Notes/Observations

  • Germany’s Ursula Von Der Leyen (EU Commission head nominee) lays out her vision ahead of an EU Parliamentary vote to confirm her
  • UK May Wage data beats expectations German July ZEW Survey misses estimates with blame pointed to global trade dispute

Asia:

  • RBA July Minutes stated that it was prepared to cut rates further if necessary and was watching the job market closely
  • New Zealand Q2 CPI data stays within target range for the 11th straight quarter (YoY: 1.7% v 1.7%e)
  • China PBOC Dep Gov Pan Gongsheng stated that China would expand yuan use in cross border investment; govt had big room to further open its financial market

Europe/Mideast:

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  • UK PM candidate Johnson: Not unrealistic to say could get new Brexit deal done before Oct 31st. Would not accept a time-limited backstop; the backstop was dead

Americas:

  • Treasury Sec Mnuchin: Treasury Dept was very concerned that Libra cryptocurrency could be used by terrorist financiers and for other illicit activity. US regulators very concerned about the speculative nature of Bitcoin and cryptocurrencies, their value is based on thin air. Urged congress to raise the debt ceiling before they recess; did not anticipate US government will shut down. On Trade: expected to have another call with Chinese counterparts this week on trade; If there was significant progress in US China conversations, good chance officials would travel to China later

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.10% at 388.14, FTSE +0.23% at 7,549.14, DAX +0.17% at 12,407.81, CAC-40 +0.24% at 5,592.24, IBEX-35 +0.27% at 9,348.35, FTSE MIB +0.13% at 22,206.50, SMI +0.24% at 9,832.50, S&P 500 Futures +0.08%]
  • Market Focal Points/Key Themes: European Indices trade slightly higher across the board following a mixed session in Asia and slightly higher US futures as markets continue to consolidate. On the corporate front, Rio Tinto shares edge lower after its Q2 production update with increased Capex at Oyu Tolgoi weighed on the stock; Burberry gains sharply following a rise in Q1 sales, which was ahead of consensus, with Yara, Schibsted, Semcon and XLMedia also rising on earnings. Renault declines on a fall in first half car sales; Telenor falls over 5% after missing on earnings and lowering outlook, A.G Barr falls over 20% on a profit warning, while Experian, Hays and Bonava are among other decliners on earnings. In other news Ryanair rises after warning on slow capacity growth on the back of Boeing Max delivery delays; CRH confirmed the divestment of its European distribution business to Blackstone and WANdisco gains on a partnership with Databricks. Looking ahead earnings continue to pick up with banking names JP Morgan, Goldman Sachs, Wells Fargo as well as Dow components Johnson & Johnson expected to report among others.

Equities

  • Consumer discretionary: Burberry [BRBY.UK] +8% (trading update), Ryanair [RYA.UK] +1% (cuts capacity), Hays [HAS.UK] -2% (trading update), BillerudKorsnas [BILL.SE] -4% (earnings), Experian [EXPN.UK] -1.5% (earnings)
  • Healthcare: Bayer [BAYN.DE] +2% (court decision)
  • Industrials: Renault [RNO.FR] -1.5% (sales), Daimler [DAI.DE] -1.5% (analyst action), Fiat Chrysler [FCA.IT] -3.5% (analyst action), Yara International [YAR.NO] +5% (earnings)
  • Technology: AMS [AMS.CH] -3% (OSRAM talks), WANdisco [WAND.UK] +7% (partnership)

Speakers

  • ECB’s Villeroy (France) reiterated General Council view on need to structural reforms to compliment monetary policy; ECB to act if and when needed at coming meetings. Reiterated Draghi’s view that ECB could not be market dependent but rather to react on data
  • Germany’s Ursula Von Der Leyen (EU Commission head nominee): Would be open for a longer brexit delay for a good reason but defended the current Withdrawal Agreement
  • Germany Finance Ministry said to see Facebook’s Libra currency as a risk for the Euro. Saw a risk of sovereignty being undermined. Govt and Bundesbank should assess how to prevent Facebook’s Libra digital coin from becoming alternative currency. Germany in touch with France, U.K. and U.S. to discuss how governments should react to Libra
  • Greece Fin Min Staikouras: Top priority for new govt was tax reform
  • ESM’s Regling: Greece should make growth its top priority while at the same time maintaining the agreed primary surplus
  • UK Parliamentary member Grieve (Conservative): Might be difficult for Parliament to block a no-deal Brexit. Expected former Tory ministers to oppose a no-deal Brexit. General election would be a way out of the current political crisis but its outcome would not be definitive and could create a 4-party system German ZEW Economists noted that lasting containment of factors causing uncertainty in export sector was currently not in sight. Ongoing trade dispute between US-China was a burden not only for Chinese economic development
  • China Foreign Ministry spokesperson Geng Shuang: China could have resorted to strong stimulus policies but instead committed to high quality development. Misleading to suggest that China needs atrade deal because its economy is slowing
  • South Korea Envoy Chung-Eui-Yong: Govt to sternly respond until Japan withdraws its export curbs
  • North Korea said to state that if US-South Korea hold joint military drills this summer it would influence planned working level talks between US-NK

Currencies/Fixed Income

  • USD: The USD was a tad firmer in the session but dealers noted it would likely to remain stymied following Fed Chair Powell’s testimony last week which seemed to have cemented a 25 bp cut on July 31st. Levels to the upside look to region of 97.20 for the monthly high and an inverse head and shoulders pattern.
  • EUR: As expected the Euro has been quiet this week with the lack of data. We will look to the USd to effect movement in the pair as well as any unscheduled comments.
  • GBP: The cable was lower as both PM candidates stated that they would seek to remove the Irish border backstop plan from any Brexit deal with the EU. Levels to the downside are the yearly low of 1.2420 and upside in the region of 1.2760.

