Notes/Observations
- New York Fed clarified that Fed’s Williams speech that view was not about possible Fed policy action but based on research
- US/China officials talk on trade but details not disclosed
Asia:
- Japan Jun National CPI Y/Y: 0.7% v 0.7%e; CPI Ex-fresh food (core) Y/Y: 0.6% v 0.6%e
Europe/Mideast:
- EU Commission President-elect Ursula von der Leyen: Could extend Brexit deadline if it’s reasonable; we did not want a hard Brexit. Must do whatever it takes for an orderly Brexit. Saw flexibility in European budgetary rules that could be used more fully to stimulate growth through investment (in regards to Italy)
- UK MP’s voted 315 vs 274 in favor of the amendment to make it more difficult for new PM to force through no-deal Brexit
Americas:
- President Trump: a US navy ship took defensive action against an Iran drone; USS Boxer destroyed an Iranian drone
- Fed’s Williams (moderate, voter): Fed should be aggressive when confronting an adverse outlook. Lower for longer rates fostered good financial conditions and allowed stimulus to pick up steam and inflation to rise. Wanted monetary policy to focus upon the macro-economy and prudential regulation to focus on the financial system. Want to attack the factors weighing on the neutral rate
- New York Fed spokesperson: Fed Williams’s speech was not about potential policy action but a reflection of 20 years of research
- US House passed bill raising Federal minimum wage to $15 per hour
- Chile Central Bank (BCCh) left Overnight Rate Target unchanged at 2.50%
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.56% at 388.96, FTSE +0.61% at 7,538.90, DAX +0.75% at 12,319.93, CAC-40 +0.69% at 5,588.97, IBEX-35 +0.48% at 9,270.05, FTSE MIB +0.08% at 22,108.50, SMI -0.07% at 10,003.50, S&P 500 Futures +0.32%]
Market Focal Points/Key Themes:
- European Indices trade higher across the board, tracking stronger Asian Indices and higher US futures, following strong results from Tech giant Microsoft after the close and strength in Semiconductors names in Asia, which hit a two month high following results from Taiwan Semi.
- In France advertising giant Publicis declines sharply weighing on the sector after earnings and cutting its Organic growth outlook; Munich Re trades higher following strong Q2 Profit guidance, with Sartorius Stedim, Plastic Omnium and Gecina among other names trading higher on earnings.
- Meanwhile SSABA, Software AG and Betsson among names declining on earnings and guidance.
- Anheuser-Busch Inbev trades over 4% higher after divesting Carlton & United to Asahi for A$16.0B; Aston Martin Legonda trades higher following Strategic European Investment Group offer for 3% stake, while Acacia Mining gains over 15% having received an all stock offer from Barrick valued at £343M.
- In other news Wirecard gains over 2% following an MoU with Aldi, Bayer gains as a judge recommends cutting roundup payouts, while Ultra Electronic rises following a DoD contract of up to $1.04B.
- Looking ahead notable earners include Blackrock, Schlumberger, American Express, Manpower and Synchrony among others.
Equities
- Consumer discretionary: AB InBev [ABI.BE] +5% (to divest unit), Publicis [PUB.FR] -7%, WPP [WPP.UK] -3% (Publicis earnings), Stora Enso [STERV.FI] +1.5% (earnings; withdraws outlook)
- Financials: Munich Re [MUV2.DE] +2.5% (outlook)
- Healthcare: Bayer [BAYN.DE] +2% (Judge cuts verdict)
- Industrials: Saab [SAABB.SE] +1.5% (earnings)
- Technology: Software [SOW.DE] -10% (earnings), Sartorius [SRT.DE] +2.5 (earnings), Wirecard [WDI.DE] +4% (partnership)
Speakers
- Italy Dep PM De Maio (5-Star) reiterated view that not undergoing any crisis with the ruling coalition; sought talks with Dep PM Salvini (League) on Friday (July 19th) (**Note: Italy President Mattarella wants Salvini to make his intentions clear in the next 48 hours whether snap elections are warranted)
- German Chancellor Merkel: Domestic economy is in a difficult phase
- Most advisers to Italy’s Dep PM Salvini (League) believed it was hard to continue governing with 5-Star in coalition; wanted him to force an election
- South Africa Graft Ombudsman: President Ramaphosa donation violated ethics code; to refer violations to parliament
Currencies/ Fixed Income
- USD: The USD futures index sold off yesterday after the Fed’s Williams made some quite dovish comments. The level to the upside seen in the region of 97.20 and to the downside 95.5. Next week volatility could come from figures we have from Wednesday on, or the progress, if any is made, from the US China trade talks.
