Notes/Observations
European Equities rise, FTSE outperforms on dovish BoE Broadbent comments
EURGBP rises to 8 month highs
UK jobs number slightly better than expected; Real wages in 3 month to May fall to the lowest in 3 years
Eurozone data continues its improving trend
Overnight
Asia:
Chinese and Hong Kong banks rose again for the second day after the PBOC injected funds through OMO for the second day after an extended stretch of no action
Europe:
UK Jobs numbers were largely in line with expectations with a slight beat in Weekly earnings ex bonus. Real wages ex Bonus in 3 months to May fall 0.7%, the lowest since August 2014.
UK BoE member Broadbent not ready to support a rate hike yet noting too many imponderables to back a rate hike
Euro Zone industrial data ahead of expectations continuing the recent bout of better data
Americas
US Fed Chair Yellen to give testimony later today
Comments from Fed’s Mester (hawkish, non-voter) overnight noting reversing QE sooner rather than later is preferable
Fed’s Brainard (Voter) made overnight comments saying appropriate to reduce balance sheet soon if economic data holds up; should move cautiously on further rate increases to help boost inflation back to 2% target
Oil
(SA) Saudi Oil exports to fall to lowest level this year at 6.6M bpd; To cut oul shipments to customers by more than 600K bpd in August due to rise i demand at home – press
(IR) Iran Deputy Petroleum Minister Zamaninia: Expects to reach oil output of 4M b/d by the end of 2017
Economic Data
(UK) MAY AVERAGE WEEKLY EARNINGS 3M/Y/Y: 1.8% V 1.8%E; WEEKLY EARNINGS (EX BONUS) 3M/Y/Y: +2.0% V 1.9%E
(UK) JUN JOBLESS CLAIMS CHANGE: 6.0K V 7.3K PRIOR; CLAIMANT COUNT RATE: 2.3% V 2.3% PRIOR
(EU) EURO ZONE MAY INDUSTRIAL PRODUCTION M/M: 1.3% V 1.0%E; Y/Y: 4.0% V 3.5%E
(UK) May ILO Unemployment Rate 3M/3M: 4.5% v 4.6%e
(DE) GERMANY JUN WHOLESALE PRICE INDEX M/M: 0.0% V -0.7% PRIOR; Y/Y: 2.5% V 3.1% PRIOR
(CZ) CZECH JUN CPI M/M: 0.0% V 0.0%E; Y/Y: 2.3% V 2.3%E
Fixed Income Issuance:
(IT) Italy Debt Agency (Tesoro) sells €6.75B vs. €6.75B indicated in 12-month Bills; Avg yield: -0.352% v -0.351% prior; Bid-to-cover: 1.65x v 1.58x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.6% at 3,484, FTSE +0.8% at 7,387, DAX +0.4% at 7,384, CAC-40 +0.8% at 5,180, IBEX-35 +0.4% at 10,495, FTSE MIB +0.8% at 21,280, SMI +0.7% at 8,935, S&P futures +0.03%]
Market Focal Points/Key Themes: European stocks opened higher and maintained momentum; Burberry helped support luxury stocks; energy stocks supported by an increase in oil prices; better data didn’t offset political concerns in terms of risk sentiment; UK Serious Fraud Office opens investigation into Amec Foster Wheeler, impacting stock performance of John Wood Group, though both companies say probe won’t affect merger; attention on central bank policy; upcoming US earnings include NRG, Fastenal and Barnes & Noble
Equities
Consumer discretionary [Stora Enso STERV.FI +3.2% (analyst action), Pearson PSON.UK -5.0% (analyst action), Burberry BRBY.UK +2.8% (earnings), Bang & Olufsen BO.DK -6.5% (earnings)]
Energy [Premier Oil PMO.UK +30.8% (discovery), Amec Foster Wheeler AMFW.UK -8.0% (SFO probe)]
Financials [DNB DNB.NO 4.0% (earnings), Amundi AMUN.FR +1.1% (analyst action), Banca Carige CRGI.IT -1.4% (asset sale, potential merger)]
Healthcare [Barratt Developments BDEV.UK 0.8% (trading update), Lundbeck LUN.DK 3.4% (analyst action)]
Industrials [Valeo FR.FR +2.3% (asset sale), Bilfinger Berger GBF.DE +1.9% (profit waring)]
Technology [Siltronic WAF.DE +2.9% (outlook), Ordina ORDI.NL +2.0% (results)]
Speakers
(UK) BOE’s Broadbent: Not ready to support a rate hike; too many imponderables to back a rate hike – Scottish press
(IR) Iran Deputy Ptroleum Minister Zamaninia: Expects to reach oil output of 4M b/d by the end of 2017
Currencies
GBPUSDrecovers from 2 week lows at 1.2810 after initial weakness from BoE Broadbent comments, Cable currently trades at 128.57 after a fall in the jobless rate. EURGBP pulls back to 0.8911 after trading an 8 month high of 0.8949 this morning.
EUR/USD trades 1.1459 off the overnight high of 1.1488 which marked the highest level seen since August 2016. Dealers look to 1.1480 initially to retest the high, with 1.16 the next target, May 2016 high.
Fixed Income
Bund futures trade at 161.09 up 21 ticks and back towards Monday’s high. Resistance lies near the 161.50 level followed by 162.10. A break of the 160.00 support level could see lows target 159.25 followed by 157.50.
Gilt futures trade at 125.42 higher by 2 ticks and off the session highs following Weekly Average Earnings decline and lowest ILO unemployment rate since 1975. Price finds key support at the 124.42 support level. An acceleration lower could test the 122.88 region. Resistance remains the noted 126.00 region, followed by 126.72.
Wednesday’s liquidity report showed ECB €258M borrowed in overnight loan facility vs. €153M prior; €621.4B parked in deposit facility vs. €629.7B prior
Corporate issuance saw $10.5B come to market via 5 issuers headlines by Bank of Nova Scotia $1.5B 2-part senior unsecured offering and Banque Federative du Credit Mutuel $2.5B 4-part senior unsecured notes
Looking Ahead
06:00 (PT) Portugal Jun CPI M/M: No est v -0.2% prior; Y/Y: No est v 1.5% prior
07:00 (US) MBA Mortgage Applications w/e July 7th: No est v +1.4% prior
08:00 (IN) India Jun CPI Y/Y: No est v 2.2% prior
08:00 (IN) India May Industrial Production Y/Y: No est v 3.1% prior
08:00 (BR) Brazil May Retail Sales M/M: No est v 1.0% prior; Y/Y: No est v 1.9% prior
08:00 (PL) Poland Jun CPI Core M/M: %e v -0.1% prior; Y/Y: %e v 0.8% prior
08:30 (CA) Canada Jun Teranet/National Bank HPI M/M: No est v 2.2% prior; Y/Y: No est v 13.9% prior
08:30 (CL) Chile Central Bank’s Traders Survey
09:00 (RU) Russia May Trade Balance: $8.8Be v $8.0B prior
09:00 (MX) Mexico May Industrial Production M/M: No est v -0.3% prior; Y/Y: No est v -4.4% prior
10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to raise Interest Rates by 25bps to 0.75%
10:00 (CA) Bank of Canada (BOC) releases July Monetary Policy Report
10:30 (US) Weekly DOE Crude Oil Inventories
12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
14:00 (US) Beige Book
