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Swiss CPI came in at -0.1% mom, 0.7% yoy in July, matched expectations. That compared to June's reading of 0.1% mom, 0.6% yoy. Retail sales rose 0.1% yoy mom in real term in June, well below expectation of 3.4% yoy. Sales excluding service stations dropped -0.5% yoy. Food, drinks and tobacco dropped -2.1% yoy. Non-food sector rose 1.2% yoy.

Market movers today

• We start the week in a fairly quiet fashion, with final manufacturing PMIs for July released across a range of European countries. The most important release of today is the US ISM manufacturing index. Signs of easing supply chain bottlenecks and inflationary cost pressures remain the key focus.
• Also in Norway we get the monthly manufacturing PMI release. However, ahead of the release we emphasize that this summer print for July historically has been very volatile sending misleading signals at several occasions.
• Later this week the key events will be the Bank of England meeting on Thursday and not least Friday's US nonfarm payrolls report as the FOMC has clearly stated that job growth is a key determinant for the policy outlook. Analyst expectations are set just south of 1M new nonfarm payrolls.

The 60 second overview

Markets: After a sour end to last week risk-sentiment is rebounding somewhat this morning. Most major Asian equity indices are trading in green and US/European equity futures are up by roughly ½ percent at the time of writing. Treasury yields are little changed yet precious metals still enjoy the support from last week's drop in real yields. Oil is trading slightly on the back foot with the front Brent contract back below USD 75/bbl.

US debt ceiling: After a two year suspension the US debt ceiling is now officially back in place this August. The debt ceiling determines the total amount of debt that the federal government is authorized to borrow and without another suspension or increase of the limit the US government will have to rely on extraordinary measures to finance its deficit. These measures are likely exhausted in October or November which increases the pressure on US politicians to find a solution amid ongoing negotiations of infrastructure and other spending plans (more below). In the very near-term a bipartisan deal on the debt ceiling seems unlikely. However, we still expect a deal as we get closer to the exhaustion of the extraordinary measures as nobody are interested in a US default. In the near-term we expect market impact to be limited but highlight the potential markets challenges this autumn of tighter USD liquidity conditions when Fed starts its tapering and a solution is found to the debt ceiling. For more information please see Research US - no re-suspension of the debt limit near-term but expect a deal eventually, 28 July.

Infrastructure bill: In the US the senate has finished the legislature text of a USD 550bn infrastructure package - the largest infrastructure spending plan in decades. According to senate majority leader Schumer the senate will vote on the package "in a matter of days". That said, the bill is set to be fully passed in Congress only via the reconciliation procedure (to avoid Republican filibustering) when the House of Representatives return in September. As this procedure also includes a broader budget framework on spending and tax increases, which has yet to be finalised, we are likely still months away from a Congressional vote.

FI: 10Y German government bond yields continue their slow decline amid speculations that the rising infections from the delta-variant of the Coronavirus will slow the economic recovery. Furthermore, given the support from ECB through QE purchases at an elevated pace, the 2Y German government bond yield is close to -80bp, which has been a kind of a "floor" in recent years apart from the periods like the pandemic escalation last year.

FX: After a Fed induced relief rally to reflation sensitive currencies Friday marked a reversal to USD strength and Scandi/commodity FX weakness. EUR/USD moved back below 1.19 while both EUR/NOK and EUR/NOK erased Thursday's losses. Moves have been very modest this morning.

Credit: CDS indices followed equities in red on Friday. iTraxx Xover closed 3½bp wider (in 236bp) and Main ½bp wider (in 46½bp). Cash bonds fared better, with HY some ½bp tighter and IG marginally tighter.

