Euro Area Inflation Remains Above ECB Target For 2nd Straight Month

Notes/Observations

• Various EU countries reporting CPI staying above the ECB target level for the 2nd straight month (Germany, Spain).
• Various EU confidence data improve in session (Dutch, French, Euro Zone readings all higher m/m).
• Concerns over the delta variant of Covid-19 linger; news of rising COVID infections, new lockdown measures, and fresh travel restrictions pouring cold water on recovery hopes.

Asia:

• Japan May Jobless Rate: 3.0% v 2.9%e.
• Japan May Retail Sales M/M: -0.4% v -0.7%e v; Y/Y: 8.2% v 7.9%e.
• RBNZ Statement of Intent noted it was prepared to navigate the challenges presented by the economic and financial environment, vulnerabilities still remained in the economy and the recovery needed continued monetary and fiscal support. As long as the virus was contained and economic recovery sustained then policy settings could be expected to normalize over the medium term.
• RBNZ Gov Orr stated that domestic activity was returning to pre-COVID levels, supported by the nation’s ability to keep the virus contained along with significant monetary and fiscal stimulus; divergences in economic activity remained significant.

Coronavirus:

• Total global cases 182.2M (+0.2% d/d); total deaths: 3.95M (+0.2% d/d).
• UK Health Sec Javid stated that there was no reason to extend COVID restrictions beyond July 19th; we had to learn to live with COVID.

Europe:

• EU’s Sefcovic: Confident of a 3-month extension being granted on meat import curbs before the June 30 deadline.
• Jersey govt statement noted that it had extended the transition period of fishing rights for French boats, which might continue to fish in Jersey waters for now.

Americas:

• US President Biden stated that would work with congress on the China competition bill.
• Fed’s Barkin (FOMC voter, hawk): the TIPS market is showing inflation at about 2%. Expected inflation to moderate over time to normal levels.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.22% at 455.96, FTSE +0.07% at 7,077.64, DAX +0.60% at 15,646.60, CAC-40 +0.26% at 6,574.87, IBEX-35 0.00% at 8,914.00, FTSE MIB +0.34% at 25,312.50, SMI +0.18% at 12,030.49, S&P 500 Futures -0.07%].
• Market Focal Points/Key Themes: European indices open modestly higher across the board and remained somewhat positive as the session progressed; sectors trending to the upside include industrials and materials; while utilities was the only sector to start the day in the red; UDG affirms has received an increased offer from CF&R; reportedly CC Capital looking to acquire IWG; AB Science looking to list in the US; earnings expected in the upcoming US session include Aurora Cannabis and Edwards Lifesciences.

Equities

• Consumer discretionary: IWG plc [IWG.UK] +2% (CC Capital confirms that it does NOT intend to make an offer).
• Energy: Lamprell [LAM.UK] -20% (earnings), Hunting [HTG.UK] -1% (trading update).
• Healthcare: UDG Healthcare [UDG.UK] +1% (confirms raised offer).
• Industrials: Norden [DNORD.DK] +7% (raises outlook again).

Speakers

• None seen in session.

Currencies/Fixed Income

• USD was steady and keeping onto its recent strength into quarter- and month-end aided the decoupling central bank views among the G7 members. Greenback roughly at 3-month highs against other majors. Safe-haven playing a role as coronavirus outbreaks threatened to snuff out global economic recovery. Looking ahead the focus will be on the upcoming US jobs report on Friday.
• EUR/USD drifting down toward 1.19 and could not benefit from Jun CPI readings. Various EU countries reporting CPI staying above the ECB target level for a 2nd straight month (Germany, Spain). Markets believing central banks speak that inflation will probably decelerate somewhat but believe ECB will have a much harder time tightening monetary policy than the Fed.

