Eurozone PMI Services Data Continued Its Improvement

Notes/Observations

• European PMI Services data shows further momentum building as a continued easing of virus-related restrictions occurs (Beats: Euro Zone, France, Italy, Spain; Misses: Germany)
• US market closed Monday in observance of the 4th of July.
• Focus on the release of FOMC Minutes on Wed.

Asia

• China Jun Caixin PMI Service registered its 14th consecutive expansion but lowest since Apr 2020 (50.3 v 54.9e).
• Japan Jun Final PMI Services: 48.0 v 47.2 prelim (confirms 17th month of contraction).
• Australia Jun Final PMI Services: 56.8 v 56.0 prelim (confirms 10th month of expansion).
• Australia May Final Retail Sales M/M: 0.4% v 0.1% prelim.
• BOJ Gov Kuroda reiterated that would closely monitor the impact of COVID and not hesitate to take additional easing measures if necessary.

Europe

• ECB chief Lagarde reiterated the stance that recovery was still fragile. Reiterated Council stance that to maintain its Pandemic bond-buying program (PEPP) until at least March 2022 or until the coronavirus crisis phase was over.
• ECB’s Schnabel (Germany) stated that was necessary to see inflation overshoot ECB target on a temporary basis, while the economy recovered.
• Germany Econ Min Altmaier stated that he did not support joint debt issuance but not totally dismissing the idea. Would take some years to spend the €750B debt we currently have.
• France Treasury Chief Economist Benassy-Quere stated that the domestic economy was experiencing a very steep rebound but problems remained.

Americas

• Various global companies said to have been attacked by ransomware over the weekend. The situation said to have been made worse in the US by reduced staff for the 4th of July holiday.
• White House to begin assistance to the ~200 companies hit by cyber and ransomware attacks.

Energy

• OPEC+ talks have been extended into Monday as UAE said to maintain its position of not supporting the extension of production agreement into 2022.
• Saudi Energy Min Abdulaziz noted that the Russian proposal was acceptable to everyone except the UAE. Stressed that there should be an output production increase to meet the expecting fall in oil during the summer.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.04% at 456.64, FTSE +0.15% at 7,133.87, DAX -0.32% at 15,600.15, CAC-40 -0.09% at 6,547.14, IBEX-35 -0.03% at 8,905.00, FTSE MIB +0.14% at 25,317.50, SMI -0.37% at 11,920.78, S&P 500 Futures -0.10%]

Market Focal Points/Key Themes: European indices open modestly lower in light trading and failed to gain direction as the session wore on; better-performing sectors include consumer discretionary and industrials; underperformers include financials and health care; US closed for the holiday, along with Czechia, Slovakia, and Colombia; Apollo confirms is considering offer for Morrisons; MetLife sells operations in Poland and Greece to NNl; no major earnings expected through rest of trading session.

Equities

• Consumer discretionary: WM Morrison [MRW.UK] +11% (offers).
• Industrials: Porvair [PRV.UK] -2% (earnings).
• Technology: Ultra Electronics [ULE.UK] +2% (trading update), Restore [RST.UK] +2% (trading update).

Speakers

• Swedish Central Party said to allow Sweden’s resigned PM Lofven to form a new government.
• Singapore Fin Min Wong stated that its FY21/22 budget position remained expansionary. Maintained budget deficit forecast at S$11.0B; equates to 2.2% of GDP.

Currencies/Fixed Income

• EUR/USD drifted higher in dull trading as European PMI Services data showed further momentum building as a continued easing of virus-related restrictions occurred. Dealers looking ahead to Wed’s release of FOMC Minutes as markets believing that the outlook for inflation is uncertain while Fed members see it as transitory. Pair at 1.1870 by mid-session.
• Turkey Jun CPI data was higher than expected. Dealers noted that the rise in inflation along with signs of a strong rebound in economic activity meant an interest rate cut looked unlikely in the next couple of months.

