Notes/Observations
- Euro Zone inflation tests above ECB target for 1st time since Nov 2018.
- Euro Area PMI Manufacturing data continues to be at or near record highs (Beats: Euro Zone, Germany, France, Italy, Spain; Misses: UK).
Asia:
- RBA kept its policy steady (as expected) with Cash Rate Target unchanged at 0.10% and 3-year Yield Control maintained at 0.10%. The reiterated stance was committed to maintaining highly supportive monetary conditions to support a return to full employment and inflation consistent with the target. The reiterated stance that conditions, in order to raise rates, were not expected before 2024 at the earliest.
- China May Caixin PMI Manufacturing registered its 13th month of expansion (52.0 v 52.0e ).
- Australia May Final PMI Manufacturing registered its consecutive monthly expansion and record high (60.4 v 59.9 prelims).
- Japan May Final PMI Manufacturing confirmed its 4th month of expansion (53.0 v 52.5 prelims).
Europe:
- ECB’s Knot (Netherlands) stated that saw no signs rising inflation would be permanent.
- France EU Affairs Min Beaune stated that EU was planning to launch its first Covid-19 recovery plan bond issue for €10.0B with over €100B to be injected in the EU economy from 2021.
- G7 Draft Communique noted that central bank digital currencies could act as liquid safe settlement asset and anchor for payment system; affirmed exchange rate commitments from May 2017; To keep supporting their economies as they emerged from the pandemic and to reach an “ambitious” deal on a minimum global corporate tax in July.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +0.97% at 451.10, FTSE +1.22% at 7,108.15, DAX +1.21% at 15,607.65, CAC-40 +0.73% at 6,493.94, IBEX-35 +0.37% at 9,183.00, FTSE MIB +1.22% at 25,477.50, SMI +0.78% at 11,452.58, S&P 500 Futures +0.31%].
Market Focal Points/Key Themes:
Equities
- European indices open higher across the board with STOXX 600 and CAC 40 indexes renewing their all-time highs; sectors among those trending upwards include oil & gas as Brent rising 3% above $70/bbl; notable movers include Volkswagen trading almost 3% higher on potential battery unit IPO; Equinor in Kopenhagen also trade sharply higher on final investment decision of $8.0Bn Brazil; corporate events scheduled during the upcoming US session include earnings from Canopy Growth and Zoom after the US close.
- Consumer discretionary: JD Sports Fashion [JD.UK] +1% (responds to press).
- Energy: Equinor [EQNR.NO] +3% (investment).
- Industrials: Volkswagen [VOW3.DE] +3% (battery division IPO speculation), Victoria [VCP.UK] +3% (trading update).
- Technology: M&C Saatchi [SAA.UK] +10% (trading update).
- Telecom: Telefonica [TEF.ES] -1% (ends JV).
Speakers
- BOE’s Ramsden stated that he was increasingly optimistic on the recovery: To guard against risk of sustained price pressure from rapid economic recovery.
- SNB Vice Chairman Zurbruegg reiterates the stance that it welcomed recent weakness in CHF currency (Franc), but reiterated that the CHF was still highly valued.
- Sweden Central Bank (Riksbank) Jansson noted that it was possible for inflation to be higher but far from a situation where it would run away from us.
- Thailand Cabinet said to approve a THB140B economic-stimulus program. Measures included cash handouts, co-payments, and cash-back programs.
- Malaysia govt said to revise Q1 GDP numbers due to the impact of pandemic and closing of industries. The GDP revisions to impact fiscal deficit forecast.
- China Banking and Insurance Regulator (CBIRC) Vice Chairman Liang Tao: Macro leverage ratio of the real economy fell in Q1. The banking sector disposed of more non-performing loans (NPLS) compared to the year-ago level.
- China Foreign Ministry spokesman Wang Wenbin reiterated govt stance that coronavirus was not leaked from a lab in Wuhan.
- Iran govt spokesperson Rabiei stated that saw no major obstacle in talks to revive the nuclear deal; hope to have an agreement before the end of the Rouhani govt.
Currencies/Fixed Income
- USD began the session on soft footing against the major European pairs but managed to claw its way back from its worst levels but still within earshot of multi-month lows.
- EUR/USD holding above 1.22 with focus beginning to shift to next week ECB decision. Dealers noted that ECB would likely emphasize the flexibility of PEPP purchases to stem any unwarranted rise in yields. Various PMI Manufacturing data highlighted the optimism for the EU economy as virus restriction ease. Dealers noted that supply constraints likely pushing inflation pressure higher in the months to come.
- GBP/USD retraced from 3-year highs as some profit-taking ensure after testing 1.4248 during Asia. The recent strength attributed to some ‘hawkish BOE rhetoric from late last week.
