Notes/Observations
- Mexico-US to continue talks ahead of the looming Monday deadline on implementation of tariffs against Mexico
- Germany Apr Industrial Production falls the most in almost 4 years; Bundesbank slashes 2019 growth outlook in its semi-annual update
Asia:
- China PBoC Gov Yi Gang commented that the upcoming trade talks with US Treasury Sec Mnuchin at G20 finance Minister meeting to be ‘difficult’; no yuan exchange rate number more important than others*, trade war would have temporary depreciation effect on CNY currency
- Japan Apr Household Spending Y0Y: 1.3% v 2.6%e
- Japan Apr Labor cash Earnings YoY: -0.1% v -0.7%e’ Real Cash Earnings YoY saw its 4th straight decline YoY: -1.1% v -1.5%e)
Europe/Mideast:
- Germany and most other EU governments said to back another delay to Brexit regardless of who becomes the new UK PM. Most European govt’s believe that the future Tory leader would be forced to use extra time for a 2nd referendum to break the Parliamentary deadlock. Final deadline expected to be as late as next Spring
- Spain Sanchez said to seek confirmation vote as PM following king’s invitation
Americas:
- US said to be considering delaying Mexico tariffs as implementation date approaches; Mexican officials seek more time for talks
- White House Press Sec Sanders: US is still moving ahead with Mexico tariffs on Monday at this time (Note: Reminder: Tariffs set to go into effect on Monday, Jun 10th)
- Mexico and US considering outlines of deal that could boost Mexico immigration enforcement efforts and give US more latitude to deport asylum-seeker. Mexico said to have pledged to deploy up to 6,000 National Guard troops to the country’s border region with Guatemala, and claimed that this deployment could reduce migration flows to the level of last fall, when arrests were averaging 50K per month.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.76% at 376.86, FTSE +0.71% at 7,311.45, DAX +0.63% at 12,028.13, CAC-40 +1.26% at 5,344.81, IBEX-35 +0.54% at 9,218.94, FTSE MIB +0.76% at 20,330.50, SMI % at #, S&P 500 Futures +0.29%]
Market Focal Points/Key Themes:
- European Indices trade higher once again ending the week on a strong note tracking stronger Asian Indices and higher US futures following another day of gains yesterday ahead to May Non Farm Payroll data.
- On a quieter morning for corporate news, Novozymes in Denmark declines over 7% after the company cut its forecast citing slowdowns in its US business. Metall Zug falls following a profit warning and lack of 2019 guidance, with Somero Enterprises also declining following a trading update.
- Meanwhile Pantaflix gains on stronger earnings, with Ferrexpo also gaining after upbeat outlook.
- In other news Mediaset Espana gains on reports Mediaset is considering options for the unit; Airbus also gains after YTD order figures.
- In the US, Beyond Meat rises sharply following a slight beat in Revenue and stronger guidance continuing the stellar performance since its IPO.
Equities
- Consumer discretionary: Games Workshop [GAW.UK] +4.5% (trading update)
- Financials: NN Group [2NN.DE] +2% (acquisition)
- Healthcare: Sanofi-Aventis [SAN.FR] +4% (appoints CEO from Novartis), NOVOZYMES [NZYMB.DK] -7% (cuts outlook), Orphazyme [ORPHA.DK] +7% (EMA advice)
- Industrials: Somero Enterprises [SOM.UK] -21% (trading update), Airbus [AIR.FR] +2.5% (orders data)
- Materials: Ferrexpo [FXPO.UK] +6% (positive profit alert), Metall Zug [METN.CH] -9% (profit warning)
Speakers
- ECB’s Vasiliauskas (Lithuania): inflation outlook was not bad but still needed time to see how economy developed in H2
- Germany Bundesbank cut its growth and inflation outlook for the horizon period. Cut 2019 GDP from 1.6% to 0.6%; 2020 GDP growth from 1.6% to 1.2% and 2021 GDP from 1.5% to 1.3%. It did maintain 2019 inflation at 1.4% but cut 2020 inflation from 1.8% to 1.5% and 2021 inflation from 1.8% to 1.7%. More protracted and clear decline in economic output seemed like an unlikely prospect and did expect domestic exports to begin rising from H2
- Austria Central Bank updated its Economic Outlookwhich cut the GDP growth outlook for 2019 thru 2021 period. Cut 2019 GDP growth from 2.0% to 1.5%; 2020 GDP growth from 1.9% to 1.6% and 2021 GDP growth from 1.7% to 1.6%. ECB’s Nowotny (Austria) added that he saw no threat of a recession but eas experiencing a slowdown
- Italy Dep PM Di Maio (5-Star): No discussions with League’s Salvini on any potential govt reshuffling
- Russia Econ Min Oreshkin stated that he saw inflation sharply decelerating from July stated that saw
- Russia Energy Min Novak: Opec had achieved market balance; most countries agree on July 2-4th for Opec+ meeting in Vienna. Had agreed to take coordinated action with Saudi Arabia. Global oil demand could grow by less than 1M bpd because of trade wars
- Saudi Energy Min Al-Falih: Oil markets being influenced by factors outside our control. Was aligned with Russia on oil market views. Unacceptable to return to where market was in 2015. Any decision made in July can always be adjusted later in H2. Did not have a price target on oil but believed that $60/barrel for oil did not provide enough confidence for industry to make investments. Believed that OPEC+ would extend oil-cut deal but did not a need to deepen cuts, just calibrate them
- Iraq Oil Ministry stated that it saw no serious difficulty in extending the OPEC+ oil cut production agreement
Currencies/ Fixed Income
- FX price action was mixed ahead of the key release of US payroll data for May. Global central banks have taken a more dovish tone in weeks and the earlier miss in ADP data pondered whether the payrolls might be negative for the 1st time in over 9 years.
