Awaiting US Job Report To Gauge The Fed

Notes/Observations

• Focus on US Jun Nonfarm payrolls for Fed policy clues
• Germany May Factory Orders registered a bigger-than-expected fall
• India Budget speech well accepted; maintained its FY gross borrowing outlook and to begin raising part of borrowing in external currencies

Asia:

• BOJ Dep Gov Amamiya reiterated stance that will take a long time to hit price target; will not rule out any policy options
• Japan May Household Spending Y/Y: 4.0% v 1.5%e (fastest increase since May 2015). Reminder: Japan’s sales tax is currently at 8% and planned to be raised to 10% in Oct
• Japan FSA said to consider tougher rules for life insurance companies, notes low interest rate environment. Rules could require these companies to hold higher levels of capital against the policies they underwrite.
• China Govt said to seek clarity on Huawei situation before making agricultural purchases from US
• China and the US could reach a preliminary trade agreement as soon as this September but  everyone said to be optimistic about the chances of a quick deal

Europe/Mideast:

• Bundesbank Spokesman said ECB member/Bundesbank President Weidman was not applying for job elsewhere; says Weidmann is ‘happy’ in current role as Bundesbank President
• UK Royal Marines seized Iran oil tanker in Gibraltar on Thursday, July 4th

Americas:

• Magnitude 6.5 earthquake reported on July 4th in central/southern California (said to be the largest quake in over 20 years), Reports of fires and damaged buildings after the quake but only ‘minor’ injuries have been reported thus far.
• Brazil Econ Min Guedes: Pension reform proposal could create savings of BRL3.0T in 20-years; reform expected to be approved next week

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.36% at 391.52, FTSE -0.34% at 7,578.08, DAX -0.19% at 12,606.26, CAC-40 -0.28% at 5,604.97, IBEX-35 -0.18% at 9,384.25, FTSE MIB -0.08% at 22,102.50, SMI -0.35% at 10,031.50, S&P 500 Futures -0.16%]

Market Focal Points/Key Themes:

• European Indices trade slightly lower across the board in quiet trade ahead of June Non Farm Payroll report out of the US. Asian Indices were mostly higher while US Index futures trade slightly lower.
• On the corporate front shares of John Menzies declines sharply after H1 results are to forecasted to be below expectations; Hexagon also declines as earnings and Revenue missed forecasts, while SIG Plc is another notable decliner as LFL sales fall 3.8%.
• Dios Fastfigheter meanwhile gains on earnings with Kid ASA also gaining on earnings.
• In other news Global Ports Holding gains on a strategic review including the sale of some assets; Ferrexpo declines on production data, while Rio Tinto leads the decliners among miners following a Chinese probe investigating the rise of iron ore prices.

Equities

• Consumer discretionary: John Menzies [MNZS.UK] -16% (profit warning), Takkt [TTK.DE] +2% (analyst action), Norwegian Air [NAS.NO] +6% (IAG deal speculation)
• Financials: VMP [VMP.FI] +10% (acquisition)
• Industrials: Hexagon [HEXAB.SE] -13% (prelim earnings; job cuts), OSRAM Licht [OSR.DE] +2% (accepts offer)
• Materials: SIG [SHI.UK] -6% (trading update), Ferrexpo [FXPO.UK] -3% (production data)

Speakers

• Italy Stats Agency (Istat) Monthly Economic Note: Jun Leading Indicator points to continued economic weakness
• India Finance Ministry FY20 Budget Presentation to maintain FY19/20 gross borrowing at INR7.1T. To set budget deficit to GDP target at 3.3% vs. 3.4% Feb forecast .Announced to begin raising part of borrowing in external currencies as it sought sell sovereign bonds overseas

Currencies/ Fixed Income

• FX markets were basically in a holding pattern as market participants awaited the US Jun jobs report for outlook for Federal Reserve monetary policy. The USD did manage to have a slight bid ahead of the data after Germany May Factory Orders registered a bigger-than-expected fall. More analysts saw a potential ECB move as soon as his month, Commerzbank analyst revised its ECB rate call and saw a 20bps cut in Deposit Rate in July from prior 10bps cut
• INR currency (Rupee) strengthened with the Indian bond yields moved lower in the aftermath of the Finance Ministry’s current fiscal year outlook. India Budget’s speech was well accepted as it maintained its FY gross borrowing outlook and to announced it would begin raising part of borrowing in external currencies

