Notes/Observations
European Equities continuing to rise following strong gains yesterday, as European Bond Yields retreat
OPEC compliance with oil cuts falls to 6 month low
Daimler shares fall after on report it cheated on Diesel emissions tests
Overnight
Asia:
Korea’;s Kospi rose nearly 1% after BOK left rates on hold but did raise its outlook for 2017 GDP
China H1 trade balance in yuan terms fall 17.7% y/y to CNY1.28T; in dollar terms June trade was $42.8B, in line with expectations. Trade with the US in dollar terms was at its highest level since October 2015 at $25.4B
(JP) Bank of Japan (BOJ) reportedly intends to raise growth outlook for FY17-18 by 0.1-0.2% at policy meeting next week
Europe:
BOE’s McCafferty (hawkish dissenter): BOE should consider unwinding £435B QE program earlier than planned, plans to vote for a 25bp hike again in August
UK to publish the Repeal Bill a key Brexit law, which is central to the government’s plan to exit the EU in 2019
Germany, France and Spain confirm final CPI readings, whilst Sweden reported slightly stronger CPI for June
BOE Credit conditions survey saw availability of mortgage lending falling this Quarter
Americas
Fed’s George (hawk, non-voter): favors starting balance sheet reduction in the near future, current asset valuations, low volatility may signal financial market complacency
Oil
IEA Monthly report: Expects 2017 Global demand to grow 1.5% to 98M b/d
Global oil supply increased by 720K b/d in June to 97.46M b/d
OPEC Compliance with cuts slips from 95% in May to 78% in June, lowest in 6 months
Economic Data
(SE) SWEDEN JUN CPI M/M: 0.1% V 0.0%E; Y/Y: 1.7% V 1.6%E
(DE) GERMANY JUN FINAL CPI M/M: 0.2% V 0.2%E; Y/Y: 1.6% V 1.6%E
(FR) FRANCE JUN FINAL CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E
(ES) SPAIN JUN FINAL CPI M/M: 0.0% V 0.0%E; Y/Y: 1.5% V 1.5%E
(TR) Turkey May Current Account: -$5.2B v -$5.0Be
Fixed Income Issuance:
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €2.0B VS. €1.5-2.0B INDICATED RANGE IN 2033 AND 2037 BTP BONDS
(IE) IRELAND DEBT AGENCY (NTMA) SELLS TOTAL €0.75B VS. €0.75B INDICATED IN 2022 AND 2045 IGB BONDS
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.5% at 3,539, FTSE +0.1% at 7,424, DAX +0.4% at 12,678, CAC-40 +0.7% at 5,259, IBEX-35 +1.0% at 10,671, FTSE MIB +0.4% at 21,524, SMI +0.4% at 9,049, S&P futures +0.2%]
Market Focal Points/Key Themes: European indices opened flat or slightly down, but moved higher as the session progressed; trend following comments from Fed Chair Yellen seen not in a rush to raise rates; oil helped performance among energy stocks Metro’s spinoffs debuted in trading; French press revived speculation that Alstrom was considering buying Siemens’ train business; Yellen to continue speaking today; attention now turning to the first reports of earning season; upcoming US earnings include Delta Airlines and Emmis Communications
Equities
Consumer discretionary [Casino CO.FR +3.9% (earnings), Asos ASC.UK -2.4% (earnings), Game Digital GMD.UK +9.3% (SD takes stake), N Brown BWNG.UK -8.1% (cost evaluation)]
Consumer staples [Koninklijke Wessanen KWZ2.DE -3.1% (analyst action)]
Energy [Premier Oil PMO.UK -2.4% (production update)]
Financials [Partners Group PGHN.CH +3.4% (results)]
Healthcare [Astrazeneca AZN.UK -4.5% (CEO approached by Teva), Oxford Biomedica OXB.UK +6.9% (receives approval)]
Industrials [Alstom ALO.FR +2.7% (earnings), Daimler DAI.DE -0.5% (under investigation), Kvaerner KVAR.NO +3.7% (results)]
Speakers
(UK) Trade Sec Fox: UK will look at bridging mechanism if needed for Brexit
(RU) Russia Central Bank (CBR) Gov Nabiullina: Russia must stick to free-floating rouble policy
Currencies
GBPUSD continues to grind higher bouncing off yesterday morning lows, dealers note resistance stands at 1.2980. The bounce in Sterling has also helped EURGBP ease, dropping below yesterday low, with next support seen at 0.8815.
EURSEK trades sharply lower after strong Swedish inflation readings with the cross dropping below 9.55 from ~9.61 prior to the release. The pair trades at a 10 week low with near term support seen at 9.505
Fixed Income
Bund futures trade at 161.62 up 22 ticks as volume rises and stops are taken out. Resistance lies near the 162.10 level followed by 162.75. A break of the 160.00 support level could see lows target 159.25 followed by 157.50.
Gilt futures trade at 125.87 higher by 23 ticks and back towards the July 4th highs. Price finds key support at the 124.42 support level. An acceleration lower could test the 122.88 region. Resistance remains the noted 126.00 region, followed by 126.72.
Thursday’;s liquidity report showed Wednesday’;s excess liquidity fell to €1.667T a drop of €3B from €1.670T prior. Use of the marginal lending facility fell to €214M from €258M prior.
Corporate issuance saw $2B come to market via 3 issuers headlines by Cencosud $1B unsecured senior offering and PTT Exploration and Production $0.5B notes offering
Looking Ahead
05:30 (ZA) South Africa May Total Mining Production M/M: 1.0%e v -1.6% prior; Y/Y: 2.2%e v 1.7% prior
08:00 (BR) Brazil May IBGE Services Sector Volume Y/Y: -1.8%e v -5.6% prior
08:15 (UK) Baltic Dry Index
08:30 (US) Jun Final Demand PPI M/M: 0.0%e v 0.0% prior; Y/Y: 1.9%e v 2.4% prior
08:30 (US) Initial Jobless Claims: 245Ke v 248K prior; Continuing Claims: 1.950 v 1.956M prior
08:30 (US) Weekly USDA Net Export Sales
08:30 (CA) Canada May New Housing Price Index M/M: 0.3%e v 0.8% prior; Y/Y: 3.5%e v 3.8% prior
09:00 (RU) Russia Gold and Forex Reserve w/e July 7th : No est v $412.2B prior
10:30 (US) Weekly EIA Natural Gas Inventories
14:00 (US) Jun Monthly Budget Statement: -$35.0Be v -$88.4B prior
