Trump still weighs Iran strike, discloses two-weeks window

EU mid-market update: Trump still weighs Iran strike, discloses two-weeks window; UK retail weakness pressures BOE; First post-holiday triple-witching since 2000.

Notes/observations

- Geopolitical concerns remain in play; reports that Trump was holding off on final decision to see if Tehran gave up its nuclear program.

- White House said Pres Trump has set a two-week deadline to decide whether the U.S. will join Israel in striking Iran's nuclear facilities, particularly the Fordo enrichment site, citing a "substantial chance" for negotiations but emphasizing Iran's proximity to nuclear weapon capability. Ahead of meeting with EU official, Iran Foreign Min Araghchi said they do not want to negotiate with US while Israel is striking the country.

- Weak UK retail sales data helping to signal the need for more BOE rate cuts, as early as at August’s decision.

- Today, the first post-holiday triple-witching since 2000 occurs, with $6.5 trillion in contracts expiring in a single session after the Juneteenth holiday. This marks the first-ever back-to-back quarterly expiries above $6 trillion, surpassing March’s $4.5 trillion and rivaling December’s record.

Asia

- Japan May National CPI Y/Y: 3.5% v 3.5%e; CPI (Ex Fresh Food) Y/Y: 3.7% v 3.6%e.

- China PBOC Monthly Loan Prime Rate (LPR) Setting left both 1-year and 5-year unchanged at 3.00% and 3.50% respectively (as expected).

- South Korea May PPI Y/Y: 0.3% v 0.8% prior.

- Japan Fin Min Kato stated that had recently seen spikes in super-long JGB yields since April. Would work to ensure stable issuance of JGBs.

Global Conflict/tensions

- Pres Trump said to give two-week window to decide whether US will directly attack Iran or not (**Note: move designed to provide more time for diplomacy to work). Britain and Europe have told US to avoid military intervention in Iran.

- US intelligence said to believes Iran was likely to develop bomb if Fordow facility was attacked or create a bomb if Khamenei was assassinated

- US Mid-East Witkoff and Iran For Min said to have held held secret talks as Iran signal nuclear flexibility if attacks stop.

- Israel has accused Iran of launching a missile that contained cluster ammunition towards a densely populated civilian area of Israel. Also accused Iran of bombing a hospital.

- Russia spokesman Dmitry Peskov highlighted that killing Ayatollah Ali Khamenei would get a very negative reaction for Russia.

Europe

- UK Jun GfK Consumer Confidence: -18 v -20e (highest since Dec).

- France said to be pushing for joint debt to increase international role of the euro.

Trade

- Japan Trade Negotiator Akazawa would not comment on trade talk details with the US; July 9th was not the deadline for Japan-US trade talk.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.44% at 538.20, FTSE +0.36% at 8,823.35, DAX +0.71% at 23,220.08, CAC-40 +0.45% at 7,587.60, IBEX-35 +0.64% at 13,839.15, FTSE MIB +0.92% at 39,302.00, SMI -0.03% at 11,890.42, S&P 500 Futures -0.33%].

Market focal points/key themes: European indices opened generally higher and advanced through the early part of the session; Sweden and Finland closed for holiday; decompression of the Middle East situation seen helping risk appetite; among sectors leading to the upside are financials and technology; lagging sectors include energy and utilities; UniCredit’s CEO suggests would desist in bid for Banco BPM; focus on Euro Area advance consumer confidence coming out later in the day; earnings expected in the upcoming US session includes Accenture, CarMax and Darden Restaurants.

Equities

- Consumer discretionary: TUI Group [TUI1.DE] +5.5% (analyst upgrade).

- Financials: Berkeley Group [BKG.UK] -7.5% (earnings; FY27 outlook; new CEO), Banco BPM [BAMI.IT] +1.5% (Unicredit CEO Orcel: Unicredit will have a great future even without BPM), Record [REC.UK] -5.0% (earnings).

- Telecom: Eutelsat [ETL.FR] +14.0% (capital increase).

Speakers

- ECB Economic Bulletin reiterated stance that was determined to ensure that inflation stabilized sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it would follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.

- BOJ Gov Ueda reiterated that the overall assessment that domestic economy is recovering moderately. Maintained that price trend to be in line with goal during 2nd half of outlook period. Stressed that the real interest rate was 'significantly low' and reiterated stance that would raise interest rate, if economic outlook was realized.

- Japan govt said to be planning to cut FY25 superlong JGB issuance by ¥3.2T; More press reports that Japan to offset these cuts by boosting issue of 2-year, 5-year notes and T-bills.

- Japan MOF meeting with primary dealers noted that it had heard views asking for cuts in 20-year bond issuance. Some asked for buyback of super-long JGB bonds while others believed it would hurt the autonomy of the market. Not working towards bond buyback at this time.

- China official stated that EU was going down protectionist path using unilateral tools.

- Iran Foreign Min Araghchi stated that it did not want to negotiate with US while Israel was striking the country.

Currencies/fixed income

- USD was mixed overall during a quiet EU session. Safe haven assets were lower after Trump administration signaled it would delay a decision to launch strikes against Iran by several weeks

- EUR/USD at 1.1520 area with focus on weekly close in the pair. A 2nd week above 1.15 area opens the door for a technical move higher

- Weak UK retail sales data helping to signal the need for more BOE rate cuts. GBP/USD at 1.3490 by mid-session

- USD/JPY at 145.35 aided by diverging yield differential between US/Japan.

- 10-year German Bund yield at 2.52% and 10-year Gilt yield at 4.53%. 10-year Treasury yield: 4.40%

Economic data

- (NL) Netherlands Jun Consumer Confidence: -36 v -37 prior.

- (UK) May Public Finances (PSNCR): £20.9B v £9.2B prior; Net Borrowing (PSNB): £17.7B v £18.0Be; PSNB (ex-banking groups): £17.7B v 20.1B prior; Central Government NCR: £24.1B v £15.8B prior
- (UK) May Retail Sales (ex-auto/fuel) M/M: -2.8% v -0.7%e; Y/Y: -1.3% v +1.8%e.

- (UK) May Retail Sales (M/M: -2.7% v -0.5%e; Y/Y:-1.3 % v +1.7%e.

- (DE) Germany May PPI M/M: -0.2% v -0.3%e; Y/Y: -1.2% v -1.2%e.

- (DK) Denmark Jun Consumer Confidence:-15.1# v -18.4 prior.

- (FR) France Jun Business Confidence: 96 v 96e; Manufacturing Confidence: 96 v 98e.

- (FR) France Q1 Final Wages Q/Q: 0.7% v 0.7% prelim.

- (ES) Spain Apr Total Mortgage Lending Y/Y: 24.9% v 51.7% prior; House Mortgage Approvals Y/Y: 14.4% v 44.5% prior.

- (TR) Turkey Jun Consumer Confidence: 85.1 v 84.8 prior.

- (MY) Malaysia Jun Foreign Reserves: $119.9B v $119.6B prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 100.8K v 101.9K tons prior.

- (TH) Thailand May Foreign Reserves w/e Jun 13th: $B v $257.7B prior.

- (RU) Russia Narrow Money Supply w/e Jun 13th (RUB): 18.29T v 18.15T prior.

- (TW) Taiwan May Export Orders Y/Y: 18.5% v 19.4%e.

- (FR) France May Retail Sales Y/Y: 0.2% v 0.1% prior.

- (HK) Hong Kong Q1 Current Account Balance: $125.2B v $95.9B prior.

- (HK) Hong Kong May CPI Composite Y/Y: 1.9% v 2.0%e.

- (BE) Belgium Jun Consumer Confidence: -4 v -7 prior.

Fixed income issuance

- (IN) India sold total INR270B vs. INR270B indicated in 2029 and 2054 bonds.

Looking ahead

- (EU) European Finance Ministers (Ecifin) meeting.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2043 and 2046 Bonds.

- 06:00 (PT) Portugal May PPI M/M: No est v -1.4% prior; Y/Y: No est v -2.7% prior.

- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £3.0B respectively).

- 07:30 (IN) India May Eight Infrastructure (Key) Industries: No est v 0.5% prior.

- 07:30 (IN) India Forex Reserve w/e Jun 13th: No est v $696.7B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jun Philadelphia Fed Business Outlook: -1.5e v -4.0 prior.

- 08:30 (CA) Canada Apr Retail Sales M/M: 0.4%e v 0.8% prior; Retail Sales (Ex Auto) M/M: -0.2%e v -0.7% prior.

- 08:30 (CA) Canada May Industrial Product Price M/M: 0.0%e v -0.8% prior; Raw Materials Price Index M/M: No est v -3.0% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed)- 10:00 (US) May Leading Index: -0.1%e v -1.0% prior.

- 10:00 (EU) Euro Zone Jun Advance Consumer Confidence: -14.9e v -15.2 prior.

- 11:00 (CO) Colombia Apr Trade Balance: -$1.4Be v -$0.9B prior; Total Imports: $5.9Be v v $5.2B prior (revised from $5.5B).

- 11:00 (EU) Potential sovereign ratings after European close (no major ones seen).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- (MX) Mexico CitiBanamex Survey of Economists.