General trend

• WTI Crude FUTs drop after China PMI data.
• US equity FUTS have remained higher.
• Shanghai Composite continued to rebound during the morning session [Kweichow Moutai and Consumer Staples indices rebound]; Property and Financial indices also rise; IT index lags.
• Hang Seng also reversed declines; HSBC rose ahead of earnings report; EV stocks rose amid comments from China’s Politburo.
• China announced new appointment in Education Ministry.
• Nikkei has extended gains; Mizuho, Japan Tobacco and NEC rise following earnings; Nomura, Hitachi, Komatsu and Mazda decline; Companies expected to report earnings include Mitsubishi UFJ, Shionogi, AGC.
• S&P ASX 200 has continued to rise after hitting record high [gainers include Financial, Energy and Consumer indices]; Afterpay to be acquired by Square in all stock deal.
• Companies expected to report during the NY morning include Arcbest, CNA Financial, Global Payments, Jeld-Wen, Loews, ON Semiconductor, Ferrari, Timken, TowerJazz.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened +0.3%.
• APT.AU To be acquired by Square in all stock deal, implied value of A$39B.
• APT.AU Reports prelim FY21 (A$) Rev 925M v 920Me; Underlying sales 21.1B v 11.1B y/y.
• OSH.AU Santos makes raised proposal of 0.6275/new Santos shares (prior 0.589), implies A$4.29/Oil search shr (prior A$4.25).
• (AU) Queensland Coronavirus lockdown to be extended by additional 5 days.

Japan

Nikkei 225 opened +0.8%.

(JP) Japan Jul Final PMI Manufacturing: 53.0 v 52.2 prelim (6th consecutive month in expansion).

(JP) Japan govt officials said to escalate calls for a new relief package to deal with the prolonged pain from the pandemic - financial press (Friday after the close).

Korea

• Kospi opened +0.5%.
• (KR) South Korea Jul PMI Manufacturing: 53.0 v 53.9 prior (lowest since Dec 2020).
• (KR) South Korea sells 30-year bonds: Avg yield 1.950% v 2.225% prior.

China/Hong Kong

• Hang Seng opened +0.4%; Shanghai Composite opened -0.3%.
• (CN) CHINA JULY MANUFACTURING PMI (GOVT OFFICIAL): 50.4 V 50.8E (16th month of expansion, lowest since Feb 2020); Non-manufacturing PMI: 53.3 v 53.3e (15th straight month of expansion).
• (CN) CHINA JUL CAIXIN PMI MANUFACTURING: 50.3 V 51.0E (15th consecutive expansion, lowest since Apr 2020).
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY30B in 7-day reverse repos prior; Net CNY0B v Net inject CNY20B prior.
• 5.HK Reports Q2 Net $3.39B v $192M y/y, adj Pretax $5.56B v $2.6B y/y, Rev $12.52B v $13.2B y/y; to reduce office space this year.
• (CN) China, Beijing Haidain district Govt has set up a fund to buy SOE bonds, traded with a discount in secondary market - China PBOC backed news.
• (CN) China PBOC sets Yuan reference rate: 6.4660 v 6.4602 prior.
• (CN) China Education Ministry: Appointed Huai Jinpeng new party chief of ministry.
• (HK) Macau Jul Casino Rev (MOP): 8.4B v 6.5B prior; Y/Y: 528.1% v 540.5%e (35% of pre-COVID levels).
• (CN) China regulators fine 3 private tutoring companies: Xueda CNY1.2M; ABC CNY181K; 51talk CNY500K.
• (CN) China PBOC: to maintain a prudent, flexible and reasonable monetary policy in the second half of 2021; Will not take "flood like" measures (Friday after the close).

North America

• SQ Reports Q2 $0.66 adj v $0.32e, Rev $4.68B v $5.02Be.
• XPEV Reports Jul deliveries 8.04K units, +228% y/y.

Europe

• (UK) Aldi said to be raising wages for truck drivers as grocery labor shortages continue - UK press.
• (FR) France July passenger car sales 115.7K, -35% y/y - Plateforme Auto.
• DWNI.DE Entered into a new business combination to merge with Vonovia, Vonovia offers €53.00/shr cash.
• ALV.DE Issues reassessment of risk relating to Structured Alpha Funds, US DoJ investigation could materially impact future results, cannot determine financial amount, so no provision to be recognized at this time.

Levels as of 01:15ET

• Hang Seng +1.1%; Shanghai Composite +1.6%; Kospi +0.6%; Nikkei225 +1.9%; ASX 200 +1.4%.
• Equity Futures: S&P500 +0.5%; Nasdaq100 +0.5%, Dax +0.5%; FTSE100 +0.5%.
• EUR 1.1874-1.1859; JPY 109.78-109.61; AUD 0.7350-0.7329; NZD 0.6985-0.6953.
• Commodity Futures: Gold -0.2% at $1,813/oz; Crude Oil -0.9% at $73.27/brl; Copper +0.2% at $4.49/lb.

