Awaiting To See If Payrolls Reinforces ‘Hawkish’ Fed Outlook

Notes/Observations

• Focus on US jobs report and release could shed light on when the Fed may start pulling back stimulus.

Asia

• South Korea Jun CPI saw the annual pace remain above target for the 3rd straight month (-0.1% v M/M: 0.0%e; Y/Y: 2.4% 2.5%e).
• Bank of Korea Chief, Finance Minister pledge policy coordination.

Coronavirus

• J&J’ announced positive new data for single-shot COVID-19 vaccine on activity against delta variant and long-lasting durability of responses. The shot neutralized the Delta variant & gives a long-lasting immune response even 8 months after the shot was administered.
• UK health officials noted that two doses of Astra Covid vaccine provide an estimated 94% protection against death in people aged 65 and over.
• EU medical regulators said not to have yet authorize and did not recognize the AstraZeneca vaccine made in India so up to 5M UK travelers could be turned away at EU borders as they don’t qualify for EU digital vaccine passport.
• Australia PM Morrison stated that then gvot agreed to a new pathway out of coronavirus which would switch from virus suppression to the prevention of serious illness; To cut international arrival caps by 50%; caps on arrivals.
• Germany said to prepare to ease restrictions on British travelers ahead of Friday’s meeting between UK PM Johnson and German Chancellor Merkel.

Europe

• ECB’s Weidmann (Germany) stated that he was skeptical about tolerating inflation overshoot, avg inflation targeting. Preferred symmetric inflation goal at 2% over medium term.
• France Stats Agency (INSEE): Domestic economy to return to its pre-crisis level by the end of the year.

Americas

• Congressional Budget Office (CBO) raised its 2021 GDP forecast to 7.4% (prior 3.7%); fiscal deficits projected at $1.153T in 2022 and $789B in 2023.
• IMF commented on US: sees US growth at 7% in 2021, sees Fed raising rates in late 2022 or early 2023.

Energy

• OPEC JMMC proposed to extend oil supply management until end 2022; proposal to raise output by 400k bpd August -December.
• OPEC+ delays meeting to Friday as UAE objects to new oil deal of an extension until end of 2022. UAE sought OPEC+ to change the baseline for cuts. UAE said to seek 3.8M bpd increase from baseline, which would allow the UAE to produce an extra 700K bpd.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.22% at 456.66, FTSE +0.18% at 7,137.85, DAX +0.18% at 15,632.20, CAC-40 -0.05% at 6,550.65, IBEX-35 -0.26% at 8,909.00, FTSE MIB -0.12% at 25,256.50, SMI +0.26% at 12,008.40, S&P 500 Futures 0.00%].
• Market Focal Points/Key Themes: European indices open higher across the board but later slipped to trade mixed; sectors leading ot he upside include consumer discretionary and materials; underperforming sectors include financial and utilities; Starwood raises offer price for CA Immobilien; Neles agrees to merge with Valmet; MTG acquires PlaySimple; focus on OPEC+ meeting and US NFP later today; no major earnings expected in the upcoming US session.

Equities

• Consumer discretionary: Kindred [KIND.SE] +7% (acquisition).
• Healthcare: Ambu [AMBUB.DK] -16% (prelim results).
• Industrials: Neles [NELES.FI] +8% (merger with Valmet).
• Technology: ASM International [ASM.NL] +2% (positive profit alert).

Speakers

• ECB chief Lagarde reiterated stance that a recovery was underway but remained fragile. Region would see a return to a lower rate of inflation.
• ECB’s Enria (SSM chief) reiterated stance that economic system was on a path to recovery; Uncertainty had abated. Some leveraged debt needs intensified supervision.
• Czech Central Bank (CNB) Jun Minutes noted that a majority of Board agreed that policy was entering phase of gradual rate hikes.

Currencies/ Fixed Income

• USD was steady in quiet trade ahead of the anticipated nonfarm payroll report later today. The greenback was holding onto 3-month highs as it had strengthened broadly since the Fed recently signaling it could tighten policy earlier than expected to curb inflation.
• The USD was also said to be aided by safe-haven flows as concerns about the risk posed by the spread of the Covid-19 Delta variant to the global recovery.