- EUR: The Euro traded lower as it failed to significantly break the 1.128 level. Dealers noted that the dovish commentary attributed to Fed’s Williams were also seen as applying to ECB as much as Fed in terms of easing. Main focus on next Thursday’s ECB policy decision and whether the central bank will layout the ground work for more easing. Dealers see the current price consolidation between 1.12 to 1.1280 area.
- GBP: The cable traded higher yesterday as the UK parliament voted to prevent the suspension of parliament and impede a no-deal Brexit. Levels to the upside are still at the 1.258 region.
Economic Dat
- (DE) Germany Jun PPI M/M: -0.4% v -0.1%e; Y/Y: 1.2% v 1.5%e
- (CN) Weekly Shanghai copper inventories (SHFE): 154.5K v 145.3K tons prior
- (RU) Russia Narrow Money Supply w/e July 12th: 10.53T v 10.41T prior
- (EU) Euro Zone May ECB Current Account Balance: €29.7B v €22.4B prior
- (PL) Poland Jun Retail Sales M/M: 1.5% v 1.5%e; Y/Y: 5.3% v 6.0%e; Real Retail Sales Y/Y: 3.7% v 3.8%e
- (GR) Greece May Current Account Balance: +€0.3B v -€1.4B prior
- (IT) Italy May Current Account Balance: €2.6B v €4.1B prior
- (UK) Jun Public Finances (PSNCR): £15.2B v £10.7B prior; Net Borrowing: £6.5B v £3.3Be;
- Central Government NCR: £13.5B v £16.6B prior; PSNB ex Banking Groups: £7.2B v £3.9Be
Fixed Income Issuance
- None seen
Looking Ahead
- (IL) Israel Jun Leading “S” Indicator: No est v 0.1% prior
- (BE) Belgium Debt Agency (BDA) size announcement for upcoming OLO auction for Monday, July 22nd
- 05:00 (EU) Daily Euribor Fixing
- 05:00 (FR) France Debt Agency (AFT) announces upcoming issuance
- 05:00 (ZA) South Africa to sell ZAR760M in I/ L 2025, 2033 and 2050 bonds
- 05:30 (IN) India to sell INR170B in 2024, 2029, 2043 and 2049 bonds
- 06:00 (UK) DMO to sell €6.0B in 1-month, 3-month and 6-month bills £0.5B, £2.5B and £3.0B respectively)
- 06:45 (US) Daily Libor Fixing
- 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations: 12-month inflation expectation currently at 14.9%
- 07:30 (IN) India Weekly Forex Reserves w/e July 12th: No est v $B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:30 (CA) Canada May Retail Sales M/M: 0.3%e v 0.1% prior; Retail Sales (Ex-auto) M/M: 0.4%e v 0.1% prior
- 09:00 (BE) Belgium July Consumer Confidence Index: No est v -7 prior
- 10:00 (US) July Preliminary University of Michigan Confidence: 98.8e v 98.2 prior
- 11:00 (CO) Colombia May Trade Balance: -$0.7Be v -$0.5B prior; Total Imports: $4.7Bet v $4.5B prior
- 13:00 (US) Weekly Baker Hughes Rig Count