Economic data

• (NL) Netherlands Jun Producer Confidence Index: 11.5 v 8.8 prior.
• (DE) Germany Jun CPI North Rhine Westphalia M/M: 0.5 v 0.5% prior; Y/Y: 2.5% v 2.6% prior.
• (FI) Finland May Preliminary Retail Sales Volume Y/Y: 1.6 v 11.0% prior.
• (FI) Finland May House Price Index M/M: 0.1 v 1.7% prior; Y/Y: 3.9 v 5.0% prior.
• (UK) Jun Nationwide House Price Index M/M: 0.7% v 0.7%e; Y/Y: 13.4% v 13.6%e.
• (FR) France Jun Consumer Confidence: 102 v 100e.
• (ES) Spain Jun Preliminary CPI M/M: 0.4% v 0.4%e; Y/Y: 2.6% v 2.7%e.
• (ES) Spain Jun Preliminary CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: 2.4% v 2.4%e.
• (ES) Spain May Adjusted Retail Sales Y/Y: 19.6% v 40.5% prior; Retail Sales (unadj) Y/Y: 18.8% v 38.3% prior.
• (SE) Sweden Jun Consumer Confidence: 109.4 v 112.2 prior; Manufacturing Confidence: 125.2 v 125.7 prior; Economic Confidence: 119.8 v 119.3 prior.
• (HU) Hungary May Unemployment Rate: 3.9% v 4.4% prior.
• (CZ) Czech Q1 Final GDP (3rd reading) Q/Q: -0.3% v -0.3%e; Y/Y: -2.4% v -2.1%e.
• (TR) Turkey Jun Economic Confidence: 97.8 v 92.6 prior.
• (SE) Sweden May Trade Balance (SEK): 5.1B v 1.9B prior.
• (DE) Germany Jun CPI Brandenburg M/M: 0.5% v 0.4% prior; Y/Y: 2.4% v 2.6% prior.
• (DE) Germany Jun CPI Hesse M/M: 0.3% v 0.6% prior; Y/Y: 2.2% v 2.5% prior.
• (DE) Germany Jun CPI Bavaria M/M: 0.3% v 0.5% prior; Y/Y: 2.2% v 2.6% prior.
• (UK) May Net Consumer Credit: £0.3B v £0.3Be; Net Lending: £6.6B v £4.4Be.
• (UK) May Mortgage Approvals: 87.5K v 85.8Ke.
• (UK) May M4 Money Supply M/M: 0.4% v 0.1% prior; Y/Y: 7.3% v 9.1% prior; M4 (ex-IOFCs) annualized: 4.4% v 5.7% prior.
• (PT) Portugal Jun Consumer Confidence Index: -14.2 v -16.7 prior; Economic Climate Indicator: 1.6 v 0.5 prior.
• (EU) Euro Zone Jun Economic Confidence: 117.9 v 116.5e (highest in 21 years); Industrial Confidence: 12.7 v 12.1e; Services Confidence: 17.9 v 14.6e; Consumer Confidence: -3.3 v -3.3 advance.
• (DE) Germany Jun CPI Saxony M/M: 0.3% v 0.4% prior; Y/Y: 2.1% v 2.4% prior.
• (IS) Iceland Jun CPI M/M: 0.3% v 0.4% prior; Y/Y: 4.3% v 4.4% prior.

Fixed income Issuance

• (ID) Indonesia sold total IDR12.5T vs. IDR11.0T target in Islamic bills and bonds (sukuk).
• (EU) European Union opened its book to sell EUR-denominated 5-year and 30-year bonds under its NextGeneration EU Funding Strategy (NGEU); To sell 5-year bonds; guidance seen.
• 8bps to mid-swaps; To sell 30-year bonds; guidance saw +25bps to mid-swaps.
• (DK) Denmark sold a total of DKK6.06B in 3-month, 6-month, 9-month, and 12-month bills.

