European manufacturing PMI firms at the core

EU mid-market update: European manufacturing PMI firms at the core as dovish ECB commentary builds ahead of highly anticipated Warsh speech at Sintra.

Notes/observations

- Main event is Fed Chair Warsh on the policymaker panel in Sintra, expected to speak alongside Lagarde, Bailey and Macklem. This is his first international appearance since taking office and since chairing his first FOMC in June (rates held at 3.5–3.75%), and it's being treated as a near-Jackson Hole moment. The hook is his low-information, reduced-forward-guidance style. It matters because July is seen as "strategy-dependent" rather than data-dependent, and the June jobs report lands tomorrow (pulled forward to Thursday for the July 4th holiday). Positioning is live: Fed futures price roughly a 35% chance of a 25bp hike this month and about 65% by September. Analysts see the dollar staying firm if Warsh leans on price stability - with core PCE at 3.4% and another strong jobs print, any pushback against hike pricing "would be a big surprise" and skews dollar risks to the upside.

- ECB speak at the forum produced a consistently dovish chorus pushing back on further tightening. Wunsch said the case for additional hikes has faded and he'll have a better read on second-round effects by September. Kazaks argued there's no need to act urgently or hike repeatedly as the energy shock weakens, favouring a more gradual response. Demarco said the Bank shouldn't rush, citing no evidence of second-round effects, undue wage pressure or de-anchoring. Nagel struck the most balanced tone - flagging inflation staying elevated through 2026 and above target in 2027 but explicitly keeping July and September options open and noting it's too early to declare second-round effects over. Separately, press reported the ECB is weighing doubling the reserves lenders must hold to trim interest costs from the inflation fight, and ECB sources reiterated that lower oil prices are easing the pressure to tighten.

- European June final manufacturing prints showed a firming core against a weakening periphery. The Eurozone aggregate confirmed a 5th month of expansion at 51.4, with Germany (50.3) and France (51.2) both back in growth and — encouragingly — new orders improving in each. Italy held at 52.2. The laggards stood out: Spain slipped to 49.7 (first contraction in three months, well below the 51.0e), and Poland disappointed at 46.1 (15th month of contraction). Elsewhere the Nordics and CEE stayed strong (Sweden 58.3, Czech 53.9, Hungary 51.5, Greece 53.8), while the UK confirmed an 8th month of expansion at 52.5, softer than flash. Net: core momentum and improving orders, but a widening divergence across the periphery.

- Tone of Iran talks is cautiously constructive but unresolved. Per the WSJ, Trump is sticking with diplomacy for now and is reportedly comfortable if talks run past the August 18th deadline. A US official characterized negotiations as positive, and shipping through the Strait of Hormuz has picked up. Iran said dialogue with mediator Qatar on implementing the interim deal - including the release of frozen assets - was expected Wednesday in Doha. That said, the picture is muddier at the margin: one competitor desk reported Iran declined to meet US envoys, clouding the path to a fuller peace deal, and Iranian state media flagged a ship running aground in the Strait after using an unapproved route.

- Reported OpenAI’s 50% inference optimization could be a set of tweaks in compounding systems engineering: not a flashy new model, but relentless, telemetry-driven improvements across dynamic batching, KV cache management, selective quantization, and intelligent routing that squeeze massive efficiency from existing Nvidia hardware. By leveraging real-world production traces—bursty traffic, multi-turn conversations, safety layers—these optimizations interact non-linearly to slash GPU requirements dramatically, proving that in the post-scaling era, low-level execution depth and hardware-software co-design matter more than raw parameter count. This mirrors xAI’s lean C/C++ rewrite philosophy and Chinese labs’ constraint-driven efficiency, signaling AI’s shift from “bigger is better” to adaptive, self-optimizing forward passes where marginal gains in cache geometry and orchestration quietly redefine the industry’s economics.

- In FX, the yen sits at multi-decade lows (USD/JPY ~162.7) with intervention watch elevated. Top FX diplomat Mimura noted the US has raised no objection to Japanese action, though officials have stayed quiet ahead of Thursday's US payrolls.

- Asia closed mixed with KOSPI underperforming -2.0%. EU indices -0.5% to +0.2%. US futures -0.5% to +0.3%. Gold -0.9%, DXY +0.2%; Commodity: Brent -1.6%, WTI -1.6%; Crypto: BTC -0.6%, ETH -0.1%.

