EU mid-market update: Japan officials remain tight-lipped on specific levels as USD/JPY approaches 160; Busy week for global politics with US debates and 1st round of French elections.

Notes/observations

- No change to macro narrative since the close on Friday, with main European focus resting on upcoming elections out of France and UK. Polling continues to paint a picture of strong far-right support with Le Pen’s National Rally leading with 32-36% of polled votes. In the UK, Conservatives are on track for a historic defeat against Labour while far-right Reform UK gathers steam. First US TV debate between Biden and Trump on Thurs.

- European automakers outperform after Germany said they were open for discussions on EV tariffs with China.

- For data, German IFO missed consensus for Business Climate, Current Assessment and Expectations surveys.

- In the FX space, USD/JPY teeters below the160 handle, with traders on intervention watch from BOJ/MOF. Senior Japan officials overnight refused to comment on levels specifically.

- Asia closed mixed with Shanghai composite underperforming -1.2%. EU indices are +0.5-1.5%. US futures are +0.2%. Gold +0.3%, DXY -0.1%; Commodity: Brent +0.4%, WTI +0.4%; Crypto: BTC -2.9%, ETH -3.8%.

Asia

- BOJ Summary of Opinions for Jun: Developments in foreign exchange rates have a wide-ranging impact on economic activity, and if exchange rates continue to deviate from fundamentals, this will also affect the sound development of the national economy.

- China PBOC sets Yuan reference rate: 7.1201 v 7.1196 prior (weakest CNY fix since Nov 23rd, 2023).

- China Commerce Ministry (MOFCOM): Reiterates resolutely object to US planned curbs on US investment in China.

- China NDRC (state planner): Urging local govts to loosen car purchase restrictions and add additional purchase quota.

- Bank of China's Russian arm reportedly suspends operations with sanctioned Russian banks; Now focuses on facilitating Chinese yuan (CNY) payments between Russia and China will continue working with non-sanctioned banks - Russian press.

- India Food Sec Chopra: Reiterates all options remain open to maintain stable wheat prices; No proposal as of now to ease rice export curbs.

Europe

- Germany Econ Min Habeck: EU doors are open for discussion on EV tariffs with China; China's support to Russia is affecting our economic relationship - comments from Shanghai.

- Ipsos Poll: France far right National Rally (RN) Party and allies: 35.5% v 29.5% for the New Popular Front (NPF) alliance - update.

- Swedish govt raises 2024 GDP growth forecast but cuts 2025 GDP forecasts. Cut 2024 inflation forecast and maintained 2025 forecast.

Americas

- US releases details on planned outbound restrictions; Proposes rules on outbound tech investments to China, which will focus on chips, Quantum computing, and artificial intelligence.

- Fed releases results of bank resolution plan review; Identified weakness in living will plans of BOA, Citigroup, Goldman Sachs and JP Morgan.

- US Appeals court rejects 'task force' power on preventative care; other Obamacare preventative care mandates revived by court.

- EPA raises 'substantial concerns' about Texas permitting process; Plans to review Texas' oversight of oil and gas wastewater disposal wells.

- Former Pres Trump: Have made VP pick; Nobody knows my choice yet; The person is likely to attend his first debate against Joe Biden on Thursday, June 27th.

- Peru Central Bank (BCRP): Maintains inflation estimate for 2024 at 2.2%, 2025 inflation 2%.

Global conflict/tensions

- Iran's UN Mission: Any imprudent decision by Israel could plunge the region into a new war; Hezbollah has the capability to defend itself and Lebanon.

Speakers/fixed income/FX/commodities/erratum.

Equities

Indices [Stoxx600 +0.43% at 517.34, FTSE +0.51% at 8,279.96, DAX +0.47% at 18,270.55, CAC-40 +0.66% at 7,678.64, IBEX-35 +0.63% at 11,101.92, FTSE MIB +1.20% at 33,709.00, SMI +0.51% at 12,088.10, S&P 500 Futures +0.16%].

Market focal points/key themes: European indices with an upward bias and stayed in the green through the early part of the session; better performing sectors include Automobiles & Parts as German Economy Minister visited China and said EU doors are open for discussion on EV tariffs with China; sectors trending lower include Travel & Leisure and Utilities; on corporate front, shares Eurofins Scientific in Paris fell sharply after short seller report; Deutz trades higher over 15% after CEO interview; on M&A front, Britvic reportedly may get increased offer from Carlsberg, shares rose around 8% in London; Prudential announced new share buyback program; earnings expected in the upcoming Americas session include Beyond Air after market closure.

Equities

- Consumer discretionary: Britvic [BVIC.UK] +8.0% (Carlsberg reportedly mulls new offer), Zalando [ZAL.DE] -6.0% (analyst cut).

-Consumer Staples: Eurofins Scientific [ERF.FR] -16.0% (short seller report).

- Financials: Prudential [PRU.UK] +6.0% (share buyback).

- Healthcare: ALK-Abello [ALKB.DK] +7.5% (raises outlook).

