Concerns Linger That EU Officials Would Not Likely Quickly Agree On Key Issues Of Recovery Fund

Notes/Observations

• Focus on UK Chancellor of the Exchequer Sunak budget speech which is expected to include fresh measures to kick-start the coronavirus-stricken economy with a wide-ranging package of tax cuts
• Concerns linger that EU officials would not likely quickly agree on key issues of Recovery Fund or 7-year budget at upcoming meetings

Asia:

• Japan May Current Account (BoP): ¥1.18T v -¥639Be; Trade Balance (BoP): -¥556.8B v ¥966.5B prior
• Australia Treasurer Frydenberg stated that govt to announce more income support beyond Sept with details to come on July 23rd (Thursday)

Coronavirus:

• Total global cases 11,799,443 (+1.8% d/d); total deaths: 543.6K (+1.1% d/d)

Europe:

• PM Johnson spoke with German Chancellor Merkel and reiterated stance that Britain was prepared to leave the EU on same trading terms as Australia if a trade deal with the single bloc could not be agreed
• Chancellor Sunak budget speech on Wed expected to raise stamp duty threshold to £500K with the temporary measure seen for a period between 6-12 months
• Italy PM Conte said to urge that EU must act decisively to build a common response to the economic crisis caused by the COVID-19 pandemic. EU support measures must be activated rapidly. Italy won’t accept a weak compromise; response has to be a strong, ambitious political response

Americas:

• US President Trump aides reported to propose ideas on undermining USD/HKD peg, the HKD peg idea was raised in talks held by advisers to US Sec of State Pompeo; some officials were however concerned that such a move could hurt HK and US banks
• Brazil President Bolsonaro tests positive for Coronavirus

Energy:

• Weekly API Crude Oil Inventories: +2M v -8.2M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.51% at 367.08, FTSE -0.16% at 6,180.25, DAX -0.26% at 12,584.20, CAC-40 -0.67% at 5,010.12, IBEX-35 -1.40% at 7,343.00, FTSE MIB -0.22% at 19,969.50, SMI -0.37% at 10,170.09, S&P 500 Futures -0.01%]
• Market Focal Points/Key Themes: European indices open lower across the board but later traded mixed; better performing sectors include telecom and health care; underperforming sectors lead by financials; Boohoo trading lower following launch of supply chain review; Worldline and Ingenico reach agreement on combination terms; focus on economic measures to be proposed by UK Chancellor; earnings expected in the upcoming US session include Bed Bath & Beyond and Marathon Oil

Equities

• Consumer discretionary:Kindred [KIND.SE] +7% (trading update), FirstGroup [FGP.UK] -16% (earnings), boohoo.com [BOO.UK] -9% (launches Independent review of UK supply chain)
• Financials: Funding Circle [FCH.UK] +14% (update on govt schemes)
• Healthcare: Kiadis Pharma [KDS.NL] +52% (agreement with Sanofi)

Speakers

• ECB’s Lagarde stated that the central bank had time to access situation. Believed ECB actions have been effective
• ECB’s De Guindos (Spain): Recent data suggests optimism on the growth front
• France PM Castex: Must preserve the economy if a 2nd lockdown occurs
• Hungary PM Orban reiterated stance that EU was not likely to quickly agree on key issues of Recovery Fund or 7-year budget
• Italy think tank Prometeia cuts Italy 2020 GDP forecast from -6.5% to -10.1%
• South Korea President Moon to announce ‘new deal’ on Monday, July 13th
• China said to restrict visas for US officials over Tibet
• Libya National Oil Corp (NOC) said to be prepared to lift the force majeure at ES Sider port

Currencies/Fixed Income

• FX price action was listless in dull trading in session. Dealers continued to debate any impact of prolong spread of the virus and the possibility it could derail the recovery – EUR/USD saw its slight gains dissipate on speculation that EU officials would not likely to agree on key issues of Recovery Fund or 7-year budget quickly. Pair little changed at 1.1275 at mid-session
• GBP/USD slightly lower by 0.2% at 1.2525 with dealers focusing on UK Chancellor of the Exchequer Sunak budget speech later today and possibility of fresh measures to kick-start the coronavirus-stricken economy with a wide-ranging package of tax cuts