Asia

- China Jun RatingDog PMI Manufacturing: 51.7 v 52.0e (8th month of expansion).

- Australia Jun Final PMI Manufacturing: 51.5 v 51.2 prelim (confirms 3rd month of expansion).

- Japan Jun Final PMI Manufacturing: 54.8 v 54.9 prelim (confirmed 5th month of expansion).

- Japan Q2 Tankan Large Manufacturing Index: 22 v 16e; Large Manufacturing Outlook: 17 v 13e.

- Japan Q2 Large Non-Manufacturing Index: 37 v 36e; Large Non-Manufacturing Outlook: 28 v 29e.

- Japan Q2 Large All Industry Capex Estimate FY: 11.5% v 11.0%e.

- (KR) South Korea Jun Trade Balance: $36.1B v $32.6Be (strongest level of monthly surplus on record, exports mark strongest y/y rise since October, 1978); Exports Y/Y: 70.9% v 60.9%e; Imports Y/Y: 30.1% v 24.5%e.

- South Korea Jun PMI Manufacturing: 52.1 v 54.8 prior (7th month of expansion).

- Australia May Building Approvals M/M: -1.1% v 0.0%e.

- Japan top FX diplomat Mimura stressed that Japan-US currency coordination remained close. Noted that US Official made supportive remarks about FX action; Had not received any objection from US against Japan's intervention from late April.

Global conflict/tensions

- President Trump said to have considered additional military strikes against Iran but opted to continue to pursue diplomatic negotiations.

Europe

- ECB’s Dolenc (acting Slovenia member) noted that if current oil prices held, the ECB might be able to wait until Sept to decide if more policy steps were needed.

- ECB said to be considering doubling banks’ minimum reserve requirements to 2%. Decision expected later this autumn.

- BOE Gov Baily noted that inflation remained on track to return to the 2% target, albeit more slowly than previously hoped; no rush to respond to higher oil prices.

- BOE said to consider implementing an AI "kill switch" to prevent trading bots from causing a potential financial meltdown, worried that new technologies could amplify volatility in stressed financial markets.

Energy

- Weekly API Crude Oil Inventories: -6.1M v -0.8M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.11% at 10,485.52, DAX +0.29% at 25,050.84, CAC-40 -0.36% at 8,373.96, IBEX-35 -0.28% at 19,405.17, FTSE MIB -0.08% at 51,642.50, SMI -0.11% at 14,178.00, S&P 500 Futures -0.26%].

Market focal points/key themes: European indices open generally lower and remained under pressure through the early part of the session; markets cautious after record high at end of second quarter; among sectors staying in the green are telecom and industrials; sectors leading the way lower include financials and energy; Schneider Electric acquires Cognite with Aker; Asos sells Atlanta fulfillment center; CMA CGM near deal to acquire FedEx logistics unit; Ipsen acquires Memo Therapeutics; focus on commentary out of central bank heads during ECB Forum at Sintra; corporate updates expected in the US session include earnings from General Mills and pre-close updates from Rational and Continental.

Equities

- Consumer discretionary: Associated British Foods [ABF.UK] -2.0% (trading update), Adidas [ADS.DE] -1.5% (Nike results), Greggs [GRG.UK] -3.5% (names CFO), Dustin Group [DUST.SE] +2.5% (earnings).

- Financials: CMC Markets [CMCX.UK] +25.0% (trading updated; raised outlook).

- Healthcare: AlzeCure Pharma [ALZCUR.SE] +64.0% (out-licenses NeuroRestore platform to QuantumCell; Deal value exceeds $2.2B excluding royalties).

Speakers

- ECB’s Nagel (Germany) noted that inflation would stay high in 2026 and remain above target in 2027; currently did not see inflation feed-through to wages. To keep options open for July and September decisions as needed to see what US-Iran peace agreement would bring.

- ECB's Wunsch (Belgium) noted that the case for further tightening had faded. Should have a better feel of 2nd round effect by Sept.

- ECB's Kocher (Austria): Next decisions would be either a hike or hold. Inflation threat was lower but not completely contained. Wage deals could keep inflation elevated.

