PMI data showed EU business activity grew sharply faster
|Notes/Observations
- European May Preliminary PMI data mixed (Beats: France, Euro Zone, UK; Misses: Germany.
- UK Retail Sales data beats.
Asia
- Australia Apr Preliminary Retail Sales M/M: 1.1% v 0.5%e.
- Australia May Preliminary PMI Manufacturing registered its 12th month of expansion and a record high (59.9 v 59.7 prior).
- Japan May Preliminary PMI Manufacturing registered its 4th straight month of expansion (52.5 v 53.6 prior).
- Japan Apr National CPI Y/Y: -0.4% v -0.5%e; CPI Ex-fresh food (core) Y/Y: -0.1% v -0.2%e.
- Japan Fin Min Aso noted that the US proposal of 15% minimum global tax was progress; Needed more discussion on topic.
Europe
- UK Chancellor of the Exchequer Sunak (Fin Min) said to be ready to secure public finances in Autumn due to the upcoming windfall coming from an economic rebound and higher tax receipts.
Mid-East
- Israeli cabinet approved ceasefire in Gaza conflict.
Americas
- Fed's Kaplan (non-voter; hawkish) reiterated stance that would like to start discussing tapering QE sooner rather than later.
- Fed Chair Powell: Fed will issue a report this summer on US digital currency; Fed has not decided whether it will move ahead on a central bank digital currency (CBDC).
- BOC Gov Macklem noted that inflation data was currently broadly in line with MPR projections with expectations remaining very well anchored at this point. BOC was prepared to respond if higher inflation becomes persistent.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.24% at 442.98, FTSE -0.41% at 6,991.01 , DAX +0.15% at 15,393.20, CAC-40 +0.37% at 6,367.28 , IBEX-35 +0.34% at 9,155.00 , FTSE MIB +0.51% at 24,827.50 , SMI +0.04% at 11,156.54, S&P 500 Futures +0.20%].
Market Focal Points/Key Themes: European indices open modestly higher continuing strong gains from prior session and advanced into the green as the session progressed following better-than-expected releases of EU and UK PMIs; Swiss-based Richemont rises as much as 4% following its final earnings release; Fsttned in Amsterdan trade sharply higher following Tesla partnership while Lufthansa trades down 6% on news that shareholder sells stake ; earnings expected in the upcoming US session include Deere, Buckle and Foot Locker.
Equities
- Consumer discretionary: Richemont [CFR.CH] +4% (earnings), Travis Perkins [TPK.UK] +3% (divestment), Lufthansa [LHA.DE] -6% (shareholder sells stake).
- Technology: Card Factory [CARD.UK] -10% (trading update).
Speakers
- BOE Hauser stated that could adjust composition of corporate bond buying for net-zero. Greening of corporate bond holdings to begin with the next scheduled reinvestment this autumn.
- France Fin Min Le Maire noted that was looking to make the 1st disbursement of EU Recovery Fund by the end of July at the latest. Believed US proposal of 15% global tax to OECD was a good compromise and added that an agreement on digital taxation was also key.
- Germany Fin Min Scholz (Chancellor Candidate): Believes that EU Recovery Fund to be ready by summer. Global minimum taxation was crucial; US proposal of 15% to OECD was a big step forward and very realistic. Expected to have a minimum global tax rate in summer.
- EU decision to add UK to travel white list said to face a two-week delay over concerns about the Indian variant of the virus.
- Sweden Central Bank (Riksbank) Jansson stated that inflation picture looked solid; April Staff Projections looked intact. Some way to go before would be concerned about inflation. Could see inflation at 3% for a year before policy action was needed. Underlying inflation pressure is not that strong.
- Norway Central Bank (Norges) 2Q Expectations Survey raised the 12-month inflation expectations from 1.8% to 2.2% while trimming the 2-3-year inflation expectations from 3.8% to 3.7%.
- Hungary PM Orban stated that Q2 GDP growth should be 'phenomenal' and would ease virus curbs further.
- Tokyo, Japan Gov Koike reiterated stance to press ahead with preparations for Olympics; looking to host safe and secure game. Spoke to PM Suga regarding vaccinations and ways to accelerate the process.
- Japan Chief Cabinet Sec Kato stated that the IOC would make the decision on Olympic Games. Govt decision on State of Emergency was not connected to games.
Currencies/ Fixed Income
- USD was softer as concerns at taper talk in Federal Reserve minutes ebbed. Dealers concluded that the Fed would maintain its loose policy stance.
- Euro Area PMI data was being closely watched for further signs of economic recovery but price action seemed to shrug off better-than-expected PMI readings for the region. The miss in German PMI Manufacturing put some pressure on the Euro and helped to lower bond yields in the region.
- EUR/USD steady at 1.2225 in a question session despite the PMI data.
- GBP/USD managed to crawl back above the 1.42 level after better Retail sales and PMI readings.
Economic data
- (NL) Netherlands Apr House Price Index M/M: 0.9% v 1.6% prior; Y/Y: 11.5% v 11.3% prior.
- (NL) Netherlands May Consumer Confidence Index: -9 v -14 prior.
- (UK) Apr Retail Sales (ex-auto/fuel) M/M: 9.0% v 4.4%e; Y/Y: 37.7% v 31.7%e.
- (UK) Apr Retail Sales (including auto/fuel) M/M: 9.2% v 4.5%e; Y/Y: 42.4% v 36.8%e.
- (DK) Denmark May Consumer Confidence Indicator: +2.8 v -1.1 prior
- (CH) Swiss Q1 Industrial Output Y/Y: +4.8% v -1.9% prior; Industry & Construction Output Y/Y: +4.5% v -2.0% prior.
- (CH) Swiss Apr M3 Money Supply Y/Y: 4.7% v 5.7% prior.
- (MY) Malaysia mid-May Foreign Reserves: $110.6B v $110.8B prior.
- (TR) Turkey May Consumer Confidence: 77.3 v 80.2 prior.
- (FR) France May Preliminary Manufacturing PMI: 59.2 v 58.5e (5th month of expansion); Services PMI: 56.6 v 53.0e ; Composite PMI: 57.0 v 53.7e.
- (DE) Germany May Preliminary Manufacturing PMI: 64.0 v 65.9e (11th month of expansion); Services PMI: 52.8 v 52.0e; Composite PMI: 56.2 v 57.1e.
- (SE) Sweden Q1 Industry Capacity: 89.4% v 88.0% prior.
- (CN) Weekly Shanghai copper inventories (SHFE): 221.1K v 229.2K tons prior.
- (EU) Euro Zone May Preliminary Manufacturing PMI: 62.8 v 62.5e (11th month of expansion); Services PMI: 55.1 v 52.5e; Composite PMI: 56.9 v 55.1e.
- (IT) Italy Mar Industrial Sales M/M: 1.6% v 0.2% prior; Y/Y: 38.1% v 0.8% prior.
- (RU) Russia Narrow Money Supply w/e May 14th (RUB): 14.08T v 14.06T prior.
- (PL) Poland Apr PPI M/M: 0.5% v 0.4%e; Y/Y: 5.3% v 4.9%e.
- (PL) Poland Apr Construction Output Y/Y: -4.2% v -7.7%e.
- (UK) May Preliminary Manufacturing PMI: 66.1 v 60.8e (12th straight expansion and record high); Services PMI: 61.8 v 62.2e; Composite PMI: 62.0 v 61.9e.
- (HK) Hong Kong Apr CPI Composite Y/Y: 0.7% v 0.6%e.
- (IS) Iceland Apr Wage Index M/M: 0.3% v 0.4% prior; Y/Y: 7.4% v 10.6% prior.
- (BE) Belgium May Consumer Confidence Index: +4 v -6 prior.
Fixed income Issuance
- None seen
Looking Ahead
- Informal EU EcoFin meeting.
- (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 2029, 2038 and 2050 Bonds.
- 06:00 (IE) Ireland Apr PPI M/M: No est v 1.0% prior; Y/Y: No est v -10.1% prior.
- 06:00 (UK) DMO to sell £3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively).
- 06:00 (PL) Poland to sells 2023, 2026, 2030 and 2031 bonds (5 tranches).
- 06:45 (US) Daily Libor Fixing.
- 07:00 (MX) Mexico Mar Retail Sales M/M: 1.6%e v 1.6% prior; Y/Y: -0.1%e v -6.3% prior.
- 07:30 (IN) India Weekly Forex Reserve w/e May 14th: No est v $589.5B prior.
- 07:30 (IS) Iceland to sell 2024 and 2026 RIKB bonds.
- 08:00 (IN) India announces upcoming bill issuance (held on Wed).
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (CA) Canada Mar Retail Sales M/M: 2.3%e v 4.8% prior; Retail Sales (ex-auto) M/M: 2.3%e v 4.8% prior.
- 09:45 (US) May Preliminary Markit Manufacturing PMI: 60.1e v 60.5 prior; Services PMI: 64.4e v 64.7 prior; Composite PMI: No est v 63.5 prior.
- 10:00 (US) Apr Existing Home Sales: 6.08Me v 6.01M prior.
- 10:00 (EU) Euro Zone May Advance Consumer Confidence Index: -6.5e v -8.1 prior.
- 11:00 (EU) Potential sovereign ratings after European close ((Moody's on Greece sovereign rating; S&P on Slovakia sovereign rating).
- 13:00 (US) Weekly Baker Hughes Rig Count.
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