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Focus On Trump-Xi Meeting At Upcoming G20, Germany Jun Regional CPI Data Accelerates

Notes/Observations

  • G-20 Approaches: with focus on Trump-Xi meeting and trade implications; risk sentiment buoyed by hopes of a truce between the two powers
  • Germany regional inflation accelerated in Jun

Asia:

  • US/China said to have tentatively agreed to a truce in their trade war so they can resume talks aimed at resolving the dispute. Fresh tariffs expected to be delayed, with two sides preparing separate statements. Trump’s decision to delay additional tariffs was Xi Jinping’s price for holding this week’s meeting with him
  • BOJ Dep Gov Wakatabe reiterated stance to maintain easy monetary policy for as long as needed to achieve 2% inflation target; appropriate to continue with current easing now. Needed to be increasingly vigilant to downside risks to economy; might preemptively take action if Board could agree it will be difficult to achieve the 2% inflation target. Must need to ease immediately if economy loses momentum to achieve price target

Americas:

  • Fed’s Daly (dove, non-voter): US labor market was very tight and strong, but there might be more room to run. Might have to do more to drive inflation above the 2% target. Signs of persistent inflation drag would be concerning and might require policymakers to do more
  • President Trump tweet: Look forward to speaking to India PM Modi; India has had high tariffs against US for years and has just recently increased the tariffs even further. This is unacceptable and tariffs must be withdrawn – President Trump planned meetings at upcoming G20 in Osaka, Japan. To meet with China President Xi on Sat, Jun 29th at 22:30 ET/02:30 GMT

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.26% at 383.18, FTSE +0.15% at 7,427.25, DAX +0.54% at 12,311.16, CAC-40 +0.04% at 5,502.94, IBEX-35 +0.21% at 9,176.55, FTSE MIB +0.60% at 21,184.50, SMI +0.30% at 9,881.50, S&P 500 Futures +0.39%]
  • Market Focal Points/Key Themes: Equities European Indices trade higher tracking higher Asian Indices and firmer US futures on talks of a truce between the US and China ahead of the G20 meeting. On the corporate front shares of Swedish Retail giant H&M gains over 8% after earnings and June sales which were up 12%; Zumtobel gains on earnings and raised EBIT outlook; Green King is another notable gainer following a beat on both the top and bottom line, while Serco trades higher after it’s trading update and raised Revenue outlook.. CHR Hansen falls over 12% after cutting its full year organic sales outlook, with SRP Groupe declining over 30% as the company’s trading update and analyst downgrade. Staffline is another notable decline after earnings and ÂŁ34M placing. In other news Bayer outperforms in Germany as Elliott advisers reveal a €1.1B stake; TLG Immobien falls following a placing while Pendragon declines after the stepping down of its CEO. Looking ahead notable earners include Wallgreens Boots Alliance, Conagra Brands and McCormick among others.
  • Consumer discretionary: H&M [HMB.SE] +10% (earnings; cuts outlook), Serco Group [SRP.UK] +6.5% (trading update), Kingfisher [KGF.UK] +3% (CEO appointment), Greene King [GNK.UK] +3.5% (earnings), Zumtobel [ZAG.AT] +7% (earnings), Staffline Group [STAF.UK] -17% (placing), Pendragon [PDG.UK] -5% (CEO resigns)
  • Consumer staples: CHR Hansen [CHR.DK] -12% (earnings; cuts outlook)
  • Energy: Premier Oil [PMO.UK] +2.5% (resource estimate)
  • Healthcare: Bayer [BAYN.DE] +7% (activist investor Elliot takes stake), Allergy Therapeutics [AGY.UK] +13% (settlement)