- South Africa Central Bank (SARB) Gov Kganyago noted that inflation expectations had crept higher and must respond to CPI expectations being above target.

- Ship said to have run aground in Strait of Hormuz after using an unapproved route - Iran State news.

Currencies/fixed income

- FX markets steady with focus on key central bankers at the ECB Sintra forum.

- EUR/USD holding around 1.14 area as recent soft EU inflation data saw ECB speakers tone down calls for any immediate rate hike and wait until Sept when new Staff Projections are released.

- USD/JPY at 162.70 and near 40-year lows for the yen currency. Continued jawboning by Japanese officials having diminishing effects on making the yen stronger. Markets eyeing whether an upcoming US holiday could have central banks embark of intervention.

- 10-year German Bund yield last at 2.88%, France 10-year Oat at 3.68% and 10-year Gilt yield at 4.80% 10-year Treasury yield: 4.46%; 10-year JGB: 2.69%.

Economic data

- (NL) Netherlands Q1 Final GDP Q/Q: 0.2% v 0.1% prelim; Y/Y: 1.4% v 1.2% prelim.

- (NL) Netherlands May Retail Sales Y/Y: 2.9% v 3.5% prior.

- (NL) Netherlands Jun Manufacturing PMI: 55.5 v 55.9 prior (13th month of expansion).

- (UK) Jun Nationwide House Price Index M/M: 0.0% v 0.1%e; Y/Y: 2.2% v 2.5%e.

- (RU) Russia Jun Manufacturing PMI: 50.3 v 48.8 prior (1st expansion in 13 months).

- (CH) Swiss May Real Retail Sales Y/Y: 3.5% v 1.7% prior.

- (SE) Sweden Jun PMI Manufacturing: 58.3 v 57.4 prior (23rd month of expansion).

- (AT) Austria Jun Preliminary CPI M/M: 0.0% v 0.1% prior; Y/Y: 3,2% v 3.7% prior.

- (TR) Turkey Jun Manufacturing PMI: 47.1 v 49.8 prior.

- (PL) Poland Jun Manufacturing PMI: 46.1 v 49.7e.

- (HU) Hungary Jun Manufacturing PMI: 51.5 v 50.4e.

- (ES) Spain Jun Manufacturing PMI: 49.7 v 51.0e (1st contraction in 3 months).

- 03:30 (CH) Swiss Jun PMI Manufacturing: 54.3 v 56.5e (4th month of expansion); PMI Services: 59.8 v 56.0 prior.

- (CZ) Czech Jun Republic Manufacturing PMI: 53.9 v 52.0e.

- (TH) Thailand Jun Business Sentiment Index: 46.1 v 42.5 prior.

- (IT) Italy Jun Manufacturing PMI: 52.2 v 52.4e (5th month of expansion).

- (FR) France Jun Final Manufacturing PMI: 51.2 v 50.7 prelim (confirmed move back into expansion).

- (DE) Germany Jun Final Manufacturing PMI: 50.5 v 50.0 prelim (confirmed 5th month of expansion).

- (EU) Euro Zone Jun Final Manufacturing PMI: 51.4 v 51.3 prelim (confirmed 5th month of expansion).

- (GR) Greece Jun Manufacturing PMI: 53.8 v 53.3 prior.

- (IT) Italy Q1 YTD Budget Deficit to GDP: 7.8% v 3.1% prior.

- (UK) Jun Final Manufacturing PMI: 52.5 v 53.1 prelim (confirmed 8th month of expansion).

- (NG) Nigeria Jun PMI (whole economy): 53.4 v 54.1 prior.

- (EU) Euro Zone Jun Preliminary CPI Estimate Y/Y: 2.8% v 3.0%e v 3; CPI Core Y/Y: 2.4% v 2.5%e.

- (GR) Greece May Unemployment Rate: 8.1% v 9.1% prior.

- (ZA) South Africa Jun Manufacturing PMI: 47.3 v 50.0e (1st contraction in 3 months).

Fixed income issuance

- (IN) India sold total INR240B vs. INR240B indicated in 3-month, 6-month and 12-month bills.

- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2031 and 2036 Bonds.

- (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2030 and 2036 Bonds.

- (UK) DMO sold £1.25B in 0.125% Aug 2031 Inflation-linked Gilts (UKTi).

