Notes/Observations
- EU Leader S enters into its 4th day with a compromise proposal gaining traction on Recovery Fun
- Brexit negotiations continue but hopes for any swift agreement is evaporating
Asia:
- Japan Jun Trade Balance: -¥268.8B v -¥11.9Be; Adjusted Trade Balance: -¥423.9B v ¥331.1Be; Exports Y/Y: -26.2% v -24.7%e (19th straight decline)
- China Banking and Insurance Regulatory Commission (CBIRC) Tol allow insurers to invest up to 45% of their total assets recorded at the end of the previous quarter in equity investments. (Note: currently capped at 30% of their total assets)
- China govt took over 9 financial firms for a period of 1 year, cited certain rule violations; China Industry Association reported to open probes into 8 brokerages over its unusually low bond underwriting fee structure
- China Finance Ministry Official: China will prevent local govt debt risks, Will not relax controls on bond issuance due to virus situation
- China PBoC left the 1-year and 5-year Loan Prime Rates (LPRS) unchanged for its [3rd straight hold (as expected)
Coronavirus:
- Total Global cases over 14.5M with total deaths over 600K prior
- WHO: Global daily new cases rose by nearly 260K over the past 24 hours ( largest daily increase)
- Hong Kong Chief Exec Lam orders new social distancing measures following recent surge in coronavirus cases; Lam says the situation is “really critical” and sees no sign that it is under control
Europe:
- EU’s Michel said to have presented a compromise proposal with a new basis for an agreement is €390B in grants. EU’s ‘frugal four: (aka EU holdouts) said to be prepared to accept €390B in grants for EU Recovery Fund..
- EU leaders stood at an impasse after three days of negotiations over a plan to revive economies impacted by the COVID-19 pandemic. Differences continued over recovery fund design and what strings to attach for countries it would benefit.
- German Chancellor Merkel and France President Macron said to have walked out on Netherlands PM Rutte in EU Stimulus dispute. Meeting ended abruptly in a dispute over how much of the package should be disbursed as grants and how much as loans.
- Netherlands PM Rutte said to have demanded that one country could block payouts to member states if they fail to meet reform commitments
- ECB Chief Lagarde: Better for EU leaders to agree to an ambitious financial aid package as opposed to having a quick deal at any cost
Americas:
- New round of coronavirus stimulus package negotiations to begin at the White House on Monday. Senate Majority Leader McConnell, Treasury Secretary Mnuchin and others to be present
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.10% at 373.08, FTSE -0.34% at 6,268.65, DAX +0.41% at 12,970.50, CAC-40 +0.05% at 5,072.02, IBEX-35 -0.18% at 7,427.00, FTSE MIB -0.05% at 20,409.50, SMI +0.10% at 10,421.05, S&P 500 Futures -0.18%]
- Market Focal Points/Key Themes: European indices open modestly lower across the board, but later turned around to perform mixed; better sectors include consumer staples and health care; underperforming sectors include energy and consumer discretionary; reportedly Intesa raises bid for UBI; Synairgen reports significant improvement in outcome from covid treatment study; GlaxoSmithKline enters collaboration agreement with CureVac for mRNA vaccine development; earnings expected in upcoming US session include Halliburton and Manpowergroup
Equities
- Consumer discretionary: Villeroy & Boch [VIB3.DE] +2% (earnings)
- Financials: Julius Baer [BAER.CH] -3.5% (earnings)
- Healthcare: Koninklijke Philips [PHIA.NL] +4% (earnings), Synairgen [SNG.UK] +194% (study results), Valneva [VLA.FR] +11% (UK govt vaccine program)
- Technology: Amigo [AMGO.UK] -18% (earnings; Chairman designate)
Speakers
- ECB’s De Guindos (Spain) reiterated Council view that Q2 GDP contraction to be slightly better than expected (in-line with recent ECB press conference)
- Netherlands PM Rutte stated that was overall making progress in EU Summit but still close to failure; talks could still fall apart. EU Michel working on a new compromise proposal
- France Finance Min Le Maire: EU stimulus deal is possible and necessary
- Poland Central Bank’s Hardt: Excessive rate cuts made central bank policy less effective
Currencies/Fixed Income
- EUR/USD probed 4-month highs as the EU Leader summit entered into its 4th day. The continuing of talks suggested that a deal on the composition of the recovery fund could be possible. Reports circulated that EU’s ‘frugal four: (aka EU holdouts) were be prepared to accept €390B for grants in the make-up of the EU Recovery Fund. The break of 1.15 would establish a fresh 2020 high and open the door for a test towards the 1.20 neighborhood.