Economic data

• (FR) France May YTD Budget Balance: -€118.8B v -€91.4B prior.
• (ES) Spain Jun Net Unemployment Change: -166.9K v -110.0Ke.
• (HU) Hungary Apr Final Trade Balance: €0.4B v €0.3B prior.
• (CN) Weekly Shanghai copper inventories (SHFE): 142.5K v 153.8K tons prior.
• (NO) Norway Jun Unemployment Rate: 2.9% v 2.8%e.
• (RU) Russia Narrow Money Supply w/e Jun 25th (RUB): 14.05T v 14.14T prior.
• (BR) Brazil Jun FIPE CPI (Sao Paulo): 0.8% v 0.8%e.
• (EU) Euro Zone May PPI M/M: 1.3% v 1.2%e; Y/Y: 9.6% v 9.5%e.

Fixed income issuance

• None seen.

Looking ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (IN) India to sell combined INR320B in 2026, 2033, 2035 and 2050 bonds.
• 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2033, 2038 and 2050 Bonds.
• 06:00 (IE) Ireland Jun Live Register Monthly Change: No est v -6.0K prior; Live Register Level: No est v 174.2K prior.
• 06:00 (UK) DMO to sell £1.5B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.5B respectively).
• 06:45 (US) Daily Libor Fixing.
• 07:00 (IN) India announces upcoming bill issuance (held on Wed).
• 07:00 (MX) Mexico Jun Vehicle Domestic Sales: No est v 85.7K prior.
• 07:00 (MX) Mexico May Leading Indicators M/M: No est v 0.29 prior.
• 07:30 (IN) India Weekly Forex Reserve w/e Jun 25th: No est v $603.9B prior.
• 08:00 (BR) Brazil May Industrial Production M/M: +1.5%e v -1.3% program; Y/Y: 24.9%e v 34.7% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Jun Change in Nonfarm Payrolls: +720Ke v +559K prior; Change in Private Payrolls: +610Ke v +492K prior; Change in Manufacturing Payrolls: +25Ke v +23K prior.
• 08:30 (US) Jun Unemployment Rate: 5.6%e v 5.8% prior; Underemployment Rate: No est v 10.2% prior; Labor Force Participation: 61.6%e v 61.6% prior.
• 08:30 (US) Jun Average Hourly Earnings M/M: 0.3%e v 0.5% prior; Y/Y: 3.6%e v 2.0% prior; Average Weekly Hours: 34.9e v 34.9 prior.
• 08:30 (US) May Trade Balance: -$71.3Be v -$68.9B prior.
• 08:30 (CA) Canada May Int’l Merchandise Trade: C$0.4Be v C$0.6B prior.
• 08:30 (CA) Canada May MLI Leading Indicator M/M: No est v 1.2% prior.
• 08:30 (CA) Canada May Building Permits M/M: +0.2%e v -0.5% prior.
• 08:30 (EU) ECB chief Lagarde.
• 09:00 (SG) Singapore Jun Purchasing Managers Index: 50.7e v 50.7 prior; Electronics Sector Index: No est v 50.4 prior.
• 09:30 (CA) Canada Jun Manufacturing PMI: No est v 57.0 prior.
• 10:00 (US) May Factory Orders: +1.6%e v -0.6% prior; Factory Orders (ex-transportation): No est v 0.5% prior.
• 10:00 (US) May Final Durable Goods Orders: 2.3%e v 2.3% prelim; Durables (ex-transportation): 0.3%e v 0.3% prelim; Capital Goods Orders (non-defense/ex-aircraft): -0.1%e v -0.1% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.9% prelim.
• 11:00 (DK) Denmark Jun Foreign Reserves (DKK): No est v 455.9B prior.
• 11:00 (CO) Colombia May Exports: $2.8Be v $2.9B prior.
• 11:00 (EU) Potential sovereign ratings after European close.
• 12:00 (RU) Russia Q1 Final GDP (3rd reading) Y/Y: -0.7%e v -0.7% prelim.
• 13:00 (US) Weekly Baker Hughes Rig Count.

Sat

• 13:00 (CO) Colombia Jun CPI M/M: 0.0%e v 1.0% prior; Y/Y: 3.7%e v 3.3% prior.
• 13:00 (CO) Colombia Jun CPI Core M/M: No est v 0.2% prior; Y/Y: No est v 2.1% prior.