Notes/Observations
UK Manufacturing drops to 3 month low, on uncertainty following the election with Factory orders slumping to 11 month lows.
European Manufacturing PMI generally stronger with notable readings from Switzerland, Norway and the Netherlands.
Equities trade higher across the board following the end of quarter sell off seen last week.
Overnight
Asia:
Incumbent Yuriko Koike won a landslide victory in the Tokyo Gov election with her Tokyo Residents First Party securing 49 out of the 127 seats, and will hold a majority 79 along with its allies including the Komeito party
BOJ outlook report expected on July 20th: inflation forecasts could be revised down to around 1% for FY17 from 1.4% in the April report, while FY18 could be lowered to ~1.5% from 1.7% -Japan PM Abe may reshuffle cabinet as early as August
China Jun Caixin manufacturing PMI recorded 3 month high
Australia Manufacturing PMI recorded 9th month of expansion
Casino names all lower after June Macau gaming rev was lower than expected, attributed to China President Xi’s visit to Hong Kong the last week of the month
Europe:
UK Manufacturing PMI drops to the lowest in 3 months, with new orders dropping sharply to a a 5 month low
European Manufacturing PMIs generally positive, Swiss PMI hits 6 year high
ECB’s Weidmann commented over the weekend noting ECB policymakers agree some degree of monetary stimulus is still required, but degree needed is being discussed
Reportedly there is a distinct possibility UK PM May could walk away out of Brexit talks over the ‘Divorce Bill’
UK Brexit Minister to hold conference with UK business leaders on Friday as part of a government drive to give them a bigger say in the process
EU’s Barnier noted Brexit time is not ‘indefinate’
Americas:
New York Fed Nowcast: maintains Q2 GDP forecast at 1.9%, unchanged from 6/23; raises Q3 GDP forecast to 1.6% from 1.5% on 6/23
China President Xi spoke with President Trump: Agree that Korea peninsula needs to be denuclearized
Oil:
Libyaoil production estimated at 1.01M bpd
Opec Crude Output rose 210K b/d in June to 32.55M b/d
Economic Data
(UK) JUN MANUFACTURING PMI: 54.3 V 56.3E (11th month of expansion, 3-month low)
(DE) GERMANY JUN FINAL MANUFACTURING PMI: 59.6 V 59.3E (31th month of expansion)
(ES) SPAIN JUN MANUFACTURING PMI: 54.7 V 55.6E (44TH MONTH OF EXPANSION)
(IT) ITALY JUN MANUFACTURING PMI: 55.2 V 55.3E (10TH MONTH OF EXPANSION)
(CH) Swiss Jun Manufacturing PMI: 60.1 v 56.3%e (Highest since April 2011)
(IT) ITALY MAY PRELIMINARY UNEMPLOYMENT RATE: 11.3% V 11.2%E
(EU) EURO ZONE MAY UNEMPLOYMENT RATE: 9.3% V 9.3%E
(FR) FRANCE JUN FINAL MANUFACTURING PMI: 54.8 V 55.0E (CONFIRMS 9TH MONTH OF EXPANSION)
(EU) EURO ZONE JUN FINAL MANUFACTURING PMI: 57.4 V 57.3E (CONFIRMS 47TH STRAIGHT MONTH OF GROWTH)
(SE) SWEDEN JUN MANUFACTURING PMI: 62.4 V 60.0E
(IE) IRELAND JUN MANUFACTURING PMI: 56.0 V 55.9 PRIOR (49 straight month of expansion)
(NO) Norway Jun Manufacturing PMI: 55.1% v 54.5%e (5 year high)
(TR) TURKEY JUN CPI M/M: -0.3% V 0.1%E; Y/Y: % V 11.2%E; CPI CORE INDEX Y/Y: 10.9% V 9.5%E
Fixed Income Issuance:
Non seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +1.0% at 3,473, FTSE +0.4% at 7,346, DAX +0.6% at 12,406, CAC-40 +1.1% at 5,176, IBEX-35 +1.0% at 10,552, FTSE MIB +1.6% at 20,916, SMI +0.8% at 8,974, S&P 500 Futures +0.3%]
Market Focal Points/Key Themes: European stocks opened higher following mixed results in Asia; trading muted ahead of upcoming US holiday; equities in general supported by positive PMI data (with the exception of the UK); extension of oil rally supports energy stocks; materials supported on better data from China; financial also outperforming; US session closing early due to holiday
Equities
Consumer discretionary [Havas HAV.FR +0.4% (Offer from Vivendi), Lufthansa LHA.DE +3.1% (analyst action), Air France-KLM AF.FR +2.6% (analyst action)]
Energy [Saipem SPM.IT +2.3% (contract extension), Premier Oil PMO.UK +3.5% (acquisition)]
Financials [Bollore BOL.FR +1.4% (sells stake in Havas)]
Industrials [Thyssenkrupp TKA.DE +2.6% (potential asset sale)]
Technology [Gemalto GTO.NL +4.9% (merger talks progressing)]
Speakers
Non seen
Currencies
EUR/USD drifts lower this morning trading below 1.14 with USD strength across the board, dealers note support at 1.1375. USDYEN trades at new 6 week highs, whilst Cable drops below 1.30 after weaker Manufacturing PMI data. Activity is expected to die down heading into the US July 4th Holiday.
Fixed Income
Bund futures trade higher back above 162 recovering from lows seen on Friday with left over Month end buying said to be helping the bid tone. The bid in Bunds is also helping Treasuries after selling off in the Asia session.
Monday’s liquidity reportshowed Friday’s excess liquidity fell to €1.600T a fall of €12B from €1.612T prior. Use of the marginal lending facility rose to €302M from €126M prior.
Corporate issuance saw $82.9B issued for the month of June via 126 tranches. For the year issuance stands at $718.7B. In Europe €39.4B was issued last week led mainly by SSAs with Spain’s €8B 10 year bond accounting for 20% of the weeks issuance.
Looking Ahead
07:25 (BR) Brazil Central Bank Weekly Economists Survey
07:30 (CL) Chile Central Bank (BCCh) Jun Minutes
08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -18.7B prior
08:00 (BR) Brazil Jun PMI Manufacturing: No est v 52.0 prior
08:15 (UK) Baltic Dry Bulk Index
09:00 (SG) Singapore Jun Purchasing Managers Index: No est v 50.8 prior, Electronics Sector Index: No est v 52.4 prior
09:00 (CL) Chile May Retail Sales Y/Y: No est v -0.4% prior; Commercial Activity Y/Y: No est v -0.5% prior
09:45 (US) Jun Final Markit Manufacturing PMI 52.1e v 52.7 prior
10:00 (US) Jun ISM Manufacturing: 55.1 v 54.9 prior; Prices Paid: 60.1e v 60.5 prior
10:00 (US) May Construction Spending M/M: 0.2%e v -1.4% prior
10:00 (MX) Mexico May Total Remittances: No est v $2.3B prior
10:00 (BR) Brazil May CNI Capacity Utilization: No est v 76.7% prior
10:00 (MX) Mexico Central Bank Economist Survey
10:30 (MX) Mexico Jun PMI Manufacturing: No est v 51.2 prior
12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v 8.2% prior
13:00 (MX) Mexico Jun IMEF Manufacturing Index: No est v 47.6 prior; Non-Manufacturing Index: No est v 52.3 prior
16:00 (US) Weekly Crop Progress Report
