Notes/Observations
- EU data continues to see hope of gradual economic recovery; German IFO Survey continued its improvement
- Soft tone in EU equity markets attributed to comments from ECB’s Lane on helicopter money
- US said to target new tariffs on EU exports; adds to concern of a wider transatlantic trade war
Asia:
- New Zealand Central Bank (RBNZ) left the Official Cash Rate (OCR) unchanged at 0.25% (as expected). Prepared to provide additional stimulus as necessary; New Zealand had contained coronavirus for now but economic risks remained to the downside. Committed to reviewing quantum of QE program and working to broader range of monetary tools
- BOJ Summary of Opinions from June 15-16th policy noted that domestic economy faced downward pressure but appeared to have bottomed out. Noted that must guard against risk of Japan returning to deflation
- North Korea leader Kim Jong-un suspended plans for military action against South Korea, the move said to come after North Korea’s Central Military Commission took stock of the prevailing situation
Coronavirus:
- Total cases 9,240,398 (+1.8% d/d); total deaths: 477.0K (+1.1% d/d)
- US Senate Judiciary Committee said to consider holding China accountable for losses related to COVID-19; Senator Graham (R-SC) said to reiterate his support for allowing US citizens to sue China in relation to coronaviru
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.30% at 362.74, FTSE -1.80% at 6,206.61, DAX -1.79% at 12,299.80, CAC-40 -1.41% at 4,947.07, IBEX-35 -1.38% at 7,336.00, FTSE MIB -0.94% at 19,654.50, SMI -0.96% at 10,147.93, S&P 500 Futures -0.62%]
- Market Focal Points/Key Themes: European indices open generally modestly lower, with all indices falling as the session wore on ; risk sentiment impacted after Germany announces lockdown in one state due to flare up of covid cases; better performing sectors lead by consumer discretionary and financials; healthcare sector under-performing; ECB Lane says sees some signs of recovery; Evolution Gaming and NetEnt agree merger; reportedly Volkswagen looking to acquire Europcar; upcoming events in US session include earnings from Blackberry, Winnebago and Yandex
Equities
- Consumer discretionary: Dufry [DUFN.CH] -3% (restructuring program)
- Energy: Petrofac [PFC.UK] -9% (trading update)
- Financials: Crest Nicholson [CRST.UK] -10% (earnings)
- Healthcare: Basilea Pharmaceutical [BSLN.CH] -4% (placement)
- Technology: Dialog Semiconductor [DLG.DE] +9% (raises outlook), Infineon [IFX.DE] +1% (analyst upgrade), Wirecard [WDI.DE] -9% (Bafin files case)
Speakers
- ECB’s Lane (Ireland, chief economist): Sees some signs of initial recovery but the process likely to be gradual. Outcome of EU recovery fund negotiations to be an important factor in determining the future path for the Euro area economy. Evidence favored asset purchases over rate cuts as the more efficient tool in current circumstances
- USTR said to target $3.2B in new tariff targets on exports from France, Germany, Spain and the UK
- Thailand Central Bank Policy Statement noted that the decision was unanimous to keep policy steady and its reiterated concerns over THB currency (Baht) strength. Staff Forecasts: cut 2020 GDP from -5.3% to -8.1% while raising 2021 GDP growth from 3.0% to 5.0%. it cut 2020 Headline CPI from -1.0% to -1.7% and raised 2021 Headline CPI from 0.3% to 0.9%
- China publishes its negative list for foreign investment for free trade zones (FTZs); effective July 23rd. Loosened entry to manufacturing and agriculture
- China official: Beijing outbreak linked to market has been contained
Currencies/Fixed Income
- The USD recovered some footing on some apparent safe-haven flows. Price action witnessed the European equity markets drifted away from its initial gains with dealers split as to the exact cause of the change in sentiment. Some traders cited that various virus hotspots as one factor while another group blamed ECB’s chief economist comment on helicopter money as the catalyst
- Additional safehaven flows picked up after reports circulated that US was targeting new tariffs on EU exports and added to concern of a wider transatlantic trade war EUR/USD lower by 0.3% at 1.1275; USD/JPY hovering at 106.50 area by mid-session
Economic Data
- (NL) Netherlands Q1 Final GDP Q/Q: -1.5% v -1.7% prelim; Y/Y: -0.2% v -0.5% prelim
