Risk Appetite Bumps Into A Wall

Notes/Observations

• More EU inflation data aid recent ECB speak on transitory factors (France, Euro Zone readings below ECB target in session).
• Concerns over the delta variant of Covid-19 linger and propmpting some risk aversion flows; continued news of rising COVID infections, new lockdown measures and fresh travel restrictions pouring cold water on recovery hopes.
• Focus on upcoming US jobs data and potential clues from Fed on tapering (ADP today, weekly claims, Thurs and Non-farm on Friday).

Asia:

• China Jun Manufacturing PMI (Govt Official) registered its 15th month of expansion (50.9 v 50.8e).
• Japan May Preliminary Industrial Production M/M: -5.9% v -2.1%e; Y/Y: 22.0% v 27.0%e.
• South Korea May Industrial Production saw the annual pace at its highest level since mid-2010 (M/M: -0.7% v +0.7%e; Y/Y: 15.6% v 18.3%e).

Europe:

• Chancellor of the Exchequer Sunak (Fin Min) expected to announce £15.0B in green savings bonds offering this week that will facilitate investment into renewable energy projects at a speech at Mansion House in London.
• UK Trade Sec Truss stated that was hoping to gain entry into Trans-Pacific Partnership (TPP) in 2022 with negotiations being months, not years.

Americas:

• Fed’s Waller stated that did not move dot forward at FOMC Meeting in June; Had very optimistic outlook. If one believed a rate hike was needed by end 2022 or early 2023 than needed to finishing tapering before then.

Energy:

• Weekly API Crude Oil Inventories: -8.2M v -7.2M prior (6th straight weekly draw).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -1.05% at 451.58, FTSE -1.01% at 7,015.72 , DAX -1.33% at 15,482.05, CAC-40 -1.33% at 6,479.88, IBEX-35 -1.58% at 8,774.00, FTSE MIB -1.50% at 24,977.50, SMI -0.78% at 11,934.90, S&P 500 Futures -0.28%].
• Market Focal Points/Key Themes: European indices open mixed but fell into the red later in the session; concern over rising covid cases blamed for weak risk appetite; sectors trending higher include consumer discretionary and technology; sectors inclined to the downside include utilities and financials; Dankse Bank merges MobilePay with Vipps and Pivo; Grifols sells minority stake in Biomat to GIC; EssilorLuxottica will proceed with GrandVision acquisition; earnings expected in the upcoming US session include Entergy, General Mills and Bed Bath and Beyond.

Equities

• Consumer discretionary: Dixons Carphone [DC.UK] -1.5% (earnings).
• Consumer staples: Safilo [SFL.IT] -17% (capital raise).
• Energy: Hurricane Energy [HUR.UK] +17% (Chairman resigns).
• Financials: Serco Group [SRP.UK] -1% (trading update).
• Healthcare: Indivior [INDV.UK] +10% (raises outlook).
• Technology: M&C Saatchi [SAA.UK] +7% (earnings).

Speakers

• ECB’s Villeroy (France) reiterated Council stance that inflation should go a bit higher in 2021 then down in 2022-23 period. Cautious but confident on economic outlook.
• ECB’s Panetta (Italy) stated that saw a digital Euro decision by mid-July.
• France President Macron reportedly could reveal pension reform plan before July 14th.
• Italy Business Lobby Confindustria noted that the domestic economy rebounded in Q2 and growth would accelerate in H2.
• Poland Central Bank Gatnar noted that inflation remained a reason for concern; favored a 15bps rate hike.
• BOJ Nakagawa (new board member) stated that must be mindful of downside risks on economy and prices. Appropriate to continue with current easing. ETF buying were part of its easing steps and had positive impact on economy.
• OPEC+ JMMC technical panel said to underscore rebound in oil demand and the expected strong growth in H2 2021. Cautions about uncertainties with pace of global economic recovery and the spread of the delta variant of the coronavirus. Looked to avoid risk of potential global oil market imbalances after April 2022.
• Kuwait Oil Min Khaled al-Fadhel stated that supported OPEC+ efforts for market stability; meeting to focus on balancing oil market. Vaccinations were having a positive impact on market but OPEC+ cautious about raising production amid challenges.

Currencies/ Fixed income

• FX markets were generally quiet into month/quarter-end.
• The recent strength in the greenback on the hawkish Fed putting gold on course for its biggest monthly drop since 2016. Focus on upcoming US jobs data and potential clues from Fed on tapering (ADP today, weekly claims, Thurs and Non-farm on Friday).
• EUR/USD steady at the 1.19 area despite more EU inflation data exceeding ECB target again (France, Euro Zone readings in session).

