Concerns Creeping In Regarding The Next Phase Of The UK’s Easing Of Restrictions

Notes/Observations

• Germany Apr factory orders unexpectedly decline in April.
• UK Halifax Housing data continue to get a boost from the extension of stamp duty tax exemption.
• UK PM Johnson said to be under pressure to leave some Covid measures in place amid further evidence that Delta variant originally detected in India was pushing up the infection rate rapidly.
• G7 Ministers reached an agreement to commit to a global minimum tax of at least 15%; the proposal still in early stages with several unknowns still to be worked out.
• Asia:
• China May Trade Balance $45.5B v $50.8Be; Exports YoY: 27.9% v 32.1%e; Imports YoY: 51.1% v 53.5%e (highest since Mar 2010).
• S&P affirmed Australia’s sovereign rating at AAA while raising the outlook to stable from negative.

Coronavirus:

• UK Health Sec Hancock noted that the Jun 21st reopening in balance. He added that the Covid Delta variant ‘about 40% more transmissible (Note: comment possibly hinting of delay to plan to reopen of June 21st if needs be).

Europe:

• France Fin Min Le Maire reiterated the view that 2021 GDP growth seen at 5.0%. The domestic economy would be back to pre-Covid levels by Q1 2022.
• Germany Saxony-Anhalt election exit polls have the CDU with 36% and AfD with 22.5% (Note” results seen as a positive for Laschet’s bid for chancellor (CDU leader).
• Italy Public Admin Min Brunetta noted that it could receive €25B during the July-Aug period from EU pandemic recovery fund package.

Americas:

• G7 Finance Ministers reached an agreement to commit to a global minimum tax of at least 15% on a country by country basis and the removal of all Digital Services Taxes.
• Treasury Sec Yellen tweeted that President Biden’s $4.0T spending plan would be good for the US, even if it contributed to rising inflation and results in higher interest rates.
• President Biden rejected the new GOP infrastructure offer but still planned to meet with Sen Capito (R-WV) again on Monday (Jun 7th). (Note: Capito offered a proposal that would increase infrastructure spending by $50B, but Biden said that did not meet his objectives).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 0% at 452.5, FTSE +0.2% at 7081, DAX -0.1% at 15680, CAC-40 -0.1% at 6512, IBEX-35 +0.2% at 9109, FTSE MIB +0.4% at 25675, SMI -0.1% at 11563, S&P 500. Futures -0.2%]

Market Focal Points/Key Themes:

• European Indices trade mixed following a mixed Asian trading session, US futures slightly lower on a light morning in the corporate front.
• Reckitt shares trade little changed after divesting their China Infant Formula business in a $2.2B deal, Clipper Logistics, CNOVA, S4 Capital trade higher on trading upgrades, while Argenx trades sharply low on discontinuation on trastuzumab collaboration with Cilag.
• Looking ahead notable earners include GIII apparel and Jiayin Group.

Equities

• Consumer discretionary: CNOVA [CNV.FR] +3.4% (Provides near and mid term guidance).
• Healthcare: Reckitt [RKT.UK] -0.2% (To sell China Infant Formula business to Primavera Capital for ~$2.2B), Addex Therapeutics [ADXN.CH] +3.3% (Starts Phase 2 clinical study of ADX71149 for epilepsy), Argenx [ARGX.BE] -6.4% (To regain global rights to Cusatuzumab).
• Industrials: Taylor Wimpey [TW.UK] +2.5% (analyst upgrade).
• Technology: Atari [ATA.FR] +13% (New stage in the strategic development of Atari’s blockchain division).

Speakers

• BOE discussion paper on digital currency noted that issuance could be govt or private. Stable coins presented a host of issues for banks.
• Russian Economy Ministry said to see Apr YTD GDP growth at 1.8%.

Currencies/Fixed Income

• USD found some relief in the aftermath of its post payroll decline after US Treasury Sec Yellen tweeted that President Biden’s $4.0T spending plan would be good for the US, even if it contributed to rising inflation and results in higher interest rates.
• EUR/USD at 1.2160 with the focus on the upcoming policy meeting on Thursday. ECB to decide about the pace of emergency bond purchases in the coming quarter at that time.
• GBP/USD was softer as UK Health Sec Hancock noted that the Jun 21st reopening in balance. He added that the Covid Delta variant ‘about 40% more transmissible (**Note: comment possibly hinting of delay to plan to reopen of June 21st if needs be).

