Focus On Key US Data Ahead Of Wednesday FOMC

Notes/Observations

• UK labor market strengthens as lockdown easing spurred hirings.
• German May Final CPI reading showed inflation was now advancing briskly (above ECB target).
• Focus on key US data in session (Retail Sales, PPI and Industrial Production).
• EU, US confirm to extend tariff suspension on aircrafts by 5 years.

Asia:

• RBA Jun Minutes agreed that it would be premature to consider ending the bond buying program. Reiterated stance that policy would need to remain highly accommodative to reach full employment.
• China PBoC conducted CNY200B in 1-year Medium-Term Lending facility (MLF) with rate unchanged at 2.95%.
• China Sec Journal wrote that PBOC might increase its liquidity injections during the second half of June.
• China govt said to possibly be planning to release state reserves of copper.
• Broad terms of a UK/Australia trade deal said likely to be announced on Tuesday (Jun 15th) following a recent dinner between UK PM/Australian PM.

Coronavirus:

• UK analysis showed that the latest findings from medical experts show that two doses of vaccine offered considerable protection against severe illness and hospitalization from the Delta variant.

Europe:

• UK PM Johnson delayed the removal of further restrictions in England for 4 weeks until July 19th (as speculated). Reserve the right to review progress and lift curbs earlier.
• EU said to be proposing to lift travel restrictions for US passengers this week.

Americas:

• Senator Manchin (D-WV): Group of Senators to set infrastructure proposal by end of the week.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.28% at 459.60, FTSE +0.32% at 7,169.22, DAX +0.65% at 15,775.60, CAC-40 +0.52% at 6,650.80, IBEX-35 -0.45% at 9,239.00, FTSE MIB -0.16% at 25,715.50, SMI +0.45% at 11,920.10, S&P 500 Futures +0.14%].
• Market Focal Points/Key Themes: European indices open broadly higher but retraced gains to trade mixed later in the session; risk sentiment initially seen improving after AZN covid vaccine data showing it was effective against latest variant; sectors leading to the upside include industrials and technology; laggard sectors include materials and energy; series of consumer discretionary firms issued latest sales figures; DEAG acquires Loud UK; earnings expected in the upcoming US session include H&R Block and Oracle.

Equities

• Consumer discretionary: H&M [HMB.SE] -2% (sales), Atlantia [ATL.IT] +5% (strategy update), boohoo.com [BOO.UK] +1% (trading update), Ashtead [AHT.UK] +1% (earnings).
• Healthcare:Astrazeneca [AZN.UK] +1% (COVID-19 drug trial did not endpoints).
• Industrials: Airbus [AIR.FR] +2% (EU and US resolve Boeing/Airbus 17-year trade tariffs dispute).

Speakers

• ECB’s Rehn (Finland) reiterated Council stance that an accommodative financing terms were key to supporting recovery. Recent pick-up in inflation due to one-off factors. PEPP buying to be flexible and needed to continue with significant purchases in program. Council did not discuss issue of transition away from PEPP.
• EU Commission President Von Der Leyen spoke about Airbus-Boeing and was confident that would find an agreement today (**Note: EU and US were said to have resolved its Boeing/Airbus trade tariffs dispute).
• Swiss SECO updated its Economic Forecasts which raises 2021 GDP growth from 3.0% to 3.6% while maintaining 2022 GDP growth at 3.3% on Inflation its maintained 2021 CPI at 0.4% while maintaining 2022 CPI from 0.4% to 0.5%.
• EU, US confirmed a temporary resolution to its aircraft tariff dispute and suspended tariffs by 5 years.
• Poland Central Bank Gatnar stated that the upcoming June CPI reading could test 5%; not clear if inflation spike was temporary.
• Czech Central Bank’s Dedek stated that keeping rates unchanged in June seemed more reasonable as recent May CPI data provided some space to wait.
• Romania Central Bank official Popa stated that more persistent price factors needed increased attention.
• Bank of Korea (BOK) May Minutes: Price pressures increasing; easing policy should be adjusted at the right time.
• Australia confirmed a Free Trade Agreement (FTA) was reached with UK (as speculated).

