Cable weakens on President Trump's warning on UK-US trade following PM May's soft Brexit stance

Notes/Observations

- China Trade Surplus with US rose to a record high, esaclating trade war concerns

-President Trump says PM May's plan for Brexit could 'kill' chances of bilateral trade deal with the US -Earnings season officially starts with major banking names JP Morgan, Citigroup and Wells Fargo set to report

Asia:

-(JP) Bank of Japan (BoJ) might note that inflation could be short of its 2% target for up to 3 additional years (in line with Nikkei report)

-China June trade surplus higher than expectations, surplus with US widens and hits record high

-New Zealand June PMI hits lowest level since Dec 2017

-China June M2 supply falls to record low of 8%

Europe:

-President Trump tell UK newspaper that soft Brexit would 'probably kill' potential for future trade deal with US. "If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK.

Trump also reveals to me PM ignored his advice on Brexit negotiations

 

Economic Data:

(DE) Germany Jun Wholesale Price Index M/M: 0.5% v 0.8% prior; Y/Y: 3.4% v 2.9% prior

(NO) Norway Jun Trade Balance (NOK): 22.0B v 16.3B prior

(NO) Norway Q2 House Price Index Q/Q: +2.2% v -0.3% prior

(FI) Finland May GDP Indicator WDA Y/Y: 3.4% v 1.8% prior

(FI) Finland Jun CPI M/M: 0.2% v 0.1% prior; Y/Y: 1.2% v 1.0% prior

(FI) Finland May Current Account: -€0.5B v -€1.6B prior

(CH) Swiss Jun Producer & Import Prices M/M: 0.2% v 0.2% prior; Y/Y: 3.5% v 3.2% prior

(CN) Weekly Shanghai copper inventories (SHFE): 234.7K v 258.7K tons prior

(PL) Poland Jun Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 2.0% v 1.6% prelim

(RU) Russia Narrow Money Supply w/e July 6th: 10.21T v 10.10T prior

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 +0.2% at 3,453, FTSE +0.6% at 7,694, DAX +0.2% at 12,523, CAC-40 +0.3% at 5,423; IBEX-35 -0.2% at 9,745, FTSE MIB +0.4% at 21,887, SMI +0.3% at 8,840, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European indices opened higher across the board and stayed largely positive; technology and consumer discretionary lead better performers; financials underperforming ahead of major bank earnings reports in US; focus on UK news with Trump visit; upcoming earnings expected in the US session include JPMorgan, PNC Financial services and Citigroup

 

Equities

- Consumer discretionary: Carrefour CA.FR -0.7% (analyst action), DCC DCC.UK +2.9% (earnings, acquisition), Halfords HFD.UK +1.9% (new CFO), L'Oreal OR.FR -0.1% (analyst action)

- Energy: Aker BP AKERBP.NO -6.2% (results), Solaria Energia SLR.ES -11.1% (share issue)

- Financials: Gam Holding GAM.CH -8.6% (results), International Personal Finance IPF.UK +5.5% (trading update), Storebrand STB.NO +2.0% (results)

- Healthcare: Capio CAP.SE +22.0% (receives unsolicited bid)

- Industrials: Orkla ORK.NO -5.3% (results)

- Technology: Altran Technologies ALT.FR -20.9%(discovery of forged sales in unit), Dassault Systems DSY.FR +0.3% (analyst action), Fugro FUR.NL +3.7% (analyst action)

- Telecom: Proximus PROX.BR -2.8% (acquisition)

 

Speakers

(UK) Foreign Office Minister Duncan: mood at Trump dinner was fantastically positive

(UK) UK Chancellor of the Exchequer Hammond (Fin Min): EU should engage with UK to deliver Brexit solution

(JP) Japan Chief Cabinet Sec Suga: No problem for bond market from keeping monetary policy easing

(UK) UK Chancellor of the Exchequer Hammond (Fin Min): EU should engage with UK to deliver Brexit solution; determined to protect financial services in UK

(RU) Russia Energy Min Novak: June Opec+ decision means gradual easing of output caps; OPEC+ weighs ongoing cooperation after 2018 - speaks at FED council

 

Currencies

US Dollar strengths across the board, USD/YEN cross trades highest in 5 months helping propel the Nikkei, as the Yen is on course for biggest weekly loss since Septemeber

-GBP/USD falls on Trump comments regarding UKs soft Brexit stance.

 

Fixed Income

- Bund Futures trade 24 ticks higher at 162.92 as the German Bund yield hovers below 0.30%. Upside targets 163.25 followed by 163.85, while a return lower targets the 159.75 level.

- Gilt futures trade at 123.35 higher by 27 ticks as Trump's comment weigh on sterling. Support continues stands at 121.75 then 120.25, with upside resistance at 123.85 then 124.25.

- Friday's liquidity report showed Thursday's excess liquidity rose from €1.867T to €1.871T. Use of the marginal lending facility rose from €56 to €135M.

- Corporate issuance saw 4 issuers raise $5.0B in the primary market

 

Looking Ahead

- 07:30 (IN) India Weekly Forex Reserves

- 08:00 (BR) Brazil May IBGE Services Sector Volume Y/Y: -4.0%e v 2.2% prior

- 08:00 (IS) Iceland Jun Unemployment Rate: No est v 2.2% prior

- 08:15 (UK) Baltic Dry Bulk Index

- 08:30 (US) Jun Import Price Index M/M: 0.1%e v 0.6% prior; Y/Y: 4.6%e v 4.3% prior, Export Price Index M/M: 0.2%e v 0.6% prior; Y/Y: No est v 4.9% prior, Import Price Index ex Petroleum M/M: 0.2%e v 0.1% prior

- 09:00 (CA) Canada Jun Existing Home Sales M/M: 1.5%e v -0.1% prior

- 10:00 (US) July Preliminary University of Michigan Confidence: 98.0e v 98.2 prior

- 11:00 (CO) Colombia May Industrial Production Y/Y: 4.9%e v 10.5% prior

- 11:00 (CO) Colombia May Retail Sales Y/Y: 5.0%e v 6.3% prior

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

- 14:00 (CO) Colombia Central Bank Jun Minutes

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