Notes/Observations
- UK Jun inflation picked up a touch but analyst still expect a short period of deflation
- Latest Fedspeak contained caution that the US economy would recover more slowly than expected amid a surge in novel coronavirus cases across the country
Asia:
- BOJ left policy steady (as expected). left Interest Rate on Excess Reserves (IOER) unchanged at -0.10%;maintained its policy framework of “QQE with Yield Control” around 0.00% and maintained asset purchases at annual pace of ‘unlimited’. In case of rapid yield rise, BOJ would buy JGBs promptly
- Tokyo reported to raise coronavirus alert to highest level – South Korea Jun Unemployment Rate moved off decade highs (4.3% v 4.5%e)
Coronavirus:
- Total global cases 13,290,153 (+1.7% d/d); total deaths: 578.0K (+1.0% d/d)
- Moderna [MRNA]: NEJM reported trial data showed mRNA-1273 COVID-19 vaccine had produced antibodies in all patients tested during initial Phase 1 study
Europe:
- Germany Chancellor Merkel: agreement on an EU recovery plan was urgent; different views remained among EU states
- UK Chancellor of the Exchequer Sunak (Fin Min): said to have ordered a review of capital gains tax that could could have homeowners and investors to help to pay for the coronavirus outbreak
Americas:
- President Trump signed executive order ending preferential treatment for Hong Kong; stated that China sanctions legislation would hold China accountable for its actions in Hong Kong
- Fed’s Brainard (voter, dove): monetary policy will need to shift to provide more stimulus rather than focus on stabilization (July 14th)
- Fed’s Kaplan (dove, voter): seeing pronounced slowing again since mid-June; prefers health care protocols over the Fed doing more; hopeful Fed will let some programs ease
- Fed’s Harker (hawk, voter in 2020): we are in a downturn that is both exceptionally painful and stubbornly long lasting; pandemic impact on economy is not a brief setback (July 14th)
- Senate Majority Leader McConnell stated that GOP to pitch Its own stimulus plan during week of July 20th
Energy:
- Weekly API Crude Oil Inventories: -8.3M v +2.0M prior – OPEC+ committee reportedly outlining a plan for 842K bpd in extra compensation cuts for Aug-Sep timeframe
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.85% at 370.52, FTSE +0.58% at 6,215.55, DAX +0.82% at 12,798.85, CAC-40 +1.03% at 5,059.26, IBEX-35 -0.38% at 7,324.00, FTSE MIB +0.74% at 20,026.50, SMI +1.18% at 10,380.40, S&P 500 Futures +0.59%]
- Market Focal Points/Key Themes: European indices open higher across the board and remained generally positive as the session progressed; consumer discretionary sector leading to the upside; underperforming sectors include financials and telecom; IATA says air traffic down 36% compared to prior year; Asos terminates contract with several clothing suppliers over labor treatment issues; Italian state to take over Autostrade; earnings expected in the upcoming US session include UntedHealth, Bank of New York, and Goldman Sachs
Equities
- Consumer discretionary: Asos [ASC.UK] +4% (trading update), Burberry [BRBY.UK] -8% (earnings), Duni [DUNI.SE] -5% (earnings), Dixons Carphone [DC.UK] -6% (earnings)
- Industrials: Atlantia [ATL.IT] +25% (CDP plans capital increase to gain stake)
- Technology: ASML [ASML.NL] -1% (earnings)
- Telecom: Tele2 [TEL2A.SE] +4% (earnings)
Speakers
- BoE’s Tenreyro: Likely to vote for further action to help the economy. Likely to see dis-inflationary pressures for some time. She believed the UK would endure an interrupted “V: shape recovery in UK. Saw Q3 GDP data improving
- Italy PM Conte reiterated stance that was crucial EU leaders decide on Recovery Plan this month. Would give green light to country rebates in next EU budget if recovery package was swiftly approved
- Sweden PM Lofven reiterated stance that grants in the EU Recovery Fund package are problematic
- Portugal Fin Min Leao stated that govt to target 2020 budget deficit to GDP at 7.0%. Saw signs of a recovery
- BOJ Gov Kuroda post rate decision press conference reiterated view that the economy was in a severe situation with future developments are unclear. Risks were tilted to the downside for both growth and prices. Expected the domestic economy to gradually improve from H2 but the pace seen would only be moderate. Expected CPI to be negative for the time being
- China Foreign Ministry spokesperson stated that UK banning of Huawei was political manipulation and viewed that move as breaching UK promises. China to take all measures to safeguard its interests. US attempts to obstruct Hong Kong National Security law would not succeed; labeled US action as violation of international law. Not aware if a phase 2 trade negotiations had begun
Currencies/Fixed Income
- USD remained on soft footing as its safe haven role subsided for now amid hopes for a coronavirus vaccine.