- USD: The dollar index yesterday sold off yesterday as the multi-front US trade war with China and Mexico continued to peculate. The US and Mexico appear to be moving in a direction to resolve any disagreements as trades resume today. We still however still do not have a definitive date on the US and China meeting as tariffs have now taken effect on products between the 2 countries. We look to the level around 96.50 to the down side, then the 95.20 region.
- EUR: The Euro had a quite volatile day yesterday during the ECB press conference after members set terms of the next TLTRO. The Euro briefly traded above 1.13 only to be pushed back again, now firming that level of 1.13.
- GBP: Cable traded slightly above 1.27 yesterday as we approach next week where we start to see the Tory leadership race for MP take shape as well as UK GDP and Unemployment economic figures. To the upside we see a level in the 1.2750 region and the 1.26 handle to the downside.
- CNY: The USD/CNY moved above 6.96 in the for its weakest level since Sept. China PBoC Gov Yi Gang commented that no yuan exchange rate number was more important than any others and added that the trade war would have temporary depreciation effect on CNY currency.
Economic Data
- (NL) Netherlands Apr Manufacturing Production M/M: -0.5% v -0.5% prior; Y/Y: -1.2% v -0.4% prior; Industrial Sales Y/Y: +3.1% v -3.8% prior
- (CH) Switzerland May Unemployment Rate: 2.3% v 2.3%e; Unemployment Rate (Seasonally Adj): 2.4% v 2.4%e
- (DE) Germany Apr Industrial Production M/M: -1.9% v -0.5%e; Y/Y: -1.8% v -0.4%e
- (DE) Germany Apr Current Account Balance: €22.6 v €30.9B prior; Trade Balance: €17.9B v €19.5Be; Exports M/M: -3.7% v -0.9%e; Imports M/M: -1.3% v -0.2%e
- (DE) Germany Q1 Labor Costs Q/Q: 1.1% v 0.2% prior; Y/Y: 2.5 v 2.0% prior
- (DK) Denmark Apr Industrial Production M/M: 0.5 v 1.7% prior
- (NO) Norway Apr Industrial Production M/M: +0.2% v -1.3% prior; Y/Y: -4.2% v -6.4% prior
- (NO) Norway Apr Manufacturing Production M/M: 2.2% v 0.4%e; Y/Y: 4.3% v 1.5% prior
- (NO) Norway Apr GDP M/M: 0.2% v 0.2% prior; GDP Mainland M/M: 0.3% v 0.3%e
- (ZA) South Africa May Gross Reserves: $48.3B v $49.5B prior; Net Reserves: $43.2B v $43.2Be
- (FI) Finland Apr Preliminary Trade Balance: -€0.3B v -€0.1B prior
- (AU) Australia May Foreign Reserves: A$79.9B v A$75.7B prior
- (FR) France Apr Trade Balance: -€5.0B v -€4.7Be
- (FR) France Apr Current Account Balance: -€0.8B v -€2.3 B prior
- (FR) France Apr Industrial Production M/M: 0.4% v 0.3%e; Y/Y: 1.15 v 1.0%e
- (FR) France Apr Manufacturing Production M/M: 0.0% v -1.1% prior; Y/Y: 0.5% v 0.6% prior
- (ES) Spain Q1 INE House Price Index Q/Q: 1.5% v 0.4% prior; Y/Y: 6.8% v 6.6% prior
- (CH) Swiss may Foreign Currency Reserves (CHF): 759.9B v 772.0B prior
- (HU) Hungary May CPI M/M: 0.7% v 0.6%e; Y/Y: 3.9% v 3.9%e
- (HU) Hungary Apr Preliminary Trade Balance: €0.2B v €0.6B prior
- (UK) May Halifax House Prices M/M: 0.5% v 0.0%e; 3M/Y: 5.2% v 5.0%e
- (RU) Russia Narrow Money Supply w/e May 31st (RUB): 10.24T v 10.30T prior
- (IT) Italy Apr Retail Sales M/M: 0.0% v -0.3% prior; Y/Y: +4.2% v -3.3% prior
- (CZ) Czech May International Reserves: $143.7B v $143.5B prior
