HomeContributorsFundamental AnalysisEU Leaders Hold Online Meeting Over Stimulus Plans

EU Leaders Hold Online Meeting Over Stimulus Plans

Notes/Observations

  • EU Leaders holding online summit to discuss €750B Recovery Fund; debate over composition of its makeup of grants and loans
  • UK May Retail Sales data rebounds from horrific April levels (in-line with global trend on data series); suggests the economic recovery
  • Risk appetite receives some tail winds on reports that China will step up its US agricultural purchases

Asia:

  • Japan May National CPI Y/Y: 0.1% v 0.2%e; CPI Ex-fresh food (core) Y/Y: -0.2% v 0.1%e
  • Japan Cabinet raised its overall economic assessment for June (as expected, 1st upward revision since Jan 2018): Says ‘economy has almost stopped deteriorating’, but reiterates it is still in an extremely severe situation
  • Australia May Preliminary Retail Sales M/M: +16.3% v -17.7% prior (Largest seasonally adjusted rise ever in 38-year publishing history)
  • Australia PM Morrison: Australia being targeted by Sophisticated State Level cyber attacks; All levels of govt being targeted
  • RBA’s Harper said to urge government to establish a way which would allow it to taper its stimulus programs; would not be helpful if AUD/USD rose back above 70 cents

Coronavirus:

  • Total global cases 8,464,739 (+1.4% d/d); total deaths: 453.3K (+1.0% d/d)

Europe:

  • PM Johnson welcomed agreement to intensify Brexit talks during meeting with France President Macron. Discussed the UK’s ongoing trade negotiations with the EU. UK underlined to Macron that it did not need to prolong negotiations into the fall
  • UK June Preliminary GfK Consumer Confidence: -30 v -36 prior (moved off 10-year lows)

Americas:

  • Trump Administration said to be contemplating significant expansion of visa restrictions for foreign workers
  • Sec of State Pompeo and Chinese Counterpart Yang pledge cooperation after Hawaii meeting. Discussed a range of topics from further transparency of Covid-19 to Hong Kong security laws
  • Argentina debt restructuring talks reported to have stalled; Argentina releases debt proposal

Energy:

  • Russia Energy Min Novak confirmed that that OPEC+ had not discussed plans for August

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.71% at 366.02, FTSE +1.09% at 6,291.74, DAX +0.95% at 12,398.75, CAC-40 +1.07% at 5,011.81, IBEX-35 +1.07% at 7,469.00, FTSE MIB +0.98% at 19,676.50, SMI +0.73% at 10,261.31, S&P 500 Futures +0.83%]
  • Market Focal Points/Key Themes: European indices open higher across the board and remained in the green as the session progressed; consumer discretionary sector leading to the upside; under-performing sectors include materials and industrials; UK FCA confirms to grand additional payment deferrals for consumer credit; focus on EU leaders virtual meeting to discuss recovery fund; earnings expected in upcoming US session include Carmax and Jabil

Equities

  • Consumer discretionary: Staffline Group [STAF.UK] -20% (notes share price movement)
  • Financials: Record [REC.UK] +8% (earnings)
  • Healthcare: Oxford Biomedica [OXB.UK] -1.5% (concludes placement)
  • Technology: Wirecard [WDI.DE] -43% (suspends executive)
  • Materials: SIG [SHI.UK] +7% (placement)

Speakers

  • ECB chief Lagarde said to have warned EU Leaders of market risks if they fail to agree on a stimulus plan
  • Austria Chancellor Kurz: Important that EU Recovery Fund was a one-off measure; hops for an agreement in July. Key issue was what the EU funds would be used for and key to any agreement was preparation
  • Luxembourg PM Bettel needed compromise in order to get an agreement on EU Recovery plan
  • Hungary PM Orban stated that would likely to support EU Economic Recovery plan
  • France’s European Affairs Minister Montchalin: No deal outcome with UK on Brexit is not excluded
  • Various central banks note the reduction of frequency in holding 7-day USD-liquidity operations. ECB, BOE and others to reduce the frequency from 5 days to 3 days per week
  • European govts said to be working with US officials on overhauling the World Health Organization (WHO)
  • Bank of Korea (BOK) official: FX funding is stable; No USD auction planned after current loans mature on Thursday, Jun 25th
  • China said to plan stepping up its purchases of US agricultural products following recent talks
  • China Foreign Ministry: Do not have information regarding US agricultural purchases