Economic data

• (SE) Sweden Jun SEB Housing-Price Indicator: 65 v 66 prior.
• (CH) Swiss May Unemployment Rate: 3.1% v 3.1%e; Unemployment Rate (seasonally adj: 3.0% v 3.1%e.
• (DE) Germany Apr Factory Orders M/M: -0.2% v +0.5%e; Y/Y: 78.9% v 77.8%e.
• (FI) Finland Apr Preliminary Trade Balance: -€0.3B v -€0.3B prior.
• (NO) Norway Apr Industrial Production M/M: -0.1% v +0.9% prior; Y/Y: 0.9% v 0.6% prior.
• (NO) Norway Apr Manufacturing Production M/M: -1.9% v +0.7% prior; Y/Y: 4.7% v 4.7% prior.
• (ZA) South Africa May Gross Reserves: $54.1B v $53.7B prior; Net Reserves: $52.2B v $51.9Be.
• (CH) Swiss May CPI M/M: 0.3% v 0.3%e; Y/Y: 0.6% v 0.5%e; CPI Core Y/Y: 0.2% v 0.0% prior.
• (CH) Swiss May CPI EU Harmonized M/M: 0.2% v 0.3% prior; Y/Y: 0.3% v 0.1% prior.
• (ES) Spain Apr Industrial Production M/M: 1.2% v 0.5%e; Y/Y: 48.2% v 44.4%e; Industrial Output NSA (unadj) Y/Y: 50.3% v 15.4% prior.
• (CH) Swiss May Foreign Currency Reserves (CHF): 902.5B v 914.4B prior.
• (AT) Austria May Wholesale Price Index M/M: 1.7% v 0.6% prior; Y/Y: 10.9% v 8.7% prior.
• (CZ) Czech Apr Industrial Output Y/Y: 55.1% v 54.0%e; Construction Output Y/Y: -3.9% v -3.3% prior.
• (CZ) Czech Apr National Trade Balance (CZK): 19.3B v 14.8Be.
• (UK) May Halifax House Price Index M/M: 1.3% v 1.4% prior; Y/Y: 9.5% v 8.2% prior.
• (SE) Sweden May Budget Balance (SEK): +36.9B v -16.9B prior.
• (CH) Swiss weekly Total Sight Deposits (CHF): 710.8B v 710.5B prior; Domestic Sight Deposits: 632.2B v 634.6B prior.
• (CZ) Czech May Unemployment Rate: 3.9% v 4.2% prior.
• (CN) China May Foreign Reserves: $3.222T v $3.215Te (2nd straight monthly rise).
• (EU) Euro Zone Jun Sentix Investor Confidence: 28.1 v 25.4e.
• (IS) Iceland May Preliminary Trade Balance (ISK): -15.5B v -11.2B prior.

Fixed income Issuance

• (EU) EFSF opened its book to sell EUR-denominated 0% Apr 2024 bonds via syndicate; guidance saw -4bps to mid-swaps.

Looking Ahead

• (IL) Israel May Foreign Currency Balance: No est v $194.0B prior.
• (UR) Ukraine May Official Reserve Assets: No est v $28.0B prior.
• (MX) Citibanamex Survey of Economists.
• 05:20 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell combined €6.0B in 3-month and 9-month Bulls.
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (IL) Israel to sell combined ILS1.3B in 2024, 2026, 2031 and 2037 bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (TR) Turkey to sell bonds.
• 07:00 (MX) Mexico Mar Gross Fixed Investment: +2.3%e v -4.5% prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 08:00 (PL) Poland May Official Reserves: No est v $155.7B prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (ES) Spain Debt Agency (Tesoro) announces details of upcoming issuance.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 08:30 (CL) Chile May Trade Balance: $0.7Be v $2.0B prior; Total Exports: No est v $8.1B prior’ Total Imports: No est v $6.1B prior; Copper Exports: No est v $4.5B prior.
• 08:30 (CL) Chile May Reserves: No est v $42.6B prior.
• 09:00 (FR) France Debt Agency (AFT) to sell €5.3-6.5B in 3-month, 6-month and 12-month bills.
• 09:00 (RU) Russia May Official Reserve Assets: $602.0Be v $590.5B prior.
• 09:00 (CL) Chile Apr Nominal Wage M/M: No est v 1.3% prior; Y/Y: No est v 4.3% prior.
• 09:45 (EU) ECB weekly QE bond-buying update.
• 10:30 (TR) Turkey May Cash Budget Balance (TRY): No est v -13.3B prior.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 12:00 (RU) Russia May CPI M/M: 0.6%e v 0.6% prior; Y/Y: 5.8%e v 5.5% prior.
• 12:00 (RU) Russia May CPI Core M/M: 0.5%e v 0.6% prior; Y/Y: 5.7%e v 5.5% prior.
• 15:00 (US) Apr Consumer Credit: $20.5Be v $25.8B prior.
• 16:00 (US) Weekly Crop Progress Report.
• 19:00 (KR) South Korea Apr Current Account Balance: No est v $7.8B prior; Balance of Goods (BOP): No est v $7.9B prior.
• 19:01 (UK) May BRC Sales Like-For-Like Y/Y: No est v 39.6% prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 111.4 prior.
• 19:30 (JP) Japan Apr Labor Cash Earnings Y/Y: 0.8%e v 0.6% prior (revised from 0.2%); Real Cash Earnings Y/Y: 1.4%e v 0.8% prior (revised from 0.5%).
• 19:50 (JP) Japan Q1 Final GDP SA Q/Q: -1.2%e v -1.3% prelim; GDP Annualized Q/Q: -4.9%e v -5.1% prelim; GDP Nominal Q/Q: -1.6%e v -1.6% prelim.
• 19:50 (JP) Japan Apr Current Account Balance: ¥1.490Te v ¥2.650T prior; Adjusted Current Account: ¥1.567Te v ¥1.696T prior; Trade Balance (BoP Basis): €295.8Be v ¥983.1B prior.
• 19:50 (JP) Japan Bank Lending: No est v 4.8% prior; Bank Lending (ex-trust): No est v 4.3% prior.
• 21:00 (PH) the Philippines Apr Unemployment Rate: No est v 7.1% prior.
• 21:30 (AU) Australia May Business Confidence: No est v 26 prior; Business Conditions: No est v 32 prior.
• 23:00 (ID) Indonesia May Foreign Reserves: No est v $138.8B prior.
• 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.
• 23:35 (JP) Japan to sell 30-Year JGB Bonds.