Currencies/Fixed Income

• USD on soft footing as EU inflation data was in focus. Participant now looking ahead to key US data in session (Retail Sales, PPI and Industrial Production); Dealers noted that signs of rising inflation had been offset by recent weak jobs data, but signs of strong demand in Tuesday’s figures could increase speculation that the Fed may scale back monetary easing early.
• EUR/USD was back towards the 1.2150 area as the German May Final CPI reading showed inflation was now advancing briskly (above ECB target).
• TRY currency (Lira) was weaker as meeting between Biden-Erdogan failed to produce a breakthrough that would eased political tensions.
• EU yields were a tad softer. European Union opened its s book to sell its inaugural bond for its NextGeneration EU Funding Strategy (NGEU). Order book was a healthy €100B+.

Economic data

• (SE) Sweden May PES Unemployment Rate: 3.6% v 3.7% prior.
• (NL) Netherlands Apr Trade Balance: €5.2B v €6.7B prior.
• (FI) Finland Apr Final Retail Sales Volume Y/Y: 11.0% v 8.0% prelim.
• (FI) Finland Apr GDP Indicator Y/Y: 6.4%v 0.1% prior.
• (DE) Germany May Final CPI M/M: 0.5% v 0.5%e; Y/Y: 2.5% v 2.5%e.
• (DE) Germany May Final CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: 2.4% v 2.4%e.
• (UK) May Jobless Claims Change: -92.6K v -55.8K prior; Claimant Count Rate: 6.2% v 6.4% prior.
• (UK) Apr Average Weekly Earnings 3M/Y: 5.6% v 4.9%e; Weekly Earnings (ex-bonus) 3M/Y: 5.6% v 5.3%e.
• (UK) Apr ILO Unemployment Rate: 4.7% v 4.7%e; Employment Change 3M/3M: +113K v +135Ke.
• (DK) Denmark May PPI M/M: 1.6% v 0.8% prior; Y/Y: 9.9% v 7.5% prior.
• (NO) Norway May Trade Balance (NOK): 15.5B v 17.0B prior.
• (FR) France May Final CPI M/M: 0.3% v 0.3%e; Y/Y: 1.4% v 1.4%e; CPI (ex-tobacco) Index: 105.34 v 105.36e.
• (FR) France May Final CPI EU Harmonized M/M: 0.3% v 0.4%e; Y/Y: 1.8% v 1.8%e.
• (FR) Bank of France May Industrial (Business) Sentiment: 107 v 108e.
• (IT) Italy May Final CPI M/M: 0.0% v 0.0% prelim; Y/Y: 1.3% v 1.3% prelim.
• (IT) Italy May Final CPI EU Harmonized M/M: -0.1% v 0.0% prelim; Y/Y: 1.2% v 1.3%e.
• (TR) Turkey May Central Gov’t Budget Balance (TRY): -13.4B v -16.9B prior.
• (PL) Poland May Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 4.7% v 4.8% prelim.
• (IT) Italy Apr General Government Debt: €2.681T v €2.651T prior (record high).
• (HK) Hong Kong Q1 PPI Y/Y: 1.7% v 2.9% prior.
• (HK) Hong Kong Q1 Industrial Production Y/Y: +2.6% v -6.1% prior.
• (EU) Euro Zone Apr Trade Balance (seasonally adj): €9.4B v €15.0Be; Trade Balance NSA (unadj): €10.9B v €15.8B prior.

Fixed income Issuance

• (EU) European Union opens book to sell EUR-denominated 10-year bond under its NextGeneration EU Funding Strategy (NGEU); guidance seen 0bps (flat) to mid-swaps; Order book was over €76B.
• (ID) Indonesia sold total IDR10.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk).
• ES) Spain Debt Agency (Tesoro) sold total €1.94B vs. €1.5-2.5B indicated range in 3-month and 9-month Bills.
• (UK) DMO sold £2.75B in 0.125% Jan 2028 Gilts; Avg Yield: 0.531% v 0.176% prior; bid-to-cover: 2.50x v 2.75x prior; Tail: 0.1bps v 0.2bps prior.

