meets EU Commission President Juncker
- 15:00 (AR) Argentina July Trade Balance: -$0.6Be v -$1.3B prior