Economic Data

• (SE) Sweden Maklarstatistik Jun Housing Prices Y/Y 1% v 4% prior; Apartments Y/Y: 3% v 3% prior
• (DE) Germany May Factory Orders M/M: -2.2% v -0.2%e; Y/Y: -8.6% v -6.2%e
• (NO) Norway May Industrial Production M/M: 0.6% v 0.5% prior; Y/Y: -2.5% v -4.2% prior
• (NO) Norway May Manufacture Production M /M: +0.3% v -0.8%e; Y/Y: 5.0% v 4.3% prior
• (DK) Denmark May Industrial Production M/M: 3.5% v 1.0% prior
• (ZA) South Africa Jun Gross Reserves: $B49.8 v $48.3B prior; Net Reserves: $43.9B v $43.2B prior
• (AU) Australia Jun Foreign Reserves: A$77.5B v A$79.1B prior
• (FR) France May Trade Balance: -€3.3B v -€4.9Be
• (FR) France May Current Account Balance: +€0.3B v -€1.2B prior
• (ES) Spain May Industrial Output NSA Y/Y: +1.4% v -2.0% prior; Industrial Output SA Y/Y: 1.4% v 0.6%e; Industrial Production M/M: +0.3% v -0.5%e
• (CH) Swiss Jun Foreign Currency Reserves (CHF): 759.1B v 759.1B prior
• (HU) Hungary May Industrial Production M/M: +1.4% v -1.1% prior; Y/Y: 6.1% v 4.9%e
• (MY) Malaysia end-Jun Foreign Reserves: $102.7B v $102.6B prior
• (AT) Austria Jun Wholesale Price Index M/M: -1.6% v +0.4% prior; Y/Y: -0.7% v +1.1% prior
• (UK) Jun Halifax House Prices M/M: -0.3% v -0.4%e; 3M/Y: 5.7% v 5.7%e
• (SE) Sweden May Private Sector Production M/M: -0.1% v 0.0%e; Y/Y: 2.3% v 2.7%e
• (SE) Sweden May Industrial Orders M/M: 1.1% v 8.9% prior; Y/Y: +3.2% v -0.1% prior
• (SE) Sweden May Industry Production Value Y/Y: 1.6% v 3.3% prior; Y/Y: 1.8% v 3.4% prior
• (SE) Sweden Jun Budget Balance (SEK): -24.8B v +64.2B prior
• (RU) Russia Narrow Money Supply w/e Jun 21st (RUB): 10.33T v 10.43T prior
• (TW) Taiwan Jun CPI Y/Y: 0.9% v 0.9%e; CPI Core Y/Y: 0.5% v 0.5%e; WPI Y/Y: -1.9% v -0.8%e
• (TW) Taiwan Jun Foreign Reserves: $467.0B v $464.4B prior
• (UK) Q1 Unit Labor Costs Y/Y: 2.1% v 3.1% prior

Fixed Income Issuance

• (IN) India sold total INR170B vs. INR170B indicated in 2024, 2029, 2043, and 2049 bonds

Looking Ahead

• (ZA) South Africa sells total ZAR vs. ZAR760M indicated in I/ L 2025, 2038 and 2050 bonds
• (IT) Bank of Italy (BOI) Jun Balance sheet aggregates Target2 Liabilities: No est v €486.5B prior
• 06:00 (IE) Ireland May Industrial Production M/M: No est v 3.7% prior; Y/Y: No est v 7.5% prior
• 06:00 (UK) DMO to sell €5.0B in 1-month, 3-month and 6-month bills £0.5B, £2.0B and £2.5B respectively)
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Apr Gross Fixed Investment: -5.6%e -2.4% prior
• 08:00 (PL) Poland Jun Official Reserves: No est v $118.6B prior
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) Jun Change in Nonfarm Payrolls: +160Ke v +75K;prior Change in Private Payrolls: +150Ke v +90K prior; Change in Manufacturing Payrolls: +3Ke v +3K prior
• 08:30 (US) Jun Unemployment Rate: 3.6%e v 3.6% prior; Underemployment Rat: No est v 7.1% prior; Labor Force Participation Rate: 62.8%e v 62.8% prior
• 08:30 (US) Jun Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: 3.2%e v 3.1% prior; Average Weekly Hours: 34.4e v 34.4 prior
• 08:30 (CA) Canada Jun Net Change in Employment: +9.9Ke v +27.7K prior; Unemployment Rate: 5.5%e v 5.4% prior; Full Time Employment Change: No est v +27.7K prior; Part Time Employment Change: No est v 0.0K prior; Participation Rate: 65.7%e v 65.7% prior; Hourly Wage Rate Y/Y: 2.7%e v 2.6% prior
• 08:30 (CL) Chile May Economic Activity Index (Monthly GDP) M/M: 0.4%e v 0.3% prior; Y/Y: 2.3%e v 2.1% prior; Economic Activity Y/Y: No est v 2.1% prior
• 09:00 (CL) Chile May Nominal Wage M/M: No est v 0.6% prior; Y/Y: No est v 5.1% prior
• 09:00 (RU) Russia Jun Official Reserve Assets: $510.0Be v $495.2B prior
• 10:00 (CA) Canada Jun Ivey Purchasing Managers Index (Seasonally Adj): No est v 55.9 prior; PMI (unadj): No est v 61.8 prior
• 10:30 (TR) Turkey Jun Cash Budget Balance (TRY): No est v -14.7b prior
• 11:00 (EU) Potential sovereign ratings after European close
• 15:00 (MX) Citibanamex Survey of Economists
• 20:00 (CO) Colombia Jun CPI M/M: 0.2%e v 0.3% prior; Y/Y: 3.4%e v 3.3% prior

Weekend:

• Greece holds first election since the country exited its international bailout