Focus On US Data, Corporate Earnings

Notes/Observations

• BOJ became the latest central bank to join the battle against climate change.

Asia

• New Zealand Q2 CPI data saw the annual pace above target range for 1st time in 19 quarters (YoY: 3.3% v 2.7%e).
• BOJ left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintained Yield Curve Control (YCC) around 0.00% (both as expected).
• BOJ Quarterly Outlook for Economic Activity and Prices mixed.
• China said to plan to exempt IPOs in Hong Kong from Cybersecurity reviews.

Coronavirus

• Los Angeles to return to mandatory mask wearing indoors, even for people that have been vaccinated..

Europe

• Certain UK House of Lord Members: BOE Asset purchases stoking inflation, Program has only benefited rich and has done little for GDP growth.
• UK PM Johnson said to be backing new tax proposals in order to pay for reforms to the social care system which may include a cap on people paying towards their own care of £50K. Plan could be agreed within weeks.

Americas

• Treasury Sec Yellen stated that she believed that country to have several more months of rapid inflation; Recent drop in yields showed inflation remained under control.
• Biden Administration to meet with Unions and Builders on Housing shortages and sought to ease house price pressures.
• Biden administration to impose sanctions on seven officials from China’s Hong Kong liaison office as well as a warning to international businesses operating in Hong Kong about deteriorating condition.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.21% at 457.18, FTSE +0.48% at 7,045.55, DAX +0.35% at 15,686.80, CAC-40 -0.01% at 6,492.53, IBEX-35 +0.57% at 8,574.00, FTSE MIB +0.39% at 24,973.50, SMI +0.37% at 12,021.65, S&P 500 Futures +0.08%].
• Market Focal Points/Key Themes: European indices open mixed but quickly moved to trade modestly in the green; sectors leading to the upside include consumer discretionary and real estate; while technology and energy sectors were underperforming; Ericsson reaches deal on 5G with Verizon; Acciona and Ferrovial JV awarded major contract in Australia; GP Strategies to be acquired by Learning Technologies; focus on extraordinary APEC meeting over the weekend; earnings expected in the upcoming US session include Autoliv, Atlas Copco and State Street.

Equities

• Consumer discretionary: Burberry [BRBY.UK] -4% (trading update), Richemont [CFR.CH] -1% (trading update), Puma [PUM.DE] -2% (prelim results).
• Industrials: Jenoptik [JED.DE] +10% (raises outlook).
• Telecom: Ericsson [ERICB.SE] -8% (earnings).

Speakers

• BOJ Gov Kuroda post rate decision press conference reiterated its overall assessment that domestic economy was picking up as a trend. He also reiterated his stance that would not hesitate to add to easing if necessary. uncertainty of economic outlook was high due to pandemic and that consumption was stagnating due to weak service-sector spending. Capex was recovering but showed some signs of weakness. Inflation remained around 0% as energy prices gain; risks remained skewed to the downside.
• India Finance Ministry chief economic advisor Subramanian stated that GDP growth could test 7.0% in the next fiscal year due to impact of reforms and accelerate beyond that.
• China PBOC released a white paper on digital yuan (digital CNY) development. Top level design in digital yuan was basically completed and transactions totaled CNY34.5B in trials.
• China Foreign Ministry spokesperson stated that it would make a firm response to any US action on Hong Kong.
• China govt said to still be planning to host senior US diplomat Wendy Sherman (#2 at the State Dept). Move could indicate that a potential Xi-Biden summit was moving closer.

Currencies/ Fixed income

• Quiet end to the week in FX.
• EUR/USD steady at 1.1815 at mid-session and little moved after EU final CPI reading for Jun saw the inflation back under ECB target. Focus turning to next week’s ECB policy decision.
• GBP was off its worst level as a report circulated that certain UK House of Lord Members attacks quantitative easing. Noting that the purchases were stoking inflation and done little for GDP growth. Analysts noted that August seemed the only possible month for the BOE to announce another slowdown in the pace of gilt purchases and a majority vote backing this seemed unlikely. BOE had used up to £815B of the £875B gilt purchase target and would need to reduce its weekly purchase pace from £3.4B/week for the program to last until end-2021.
• USD/JPY holding above the 110 level after BOJ kept its policy steady.

