Notes/Observations

  • Big week for central bank policy meetings (ECB and Turkey as highlights) with markets anticipating how much and how fast they might ease policy (Note: Fed and BOJ decision next week)
  • Iran remains in focus as confrontations occur in the Strait of Hormuz; Iranian forces recently seize UK-flagged tanker in Omani territorial waters

Asia:

  • Japan Upper House Election saw the ruling LDP-led coalition take 137 of 245 seats but fell short of super majority needed for constitutional reform
  • Hong Kong police fired tear gas and rubber bullets as protests against extradition bill entered 7th week; hundreds of armed pro-Beijing men attacked protesters, journalists, and lawmakers in subway stations and cars

Europe/Mideast:

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  • Italy coalition partners (League and 5-Star) said to be gearing up for a showdown this week to determine if the government will collapse
  • Chancellor of the Exchequer Hammond (Fin Min) confirmed that he intended to resign if Boris Johnson became Prime Minister as he would not wait to be sacked by new PM. Justice Sec Gauke confirmed he’ll resign from Cabinet on Wednesday (July 24th)
  • Fitch affirmed Germany sovereign rating at AAA; outlook stable

Americas:

  • Fed officials said to have signaled a 25bps cut is likely at June meeting; officials view 25bps cut as sufficient given US economy. The rate cut viewed as insurance against a sharper slowdown

Energy:

  • UK ministers said to be planning to put sanctions on the Iran regime. Foreign ministry to announce it would freeze Iranian assets after tanker was seized

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.10% at 387.64, FTSE +0.39% at 7,538.10, DAX +0.23% at 12,288.23, CAC-40 +0.14% at 5,560.14, IBEX-35 +0.09% at 9,178.75, FTSE MIB +0.11% at 21,665.50, SMI -0.13% at 9,924.50, S&P 500 Futures +0.22%]
  • Market Focal Points/Key Themes: Equities European Indices trade mostly higher, following lower Asian Indices and higher US futures. On the corporate front shares of Dutch trade Philips trades higher following a top and bottom line beat and affirmed outlook; Julius Baer also trades higher as profits came in ahead of expectations, with Learning Technologies group, Mensch & Maschine Software, Sthree and Ascential among other gainers following earnings and trading updates. Meanwhile Meyer Burger Tech declines sharply following preliminary earnings which swung to negative territory and the launch of a strategy review, whilst Petra Diamonds also declines as the company provided a revenue update and initiated FY20 guidance. Elsewhere Idox, Modern times Group and Yellow cake are among other names declining on earnings. In other news Ted Baker gains on reports that founder and largest shareholder Ray Kelvin is seeking support for taking the company private, while Clariant trades higher following the divestiture of its Healthcare packaging unit in the US for CHF308M, with Amerisur Resources gaining as Maurel et Prom makes an offer to acquire the company, which was initially rejected on valuation grounds. Looking ahead notable earners include Halliburton, Lennox International, RPM International and GNC Holdings among others.
  • Consumer discretionary: Ted Baker [TED.UK] +13.5% (Founder mulling PE buyout support), Ascential [ASCL.UK] +3% (earnings; divestment)
  • Financials: Berkeley Group [BKG.UK] -1% (Chairman sells share), Metro Bank [MTRO.UK] +2% (responds to press speculation), Coface [COFA.FR] -3% (Nataxis statement)
  • Healthcare: Bayer [BAYN.DE] -1% (supervisory board comments), Koninklijke Philips [PHIA.NL] +4% (earnings)
  • Industrials: Meyer Burger Technology [MBTN.CH] -18% (earnings; contract)
  • Technology: Learning Technologies [LTG.UK] +16% (trading update)
  • Materials: Petra Diamonds [PDL.UK] -4% (earnings)

Speakers

  • UK Foreign Office’s Duncan resigns
  • National Institute of Economic and Social research (NIESR Think Tank): sees 25% change that UK is already in a technical recessio
  • Hong Kong Chief Exec Lam: Strongly condemned attacks in Yuen Long; protests around the China Liaison office a challenge to national sovereignty
  • China Foreign Ministry spokesperson Geng Shuang: Some radical Hong Kong protesters’ behavior violated the bottom line of one country two systems

Currencies/Fixed Income

  • USD: Trading was firmer in the USD index as market participants dial back expectations for a 50bps Fed rate cut later this month. The index may get a good break of the inverse head and shoulders that has formed, should the Fed only cut 25 basis points.
  • ECB: The Euro will focus on Draghi who could signal more easing before his term ends in Oct. Reports circulated that ECB planned to resume government bond purchases by Nov. EUR/USD softer by 0.1% at 1.1215 area.
  • GBP: currency was softer ahead of the Conservative Party leadership ballot closing, with at least two government ministers preparing to resign should Boris Johnson emerge victorious and become prime minister. The week is quiet for economic data, but expect there to be volatility with comments regarding Brexit and new PM.

Economic Data

  • (NL) Netherlands July Consumer Confidence Index: 2 v 0 (flat) prior
  • (NL) Netherlands Jun House Price Index M/M: 0.4% v 0.4% prior; Y/Y: 6.9%e v 7.2% prior
  • (NL) Netherlands May Consumer Spending Y/Y: 2.4% v 1.8% prior
  • (CH) Swiss Jun M3 Money Supply Y/Y: 3.7 v 3.4% prior
  • (MY) Malaysia Mid-July Foreign Reserves: $103.3B v $102.7B prior
  • (JP) Japan Jun Convenience Store Sales Y/Y: 0.0% v 1.7% prior
  • (CH) Swiss Weekly Total Sight Deposits (CHF): 579.5B v 579.0B prior; Domestic Sight Deposits: B v 477.5B v 480.1B prior
  • (TW) Taiwan Jun Export Orders Y/Y: -4.5% v -2.3%e
  • (TW) Taiwan Jun Unemployment Rate: 3.7% v 3.8%e
  • (HK) Hong Kong Jun CPI Composite Y/Y: 3.3% v 2.6%e
  • (IS) Iceland July CPI M/M: -0.2% v +0.4% prior; Y/Y: 3.1% v 3.3% prior

Fixed Income Issuance

  • None seen

Looking Ahea

  • (IL) Israel Central bank (BOI) July Minutes
  • (IL) Israel Jun Leading “S” Indicator: No est v 0.1% prior
  • (AR) Argentina Jun Budget Balance (ARS): No est v 26.0B prior
  • (MX) Citibanamex Survey of Economists
  • 05:30 (SL) Sri Lanka Jun National CPI (NCPI) Y/Y: No est v 3.5% prior
  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 05:30 (DE) Germany to sell €2.0B in 6-month BuBills
  • 05:30 (BE) Belgium Debt Agency (BDA) announcement for upcoming OLO auction; to sell €1.6-2.0 in 2029 and 2033 OLO bonds
  • 06:00 (IL) Israel May Manufacturing Production M/M: No est v 2.9% prior
  • 06:00 (IE) Ireland Jun PPI M/M: No est v 0.3% prior; Y/Y: No est v 6.3% prior
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (IL) Israel to sell bonds
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Jun Chicago Fed National Activity Index: +0.10e v -0.05 prior
  • 08:30 (CA) Canada May Wholesale Trade Sales M/M: 0.5%e v 1.7% prior
  • 09:00 (FR) France Debt Agency (AFT) to sell combined €3.8-5.0B in 3-month, 6-month and 12-month Bills
  • 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
  • 15:00 (CO) Colombia May Economic Activity Index (Monthly GDP) Y/Y: 3.2%e v 2.1% prior

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