- (FI) Finland May PPI M/M: 0.0% v -1.4% prior; Y/Y: -7.1 v -7.0% prior;
- (FI) Finland May Unemployment Rate: 10.6% v 8.1% prior
- (NO) Norway Apr AKU Unemployment Rate: 4.2% v 3.8%e
- (FR) France Jun Business Confidence: 78 v 72e; Manufacturing Confidence: 77 v 79e; Production Outlook Indicator: -15 v -30e; Own-Company Production Outlook: +19 v -12 prior
- (CZ) Czech Jun Consumer Confidence Index: -13.0 v -14.3 prior; Business Confidence: -15.5 v -18.6 prior; Consumer & Business Confidence: -16.1 v -17.8 prior
- (SE) Sweden Jun Consumer Confidence: 84.0 v 77.7 prior; Manufacturing Confidence: 89.1 v 76.4 prior; Economic Tendency Survey: 75.2 v 64.4 prior
- (TU) Turkey Jun Real Sector Confidence (seasonally adj): 89.8 v 73.5 prior; Real Sector Confidence NSA (unadj): 92.6 v 76.9 prior
- (TU) Turkey Jun Capacity Utilization: 66.0 v 62.6% prior
- (TH) Thailand Central Bank(BOT) left its Benchmark Interest Rate unchanged at 0.50% (as expected)
- (CN) Weekly Shanghai copper inventories (SHFE): 100.0K v 110.0K tons prior
- (DE) Germany Jun IFO Business Climate Survey: 86.2 v 85.0e; Current Assessment: 81.3 v 84.0e; Expectations Survey: 91.4 v 87.0e
- (CH) Swiss Jun Credit Suisse Expectations Survey: 48.7 v 31.3 prior
- (PL) Poland May Unemployment Rate: 6.0% v 6.1%e
- (ZA) South Africa Apr CPI M/M: -0.5% v -0.5%e; Y/Y: 3.0% v 3.0%e
- (ZA) South Africa Apr CPI Core M/M: -0.2% v +0.1%e; Y/Y: 3.2% v 3.5%e
- (CH) China Q1 Final Current Account: -$33.7B v -$29.7B prelim
Fixed Income Issuance
- (IN) India sold total INR450B vs. INR450B indicated in 3-month, 6-month and 12-month bills
- (AT) Austria Debt Agency (AFFA) opened its book to sell €2.0B July 2120 RAGB bond; yield guidance seen at 0.95% area; order book over €13.0B (record level)
- (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 3-month and 12-month bills
- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in Mar 2025 bond; Avg Yield: 0.42% v 0.33% prior; bid-to-cover: 2.63x v 2.79x prior
- (UK) DMO sold £3.25B in 2.75%Sept 2024 Gilts; Avg Yield: %-0.040% v +0.103% prior; Bid-to-cover: 2.01x v 2.79x prior; Tail: 0.8bps v 0.3bps prior
Looking Ahead
- (RO) Romania May M3 Money Supply Y/Y: No est v 12.6% prior
- 05:30 (DE) Germany to sell €2.5B in 0.00% May 2035 Bunds
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (CZ) Czech Republic to sell 2027 and 2040 bonds
- 06:30 (UK) DMO to sell £1.5B in 1.625% Oct 2054 Gilts
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Jun 19th: No est v 8.0% prior
- 07:00 (CZ) Czech Central Bank (CNB) Interest Rate Decision: expected leave Repurchase Rate unchanged at 0.25%
- 07:00 (ZA) South Africa Mar Retail Sales M/M: +1.0%e v -0.4% prior; Y/Y: 1.9%e v 2.0% prior
- 07:00 (BR) Brazil Jun FGV Consumer Confidence: 72.1e v 62.1 prior
- 07:00 (UK) Weekly PM Question time in House
- 07:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (3-7 years)
- 08:30 (BR) Brazil May Current Account Balance: $2.0Be v $3.8B prior; Foreign Direct Investment (FDI): $1.5Be v $0.2B prior
- 08:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (7-20 years)
- 09:00 (BE) Belgium Jun Business Confidence Index: -25.0e v -34.4 prior
- 09:00 (US) Apr FHFA House Price Index M/M: 0.3%e v 0.1% prior
- 09:00 (CL) Chile PPI M/M: No est v -0.10% prior
- 09:00 IMF updates its World Economic Outlook
- 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation (20+ years)
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 12:30 (US) Fed’s Evans participates in virtual discussion on Economy
- 13:00 (US) Treasury to sell 2-Year FRN Reopening
- 13:00 (US) Treasury to sell 5-Year Notes
- 15:00 (AR) Argentina Apr Supermarket Sales Y/Y: No est v 10.7% prior; Shop Center Sales Y/Y: No est v -56.6% prior
- (BR) Brazil May Total Federal Debt (BRL): No est v 4.16T prior
- (CO) Colombia May Industrial Confidence: No est v -35.8 prior; Retail Confidence: No est v -25.5 prior
- 15:00 (US) Fed’s Bullard – 18:45 (NZ) New Zealand May Trade Balance: 1.3Be v 1.3B prior; Exports: 5.4Be v 5.3B prior; Imports: 4.1Be v 3.9B prior
- 21:30 (AU) Australia May Job vacancies: No est v -0.1% prior (prior refers to Feb)
- 22:05 (NZ) New Zealand to sell 2023, 2029 and 2037 Bonds;
- 23:00 (TH) Thailand Central Bank to sell THB35B in 2022Bonds
- 23:35 (JP) Japan to sell 20-Year JGB Bonds