Economic data

• (EU) EU27 Jun New Car Registrations: 10.4% v 53.4% prior (4th straight rise).
• (AT) Austria Jun Final CPI M/M: 0.5% v 0.4% prelim, Y/Y: 2.8% v 2.7% prelim.
• (CN) Weekly Shanghai copper inventories (SHFE): 113.6K v 129.5K tons prior.
• (ES) Spain May Trade Balance: +€0.1B v -€1.3B prior.
• (IT) Italy May Total Trade Balance: €5.6B v €5.9B prior; Trade Balance EU: €0.9B v €1.0B prior.
• (TR) Turkey Jun Central Gov’t Budget Balance (TRY): -25.0B v -13.4B prior.
• (RU) Russia Narrow Money Supply w/e July 9th (RUB): 14.15 v 14.05T prior.
• (EU) Euro Zone Jun Final CPI Y/Y: 1.9% v 1.9%e; CPI Core Y/Y: 0.9% v 0.9%e; CPI M/M: 0.3% v 0.3%e.
• (EU) Euro Zone May Trade Balance (seasonally adj): €B v €8.0Be; Trade Balance NSA (unadj): €B v €10.9B prior.
• (CY) Cyprus Jun CPI Harmonized M/M: 1.0% v 0.4% prior; Y/Y: 2.2% v 1.5% prior.

Fixed income issuance

• None seen

Looking ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (IN) India to sell combined INR320B in 2026, 2033, 2035 and 2050bonds.
• 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2029, 2033 and 2046Bonds.
• 06:00 (PT) Portugal Jun PPI M/M: No est v 1.6% prior; Y/Y: No est v 7.8% prior.
• 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively).
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil July FGV Inflation IGP-10 M/M: 0.2%e v 2.3% prior.
• 07:30 (IN) India Weekly Forex Reserve w/e July 9th: No est v $610.0B prior.
• 08:00 (PL) Poland Jun CPI Core M/M: 0.3%e v 0.3% prior; Y/Y: 3.6%e v 4.0% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces upcoming bill issuance (held on Wed).
• 08:15 (CA) Canada Jun Annualized Housing Starts: 270.0Ke v 275.9K prior.
• 08:30 (US) Jun Advance Retail Sales M/M: -0.3%e v -1.3% prior; Retail Sales (ex-auto) M/M: +0.4%e v -0.7% prior; Retail Sales (ex-auto/gas): +0.5%e v -0.8% prior; Retail Sales (control group): +0.4%e v -0.7% prior.
• 08:30 (CA) Canada May Int’l Securities Transactions (CAD): No est v 10.0B prior.
• 08:30 (CA) Canada May Wholesale Trade Sales M/M: 1.1%e v 0.4% prior.
• 09:00 (IT) Bank of Italy (BOI) Quarterly Economic Bulletin.
• 10:00 (US) May Business Inventories: +0.5%e v -0.2% prior.
• 10:00 (US) July Preliminary University of Michigan Confidence: 86.5e v 85.5 prior.
• 11:00 (US) Fed’s Evans on economy.
• 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Finland sovereign rating; S&P on Russia sovereign rating; Fitch on Greece sovereign rating).
• 12:00 (RU) Russia Jun PPI M/M: 2.0%e v 2.3% prior; Y/Y: 29.3%e v 35.3% prior.
• 13:00 (US) Weekly Baker Hughes Rig Count.
• 16:00 (US) May Total Net TIC Flows: No est v $101.2B prior; Net Long-term TIC Flows: No ext v $100.7B prior.