Economic Data
- (DE) Germany Jun PPI M/M: 0.0% v 0.2%e; Y/Y: -1.8% v -1.7%e
- (EU) Euro Zone May Current Account Balance: €8.0B v €14.3B prior
- (CH) Swiss weekly Total Sight Deposits (CHF): 691.5B v 688.6B prior; Domestic Sight Deposits: 618.5B v 613.5B prior
- (PL) Poland Jun Sold Industrial Output M/M: 13.9% v 6.5%e; Y/Y: +0.5% v -6.9%e
- (PL) Poland Jun PPI M/M: 0.4% v 0.1%e; Y/Y: -0.8% v -1.0%e
- (TW) Taiwan Jun Export Orders Y/Y: 6.5% v 1.2%e
- (IT) Italy May Current Account Balance: +€2.3B v -€1.0B prior
- (GR) Greece May Current Account Balance: -€0.9B v -€1.1B prior
- (HK) Hong Kong Jun Unemployment Rate: 6.2% v 6.4%e
- (BE) Belgium July Consumer Confidence Index: # v -19 prior
Fixed Income Issuance
- None seen
Looking Ahead
- (NG) Nigeria Central Bank Interest Rate Decision: expected to leave Interest rate unchanged at 12.50%
- (IL) Israel Central Bank July Minutes
- 05:30 (DE) Germany to sell combined €8.0B in 6-month and 12-month Bubills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 9-month bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (DE) German Bundesbank Monthly Report
- 06:00 (IL) Israel to sell Bonds
- 06:00 (RO) Romania to sell RON500M in 4.15% 2028 Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada Jun Teranet House Price Index (HPI) M/M: No est v 1.1% prior; Y/Y: No est v 6.0% prior; House Price index: No est v 236.55 prior
- 08:50 (FR) France Debt Agency (AFT) to sell €7.2-8.8B in 3-month, 6-month and 12-month bills (4 tranches)
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (EU) EU Leaders continue talks on Recovery Fund
- 10:40 (IE) ECB’s Lane (Ireland, chief economist)
- 11:10 (UK) BOE Haldane (chief economist)
- 11:30 (US) Treasury to sell 13-week and 26-week bills
- 16:00 (US) Weekly Crop Progress Report
- 17:00 (KR) South Korea Jun PPI Y/Y: No est v -1.7% prior
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 91.6 prior
- 19:30 (JP) Japan Jun National CPI Y/Y: 0.1%e v 0.1% prior; CPI Ex-fresh food (core) Y/Y: -0.1%e v -0.2% prior; CPI Ex-fresh food/energy (core-core) Y/Y: 0.4%e v 0.4% prior
- 20:00 (KR) South Korea July 1st 20 day Imports Y/Y: No est v -12.0% prior; Exports Y/Y: No est v -7.5% prior
- 21:30 (AU) RBA July Minutes
- 22:30 (AU) RBA Gov Lowe
- 23:00 (NZ) New Zealand Jun Credit Card Spending M/M: No est v 54.3% prior; Y/Y: No est v -21.1% prior
- 23:30 (HK) Hong Kong to sell 3-month and 6-month bills
- 23:30 (JP) Japan to sell 6-Month Bills
- 23:35 (JP) Japan to sell 20-Year JGB Bonds
- 23:00 (CN) China to sell 10-year Upsized Special Govt Bonds
- (BR) Brazil July CNI Industrial Confidence:
