A few data releases today may attempt to spoil the party


MAJOR HEADLINES – PREVIOUS SESSION

  • US Jun. PPI out at +1.8% m/m, +0.5% ex-Food/Energy vs. 0.9%/0.1% expected respectively

  • US Jun. Advance Retail Sales out at +0.6%, +0.3% ex-autos vs. +0.4%/+0.5% expected respectively

  • US IBD/TIPP Economic Optimism out at 46.3 vs. 49.0 expected and 50.8 prior

  • US May Business Inventories out at -1.0% vs. -0.8% expected and revised -1.3% prior

  • US Weekly ABC Consumer Confidence out at -51, as expected vs. -52 prior

  • AU May Westpac Leading Index out at -0.2% vs. revised +0.5% prior

  • JP BOJ leaves key rates unchanged at 0.1%, extends corporate funding steps by 3 months

  • SI May Retail Sales out at -10.3% y/y vs. -10.6% expected and revised -11.4% prior


THEMES TO WATCH – UPCOMING SESSION

  • Swiss Retail Sales (0715)

  • Denmark Wholesale Prices (0730)

  • Norway Trade Balance (0800)

  • UK Jobless Claims Change (0830)

  • UK Unemployment Rate (0830)

  • UK Avg. Earnings (0830)

  • UK Manuf. Unit wage Costs (0830)

  • EU Euro-zone CPI (0900)

  • EU ECB’s Constancio speaks (1000)

  • US MBA Mortgage Applications (1100)

  • US CPI (1230)

  • US Empire manufacturing Index (1230)

  • CA manufacturing Shipments (1230)

  • US Industrial Production (1315)

  • US Capacity Utilization (1315)

  • US Treasury’s Barr speaks (1710)

  • US FOMC Minutes (1800)

Market Comments:

With the market’s reaction to the stellar Goldman Sachs earnings release seemingly subdued, it took another upbeat release, and projection, from Intel after the bell to set the “risk on” ball rolling again. Intel beat analysts’ earnings forecasts for Q2 and presented an above consensus sales guidance for Q3 amid strengthening PC end-demand in Asia pacific. This ran in contrast to Dell’s earlier warnings on PC markets with little improvement seen in the US and extended weakness in Europe.

US data on the whole remained on the disappointing side. Breakdown of the headline retail sales number showed an altogether less-convincing picture, The TIPP economic confidence index slid back to 46.3 from 50.8 in June while May business inventories came in at -1.0% against -0.8% expected and a revised -1.3% in April.

Nevertheless, Asia walked in with a more bullish attitude towards risk, with local bourses pushing the 1%+ mark but currencies adopted a more cautious approach which saw the risk appetite trend continuing (JPY crosses higher and a weaker USD) albeit at a snail’s pace and unable to break through recent highs.

EUR appeared to struggle to gather momentum for a challenge on the 1.40 mark again (1.4014 yesterday’s high at the European open), possibly weighed down by the weaker European economic data in comparison to the rest of the world (though the ZEW data is largely ignored as being too erratic and out of sync). GBP preserved a hold of its lofty perch attained after the solid housing news. BOE’s Bean was also in the news downplaying the significance of the BOE’s recent decision not to extend its QE program. He reiterated that the Bank had not “paused”, was still committed to buying GBP125 bln worth of assets which would take it through to August when the next review would be made. (Note analysts had forecast that if the recent pace of buying was continued then the GBP125 bln limit would have been reached late-July).

Latest data on US crude oil inventories showed a drop in inventories but any positive impact on oil prices was negated by on OPEC report which envisaged a fall in demand for its oil in 2010 as a result of the sluggish rebound in the global economy and increased supplies from non-member countries. Oil continued to hover around the $60.0 mark during the Asian session, seriously lacking direction.

Europe has a bit more on its data plate to digest today with UK unemployment report probably the major attraction. The report accompanies average earnings and manufacturing wage costs and is expected to rise to 5.0% from 4.8%, according to the latest surveys but may struggle to dent the pound’s recent push higher. Swiss retail sales and EU CPI complete the European schedule. In North America we will see Canada’s manufacturing inventories/shipments, new orders and manufacturing sales. US CPI may garner more attention than usual given the surprising jump in PPI yesterday. The empire state index, industrial production and capacity utilization complete the economic data releases. Later, the FOMC minutes for the June 24 meeting may grab the headlines.