- EUR/USD approached the 1.1450 level for 4-month highs. A break above the 1.15 level would open the door for further upside. Focus look ed towards ECB rate decision on Thursday
- Higher UK inflation data helped the GBP currency to move higher in the session with GBP/USD higher by 0.5% at 1.2610.
Economic Data
- (NL) Netherlands May Trade Balance: €3.5B v €3.0B prior
- (FI) Finland May Final Retail Sales Volume Y/Y: 6.4% v 4.7% prelim
- (FI) Finland May GDP Indicator Y/Y: -5.5 v -5.3% prior
- (UK) Jun CPI M/M: 0.1% v 0.0%e; Y/Y: 0.6% v 0.4%e; CPI Core Y/Y: 1.4% v 1.2%e; CPIH Y/Y: 0.8% v 0.6%e
- (UK) Jun RPI M/M: 0.2% v 0.2%e; Y/Y: 1.1% v 1.1%e; RPI-X (ex-mortgage interest payments) Y/Y: 1.3% v 1.2%e; Retail Price Index: 292.7 v 292.8e
- (UK) Jun PPI Input M/M: 2.4% v 3.0%e; Y/Y: -6.4% v -6.5%e
- (UK) Jun PPI Output M/M: 0.3% v 0.3%e; Y/Y: -0.8% v -1.1%e
- (UK) Jun PPI Output Core M/M: 0.0% v 0.0%e; Y/Y: 0.5% v 0.5%e
- (NO) Norway Jun Trade Balance (NOK): -10.2B v -1.2B prior
- (DK) Denmark Jun PPI M/M: 3.4% v -0.6% prior; Y/Y: -1.6% v -5.6% prior
- (PL) Poland Jun Final CPI M/M: 0.6% v 0.7% prelim; Y/Y: 3.3% v 3.3% prelim
- (IT) Italy Jun Final CPI M/M: 0.1% v 0.1% prelim; Y.Y: -0.2% v -0.2% prelim; CPI Index (ex-tobacco): 102.4 v 102.3 prior
- (IT) Italy Jun Final CPI EU Harmonized M/M: 0.0% v 0.0% prelim; Y.Y: -0.4% v -0.4% prelim;
- (ZA) South Africa May CPI M/M: % v -0.5%e; Y/Y: % v 2.2%e
- (ZA) South Africa May CPI Core M/M: % v 0.0%e; Y/Y: % v 3.2%e
- (IT) Italy may General Government Debt: €2.508T v €2.467T prior (record level)
Fixed Income Issuance
- (IN) India sold total INR350B vs. INR350B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK4.5B in 2022 and 2029 DBG bonds
- (UK) DMO sold £3.25B in 2.25% Sept 2023 Gilt; Avg Yield: -0.069% v -0.002% prior; Bid-to-cover: 2.10x v 2.46x prior; Tails: 0.5bps v 0.3bps prior
- Looking Ahead
- (PE) Peru May Economic Activity Index (Monthly GDP) Y/Y: -32.5%e v -40.5% prior
- (PE) Peru Jun Unemployment Rate: 15.0%e v 13.0% prior
- 05:30 (DE) Germany to sell €5.0B in 0.00% Aug 2030 Bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.5-1.75B in 6-month and 12-month bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (IE) Ireland May Trade Balance: No est v €5.8B prior
- 06:00 (IE) Ireland May Property Prices M/M: No est v -0.2% prior; Y/Y: No est v 0.5% prior
- 06:00 (RU) Russia to sell OFZ bonds
- 06:30 (UK) DMO to sell £1.5B in 1.75% July 2057 Gilts
- 07:00 (US) MBA Mortgage Applications w/e July 10th: No est v 2.2% prior
- 07:00 (BR) Brazil July FGV Inflation IGP-10 M/M: No est v 1.6% prior