Economic data

• (UK) Jun Official Reserves Changes: -$2.2B v +$1.5B prior.
• (RU) Russia Jun PMI Services: 56.5 v 55.8e (6th straight expansion); PMI Composite: 55.0 v 56.2 prior.
• (SE) Sweden Jun PMI Services: 67.4 v 71.3 prior (13th month of expansion); PMI Composite: 66.9 v 69.8 prior.
• (FR) France May Industrial Production M/M:-0.3% v +0.8%e; Y/Y: 20.5% v 21.7%e.
• (FR) France May Manufacturing Production M/M: -0.5% v -0.1% prior, Y/Y: 22.3% v 26.0%e.
• (TR) Turkey Jun CPI M/M: 1.9% v 1.4%e; Y/Y: 17.5% v 16.8%e; CPI Core Index Y/Y: 17.5% v 16.9%e.
• (TR) Turkey Jun PPI M/M: 4.0% v 2.9%e; Y/Y: 42.9% v 41.4%e.
• (ES) Spain Jun Services PMI: 62.5 v 60.6e(3rd month of expansion and highest since Mar 2000)); Composite PMI: 62.4 v 60.5e.
• (ZA) South Africa Jun PMI (whole economy): 51.0 v 53.2 prior (9th month of expansion).
• (IT) Italy Jun Services PMI: 56.7 v 56.2e(2nd straight expansion and highest since Jan 2018)); Composite PMI: 58.3 v 58.0e.
• (FR) France Jun Final Services PMI: 57.8 v 54.7e(confirmed 3rd straight expansion); Composite PMI: 57.4 v 57.1e.
• (DE) Germany Jun Final Services PMI: 57.5 v 58.1e(confirmed 2nd month of expansion and highest since Mar 2011); Composite PMI: 60.1 v 60.4e.
• (EU) Euro Zone Jun Final Services PMI: 58.3 v 58.0e (confirmed 3rd straight expansion and highest since Jun 2007)); Composite PMI: 59.5 v 59.2e.
• (CH) Swiss weekly Total Sight Deposits (CHF): 712.1B v 712.5B prior; Domestic Sight Deposits: 632.8B v 631.0B prior.
• (UK) Jun New Car Registrations Y/Y: 28.0% v 674.1% prior.
• (TW) Taiwan Jun Foreign Reserves: $543.3B v $543.0B prior.
• (EU) Euro Zone July Sentix Investor Confidence: 29.8 v 30.0e.
• (UK) Jun Final Services PMI: 62.4 v 61.7e (confirms 4th month of expansion); Composite PMI: 62.2 v 61.7e.

Fixed income Issuance

• (EU) EFSF opened its book to sell EUR-denominated 0% Jan 2031 bond; guidance saw -3bps to mid-swaps.

Looking Ahead

• (IE) Ireland Debt Agency (NTMA) announces details for upcoming bond issuance (Thurs).
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell combined €6.0B in 3-month and 9-month BuBills.
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €1.5-3.5B in 3-month Bills.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (IL) Israel to sell bonds.
• 06:00 (RO) Romania to sell RON575M in 4.15% 2030 Bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (MX) Mexico Jun Consumer Confidence: No est v 42.7 prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 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).
• 09:00 (BR) Brazil Jun PMI Services: No est v 48.3 prior; PMI Composite: No est v 49.2 prior.
• 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%.
• 09:00 (FR) France Debt Agency (AFT) to sell €5.1-6.3B in 3-month, 6-month, and 12-month bills.
• 09:45 (EU) ECB weekly QE bond-buying update.
• 10:30 (CA) Bank of Canada Q2 Overall Business Outlook Survey: No est v 2.9 prior; Business Outlook Future Sales: No est v 52 prior.
• 13:00 (ES) ECB’s de Guindos (Spain).
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 112.2 prior.
• 19:30 (JP) Japan May Labor Cash Earnings Y/Y: 2.1%e v 1.4% prior (revised from 1.6%); Real Cash Earnings Y/Y: 2.4%e v 1.9% prior (revised from 2.1).
• 19:30 (JP) Japan May Household Spending Y/Y: No est v 13.0% prior.
• 20:30 (HK) Hong Kong Jun PMI (whole economy): No est v 52.5 prior.
• 21:00 (PH) Philippines Jun CPI Y/Y: 4.3%e v 4.5% 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.