Looking ahead

- (RO) Romania Jun International Reserves: No est v $77.0B prior.

- (AR) Argentina Jun Government Tax Revenue (ARS): No est v 21.513T prior.

- (ZA) South Africa Jun Naamsa Vehicle Sales Y/Y: No est v 12.8% prior.

- (IT) Italy Jun Budget Balance: No est v -€14.7B prior.

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

- 05:30 (US) Jun Challenger Job Cuts: No est v 97.0K prior; Y/Y: No est v 3.4% prior.

- 05:30 (DE) Germany to sell combined €3.5B in 2.5% Nov 2032 Bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (PT) Portugal May Industrial Production M/M: No est v -2.6% prior; Y/Y: No est v 0.0% prior.

- 06:00 (IE) Ireland Jun Unemployment Rate: No est v 4.9% prior.

- 06:00 (EU) European Union to sell combined €4.5B in 3-month, 6-month and 12-month bills.

- 06:15 (IE) ECB's Lane (Ireland, chief economist) on Global Trade Panel in Sintra.

- 07:00 (US) MBA Mortgage Applications w/e Jun 26th: No est v 1.0% prior.

- 07:00 (RU) Russia to sell OFZ Bonds.

- 08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -170.2B prior.

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

- 08:01 (NZ) New Zealand Jun Cotality Home Value M/M: No est v 0.0% prior.

- 08:15 (US) Jun Monthly ADP Employment Change: +120Ke v +122K prior.

- 08:30 (CL) Chile May Economic Activity Index (Monthly GDP) M/M: 0.2%e v 0.1% prior; Y/Y: -0.1%e v -1.2% prior.

- 09:00 (BR) Brazil Jun Manufacturing PMI: No est v 49.1 prior.

- 09:00 (EU) ECB chief Lagarde with Fed's Warsh, BOE's Bailey, BOC's Macklem.

- 09:45 (US) Jun S&P Final Manufacturing PMI: 55.7e v 55.7 prelim.

- 10:00 (US) Jun ISM Manufacturing: 53.9e v 54.0 prior.

- 10:00 (US) May Construction Spending M/M: 0.2%e v 0.4% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (MX) Mexico May Total Remittances: $5.6Be v $5.0B prior.

- 11:00 (CO) Colombia Jun PMI Manufacturing: No est v 51.8 prior.

- 11:00 (MX) Mexico Jun Manufacturing PMI: No est v 49.6 prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 11:00 (PE) Peru Jun CPI M/M: 0.0%e v -0.2% prior; Y/Y: 3.8%e v 3.9% prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (RU) Russia Q1 Final GDP (3rd reading) Y/Y: No est v -0.2% prelim.

- 12:00 (RU) Russia May Real Retail Sales Y/Y: 5.5%e v 6.5% prior.

- 12:00 (RU) Russia May Unemployment Rate: 2.2%e v 2.2% prior.

- 12:00 (RU) Russia Apr Real Wages Y/Y: 6.0%e v 8.1% prior.

- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v 7.6% prior.

- 12:30 (UK) Labour’s Burnham at LSE.

- 13:30 (EU) ECB's Lagarde Closing Remarks in Sintra.

- 14:00 (MX) Mexico Jun IMEF Manufacturing Index: 48.9e v 48.5 prior; Non-Manufacturing Index : 49.2e v 48.7 prior.

- 18:00 (NZ) New Zealand N.Z. Government 11-Month Financial Statements.

- 18:45 (NZ) New Zealand May Building Permits M/M: No est v 10.9% prior.

- 19:00 (KR) South Korea Jun CPI M/M: 0.1%e v 0.5% prior; Y/Y: 3.2%e v 3.1% prior; CPI (ex-food/energy) Y/Y: 2.6%e v 2.5% prior.

- 19:50 (JP) Japan Jun Monetary Base End of Period: No est v ¥571.9T prior; Y/Y: No est v -12.2% prior.

- 21:30 (AU) Australia May Trade Balance (A$): 2.2Be v 1.8B prior; Exports M/M: No est v 7.2% prior; Imports M/M: No est v 0.8% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$450M in 2030, 2036 and 2054 bonds.

- 23:35 (JP) Japan to sell 10-Year JGB Bonds.