Speakers

  • Remain Parliamentary members in UK said to seek to block a no-deal Brexit by cutting off some govt funding during week of July 1st
  • Turkey Parliament said to be preparing bill on transfer more of more of the Central Bank funds to the nation’s treasury
  • China Foreign Ministry spokesperson Geng Shuang called for favorable environment for Xi-Trump meeting at G-20; reiterated to reveal details of unreliable entities list soon. Stated that US Trade Rep Lighthizer and China Vice Premier Liu He had a good call earlier in the week (Jun 24th); U. and China teams kept communication afterwards
  • China PBoC Quarterly Monetary Policy Meeting reiterated view that external uncertainties were increasing. To strike balance in monetary easing and tightening and use various monetary policy tools. To keep CNY rate basically stable at reasonable level and to keep liquidity reasonably sufficient

Currencies/Fixed Income

  • Risk on sentiment was bubbling in the session on reports the US would delay additional tariffs on Chinese goods ahead of this weekend’s G-20 summit in order to spur efforts to resume talks
  • USD/JPY was higher by 0.2% on the risk appetite to retest the 108 level.
  • Germany regional inflation accelerated in Jun helping to push the EUR/USD off its worst levels. pair at 1.1370 just ahead of the NY morning.

Economic Data

  • (NL) Netherlands Jun Producer Confidence Index: 3.3 v 4.7 prior
  • (FI) Finland Jun Consumer Confidence Index: -4.6 v -1.8 prior; Business Confidence: -5 v +1 prior
  • (FI) Finland May Preliminary Retail Sales Volume Y/Y: -0.3% v +3.6% prior
  • (FI) Finland May Preliminary House Price Index M/M: -3.0% v +0.5% prior; Y/Y: -1.0% v +0.1% prior
  • (NO) Norway May Retail Sales (includes fuel) M/M: -1.3% v -1.0%e
  • (DE) Germany Jun CPI Saxony M/M: 0.5% v 0.3% prior; Y/Y: 1.8% v 1.4% prior
  • (ES) Spain Jun Preliminary CPI M/M: -0.1% v 0.0%e; Y/Y: 0.4% v 0.6%e
  • (ES) Spain Jun Preliminary CPI EU Harmonized M/M: -0.1% v 0.0%e prior; Y/Y: 0.6% v 0.7%e
  • (ES) Spain Apr Total Mortgage Lending Y/Y:-2.5 % v +23.2% prior; House Mortgage Approvals Y/Y: -0.1% v +15.8% prior
  • (HU) Hungary May Unemployment Rate: 3.4% v 3.5%e
  • (TR) Turkey Jun Economic Confidence: 83.4 v 77.5 prior
  • (CN) China Q1 Final Current Account: $49.0B v $58.6B prelim
  • (SE) Sweden May Trade Balance (SEK): 8.3B v 1.2B prior
  • (DE) Germany Jun CPI Brandenburg M/M:0.5 % v 0.3% prior; Y/Y: 1.8% v 1.3% prior
  • (DE) Germany Jun CPI Hesse M/M: 0.1% v 0.4% prior; Y/Y: 1.5% v 1.4% prior
  • (DE) Germany Jun CPI Bavaria M/M: 0.4% v 0.1% prior; Y/Y: 1.8% v 1.6% prior
  • (IT) Italy Jun Consumer Confidence Index: 109.6 v 111.4e; Manufacturing Confidence: 100.8 v 101.0e; Economic Sentiment: 99.3 v 100.2 prior
  • (DE) Germany CPI North Rhine Westphalia M/M: 0.2% v 0.2% prior; Y/Y: 1.7% v 1.6% prior
  • (PT) Portugal Jun Consumer Confidence Index: -8.3 v -9.0 prior; Economic Climate Indicator: 2.4 v 2.3 prior
  • (EU) Euro Zone Jun Business Climate Indicator: 0.17 v 0.29e; Consumer Confidence: -7.2 v -7.2e; Economic Confidence: 103.3 v 104.8e; Industrial Confidence: -5.6 v -3.0e; Services Confidence: 11.0 v 12.4e