Economic data

• (NL) Netherlands May Retail Sales Y/Y: 7.9 v 10.2% prior.
• (UK) Q1 Final GDP Q/Q: -1.6% v -1.5%e; Y/Y: -6.1% v -6.1%e.
• (UK) Q1 Final Private Consumption Q/Q: -4.6% v -3.9%e; Government Spending Q/Q: 1.5% v 2.6%e; Gross Fixed Capital Formation Q/Q: -1.7% v -2.3%e; Exports Q/Q: -6.1% v -7.5%e; Imports Q/Q: -13.5% v -13.9%e.
• (UK) Q1 Final Total Business Investment Q/Q:-10.7 % v -11.9%e; Y/Y: -16.9% v -18.1%e.
• (UK) Q1 Current Account Balance: -£12.8B v -£14.0Be.
• (FI) Finland Apr Final Trade Balance: -€0.3B v -€0.3B prelim.
• (NO) Norway May Credit Indicator Growth Y/Y: 5.2% v 5.0% prior.
• (DK) Denmark Q1 Final GDP Q/Q: -1.0% v -1.3% prelim; Y/Y: -0.8% v -1.3% prelim.
• (DK) Denmark May Gross Unemployment Rate: 4.0% v 4.5% prior; Unemployment Rate (seasonally adj): 3.6% v 4.1% prior.
• (ZA) South Africa May M3 Money Supply Y/Y: %1.8 v 2.0% prior; Private Sector Credit Y/Y: -0.4% v -1.0%e.
• (FR) France Jun Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 1.5% v 1.5%e.
• (FR) France Jun Preliminary CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 1.9% v 1.9%e.
• (FR) France May PPI M/M: +0.5% v -0.8% prior; Y/Y: 7.2% v 6.7% prior.
• (FR) France May Consumer Spending M/M: 10.4% v 7.5%e; Y/Y: 7.4% v 5.5%e.
• (CH) Swiss Jun KOF Leading Indicator: 133.4 v 145.0e.
• (CH) SNB Q1 Foreign exchange transactions (CHF): 0.3B v 8.7B prior.
• (TR) Turkey May Trade Balance: -$4.1B v -$4.1Be.
• (HU) Hungary Apr Average Gross Wages Y/Y: 10.1% v 8.7% prior.
• (HU) Hungary May PPI M/M: -0.1% v +0.6% prior; Y/Y: 11.3% v 9.8% prior.
• (AT) Austria Jun Preliminary CPI M/M: 0.4% v 0.3% prior; Y/Y: 2.7% v 2.8% prior.
• (AT) Austria May PPI M/M: 0.9% v 1.1% prior; Y/Y: 6.0% v 4.7% prior.
• (TH) Thailand May Current Account Balance: -$2.6B v -$1.4Be; Overall Balance of Payments (BOP): -$1.6B v +$0.3B prior; Trade Account Balance: $3.4B v $2.4B prior; Exports Y/Y: 44.4% v 19.1% prior; Imports Y/Y: 56.6% v 25.9% prior.
• (SE) Sweden Apr Non-Manual Workers Wages Y/Y: 2.9% v 2.2% prior.
• (DE) Germany Jun Net Unemployment Change: -38.0K v -20Ke; Unemployment Claims Rate: 5.9% v 5.9%e.
• (CH) Swiss Jun Expectations Survey: 51.3 v 72.2 prior.
• (NO) Norway Central Bank (Norges) July Bank Daily FX Purchases (NOK): -1.7B v -1.7B prior.
• (CZ) Czech May M2 Money Supply Y/Y: 10.7% v 10.9% prior.
• (PL) Poland Jun Preliminary CPI M/M: 0.1% v 0.3%e; Y/Y: 4.4% v 4.6%e.
• (IT) Italy May PPI M/M: 1.3% v 1.4% prior; Y/Y: 10.0% v 8,2% prior.
• (ES) Spain Apr Current Account: +€0.4B v -€0.2B prior.
• (PT) Portugal Jun Preliminary CPI M/M: 0.1% v 0.2% prior; Y/Y: 0.5% v 1.2% prior.
• (PT) Portugal Jun Preliminary CPI EU Harmonized M/M: 0.2% v 0.3% prior; Y/Y: -0.6% v +0.5% prior.
• (HK) Hong Kong May Retail Sales Value Y/Y: 10.5% v 6.9%e; Retail Sales Volume Y/Y: 7.8% v 6.2%e.
• (EU) Euro Zone Jun Advance CPI Estimate Y/Y: 1.9% v 1.9%e; CPI Core Y/Y: 0.9% v 0.9%e; CPI M/M: 0.3% v 0.2%e.
• (IT) Italy Jun Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 1.3% v 1.4%e.
• (IT) Italy Jun Preliminary CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 1.3% v 1.4%e.
• (GR) Greece Apr Retail Sales Value Y/Y: +39.3%v -0.7% prior; Retail Sales Volume Y/Y: +38.9% v -3.0% prior.
• (IS) Iceland May Final Trade Balance (ISK): -15.6B v -15.5B prelim.