Daily Pivots: (S1) 152.23; (P) 152.73; (R1) 153.00; More...

Intraday bias in GBP/JPY remains neutral this point. We're favoring that case that corrective fall from 156.05 has completed at 148.43. Break of 153.46 will resume the rise from 148.43 to retest 156.05 high. Though, break of 151.55 minor support will dampen this bullish view, and turn bias to the downside for 148.43 support.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus remains on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, sustained break of 149.03 support, however, will argue that rise from 123.94 has completed. Further break of 142.71 would open up the bearish case for retesting 122.75 low.

Daily Pivots: (S1) 129.97; (P) 130.24; (R1) 130.45; More....

Intraday bias in EUR/JPY remains neutral for the moment. Deeper fall remains mildly in favor with 131.07 resistance intact. On the downside, break of 128.85 will resume the fall from 134.11 to 127.07 resistance turned support next. On the upside, break of 131.07 resistance will argue that choppy fall from 134.11 has completed. Intraday bias will be turned back to the upside for 132.68 resistance first.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, and open up the case for retesting 114.42.

Daily Pivots: (S1) 0.8518; (P) 0.8528; (R1) 0.8545; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the downside, break of 0.8498 support will resume the choppy corrective fall from 0.8718 towards 0.8470 low. On the upside, break of 0.8555 minor resistance will turn bias back to the upside for 0.8668 resistance instead.

In the bigger picture, price actions from 0.9499 are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8718 resistance holds. However, firm break of 0.8717 would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Daily Pivots: (S1) 1.6088; (P) 1.6132; (R1) 1.6204; More...

Intraday bias in EUR/AUD remains on the upside at this point. Rise from 1.5250 is still in progress and should target 1.6827 resistance next. On the downside, break of 1.5925 support is needed to indicate short term topping. Otherwise, near term outlook will stay mildly bullish in case of retreat.

In the bigger picture, a medium term bottom was formed at 1.5250, on bullish convergence condition in daily MACD. Rise from 1.5250 is currently seen as a correction to the down trend from 1.9799 first. Stronger rise would be seen to 38.2% retracement of 1.9799 to 1.5250 at 1.6988 next. We'd tentatively expect strong resistance from there to limit upside, at least on first attempt.

Daily Pivots: (S1) 1.0732; (P) 1.0757; (R1) 1.0771; More....

Intraday bias in EUR/CHF remains on the downside at this point. Sustained trading below 1.0737 cluster support (61.8% retracement of 1.0505 to 1.1149 at 1.0751) will extend the fall from 1.1149 to retest 1.0505 low. On the upside, break of 1.0802 support turned resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, rebound from 1.0505 (2020 low) should have completed at 1.1149 already. The three wave corrective structure argues that the downtrend from 1.2004 (2018 high) is not over yet. Medium term outlook will now stay bearish as long as 1.1149 resistance holds. Break of 1.0505 low would be seen at a later stage.

Daily Pivots: (S1) 1.1846; (P) 1.1878; (R1) 1.1903; More...

Intraday in EUR/USD remains neutral at this point. Current development argues that a short term bottom is formed at 1.1751. Above 1.1907 will target 1.1974 resistance first. Firm break there should argue that whole corrective pattern from 1.2348 has completed. On the downside, however, break of 1.1751 will resume the fall from 1.2265 to 1.1703 support instead.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

Daily Pivots: (S1) 1.3869; (P) 1.3927; (R1) 1.3965; More....

Intraday bias in GBP/USD remains neutral at this point. Consolidation pattern from 1.4240 could have completed with three waves down to 1.3570. Further rise is expected as long as 1.3766 support holds. On the upside, break of 1.3982 will resume the rise from 1.3570 to retest 1.4248 high. However, break of 1.3766 support will dampen this bullish view and bring retest of 1.3570.

In the bigger picture, as long as 1.3482 resistance turned support holds, up trend from 1.1409 should still continue. Decisive break of 1.4376 resistance will carry larger bullish implications. However, firm break of 1.3482 support will argue that the rise from 1.1409 has completed. GBP/USD would then be seen in another leg of long term range pattern between 1.1409 and 1.4376. Deeper fall could then be seen to 61.8% retracement of 1.1409 to 1.4248 at 1.2493, and even below.