Looking Ahead

• (UR) Ukraine Central Bank (NBU) Jun Minutes.
• (DE) Germany Jun CPI Baden Wuerttemberg M/M: No est v 0.5% prior; Y/Y: no est v 2.5% prior.
• (BE) Belgium Jun CPI M/M: No est v 0.2% prior; Y/Y: No est v 1.5% prior.
• (EG) Egypt Q1 GDP Constant Q/Q: No est v 6.2% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (ZA) South Africa Q1 Non-Farm Payrolls Q/Q: No est v 0.8% prior; Y/Y: No est v -5.8% prior.
• 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 2032, 2037, and 2040 bonds.
• 06:00 (FR) France Q1 ILO Unemployment Rate: 8.0%e v 8.0% prior; Mainland Unemployment Rate: 7.7%e v 7.7% prior.
• 06:00 (PT) Portugal May Retail Sales M/M: No est v 4.4% prior; Y/Y: No est v 28.3% prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Jun FGV Inflation M/M: 1.0%e v 4.1% prior; Y/Y: 36.2%e v 37.0% prior.
• 07:15 (AU) Reserve Bank of Australia (RBA) Gov Lowe.
• 07:30 (IS) Iceland to sell 3-month and 6-month bills.
• 08:00 (DE) Germany Jun Preliminary CPI M/M: 0.4%e v 0.5% prior; Y/Y: 2.4%e v 2.5% prior.
• 08:00 (DE) Germany Jun Preliminary CPI EU Harmonized M/M: 0.3%e v 0.3% prior; Y/Y: 2.1%e v 2.4% prior.
• 08:00 (BR) Brazil May PPI Manufacturing M/M: No est v 2.1% prior; Y/Y: No est v 31.7% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 08:55 (US) Weekly Redbook LFL Sales data.
• 09:00 (US) Apr FHFA House Price Index M/M: 1.6%e v 1.4% prior.
• 09:00 (US) Apr S&P/Case-Shiller House Price Index (20-City) M/M: 1.80%e v 1.60% prior; Y/Y: 14.85%e v 13.27% prior.
• 09:00 (US) Apr S&P/Case-Shiller House Price Index (Overall) Y/Y: No est v 13.19% prior.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:00 (US) Fed’s Barkin.
• 09:40 (EU) ECB chief Lagarde at Brussels Economic Forum.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (20+ years).
• 10:00 (US) Jun Consumer Confidence Index: 119.0e v 117.2 prior.
• 10:00 (MX) Mexico Weekly International Reserve data.
• 11:45 (FR) ECB’s Villeroy (France) at the conference.
• 12:00 (UK) BOE’s Hauser on panel.
• 12:00 (DE) ECB’s Weidmann (Germany).
• 15:00 (AR) Argentina Apr Economic Activity Index (Monthly GDP) M/M: No est v -0.2% prior; Y/Y: No est v 11.4% prior.
• 16:30 (US) Weekly API Oil Inventories.
• 19:00 (KR) South Korea May Industrial Production M/M: +0.7%e v -1.6% prior; Y/Y: 18.3%e v 12.4% prior.
• 19:00 (KR) South Korea May Cyclical Leading Index Change: No est v 0.4 prior.
• 19:01 (UK) Jun Lloyds Business Barometer: No est v 33 prior.
• 19:01 (UK) Jun BRC Shop Price Index Y/Y: No est v -0.6% prior.
• 19:15 (AU) RBA’s Lowe participates on a panel.
• 19:50 (JP) Japan May Preliminary Industrial Production M/M: -2.1%e v +2.9% prior; Y/Y: 27.0%e v 15.8% prior.
• 21:00 (CN) China Jun Manufacturing PMI (Govt Official): 50.8e v 51.0 prior; Non-manufacturing PMI: 55.3e v 55.2 prior; Composite PMI: No est v 54.2 prior.
• 21:00 (NZ) New Zealand Jun Final Business Confidence: No est v -0.4 prelim; Activity Outlook: No est v 29.1 prelim.
• 21:30 (AU) Australia May Private Sector Credit M/M: 0.3%e v 0.2% prior; Y/Y: 1.6%e v 1.3% prior.
• 22:00 (SG) Singapore May M2 Money Supply Y/Y: No est v 7.2% prior; M1 Money Supply Y/Y: No est v 21.1% prior.