Quiet Start To Trading Week

Notes/Observations

• Quiet start to the trading week.
• Focus on Thursday’s OPEC+ meeting to discuss a supply roadmap for August.
• US payroll report on Friday.

Asia:

• BOJ Summary of Opinions on the June Meeting noted that it needed to continue to support funding of the business. Prices were likely to lack momentum despite support from rising commodities costs and improved demand. Inflation is likely to speed up as pent-up demand appears in 2H.
• China PBOC Open Market Operation (OMO) again injected CNY30B in 7-day reverse repos.

Coronavirus:

• Germany expected to attempt to ban UK travelers from the EU, regardless of whether or not they had a vaccine. German Chancellor Merkel wants to designate Britain as a country of concern because the Delta variant was so widespread.
• UK New Health Sec Javid said to push for lockdown restrictions to be eased ASAP due to worries about threat to the economy.
• UK tourists traveling to Portugal must quarantine for 14 days if not vaccinated.

Europe:

• UK Health Sec Hancock resigned after press reports that he breached distancing guidelines with his aide earlier in May; Sajid Javid appointed as replacement.
• Centre-right Republicans and center-left Socialists retained control of powerful councils across the country while Macron’s party and Le Pen’s party were defeated.

Mid-East:

• US carried out airstrikes in Iraq and Syria on Iran-backed militias targeting operational and weapons storage facilities.

Americas:

• Fed’s Rosengren noted that Fed might reach point of debating substantial further progress before the start of next year which could trigger tapering although there’s a great deal of uncertainty in projections. US could not afford a housing market boom and bust.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.28% at 456.36, FTSE -0.42% at 7,107.25, DAX -0.14% at 15,585.70, CAC-40 -0.34% at 6,600.59, IBEX-35 -1.20% at 8,986.00, FTSE MIB -0.39% at 25,411.50, SMI +0.11% at 12,012.68, S&P 500 Futures +0.05%].
• Market Focal Points/Key Themes: European indices open mixed but later fell to trade in the re red (SMI notable exception trading barely positive); better performing sectors include materials and telecom; while consumer discretionary and financials among the leaders to the downside; NatWest unit UBIDAC to sell commercial ending to AIB; Glencore to buy BPH and Anglo American’s stakes in Cerrajon thermal coal project; Eurofins acquiers DNA Diagnostic; RTL divests Belgian unit; S Immo reject offer from Immofinaz; NN group bidding for MetLife’s European business; earnings expected in the upcoming US session include LiveXLive.

Equities

• Consumer discretionary: Danone [BN.FR] +2% (analyst action), Burberry [BRBY.UK] -9% (CEO steps down).
• Healthcare: Ipsen [IPN.FR] -5% (collaboration).
• Telecom: Nokia [NOKIA.FI] +5% (partnership with Vodafone).

Speakers

• ECB’s Panetti (Italy) reiterated stance that neither monetary or fiscal policy should be withdrawn prematurely. Reiterated that risks of any 2nd round inflationary effects were limited. ECB forward guidance to be key for credibility. Must strive to retain unconventional flexibility; PEPP had shown such benefits.
• Sweden PM Lofven announced his resignation believing that a snap election was not the best option for the country.
• Russia Central Bank (CBR) Gov Nabiullina noted that Inflation in Russia had accelerated markedly and that another rate hike may be necessary. Considering between 25bps to 100bps rate hike for the next move.
• Russia said to have successfully tested a new Intercontinental ballistic missile (ICBM).
• Turkey Dep Fin Min reiterated that govt was committed to lowering inflation; rate hikes were not the only options for tight monetary policy.
• South Korea Finance Ministry raised its 2021 GDP growth from 3.2% to 4.2% and raised its 2021 Avg Inflation forecast from 1.1% to 1.8%. Expected GDP to return to pre-pandemic level this year.
• China Foreign Ministry spokesperson Wang Wenbin noted that China looked at G20 to promote steady economic recovery. Fin Min Wang Yi to attend G20 via video link.
• Fitch affirmed China sovereign rating at A+; outlook stable.

Currencies/Fixed Income

• USD holding onto its recent gains as the bipartisan infrastructure deal said to have added to optimism about the US’s economic recover. Focus will turn to the job market with non-farm payroll data to be released on friday.
• GBP was firmer on hopes the new Health Sec Javid could accelerate the country’s exit from pandemic restrictions. Dealers noted that some headwinds to more upside could occur if EU failed to respond to the UK’s request to extend a grace period for chilled-meat imports into Northern Ireland by the June 30th deadline. GBP/USD at 1.3925 by mid-session.

