Notes/Observations
- Growing worries that the Brexit transition period will end on December 31 without a UK-EU trade deal
- US-China tensions continue to simmer
- Continued concerns over various coronavirus hot spots around the globe
- Japan markets closed for Thurs and Friday sessions
Asia:
- South Korea Q2 Preliminary GDP data entered into a technical recession with its largest contraction since 1997 debt crisis (QoQ: -3.3% v -2.4%e; YoY: -2.9% v -2.0%e)
- Australia Treasurer Frydenber updated economic projections which forecasted FY20/21 Budget Deficit of A$184.5B [below expectations for above A$200B deficit]. Cut 2020 GDP forecast from -3.3% to -3.8% and cut 2021 GDP growth forecast from 3.4% to 3.1%. Cut 2020 CPI from 1.5% to 0.6% and cut 2021 CPI from 2.0% to 1.6%
- Both Moody’s and S&P affirm Australia AAA sovereign rating
- US Consulate in Chengdu said to be the prime target for Chinese retaliation for Houston closure
Coronavirus:
- Total global cases 15,226,993 (+2.2% d/d); total deaths: 623.4K (+1.2 d/d%)
- Tokyo reported to find 366 coronavirus cases (record high)
- California has overtaken New York as state with highest total virus cases
Europe:
- Italy cabinet approved €25.0B extra deficit for 2020 to help coronavirus-hit economy; budget deficit to GDP seen approaching 12.0% vs. 10.4% target set back in April
Americas:
- President Trump: Possible to close more diplomatic sites
- White House Chief of Staff Meadows: The Trump administration opposed to a short-term extension of enhanced federal unemployment benefits
- Sen Shelby (R-AL): Senate had tentative deal on Stimulus; to finish appropriations part of Bill on Thurs (July 23rd)
- S&P affirmed Canada at AAA, outlook stable
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.44% at 375.10, FTSE +0.66% at 6,248.07, DAX +0.56% at 13,177.95, CAC-40 +0.52% at 5,063.41, IBEX-35 +0.31% at 7,413.00, FTSE MIB +0.01% at 20,601.50, SMI +0.04% at 10,443.37, S&P 500 Futures +0.34%]
- Market Focal Points/Key Themes: European indices open generally higher and remained in the green as the session progressed; consumer discretionary sector leads to the upside; health care and utilities sectors among underperformers; automotive sector supported after good results from Daimler and Renault; advertising sector supported after better than expected earnings from Publicis; Pernod Ricard STMicroelectronics increases outlook; Dassault Systems and Bouygues Construction extend partnership; earnings expected in the upcoming US session include Dow Chemical, AT&T and Twitter
Equities
- Consumer discretionary:Unilever [UNA.NL] +8% (earnings), Publicis [PUB.FR] +15% (earnings), Ubisoft [UBI.FR] +4% (sales)
- Healthcare: Roche [ROG.CH] -1.5% (earnings)
- Industrials: Daimler [DAI.DE] +5% (earnings), Skanska [SKAB.SE] -6% (earnings), Covestro [1COV.DE] -1% (earnings)
- Technology: STMicro [STM.FR] +4% (earnings; raises outlook)
- Materials: Petra Diamonds [PDL.UK] -9% (trading update)
Speakers
- EU President Michel stated in Parliament that recent leader summit was a pivotal moment for bloc; recovery fund would be well spent
- EU Commission President Von der Leyen: Leader summit gave the bloc the tools to recover but region not out of the woods ye
- ECB’s De Guindos (Spain): EU deal on recovery fund and budget is a change for the better for European integration
- France Fin Min Le Maire stated that economic data had been satisfying but remained fragile. Maintained 2020 GDP forecast of -11.0%
- China Foreign Ministry spokesperson Wang Wenbib: US allegations on Houston consulate stealing secrets were malicious and slandering
Currencies/Fixed Income
- EUR/USD continued to have some difficulties breaking above the 1.16 level which represented the 4-year downtrend line for the pair. Dealers cite technical factors that support view that the Euro wa sin the early phase of an uptrend and could test the 1.20 level in coming weeks. EU officials were in parliament trying to win approval of the recent Recovery Fund and 7-year budget approved by EU leaders.
- GBP/USD was softer in the session over growing worries that the Brexit transition period would end on December 31 without a UK-EU trade deal. UK said to be planning to hold an emergency round of talks next week to avoid taking blame for any failure to agree a deal. EU chief negotiator Barnier to hold a press conference on Thursday and was expected to warn the UK that time was running out to agree a trade deal after the latest round of negotiations
Fixed Income Issuance
- None seen
Looking Ahead
- (RO) Romania Jun M3 Money Supply Y/Y: No est v 14.5% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
- 05:30 (PL) Poland to sell PLN3-5B in Bonds
- 06:00 (UK) July CBI industrial Trends Total Orders: -38e v -58 prior; Selling prices: No est v -10 prior; Business Optimism: No est v -87 prior
- 06:00 (RO) Romania to sell RON200M in4.75% 2034 Bonds
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 8.25%
- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to cut Key Rate by 25bps to 5.75%
- 07:00 (UK) BOE’s Haskel
- 07:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (3-7 years)
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Initial Jobless Claims: 1.30Me v 1.300M prior; Continuing Claims: 17.10Me v 17.338M prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (7-20 years)
- 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rate by 25bps to 3.50%
- 09:00 (ZA) South Africa BER Inflation Expectations Survey
- 09:00 (RU) Russia Gold and Forex Reserve w/e July 17th: No est v $574.2B prior
- 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (20+ years)
- 10:00 (US) Jun Leading Index: 2.1%e v 2.8% prior
- 10:00 (EU) Euro Zone July Advance Consumer Confidence Index: -12.0e v -14.7 prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) July Kansas City Fed Manufacturing Activity: 5e v 1 prior
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
- 12:00 (CA) Canada to sell 30 Year Bonds
- 13:00 (US) Treasury to sell 10-Year TIPS
- 13:30 (BR) Brazil Jun Tax Collections (BRL): 87.6Be v 77.4B prior
- 15:00 (AR) Argentina May Supermarket Sales Y/Y: No est v 0.2% prior; Shop Center Sales Y/Y: No est v -98.6% prior
- (AR) Argentina July Consumer Confidence Index: No est v 39.5 prior
- 18:45 (NZ) New Zealand Jun Trade Balance (NZD): 0.5Be v 1.3B prior; Exports: 5.1Be v 5.4B prior; Imports: 4.6Be v 4.1B prior
- 19:00 (AU) Australia July Preliminary PMI Manufacturing: No est v 51.2 prior; PMI Services: No est v 53.1 prior; PMI Composite: No est v 52.7 prior
- 19:01 (UK) July Preliminary GfK Consumer Confidence: -24e v -27 prior
- 23:00 (CN) China to sell 3-month bills
- 23:30 (TH) Thailand Jun Customs Trade Balance: $2.9Be v $2.7B prior