- Industrials: Deutz [DEZ.DE] +18.0% (mulls entering Defense sector).

- Materials: SIG [SHI.UK] -12.5% (trading update; cut outlook).

-Information Technology: Prosus [PRZ.NL] +0.5% (earnings).

Speakers

-Japan Top FX Diplomat Kanda: Declines to comment on daily FX levels.

-Japan Fin Min Suzuki: Want to respond appropriately as needed; Declines comment on FX levels.

-ECB’s Schnabel (Germany): Reiterates ECB will not pre-commit to rate path as we could be threatened by potential price shocks.

-Indonesia Central Bank (BI) Gov Warjiyo: See no need to hike rates; Focus on using FX intervention.

-Indonesia Chief Economy Min: Bond yields are relatively attractive to market with moderate risk.

-Indonesia President Prabowo Adviser: Debt-to-gdp ratio at 50% is not possible.

Economic data

-(NZ) New Zealand May Trade Balance (NZ$): +204M v +91M prior.

-(NL) Netherlands Q1 Final GDP Q/Q: -0.5% v -0.1% prelim; Y/Y: -0.6% v -0.7% prelim.

-(SG) Singapore May CPI M/M: 0.7% v 0.1% prior; Y/Y: 3.1% v 3.1%e.

- CPI Core Y/Y: 3.1% v 3.1%e.

-(FI) Finland May PPI M/M: -0.4% v +0.9% prior; Y/Y: -0.4% v -2.1% prior.

-(CZ) Czech Jun Consumer Confidence: 101.0 v 102.4e; Business Confidence: 97.4 v 96.2e.

-(TR) Turkey Jun Real Sector Confidence (unadj): 102.8 v 105.4 prior; Capacity Utilization: 76.3% v 76.3% prior.

-(MY) Malaysia end-Jun Foreign Reserves: $114.1B v $113.6B prior.

-(CH) Swiss weekly Total Sight Deposits (CHF): 451.8B v 453.5B prior; Domestic Sight Deposits: 443.4B v 445.3B prior.

-(TW) Taiwan May Industrial Production Y/Y: 16.1% v 14.5% prior.

-(TW) Taiwan May Unemployment Rate: 3.4% v 3.4% prior.

-(PL) Poland May Real Retail Sales M/M: -0.1% v -1.8% prior; Y/Y: 5.0% v 5.7%e; Real Sales (current prices) Y/Y: 6.8% v 4.3% prior.

-(DE) Germany Jun IFO Business Climate: 88.6 v 89.7e; Current Assessment Survey: 88.3 v 88.5e; Expectations Survey: 89.0 v 91.0e (lowest since March).

-(TW) Taiwan May M2 Money Supply Y/Y: 6.0% v 6.1% prior.

Fixed income issuance

-Australia sells A$900M v A$900M indicated in 3.25% Apr 2029 bonds; Avg Yield 3.9389%; bid-to-cover: 3.47x.

Looking ahead

- 05:30 ((DE) Germany to sell combined €4.0B in 6-month and 12-month BuBills.

- 05:30 (EU) European Union to sell €5.0B in 2-year and 10-year NGEU Bonds.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (UK) Jun CBI Industrial Trends Total Orders: -25e v -33 prior; Selling Prices: No est v 15 prior.

- 06:00 (NO) Norway announcement on upcoming Bond issuance (held on Wed).

- 06:00 (IL) Israel to sell ILS2.9B in 2027, 2029, 2033, 2034, 2035 and 2037 bonds and linkers.

-06:10 (DE) ECB’s Nagel.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:30 (BR) Brazil May Current Account Balance: No est v -$2.5B prior; Foreign Direct Investment (FDI): No est v $3.9B prior.

- 08:00 (PL) Poland May M3 Money Supply M/M: No est v 1.1% prior; Y/Y: No est v 7.4% prior.

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

-08:30 (FR) ECB’s Villeroy.

- 09:00 (CL) Chile May PPI M/M: No est v 3.0% prior.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €6.0-7.2B in 3-month, 6-month and 12-month bills.

- 10:30 (US) Jun Dallas Fed Manufacturing Activity: No est v -19.4 prior.

-11:30 (DE) ECB’s Schnabel.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

-13:30 (CA) Bank of Canada (BoC) Gov Macklem.

-14:00 (US) Fed’s Daly.

- 15:00 (AR) Argentina Q1 GDP Q/Q: No est v -1.9% prior; Y/Y: No est v -1.4% prior.

- 15:00 (AR) Argentina Q1 Unemployment Rate: No est v 5.7% prior.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Jun Consumer Confidence: No est v 98.4 prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: No est v 80.3 prior.

- 19:50 (JP) Japan May PPI Services Y/Y: No est v 2.8% prior.

- 20:30 (AU) Australia Jun Westpac Consumer Confidence: No est v 82.2 prior.

- 22:30 (KR) South Korea to sell KRW700B in 20-year Bonds.

- 23:35 (JP) Japan to sell 20-year JGB Bonds.

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