Notes/Observations
- Major European Jun Preliminary PMI data handily beats expectations and back at pre-lockdown levels (Beats: France, Germany, Euro Zone and UK); France and UK PMI Manufacturing back in expansion territory
- Whipsaw Asia session price action as US Trade adviser Navarro comments on trade taken out of context; Trump assured that phase-1 trade deal intact at this time
Asia:
- Australia Jun Preliminary PMI Manufacturing: 49.8 v 44.0 prior (4th consecutive month of contraction, but highest level since Feb
- Japan Jun Preliminary PMI Manufacturing: 37.8 v 38.4 prior (14th month of contraction and lowest level since April 2009
- China’s Beige Book (CBB) survey: Economy contracted in Q2 compared to year ago level. Eventual return to growth did not mean a return to anything approaching the old levels of growth. Without a more forceful recovery in global demand, incremental improvement sets up a contraction for 2020
Coronavirus:
- Total global cases 9,079,452 (+1.7% d/d); total deaths 471.8K (+0.9% d/d)
Europe:
- Spain govt reportedly considering a significant increase to its €100B loan guarantee scheme. considering increasing the size of its loan guarantee fund by as much as €50B
- SNB’s Zurbruegg: Not concerned about being labeled currency manipulator by the US; Reiterates stance that FX intervention is vital
- PM Johnson expected to outline a further easing of coronavirus restrictions on Tuesday, Jun 23rd. Cinemas, museums and galleries will be able to reopen in England from July 4th. To also set out how pubs can safely reopen following a review of the 2 meter distancing rule
Americas:
- White House Adviser Navarro declared trade deal between Trump and China as ‘over’; Trump had decided to terminate the trade deal. He later clarified the statement was about making a point on trust and that the comment on China was not as it seems (taken wildly out of context). The phase 1 trade deal, deal remained in place
- President Trump tweet : US China Trade deal fully intact; Hopes China will continue to live up to terms of trade deal
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +1.10% at 366.70, FTSE +0.81% at 6,295.34, DAX +1.86% at 12,491.35, CAC-40 +1.33% at 5,014.68, IBEX-35 +1.42% at 7,450.00, FTSE MIB +1.34% at 19,739.50, SMI +0.54% at 10,206.00, S&P 500 Futures +0.55%]
- Market Focal Points/Key Themes: Euorpean indices open modestly higher across the board and advanced through the session following PMI releases; energy and financials best performing sectors; all sectors performing in the green, but health care remains the least positive; UK PM to announce reduction of social distancing rules for hospitality sector; Wirecard opened lower, but later recovered, while in parallel former CEO was arrested; intu property names KPMG as part of administration contingency plan; events expected in the upcoming US session include a conference call by Allianz and earnings from FedEx
Equities
- Consumer discretionary: Gear4music [G4M.UK] +23% (earnings), Nanogate [N7G.DE] +41% (protective shield)
- Healthcare: Hikma Pharmaceuticals [HIK.UK] -7% (placement)
- Industrials: Kloeckner [KCO.DE] +20% (positive profit alert), Scapa [SCPA.UK] -13% (earnings; Chairman resigns)
- Technology: Wirecard [WDI.DE] +12% (ex-CEO arrested; companies and states reviewing contact with Wirecard)
Speakers
- ECB’s De Cos (Spain) reiterated call for a high degree of political consensus to address reform agenda. Cautioned against any early removal of fiscal support and added that the EU should create a permanent macroeconomic stabilization fiscal mechanism to allow greater risk sharing. Reiterated stance that ECB would adjust all instruments as needed. Spain should consider extending loan guarantees
- Sweden Fin Min Andersson said to propose more foreign workers employed via staffing agencies to pay local tax rates
- Moody’s affirms Australia sovereign rating at AAA; outlook stable
- Singapore PM Lee said to advise President to dissolve Parliament and call for general elections. Should not be under any illusion that Covid-19 had been defeated; to remain with us until there was a vaccine. Singapore was braced for economic tough times
- China Foreign Ministry spokesperson Zhao Lijoan: stated that the US was politically oppressing Chinese media; China urges US to stop wrongdoing, or it will respond. China stance on trade has been both clear and consistent
Currencies/Fixed Income
- Risk on appetite was back on the front burner as various Major European Jun Preliminary PMI data handily beat expectations and were back at pre-lockdown levels
- EUR/USD making another run at the 1.13 level while the GBP/USD hovered around the 1.25 neighborhood.