Economic data

• (FI) Finland Jun Consumer Confidence: 4.6 v 2.7 prior; Business Confidence: 20 v 143 prior.
• (DE) Germany May Import Price Index M/M: 1.7% v 1.3%e; Y/Y: 11.8% v 11.4%e.
• (NO) Norway May Retail Sales (includes auto/fuel) M/M: 5.8% v 0.4% prior.
• (ES) Spain Apr Total Mortgage Lending Y/Y: 38.7% v 25.4% prior; House Mortgage Approvals Y/Y: 32.1% v 35.1% prior.
• (SE) Sweden May Retail Sales M/M: +2.3% v -0.4% prior; Y/Y: 10.3% v 7.0% prior.
• (SE) Sweden May Household Lending Y/Y: 5.9% v 5.7% prior.
• (AT) Austria Jun Manufacturing PMI: 67.0 v 66.4 prior (12th straight expansion and record high).
• (CH) Swiss weekly Total Sight Deposits (CHF): 712.5B v 712.2B prior; Domestic Sight Deposits: 631.0B v 631.4B prior.
• (ZA) South Africa Q2 BER Consumer Confidence: -13 v -9 prior.
• (HK) Hong Kong May Trade Balance (HKD): -25.5B v -30.3Be; Exports Y/Y: 24.0% v 23.6%e; Imports Y/Y: 26.5% v 27.4%e.
• (GR) Greece Q1 Unemployment Rate: 17.1% v 16.2% prior.

Fixed income Issuance

• (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month bills; Avg Yield: -0.521% v -0.504% prior; Bid-to-cover: 1.35x v 1.34x prior.
• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 0.07% v 0.14% prior; Bid-to-cover: 2.55x v 4.61x prior.

Looking Ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell €4.0B in 12-month BuBills.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (IE) Ireland May Retail Sales Volume M/M: No est v 7.4% prior; Y/Y: No est v 90.1% prior.
• 06:00 (IL) Israel Apr Manufacturing Production M/M: No est v 2.1% prior.
• 06:00 (BE) Belgium Debt Agency (BDA) to sell €3.3-3.8B in 2031, 2033 and 2050 OLO bonds.
• 06:00 (IL) Israel to sell 2026, 2030, 2031 bonds (5 tranches).
• 06:00 (RO) Romania to sell 4.75% 2034 Bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (MX) Mexico May Trade Balance: $1.4Be v $1.5B prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 08:00 (UK) BOE Haldane (chief economist).
• 08:00 (DE) ECB’s Weidmann (Germany).
• 08:30 (BR) Brazil May Total Outstanding Loans (BRL): 4.147Te v 4.126T prior; M/M: 0.7%e v 0.5% prior; Personal Loan Default Rate: No est v 4.0% prior.
• 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills.
• 09:00 (US) Fed’s Williams.
• 09:45 (EU) ECB weekly QE bond-buying update.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (3-7 years); bid-to-cover: x.
• 10:00 (ES) ECB’s De Guindos (Spain).
• 10:30 (US) Jun Dallas Fed Manufacturing Activity Index: 32.5e v 34.9 prior.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 12:00 (RU) Russia Q2 Consumer Confidence Index: No est v -21 prior.
• 14:00 (CO) Colombia Central Bank Interest Rate Decision: expected to leave Overnight Lending Rate unchanged at 1.75%.
• (BR) Brazil May Total Formal Job Creation: No est v 120.9K prior.
• 16:00 (US) Weekly Crop Progress Report.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 112.4 prior.
• 19:30 (JP) Japan May Jobless Rate: 2.9%e v 2.8% prior; Job-To-Applicant Ratio: 1.08x v 1.09x prior.
• 19:50 (JP) Japan May Retail Sales M/M: -0.7%e v -4.6% prior (revised from -4.5%); Y/Y: 7.9%e v 11.9% prior (revised from 12.0%; Dept. Store, Supermarket Sales Y/Y: 6.9%e v 15.5% prior.
• 23:00 (TH) Thailand Central bank to sell THB60B in 3-month bills.
• 23:30 (HK) Hong Kong to sell 3-month and 6-month bills.
• 22:35 (JP) Japan to sell 2-year JGB bonds.