Economic Data

• (SE) Sweden Maklarstatistik May Housing Prices Y/Y 5% v 5% prior; Apartment Prices Y/Y: 2% v 3% prior
• (CH) Swiss Jun Unemployment Rate: 3.2% v 3.4%e; Unemployment Rate (Seasonally Adj): 3.3% v 3.6%e
• (NO) Norway May Overall GDP M/M: +1.9% v -3.8% prior; Mainland GDP M/M 2.4% v 4.3%e
• (CZ) Czech May Retail Sales Y/Y: -12.2% v -14.4%e; Retail Sales (ex-auto) Y/Y: -0.7% v -6.4%e
• (HU) Hungary Jun CPI M/M: 0.4% v 0.7%e; Y/Y: 2.9% v 2.9%e
• (HU) Hungary Jun YTD Budget Balance (HUF): -1.837T v -1.052T prior

Fixed Income Issuance

• (FR) French Debt Agency (AFT) opened its book to sell EUR-denominated Mar 2036 inflation-linked bonds (Oatei) via syndicate; guidance seen 20bps over benchmark
• (IN) India sold total INR450B vs. INR450B indicated in 3-month, 6-month and 12-month bills
• (DK) Denmark sold total DKK4.92B in 3-month, 6-month, 9-month and 12-month bills
• (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 3-month 6-month bills
• (CH) Switzerland sold total CHF395.4B in 2030 and 2039 Bonds

Looking Ahead

• 05:30 (DE) Germany to sell €5.0B in new 0.00% Oct 2025 BOBL
• 05:30 (GR) Greece Debt Agency (PDMA) to sell 13-week Bills
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:00 (RU) Russia to sell Mar 2026 OFZ bonds
• 06:00 (CZ) Czech Republic to sell combined CZK5.0B in 2027 and 2031 bonds
• To sell CZK3.0B in 2027 Floating Bonds
• To sell CZK2.0B in 1.2% 2031
• 06:45 (US) Daily Libor Fixing
• 07:00 (US) MBA Mortgage Applications w/e July 3rd: No est v -1.8% prior
• 07:00 (BR) Brazil Jun FGV Inflation IGP-DI M/M: 1.5%e v 1.1% prior; Y/Y: 7.7%e v 6.8% prior
• 07:00 (UK) Weekly PM Question time in House
• 07:30 (UK) Chancellor of the Exchequer Sunak (Fin Min) Budget Speech
• 07:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (3-7 years)
• 08:00 (HU) Hungary Central Bank Jun Minutes
• 08:00 (CL) Chile Jun CPI M/M: 0.0%e v -0.1% prior; Y/Y: 2.7%e v 2.8% prior
• 08:00 (BR) Brazil May Retail Sales M/M: +5.9%e v -16.8% prior; Y/Y: -13.2%e v -16.8% prior
• 08:00 (BR) Brazil May Broad Retail Sales M/M: +6.7%e v -17.5% prior; Y/Y: -22.5%e v -27.1% prior
• 08:00 (BR) CONAB Crop Report
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (7-20 years)
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (20+ years)
• 10:00 (ES) ECB’s De Guindos (Spain)
• 10:30 (US) Weekly DOE Oil Inventories
• 12:00 (RU) Russia Jun CPI M/M: 0.3%e v 0.3% prior; Y/Y: 3.2%e v 3.0% prior
• 12:00 (RU) Russia Jun CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 3.0%e v 2.9% prior
• 12:00 (CA) Canada to sell 3 Year Bonds
• 12:15 (US) Fed’s Bostic participates in webinar on economy
• 13:00 (US) Treasury to sell $29B in 10-Year Notes Reopening
• 15:00 (US) May Consumer Credit: -$15.0Be v -$68.8B prior
• 18:00 (NZ) New Zealand Jun Heavy Truckometer Index M/M: No est v 86.9% prior
• 19:01 (UK) Jun RICS House Price Balance: -25%e v -32% prior
• 19:50 (JP) Japan Jun M2 Money Stock Y/Y: 5.7%e v 5.1% prior; M3 Money Stock Y/Y: 4.4%e v 4.1% prior
• 19:50 (JP) Japan May Core Machine Orders M/M: -5.0%e v -12.0% prior; Y/Y: -16.8%e v -17.7% prior
• 21:00 (NZ) New Zealand July Preliminary Business Confidence: No est v -34.4 prior
• 21:30 (CN) China Jun CPI Y/Y: 2.5%e v 2.4% prior; PPI Y/Y: -3.2%e v -3.7% prior
• 22:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Standing Deposit Rate; Standing Lending Rate
• 22:05 (NZ) New Zealand to sell 2023, 2029 and 2033 bonds
• 23:00 (CN) China to sell 10-year Upsized Special Government Bond
• 23:30 (JP) Japan to sell 6-Month Bills – 23:35 (JP) Japan to sell 5-Year Bonds