Economic data
- (UK) May Nationwide House Price Index M/M: 1.8% v 0.8%e; Y/Y: 10.9% v 9.4%e.
- (RU) Russia May PMI Manufacturing: 51.9 v 51.2e (5th straight expansion and highest since Mar 2019).
- (AU) Australia May Commodity Index: 121.9 v 115.2 prior.
- (SE) Sweden May PMI Manufacturing: 66.4 v 69.0 prior.
- (CH) Swiss Apr Real Retail Sales Y/Y: 35.7% v 22.6% prior.
- (CH) Swiss Q1 GDP Q/Q: -0.5% v -0.4%e; Y/Y: -0.5% v -0.2%e.
- (NL) Netherlands May Manufacturing PMI: 69.4 v 67.2e (10th straight expansion and record high).
- (HU) Hungary May Manufacturing PMI: : 52.8 v 54.1e (2nd straight expansion).
- (PL) Poland May PMI Manufacturing: 57.2 v 54.1e (10th straight expansion and record high).
- (TR) Turkey May PMI Manufacturing: 49.3 v 50.4 prior (1st contraction in 12 months).
- (AT) Austria May Preliminary CPI M/M: +0.3% v -0.1% prior; Y/Y: 2.8% v 1.9% prior.
- (CZ) Czech Q1 Preliminary GDP (2nd reading) Q/Q: -0.3% v -0.3%e; Y/Y: -2.1% v -2.1%e.
- (HU) Hungary Mar Final Trade Balance: €0.9B v €1.0B prelim.
- (HU) Hungary Q1 Final GDP Q/Q: 2.0% v 1.9%e; Y/Y: -2.1% v -2.3%e.
- (ES) Spain May Manufacturing PMI: 59.4 v 59.3e (4th month of expansion and highest since May 1998).
- (CH) Swiss May PMI Manufacturing: 69.9 v 70.0e (10th straight expansion).
- (CZ) Czech Republic May PMI Manufacturing: 61.8 v 59.0e (9th straight expansion and record high).
- (TH) Thailand May Business Sentiment Index: 43.0 v 46.0 prior.
- (IT) Italy May Manufacturing PMI: 62.3 v 62.1e (11th month of expansion and record high).
- (FR) France May Final Manufacturing PMI: 59.2 v 59.2e (confirms 6th month of expansion and highest since Sept 2000).
- (DE) Germany May Final Manufacturing PMI: 64.4 v 64.0e (confirmed 11th month of expansion).
- (DE) Germany May Net Unemployment Change: -15.0K v -9.0Ke; Unemployment Claims Rate: 6.0% v 6.0%e.
- (EU) Euro Zone May Final Manufacturing PMI: 63.1 v 62.8e (confirmed 11th month of expansion).
- (GR) Greece May Manufacturing PMI: 58.0 v 54.4 prior (3rd month of expansion and highest since Apr 2000).
- (NO) Norway May PMI Manufacturing: 58.5 v 58.9 prior (9th month of expansion).
- (IT) Italy Apr Preliminary Unemployment Rate: 10.7% v 10.1%e.
- (PL) Poland May Preliminary CPI M/M: 0.3% v 0.3%e; Y/Y: 4.8% v 4.8%e.
- (UK) May Final Manufacturing PMI: 65.6 v 66.1e (confirmed 12th straight expansion and a record high).
- (HK) Hong Kong Apr Retail Sales Value Y/Y: 12.1% v 17.0%e; Retail Sales Volume Y/Y: 10.9% v 16.2%e.
- (EU) Euro Zone May Advance CPI Estimate Y/Y: 2.0% v 1.9%e; CPI Core Y/Y: 0.9% v 0.9%e; CPI M/M: 0.3% v 0.2%e (**Note: above ECB target for 1st time since Nov 2018).
- (EU) Euro Zone Apr Unemployment Rate: 8.0% v 8.1%e.
- (BE) Belgium Apr Unemployment Rate: 5.3% v 5.4% prior.
- (IT) Italy Q1 Final GDP Q/Q: +0.1% v -0.4%e; Y/Y: -0.8% v -1.4% prelim.
- (DK) Denmark May PMI Survey: 67.7 v 71.6 prior (3rd straight expansion).
- (ZA) South Africa May Manufacturing PMI: 57.8 v 56.2 prior (13th month of expansion).
- (IS) Iceland Q1 Current Account Balance (ISK): -27.1B v 23.3B prior.
Fixed income Issuance
- None seen.
Looking Ahead
- (ZA) South Africa May Naamsa Vehicle Sales Y/Y: No est v 6,133.30 prior.
- (EU) Daily ECB Liquidity Stats.
- (CH) Switzerland to sell 3-month Bills.