Looking Ahead

• (NG) Nigeria May CPI Y/Y: 18.2%e v 18.1% prior.
• (PE) Peru Apr Economic Activity Index (Monthly GDP) Y/Y: No est v 18.2% prior.
• (CH) Switzerland to sell 3-month Bills; Avg Yield: % v -0.766% prior.
• 05:20 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell €5.0B in 0% Jun 2023 Schatz.
• 05:30 (HU) Hungary Debt Agency (AKK) 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, 2037 and 2048 bonds
• 06:00 (IE) Ireland Apr Trade balance: No est v €5.5B prior.
• 06:00 (FI) Finland to sell €1.5B in 2028 and 2031 RFGB Bonds.
• 06:00 (ES) ECB’s De Cos (Spain).
• 06:30 (UK) DMO to sell £2.0B in 1.25% July 2051 Gilts.
• 06:30 (EU) ESM to sell €1.5B in 6-month Bills.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (IE) ECB’s Lane (Ireland, chief economist) at conference.
• 07:30 (IN) India May Trade Balance: -$6.3Be v -$15.1B prior; Exports Y/Y: No est v 196.7% prior; Imports Y/Y: No est v 167.1% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:15 (CA) Canada May Annualized Housing Starts: 277.5Ke v 268.6K prior.
• 08:15 (UK) BOE Gov Bailey on financial services.
• 08:30 (US) Jun Empire Manufacturing: 22.0e v 24.3 prior.
• 08:30 (US) May Advance Retail Sales M/M: -0.6%e v 0.0% prior; Retail Sales (ex-auto) M/M: +0.4%e v -0.8% prior; Retail Sales (ex-auto/gas): 0.0%e v -0.8% prior; Retail Sales (control group): -0.4%e v -1.5% prior.
• 08:30 (US) May PPI Final Demand M/M: 0.5%e v 0.6% prior; Y/Y: 6.2%e v 6.2% prior.
• 08:30 (US) May PPI (ex-food/energy) M/M: 0.5%e v 0.7% prior; ; Y/Y: 4.8%e v 4.1% prior.
• 08:30 (US) May PPI (ex-food/energy/trade) M/M: 0.5%e v 0.7% prior; Y/Y: No est v 4.6% prior.
• 08:55 (US) Weekly Redbook Sales.
• 09:00 (CA) Canada May Existing Home Sales M/M: No est v -12.5% prior.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 09:15 (US) May Industrial Production M/M: 0.6%e v 0.5% prior (revised from 0.7%); Capacity Utilization: 75.1%e v 74.6% prior (revised from 74.9%); Manufacturing Production: 0.7%e v 0.4% prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (20 years+).
• 09:50 (IT) ECB’s Panetta (Italy) at Bundesbank conference.
• 10:00 (US) Apr Business Inventories: -0.1%e v +0.3% prior.
• 10:00 (US) Jun NAHB Housing Market Index: 83e v 83 prior.
• 10:00 (MX) Mexico Weekly International Reserve data.
• 11:00 (CO) Colombia Apr Manufacturing Production Y/Y: 60.0%e v 20.7% prior.
• 11:00 (CO) Colombia Apr Retail Sales Y/Y: 70.0%e v 20.1% prior.
• 11:00 (PE) Peru May Unemployment Rate: No est v 15.1% prior.
• 11:00 (AT) ECB’s Holzmann (Austria).
• 11:30 (IL) Israel May CPI M/M: 0.5%e v 0.3% prior; Y/Y: 1.6%e v 0.8% prior.
• 11:30 (US) Treasury to sell 52-Week Bills.
• 12:00 (RU) Russia Q1 Preliminary GDP (2nd reading) Y/Y: -1.0%e v -1.0% advance.
• 13:00 (US) Treasury to sell 20-year bonds.
• 15:00 (AR) Argentina Apr Capacity Utilization: No est v 64.5% prior.
• 15:00 (CO) Colombia Apr Industrial Production Y/Y: No est v 9.1% prior.
• 16:00 (US) Apr Total Net TIC Flows: No est v $146.4B prior; Net Long-term TIC Flows: No est v $262.2B prior.
• 16:30 (US) Weekly API Crude Oil Inventories.
• 18:45 (NZ) New Zealand Q1 Current Account Balance (NZD): -2.5Be v -2.7B prior Current Account to GDP Ratio: -2.1%e v -0.8% prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 110.7 prior.
• 19:50 (JP) Japan May Trade Balance: -¥77.9Be v ¥253.1B (revised from ¥255.3B); Adjusted Trade Balance: ¥241.8B v ¥65.2B prior; Exports Y/Y: 50.9%e v 38.0% prior; Imports: 26.5%e v 12.8% prior.
• 19:50 (JP) Japan Core Machine Orders M/M: 2.5%e v 3.7% prior; Y/Y: +8.0%e v -2.0% prior.
• 20:30 (AU) Australia May Leading Index M/M: No est v 0.2% prior.
• 21:30 (JP) BOJ bond purchase operation.
• 23:00 (CN) China to sell 1-year and 10-year Upsize Bonds.
• 23:30 (JP) Japan to sell 12-Month Bills.