- (UK) BoE/TNS Jun Inflation Quarterly Survey Next 12-month: 3.1% v 3.2% prior
- (HU) Hungary May YTD Budget Balance (HUF): -176.4B v -39.0B prior
- (SG) Singapore May Foreign Reserves: $265.4B v $296.8B prior
Fixed Income Issuance
- (IN) India sold total INR170B vs. INR170B indicated in 2024, 2029, 2043 and 2049 bonds
Looking Ahead
- 05:30 (IN) India to sell combined INR170B in 2024, 2029, 2043 and 2049 bonds
- 06:00 (IE) Ireland May Live Register Monthly Change: No est v -0.7K prior; Live Register Level: No est v 194.7 prior
- 06:00 (PT) Portugal Apr Trade Balance: No est v -€1.9B prior
- 06:00 (HU) Hungary Fin Min Varga
- 06:00 (FI) Finland parliament elects new Speaker
- 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.0B respectively)
- 06:15 (SE) Sweden Central Bank (Riksbank) Gov Ingves in Paris
- 06:30 (ES) Bank of Spain (BOS) updates economic forecasts
- 06:30 (IS) Iceland to sell 5% Nov 2028 RIKB bond
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: 0.3%e v 0.9% prior; Y/Y: 6.8%e v 8.3% prior
- 07:30 (IN) India Weekly Forex Reserves w/e May 31st: No est v $420.0B prior
- 08:00 (PL) Poland May Official Reserves: No est v $117.0B prior
- 08:00 (BR) Brazil May IBGE Inflation IPCA M/M: 0.2%e v 0.6% prior; Y/Y: 4.7%e v 4.9% prior
- 08:00 (CL) Chile May CPI M/M: 0.5%e v 0.3% prior; Y/Y: 2.2%e v 2.0% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:30 (US) May Change in Nonfarm Payrolls: +180Ke v +263K prior; Change in Private Payrolls: +172Ke v +236K prior; Change in Manufacturing Payrolls: +3Ke v +4K prior
- 08:30 (US) May Unemployment Rate: 3.6%e v 3.6% prior; Underemployment Rate: No est v 7.3% prior; Labor Force Participation Rate: No est v 62.8% prior
- 08:30 (US) May Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: 3.2%e v 3.2% prior; Average Weekly Hours: 34.5e v 34.4 prior
- 08:30 (CA) Canada May Net Change in Employment: +5.0Ke v +106.5K prior; Unemployment Rate: 5.7%e v 6.5% prior; Full Time Employment Change: +9.0Ke v +73.0K prior; Part Time Employment Change: +0.5Ke v +33.6K prior; Participation Rate: 65.8%e v 65.9% prior; Hourly Wage Rate Y/Y: 2.4%e v 2.6% prior
- 08:30 (CA) Canada Q1 Capacity Utilization Rate: 81.0%e v 81.7% prior
- 08:30 (CL) Chile May Trade Balance: $0.6Be v $0.6B prior; Total Exports: $6.5Be v $5.9B prior; Total Imports: $6.0Be v $5.3B prior; Copper Exports: No est v $2.8B prior
- 08:30 (CL) Chile May International Reserves: No est v $37.8B prior
- 09:00 (MX) Mexico May CPI M/M: -0.2%e v +0.1% prior; Y/Y: 4.4%e v 4.4% prior; CPI Core M/M: 0.2%e v 0.5% prior
- 09:00 (RU) Russia May Official Reserve Assets: $495.0Be v $491.1B prior
- 10:00 (US) Apr Wholesale Trade Sales M/M: 0.2%e v 2.3% prior; Wholesale Inventories M/M: 0.7%e v 0.7% prelim
- 11:00 (EU) Potential sovereign ratings after European close (Fitch on Sweden)
- 13:00 (US) Weekly Baker Hughes Rig Count data
- 15:00 (US) Apr Consumer Credit: $13.0Be v $10.3B prior
- 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: expected to leave Overnight Rate Target unchanged at 3.00%
- (UK) PM May steps down as leader of Conservative party
- (G20) G20 Finance Ministers meeting in Fukuoka, Japan