- 07:00 (UK) Weekly PM Question time in House
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) July Empire Manufacturing: +10.0e v -0.2 prior
- 08:30 (US) Jun Import Price Index M/M: 1.0%e v 1.0% prior; Y/Y: -3.7%e v -6.0% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.1% prior
- 08:30 (US) Jun Export Price Index M/M: 0.8%e v 0.5% prior; Y/Y: No est v -6.0% prior
- 08:30 (CA) Canada May Manufacturing Sales M/M: +9.0%e v -28.5% prior
- 09:00 (CA) Canada Jun Existing Home Sales M/M: 65.0%e v 56.9% prior
- 09:15 (US) Jun Industrial Production M/M: 4.4%e v 1.4% prior; Capacity Utilization: 57.8%e v 64.8% prior; Manufacturing Production: 5.6%e v 3.8% prior
- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.25%
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (CO) Colombia May Manufacturing Production Y/Y: -25.0%e v -35.8% prior
- 11:00 (CO) Colombia May Retail Sales Y/Y: -26.0%e v -42.9% prior
- 11:30 (IL) Israel Jun CPI M/M: -0.1%e v -0.3% prior; Y/Y: -1.1%e v -1.6% prior
- 12:00 (US) Fed’s Harker discusses Economic Outlook
- 14:00 (US) Federal Reserve Beige Book
- 15:00 (AR) Argentina Jun National CPI M/M: 1.9%e v 1.5% prior; Y/Y: 42.3%e v 43.5% prior
- 15:00 (CO) Colombia May Industrial Production Y/Y: No est v -29.6% prior
- 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 0.50%
- 18:45 (NZ) New Zealand Q2 CPI Q/Q: -0.6%e v +0.8% prior; Y/Y: 1.4%e v 2.5% prior
- 21:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to leave 7-Day Repo Rate unchanged at 0.50%
- 21:00 (AU) Australia July Consumer Inflation Expectation Survey: No est v 3.3% prior
- 21:30 (CN) China Jun New Home Prices M/M: No est v 0.5% prior
- 21:30 (AU) Australia Jun Employment Change: +102.0Ke v -227.7K prior; Unemployment Rate: 7.2%e v 7.1% prior; Full Time Employment Change: No est v -89.1K prior; Part Time Employment Change: No est v -138.6K prior; Participation Rate: 63.4%e v 62.9% prior
- 22:00 (CN) China Q2 GDP Q/Q: +9.6%e v -9.8% prior; Y/Y: +2.2%e v -6.8% prior; GDP YTD Y/Y: -2.4%e v -6.8% prior
- 22:00 (CN) China Jun Industrial Production Y/Y: 4.8%e v 4.4% prior; Industrial Production YTD Y/Y: -1.5%e v -2.8% prior
- 22:00 (CN) China Jun Retail Sales Y/Y: 0.5%e v -2.8% prior; Retail Sales YTD Y/Y: -11.2%e v -13.5% prior
- 22:00 (CN) China Jun YTD Property Investment Y/Y: +0.2%e v -0.3% prior
- 22:00 (CN) China Jun YTD Fixed Urban Y/Y: -3.3%e v -6.3% prior
- 22:00 (CN) China Jun Surveyed Jobless Rate: 5.9%e v 5.9% prior
- 22:05 (NZ) New Zealand to sell 2025, 2031 and 2040 bonds
- 23:30 (JP) Japan to sell 12-Month Bills