Fixed income issuance

• (IN) India sold total INR360B vs. INR360B indicated in 3-month, 6-month and 12-month bills.
• (TR) Turkey to sell EUR-denominated 6-year bond via syndicate; yield guidance seen 4.75%.
• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.75% Mar 2025 Bonds; Avg Yield: 1.02% v 1.40% prior; bid-to-cover: 3.90x v 1.73x prior.
• (IT) Italy Debt Agency (Tesoro) sold total €6.0B vs. €5.0-6.0B indicated range 5-year and 10-year BTP Bonds (3 tranches).
• Sold €3.0B vs. €2.5-3.0B indicated range in 0.00% Apr 2026 BTP bonds; Avg Yield: 0.12% v 0.17% prior; Bid-to-cover: 1.37x v 1.36x prior.
• Sold €1.5B vs. €1.0-1.5B indicated range in 0.95% Aug 2030 BTP; Avg Yield: 1.20% v 1.42% prior; Bid-to-cover: 1.56x v 2.07x prior.
• Sold €1.5B vs. €1.0-1.5B indicated range in 0.90% Aug 2031 BTP; Avg Yield: 0.81% v 0.83% prior; bid-to-cover: 1.57x v 1.49x prior.

Looking ahead

• (NZ) New Zealand Jun CoreLogic House Prices Y/Y: No est v 20.5% prior.
• (MX) Mexico May YTD Budget Balance (HUF): No est v -109.7B prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (SL) Sri Lanka Jun CPI Y/Y: 4.9%e v 4.5% prior.
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).
• 06:00 (IE) Ireland Jun Unemployment Rate: No est v 7.8% prior.
• 06:00 (PT) Portugal May Industrial Production M/M: No est v 0.5% prior; Y/Y: No est v 36.9% prior.
• 06:00 (IL) Israel May Chain Store Sales M/M: No est v 1.8% prior.
• 06:00 (CZ) Czech republic to sell 2024, 2031 and 2032 bonds.
• To sell CZK4.0B in 0% 2024 Bonds.
• To sell CZK4.0B in 2031 Floating Bonds.
• To sell CZK6.0B in 1.75% 2032 Bonds.
• 06:30 (IN) India May Fiscal Deficit (INR): No est v 78.7K prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (RU) Russia to sell 2031 and 2036 OFZ Bonds.
• 07:00 (US) MBA Mortgage Applications w/e Jun 25th: No est v 2.1% prior.
• 07:00 (UK) Weekly PM Question time in House.
• 08:00 (BR) Brazil Apr National Unemployment Rate: No est v 14.7% prior.
• 08:00 (ZA) South Africa May Trade Balance (ZAR): 49.6Be v 51.2B prior.
• 08:00 (ZA) South Africa May Budget Balance (ZAR): -6.1Be v -80.4B prior.
• 08:00 (IN) India May Eight Infrastructure Industries: No est v 56.1% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:15 (US) Jun ADP Employment Change: +550Ke v +978K prior.
• 08:30 (CA) Canada Apr GDP M/M: -0.8%e v +1.1% prior; Y/Y: 19.1%e v 6.6% prior.
• 08:30 (CA) Canada May Industrial Product Price M/M: 3.1%e v 1.6% prior; Raw Materials Price Index M/M: 2.0%e v 1.0% prior.
• 08:30 (BR) Brazil May Primary Budget Balance (BRL): -20.2Be v +24.3B prior; Nominal Budget Balance: -34.3Be v +30.0B prior; Net Debt to GDP Ratio: 60.7%e v 60.5% prior.
• 09:00 (RU) Russia Q1 Final Current Account Balance: No est v $16.8B prelim.
• 09:00 (CL) Chile May Unemployment Rate: 10.5%e v 10.2% prior.
• 09:00 (CL) Chile May Retail Sales Y/Y: 46.5%e v 44.0% prior; Commercial Activity Y/Y: No est v 33.3% prior.