Currencies/Fixed Income

  • FX market was a but listless on limited economic releases in the session
  • EUR/USD holding above the 1.12 level with market focus on the EU Leaders online summit to discuss €750B Recovery Fund. The debate among EU members was the composition of the Recovery Fund and its makeup of grants and loans
  • GBP was little phased despite UK May Retail Sales data rebounding from horrific April levels. The data was in-line with global trend in this data series and suggested the global economic recovery was underway

Economic Data

  • (UK) May Retail Sales (ex-auto/fuel) M/M: 10.2% v 4.1%e; Y/Y: -9.8% v -14.9%e
  • (UK) May Retail Sales (including auto/fuel) M/M: 12.0% v 6.3%e; Y/Y: -13.1% v -16.4%e
  • (UK) May Public Finances (PSNCR): £71.4B v £73.9B prior; Net Borrowing: £54.5B v £49.3Be; Central Government NCR: £62.7B v £63.5B prior; PSNB (ex-banking groups):£55.2B v £50.0Be
  • (DE) Germany May PPI M/M: -0.4% v -0.3%e; Y/Y: -2.2% v -2.0%e
  • (CN) Weekly Shanghai copper inventories (SHFE): 110.0K v 128.1K tons prior
  • (RU) Russia Narrow Money Supply w/e Jun 12th (RUB): 12.72T v 12.60T prior
  • (EU) Euro Zone Apr Current Account Balance: €14.4B v €27.4B prior
  • (GR) Greece Apr Current Account Balance: -€1.1B v -€1.1B prior
  • (PL) Poland May Sold Industrial Output M/M: 10.1% v 8.9%e; Y/Y: -17.0% v -18.0%e
  • (PL) Poland May PPI M/M: 0.0% v 0.1%e; Y/Y: -1.5% v -1.5%e
  • (IT) Italy Apr Current Account Balance: -€0.9B v +€4.1B prior
  • (BE) Belgium Jun Consumer Confidence Index: -19 v -23 prior

Fixed Income Issuance

  • none seen

Looking Ahead

  • (EU) EU leaders hold online summit (in process)
  • (UR) Ukraine Q1 Final GDP Q/Q: -0.8%e v -0.8% prelim; Y/Y: -1.5%e v -1.5% prior
  • (IN) India to sell combined INR300B in 2022, 2030, 2033 and 2060 bonds
  • 05:30 (ZA) South Africa to sell combined ZAR1.4.0B in I/L Bonds
  • 06:00 (PT) Portugal May PPI M/M: No est v -2.8% prior; Y/Y: No est v -5.5% prior
  • 06:00 (UK) DMO to sell £3.5B in 1-month, 3-month and 6-month bills (£1.5B, £2.5B and £4.5B respectively)
  • 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: expected to cut Key 1-Week Auction Rate by 100bps to 4.50%
  • 06:45 (US) Daily Libor Fixing – 07:00 (MX) Mexico Q1 Aggregate Supply and Demand: -2.8%e v -1.6% prior
  • 07:30 (TR) Turkey Central Bank TCMB Apr Survey of Expectations: 12-month inflation expectation: No est v 9.7% prior
  • 07:30 (IN) India Weekly Forex Reserve w/e Jun 12th: No est v $501.7B prior
  • 07:30 (IS) Iceland cancelled planned RIKB Bond auction
  • 08:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Q1 Current Account Balance: -$102.9Be v -$109.8B prior
  • 08:30 (CA) Canada Apr Retail Sales M/M: -15.1%e v -10.0% prior; Retail Sales (Ex-auto) M/M: -12.0%e v -0.4% prior
  • 08:30 (DE) German Chancellor Merkel post EU Leader Summit press conference
  • 10:15 (US) Fed’s Rosengren
  • 11:00 (EU) Potential sovereign ratings after European close (Cyprus Sovereign Debt to be rated by Moody’s)
  • 11:00 (CO) Colombia Apr Trade Balance: -$1.1Be v -$1.0B prior; Total Imports: $2.8Be v $3.6B prior
  • 12:00 (RU) Russia May Unemployment Rate: 6.2%e v 5.8% prior; Real Wages Y/Y: -3.0%e v +5.9% prior
  • 12:00 (RU) Russia May Real Retail Sales Y/Y: -16.6%e v -23.4% prior
  • 12:00 (US) Fed’s Quarles
  • 13:00 (US) Fed Chair Powell with member Mester for Youngstown Community Event
  • 13:00 (US) Weekly Baker Hughes Rig Count
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