- USD/JPY holding above the 107 area
Economic Data
- (ZA) South Africa Apr Leading Indicator: 97.2 v 102.4 prior
- (FR) France Jun Preliminary Manufacturing PMI: 52.1 v 46.0e (1st expansion in 5 months and highest reading since Sept 2018); Services PMI: 50.3 v 45.2e; Composite PMI: 51.3 v 46.8e
- (DE) Germany Jun Preliminary Manufacturing PMI: 44.6 v 42.5e (18th straight contraction); Services PMI: 45.8 v 42.3e; Composite PMI: 45.8 v 44.4e
- (EU) Eurozone Jun Preliminary Manufacturing PMI: 46.9 v 45.0e (17th straight contraction but highest reading since Feb 2020); Services PMI: 47.3 v 41.5e; Composite PMI: 47.5 v 43.0e
- (PL) Poland May Construction Output Y/Y: -5.1% v -1.5%e;
- (TW) Taiwan May Industrial Production Y/Y: 1.5% v 3.0%e
- (UK) PMI Jun Preliminary Manufacturing: 50.1 v 45.0e )1st expansion in 4 months); Services PMI: 47.0 v 40.0e; Composite PMI: 47.6 v 41.2e – (SA) South Africa Q1 Unemployment: 30.1% v 29.7%e (highest since 2009)
Fixed Income Issuance
- (ID) Indonesia sold total IDR9.5T vs. IDR7.0T target in Islamic bonds (Sukuk)
- (NL) Netherlands Debt Agency (DSTA) sold €1.42B vs. €1.0-1.5B in 0.50% Jan 2040 DSL Bonds; Avg Yield: -0.19% v 0.298% prior
- (UK) DMO sold £3.25B in 0.125% Jan 2026 Gilts; Avg Yield: 0.031% v 0.048% prior; Bid-to-cover: 2.28x v 2.72x prior; Tail: 0.4bps v 0.2bps prior
- (ZA) South Africa sold total ZAR6.1B vs. ZAR6.1B indicated in 2030, 2032 and 2048 bonds
- (HU) Hungary Debt Agency (AKK) sold HUF20.0B vs. HUF target in 3-Month Bills; Avg Yield: 0.49% v 0.67% prior; Bid-to-cover: 2.92x v 2.84x prior
- (DE) Germany sold €4.035B vs. €5.0B indicated in 0.00% Jun 2022 Schatz; Avg Yield: -0.69% v -0.66% prior; Bid-to-cover: 2.4x v 3.26x prior
Looking Ahead
- (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO
- 05:40 (UK) BOE weekly allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 06:00 (PT) Portugal Apr Current Account Balance: No est v -€0.4B prior
- 06:30 (UK) DMO to sell £3.0B in 0.375% Oct 2030 Gilts
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Central Bank (BCB) Jun Minutes
- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 07:45 (US) Goldman Economist Chain Store Sales
- 07:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (3-7 years)
- 08:00 (PL) Poland May M3 Money Supply M/M: 1.8%e v 2.7% prior; Y/Y: 14.6%e v 14.0% prior
- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision Expected to leave Base Rate unchanged at 0.90%
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (7-20 years)
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (HU) Hungary Central Bank (MNB) Gov Matolcsy post rate decision press statement
- 09:45 (US) Jun Preliminary Markit Manufacturing PMI: 50.8e v 39.8 prior; Services PMI: 48.0e v 37.5 prior; Composite PMI: No est v 37 prior
- 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (20+ years)
- 10:00 (US) May New Home Sales: 640Ke v 623K prior
- 10:00 (US) Jun Richmond Fed Manufacturing: -2e v -27 prior
- 10:00 (MX) Mexico International Reserves No est v $B prior
- 11:30 (US) Treasury to sell 2-Year Notes
- 14:30 (TW) Taiwan May M1 Money Supply Y/Y: No est v 7.5% prior
- 15:00 (AR) Argentina Q1 GDP Q/Q: No est v -1.0% prior; Y/Y: No est v -1.1% prior
- 15:00 (AR) Argentina Q1 Unemployment Rate: No est v 8.9% prior
- 15:00 (CO) Colombia Apr Economic Activity Index: No est v -4.9% prior
- 16:30 (US) Weekly API Oil Inventories
- 19:50 (JP) Japan May PPI Services Y/Y: 0.8%e v 1.0% prior
- 19:50 (JP) Bank of Japan (BOJ) Summary of Opinions from June 23rd emergency policy meeting
- 21:00 (AU) Australia May Skilled Vacancies M/M: No est v -16.4% prior
- 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate (OCR) unchanged at 0.25%
- 23:30 (TH) Thailand May Customs Trade Balance: $2.8Be v $2.5B prior; Exports Y/Y: -5.0%e v +2.1% prior; Imports Y/Y: -18.0%e v -17.1% prior