• 09:00 (CL) Chile May Manufacturing Production Y/Y: 15.0%e v 5.9% prior; Industrial Production Y/Y: 6.7%e v 5.1% prior; Total Copper Production: No est v 467.6K prior.
• 09:45 (US) Jun Chicago Purchase Managers Index: 70.0e v 75.2 prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (7-20 years).
• 10:00 (US) May Pending Home Sales M/M: -1.0%e v -4.4% prior; Y/Y: No est v 53.5% prior.
• 10:00 (MX) Mexico May Net Outstanding Loans (MXN): No est v 4.593T prior.
• 10:30 (US) Weekly DOE Oil Inventories.
• 11:00 (CO) Colombia May National Unemployment Rate: No est v 15.1% prior; Urban Unemployment Rate: 18.2%e v 17.4% prior.
• 12:00 (RU) Russia May Unemployment Rate: 5.1%e v 5.2% prior.
• 12:00 (RU) Russia May Real Retail Sales Y/Y: 26.3%e v 34.7% prior.
• 12:00 (RU) Russia Apr Real Wages Y/Y: 2.3%e v 1.8% prior.
• 12:00 (CA) Canada to sell 10-year notes.
• 15:00 (AR) Argentina Apr Wages M/M: No est v 5.0% prior.
• 18:00 (CO) Colombia Central Bank Jun Minutes.
• 18:00 (NZ) New Zealand Govt 11-Month Financial Statements.
• 18:45 (NZ) New Zealand May Building Permits M/M: No est v 4.8% prior.
• 19:00 (AU) Australia Jun Final PMI Manufacturing: No est v 58.4 prelim.
• 19:50 (JP) Japan Q2 Tankan Large Manufacturing Index: 16e v 5 prior; Outlook Survey: 18e v 4 prior.
• 19:50 (JP) Japan Q2 Tankan Large Non-Manufacturing Index: +3e v -1 prior; Outlook Survey: +8e v -1 prior.
• 19:50 (JP) Japan Q2 Tankan Small Manufacturing Index: -5e v -13 prior; Outlook Survey: -2e v -12 prior.
• 19:50 (JP) Japan Q2 Tankan Small Non-Manufacturing Index: -9e v -11 prior; Outlook Survey: -8e v -16 prior.
• 20:00 (KR) South Korea Jun Trade Balance: $4.9Be v $2.9B prior; Exports Y/Y: 33.8%e v 45.6% prior; Imports Y/Y: 33.6%e v 37.9% prior.
• 20:00 (AU) Australia Jun CoreLogic House Price Index M/M: No est v 2.3% prior.
• 20:01 (IE) Ireland Jun PMI Manufacturing: No est v 64.1 prior.
• 20:30 (JP) Japan Jun Final PMI Manufacturing: No est v 51.5 prelim.
• 20:30 (KR) South Korea Jun PMI Manufacturing: No est v 53.7 prior.
• 20:30 (TW) Taiwan Jun PMI Manufacturing: No est v 62.0 prior.
• 20:30 (MY) Malaysia Jun PMI Manufacturing: No est v 51.3 prior.
• 20:30 (ID) Indonesia Jun PMI Manufacturing: No est v 55.3 prior.
• 20:30 (TH) Thailand Jun PMI Manufacturing: No est v 47.8 prior.
• 20:30 (PH) Philippines Jun PMI Manufacturing: No est v 49.9 prior.
• 20:30 (VN) Vietnam Jun PMI Manufacturing: No est v 53.1 prior.
• 20:30 (SG) Singapore Q2 Preliminary Private Home Prices Q/Q: No est v 3.3% prior.
• 21:00 (PH) Philippines May Unemployment Rate: No est v 8.7% prior.
• 21:30 (AU) Australia May Trade Balance: A$10.5Be v A$8.0B prior; Exports M/M: 6%e v 3% prior; Imports M/M: 0%e v -3% prior.
• 21:30 (AU) Australia May Job vacancies: No est v 13.7% prior.
• 21:45 (CN) China Jun Caixin PMI Manufacturing: 51.9e v 52.0 prior.
• 23:35 (JP) Japan to sell 10-Year JGB Bonds.