June ADP Jobs Report Strong, Greece PM Says Referendum Is On for Sunday

Economic data

- (ZA) South Africa Jun Naamsa Vehicle Sales Y/Y: -4.8% v -3.2% prior
- (US) MBA Mortgage Applications w/e Jun 26th: -4.7% v +1.6% prior
- (US) Jun Challenger Job Cuts: 44.8K v 41.0K prior; Y/Y: +42.7% v -22.5% prior
- (CZ) Czech Jun Budget Balance (CZK): +22.6B v -22.1B prior
- (US) Jun ADP Employment Change: +237K v 218Ke
- (BR) Brazil Jun PMI Manufacturing: 46.5 v 45.9 prior
- (US) Jun Final Markit Manufacturing PMI: 53.6 v 53.4e
- (US) May Construction Spending M/M: 0.8% v 0.4%e
- (US) Jun ISM Manufacturing: 53.5 v 53.1e; Prices Paid: 49.5 v 51.0e
- (US) DOE Crude: +2.39M v -1.0Me; Gasoline: -1.76M v +1.0Me; Distillate: +0.39M v +1.0Me

US stocks are heading higher this morning as markets turn optimistic on the Greece situation. EUR/USD dipped to 1.1060 after testing 1.1170 during the European session. As of writing, the DJIA is up 0.73%, the S&P500 is up 0.67% and the Nasdaq is up 0.70%.

Traders dumped European stocks yesterday after word came that the Greeks made a last-ditch plea for a new bailout and skipped repayment of an IMF payment, but today there were reports that PM Tsipras wrote separately to Greece's main creditors and accepted many of their conditions to extend the now-expired bailout. The CAC and DAX close up 2% a piece and the 10-year bund sold off, gaining more than five basis points to trade 1.242%. In an address to the nation, Tsipras said that contrary to rumors, the referendum will move forward and reiterated his support for a "no" vote in order to get a "better agreement with lenders."

The June ADP report beat expectations, strongly suggesting another solid payroll report from the Labor Department tomorrow morning. The current consensus expectation for June nonfarm payrolls stands around 280K. The June ISM manufacturing index was right in line with expectations, with new orders also squarely meeting expectations at 56 and employment topping estimates.

US crude oil inventories rose last week for the first time in nine weeks. Analysts had been calling for the ninth consecutive week of drawdowns in the DoE report, but inventories grew sharply. Last night, the private API inventories report saw its first build in crude stocks in four weeks, even as expectations were also calling for another slight drawdown. WTI crude has fallen about $1.50 to one-month lows below $58. Note that both sides in the Iran negotiations continue to make very upbeat comments a day after the deadline was extended by a week, to July 7th.

US June auto sales saw some notable misses, with the big three all seeing small-than-expected sales gains. Ford and Fiat Chrysler sustained decent y/y increases in sales, +1.5% and +8.2%, respectively. General Motors however saw a 3% drop y/y, widely missing expectations for a 3% gain. Honda and Toyota saw very good gains that beat expectations, while Nissan fell short. Shares of GM and F are in the red, while FCAU is still up slightly.

ACE Ltd. Reached a deal to acquire Chubb in a combined cash and stock deal valued at $28.3 billion. Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock, for a total per-share price of around $124.13/shr, based on yesterday's closing price. Upon completion of the transaction, ACE shareholders will own 70% of the combined company, and Chubb shareholders will own 30%.

Looking Ahead

- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v 10.8% prior
- 12:00 (IT) Italy Jun Budget Balance: No est v -€4.3B prior
- 13:00 (MX) Mexico Jun IMEF Survey Manufacturing Index: 52.0e v 52.4 prior; Non-Manufacturing Index: 51.5e v 51.1 prior
- 14:00 (BR) Brazil Jun Trade Balance: $4.0Be v $2.8B prior; Total Exports: $19.7Be v $16.8B prior; Total Imports: $15.6Be v $14.0B prior
- 19:00 (KR) South Korea May Current Account Balance: No est v $8.1B prior; Balance of Goods (BoP): No est v $12.6B prior
- 21:30 (AU) Australia May Trade Balance: -A$2.2B v -A$3.9B prior
- 23:35 (JP) Japan to sell 3-Month Bills
- 23:45 (JP) Japan to sell 10-Year JGB Bonds