- 05:30 (ZA) South Africa Q1 Unemployment Rate: 33.5%e v 32.5% prior.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (DE) Germany to sell inflation-linked 2030 and 2033 bonds (Bundei).
- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month Bills;.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2031, 2032 and 2035 bonds.
- 06:00 (PT) Portugal Apr Industrial Production M/M: No est v -0.9% prior; Y/Y: No est v 5.0% prior.
- 06:30 (EU) ESM to sell 3-month Bills; Avg Yield: % v 0.1000% prior; Bid-to-cover: x v 8.35x prior (May 4th).
- 06:45 (US) Daily Libor Fixing.
- 07:00 OPEC+ Technical and Ministerial meetings.
- 08:00 (BR) Brazil Q1 GDP Q/Q: 0.8%e v 3.2% prior; Y/Y: +0.7%e v -1.1% prior; GDP 4 Quarters Accumulated: -3.8%e v -4.1% prior.
- 08:00 (BR) Brazil Apr PPI Manufacturing M/M: No est v 4.8% prior; Y/Y: No est v 29.2% prior.
- 08:00 (CZ) Czech May Budget Balance (CZK): No est v -192.0B prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (CA) Canada Mar GDP M/M: 1.0%e v 0.4% prior; Y/Y: 6.5%e v -2.2% prior; Quarterly GDP Annualized: 6.8%e v 9.6% prior.
- 08:30 (CA) Canada Apr MLI Leading Indicator M/M: No est v 1.4% prior.
- 08:30 (CL) Chile Apr Economic Activity Index (Monthly GDP) M/M: -4.0%e v -1.6% prior; Y/Y: 10.2%e v 6.4% prior.
- 08:55 (US) Weekly Redbook LFL Sales data.
- 09:00 (BR) Brazil May PMI Manufacturing: No est v 52.3 prior.
- 09:00 (EU) Weekly ECB Forex Reserves.
- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 09:30 (CA) Canada May Manufacturing PMI: No est v 57.2 prior.
- 09:45 (US) May Final Markit Manufacturing PMI: 61.5e v 61.5 prelim.
- 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (over 20-years).
- 10:00 (US) May ISM Manufacturing: 60.9e v 60.7 prior; Prices Paid: 89.0e v 89.6 prior.
- 10:00 (US) Apr Construction Spending M/M: 0.5%e v 0.2% prior.
- 10:00 (MX) Mexico Apr Total Remittances: $4.0Be v $4.2B prior.
- 10:00 (MX) Mexico Central Bank Economist Survey.
- 10:00 (MX) Mexico Weekly International Reserve data.
- 10:00 (US) Fed’s Quarles.
- 10:30 (MX) Mexico May PMI Manufacturing: No est v 48.4 prior.
- 10:30 (US) May Dallas Fed Manufacturing Activity Index: 36.3e v 37.3 prior.
- 11:00 (CO) Colombia May PMI Manufacturing: No est v 54.0 prior.
- 11:00 (PE) Peru May CPI M/M: +0.2%e v -0.1% prior; Y/Y: No est v 2.4% prior.
- 11:00 (UK) BOE Gov Bailey speech.
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
- 12:00 (IT) Italy May New Car Registrations Y/Y: No est v 3,276.8% prior.
- 13:00 (MX) Mexico May IMEF Manufacturing Index: No est v 50.3 prior; Non-Manufacturing Index: No est v 53.2 prior.
- 14:00 (BR) Brazil May Trade Balance: $9.5Be v $10.4B prior; Total Exports: $27.3Be v $2.7B prior; Total Imports: $17.5Be v $16.1B prior.
- 14:00 (US) Fed’s Brainard.
- 16:00 (US) Weekly Crop Progress Report.
- (IT) Italy May Budget Balance: No est v -€12.5B prior.
- (AR) Argentina May Government Tax Revenue (ARS): No est v 817.9B prior.
- 18:45 (NZ) New Zealand Q1 Terms of Trade Index Q/Q: No est v 1.3% prior.
- 19:00 (KR) South Korea May CPI M/M: 0.1%e v 0.2% prior; Y/Y: 2.6%e v 2.3% prior; CPI Core Y/Y: 1.3%e v 1.4% prior.
- 19:01 (UK) May BRC Shop Price Index Y/Y: No est v -1.3% prior.
- 19:50 (JP) Japan End-May Monetary Base: No est v ¥655.5T prior.
- 20:30 (ID) Indonesia May PMI Manufacturing: No est v 54.6 prior.
- 21:30 (AU) Australia Q1 GDP Q/Q: 1.1%e v 3.1% prior; Y/Y: +0.3%e v -1.1% prior.
- 23:00 (CN) China to sell 3-year and 7-year Upsize Bonds.