Fixed Income Issuance

  • (DK) Denmark sold total DKK1.7B in 3-month and 6-month bills
  • (IT) Italy Debt Agency (Tesoro) sold total €5.0B vs. €4.0-5.0B indicated range in 5-year and 10-year BTP bonds
  • Sold €2.25B vs. €1.75-2.25B indicated range in 1.75% July 2024 BTP bonds; Avg Yield: 1.34% v 1.81% prior; Bid-to-cover: 1.48x v 1.78x prior
  • Sold €2.75B vs. €2.25-2.75B indicated range in 3.00% Aug 2029 BTP; Avg Yield: 2.09% v 2.60% prior; Bid-to-cover: 1.32x v 1.28x prior
  • (IT) Italy Debt Agency (Tesoro) sold €1.0B vs. €0.75-1.0B indicated range in Jan 2025 CCTeu (Floating rate Note); Avg Yield: 1.60% v 1.95% prior; Bid-to-cover: 1.74x v 2.35x prior

Looking Ahead

  • (IT) Italy Debt Agency (Tesoro) to sell €4.0-5.0B in 5-year and 10-year BTP bonds
  • (IT) Italy Debt Agency (Tesoro) to selll €0.75-1.0B in Jan 2025 CCTeu (Floating rate Note); Avg Yield: % v 1.95% prior; Bid-to-cover: x v 2.35x prior
  • 05:30 (ZA) South Africa PPI M/M: 0.5%e v 1.3% prior; Y/Y: 6.4%e v 6.5 % prior
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-week bills
  • 05:30 (PL) Poland to sell Bonds
  • (DE) Germany Jun CPI Baden Wuerttemberg M/M: No est v 0.2% prior; Y/Y: No est v 1.5% prior
  • (RO) Romania May M3 Money Supply Y/Y: No est v 9.9% prior
  • (BE) Belgium Jun CPI M/M: No est v 0.0% prior; Y/Y: No est v 1.9% prior
  • 06:30 (IS) Iceland to sell 6-month Bills
  • 06:00 (CA) Canada Jun CFIB Business Barometer: No est v 59.7 prior
  • 07:00 (BR) Brazil Jun FGV Inflation IGPM M/M: 0.7%e v 0.4% prior; Y/Y: 6.4%e v 6.9% prior
  • 08:00 (DE) Germany Jun Preliminary CPI M/M: 0.2%e v 0.2% prior; Y/Y: 1.4%e v 1.4% prior
  • 08:00 (DE) Germany Jun Preliminary CPI EU Harmonized M/M: 0.1%e v 0.3% prior; Y/Y: 1.3%e v 1.3% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Q1 Final GDP Annualized Q/Q: No 3.2%e v 3.1% prelim; Personal Consumption: 1.3%e v 1.3% prelim
  • 08:30 (US) Q1 Final GDP Price Index: 0.8%e v 0.8% prelim; Core PCE Q/Q: No est v 1.0% prelim
  • 08:30 (US) Initial Jobless Claims: 220Ke v 216K prior; Continuing Claims: 1.67Me v 1.662M prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 09:00 (RU) Russia Gold and Forex Reserve w/e Jun 21st: No est v $504.5B prior
  • 09:00 (MX) Mexico May Trade Balance: -$1.0Be v $1.4B prior
  • 10:00 (US) May Pending Home Sales M/M: +1.0%e v -1.5% prior; Y/Y: 0.4%e v 0.4% prior
  • 10:00 (BR) Brazil Central Bank Q2 Inflation Report (QIR)
  • 10:30 (US) Weekly EIA Natural Gas Inventories
  • 11:00 (US) Jun Kansas City Fed Manufacturing Activity Index: 1e v 4 prior
  • 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
  • 12:00 (AT) ECB’s Nowotby (Austria) in Vienna
  • 13:00 (US) Treasury to sell 7-year Notes
  • 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 8.25%
  • 14:00 (BR) Brazil May Total Formal Job Creation: +65.5Ke v +129.6K prior
  • (AR) Argentina Jun Consumer Confidence Index: No est v 36.5 prior
  • (CO) Colombia May Industrial Confidence: No est v 4.4 prior; Retail Confidence: No est v 29.7 prior
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