Economic Data

  • (FI) Finland May GDP Indicator WDA Y/Y: 0.8% v 1.8% prior
  • (TR) Turkey Apr Unemployment Rate: 13.0% v 14.1% prior
  • (IT) Italy May Total Trade Balance: €5.4B v €2.9B prior; Trade Balance EU: €2.3B v €1.0B prior
  • (TR) Turkey Jun Central Gov’t Budget Balance (TRY): -12.1B v -12.1B prior
  • (UK) Jun Jobless Claims Change: +38.0K v +24.5K prior; Claimant Count Rate: 3.2% v 3.1% prior
  • (UK) May Average Weekly Earnings 3M/Y: 3.4% v 3.1%e; Weekly Earnings (ex-bonus) 3M/Y: 3.6% v 3.5%e
  • (UK) May ILO Unemployment Rate: 3.8% v 3.8%e; Employment Change 3M/3M: +28K v +45Ke
  • (EU) Euro Zone May Trade Balance (Seasonally Adj): €20.2B v €17.5Be; Trade Balance NSA (unadj): €23.0B v €15.7B prior
  • (DE) Germany July ZEW S Current Situation Survey:-1.1 v+ 5.0e; Expectations Survey: # v -22.0e
  • (EU) Euro Zone July ZEW Expectations Survey: -20.3 v -20.2 prior
  • (IT) Italy Jun Final CPI M/M: 0.1% v 0.2% prelim; Y/oY: 0.7% v 0.8% prelim; CPI Ex-tobacco: 102.7 v 102.7 prior
  • (IT) Italy Jun Final CPI EU Harmonized M/M: 0.1% v 0.1% prelim; Y/oY: 0.8% v 0.8% prelim

Fixed Income Issuance

  • (GR) Greece Debt Agency (PDMA) opened its book to sell 7-year bond via syndicate; yield guidance seen 2.0%
  • (ID) Indonesia sold total IDR22.05T in 3-month and 9-month Bills and 5-year, 10-year, 15-year, and 20-year Bonds
  • (ES) Spain Debt Agency (Tesoro) sold total €2.14B vs. €1.5-2.5B indicated range in 3-month and 9-month Bills
  • (CH) Switzerland sold CHF416.2M in 3-month bills; Avg Yield: -0.861% v -0.829% prior
  • (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2030, 2035, and 2037 bonds

Looking Ahead

  • 05:30 (UK) Weekly John Lewis LFL Sales data
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
  • 05:30 (UK) DMO to sell £2.25B in 1.75% Sept 2037 Gilts
  • 06:00 (IL) Israel Q1 Final GDP Annualized (3rd reading): No est v 4.8% prelim
  • 06:30 (EU) ESM to sell €2.5B in 6-month bills; Avg Yield: % v -0.5147% prior; Bid-to-cover: x v 2.9x prior (Jun 18th 2019)
  • 07:00 (BR) Brazil July FGV Inflation IGP-10 M/M: 0.5%e v 0.5% prior
  • 08:00 (PL) Poland Jun CPI Core M/M: +0.3%e v -0.3% prior; Y/Y: 1.9%e v 1.7% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (UK) BOE Gov Carney on panel
  • 08:00 (RU) Russia announces upcoming OFZ Bond issuance
  • 08:15 (US) Fed’s Bostic (dove, non-voter) at event
  • 08:15 (US) Fed’s Bowman (voter)
  • 08:30 (US) Jun Import Price Index M/M: -0.6%e v -0.3% prior; Y/Y: -2.1%e v -1.5% prior; Import Price Index (ex-petroleum) M/M: -0.2%e v -0.3% prior
  • 08:30 (US) Jun Export Price Index M/M: -0.3%e v -0.2% prior; Y/Y: No est v -0.7% prior
  • 08:30 (US) Jun Advance Retail Sales M/M: 0.2%e v 0.5% prior; Retail Sales (Ex-auto) M/M: 0.1%e v 0.5% prior; Retail Sales (ex-auto/gas): 0.3%e v 0.5% prior; Retail Sales Control Group: 0.3%e v 0.4% prior (revised from 0.5%)
  • 08:30 (CA) Canada May Int’l Securities Transactions (CAD): No est v -12.8B prior
  • 08:55 (US) Weekly Redbook LFL Sales data
  • 09:00 (EU) Weekly ECB Forex Reserves
  • 09:15 (US) Jun Industrial Production M/M: 0.1%e v 0.4% prior; Capacity Utilization: 78.1%e v 78.1% prior; Manufacturing Production: 0.3%e v 0.2% prior
  • 10:00 (US) July NAHB Housing Market Index: 64e v 64 prior
  • 10:00 (US) May Business Inventories: 0.4%e v 0.5% prior
  • 10:00 (MX) Mexico Weekly International Reserve data
  • 11:30 (US) Treasury 52-Week Bills
  • 13:00 (US) Fed Chair Powell in Paris
  • 13:00 (EU) European Parliament’s (EP) vote on Germany’s Ursula Von Der Leyen as next EU Commission head
  • 15:00 (AR) Argentina Jun National CPI M/M: 2.6%e v 3.1% prior; Y/Y: No est v 57.3% prior
  • 15:30 (US) Fed’s Evans (dove, voter) in Chicago
  • 16:00 (US) May Net Long-term TIC Flows: No est v $46.9B prior; Total Net TIC Flows: No est v $7.8B prior
  • 16:30 (US) Weekly API Oil Inventories
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