Notes/Observations

- Various Jun PMI data showed improvement in sentiment aided by the easing of lockdowns measures (Beats: France, Germany and Euro Zone revised higher; Misses: Italy; In-line: UK)

- German retail sales rebound in May as lockdown lifted

- Sweden Central Bank expands size and scope of its QE bond buying program to further enhance its easing measures

- China ordered more American news outlets to declare their finances and staff, in the latest tit-for-tat exchange with the US over media access

- HK began making arrests under the new Security Law

Asia:

- China Jun Caixin PMI Manufacturing beats expectations and registered a 6-month high (51.2 v 50.5e)

- Australia Jun Final Manufacturing PMI registerd its 1st expansion in 4 months (51.2 v 49.8 prelim

- Japan Jun Final PMI Manufacturing confirmed its 14th month of contraction and lowest level since April 2009 (37.8 v 37.8 prelim)

- Japan Q2 Tankan Large Manufacturing Index: -34 v -31e; Outlook Index: -27 v -24e (weakened for 6th successive quarter to lowest level since 2009)

- China said to be preparing reciprocal restrictions on US media branches in China

Coronavirus:

- Total global cases 10,450,628 (+1.7% d/d); total deaths: 510.6K (+1.1% d/d)

Europe:

- ECB's De Guindos (Spain): main concern is dual speed of recovery in Europe. To avoid a two-speed recovery the region would need a pan-European fiscal response. EU fiscal support shouldn't be loans but should be grants (Note: would be in-line with current EU Commission proposal)

- Chancellor of the Exchequer (Fin Min) Sunak announced that he would give economic update on Wed, July 8th and set out next stage of recovery plan

- UK PM Johnson said to have received a letter signed by over 100 business leaders that warned PM Johnson that it would be hugely damaging to the UK economy if the Britain left the EU without a deal at the end of the year Americas: - US Senate passed Paycheck Protection Program extension bill, also passes bill which gives companies more time to apply for relief

Energy:

- Weekly API Crude Oil Inventories: -8.2M v +1.7M prior

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.46% at 361.98, FTSE +0.20% at 6,181.90, DAX +0.29% at 12,346.55, CAC-40 -0.09% at 4,931.33, IBEX-35 +0.67% at 7,280.00, FTSE MIB +0.26% at 19,425.50, SMI +0.51% at 10,096.70, S&P 500 Futures -0.03%]

Market Focal Points/Key Themes: European indices open mixed, moving marginally higher as the session progressed; Energy sector leading to the upside; underperforming secotrs include consumer discretionary and telecom; Renault commercial director sees French car market shrinking by 20% this year; reportedly Clariant in merger discussions; focus on ADP employment figures from US; earnings expected in the upcoming US session include General Mills, Macy's and Constellation Brands

 

Equities

- Consumer discretionary: Clariant [CLN.CH] +9% (merger speculation), Home24 [H24.DE] +12% (raises outlook), Smith & Nephew [SN.UK] +4% (trading update), Sainsbury [SBRY.UK] -1% (trading update)

- Industrials: Kier [KIE.UK] -10% (trading update)

 

Speakers

- ECB's Panetta (Italy) reiterated Council stance that was prepared to adjust all measures if needed; policy must be proactive to prevent fragmentation. In better position to see how key developments played out

- Italy govt said to be planning to pass an additional €20B stimulus package in July which would take the budget deficit to GDP to 11.6%

- Sweden Central Bank (Riksbank) Policy Statement reiterated stance that Repo Rate could be cut if necessary and deemed effective. To continue to purchase govt, municipal and mortgage bonds and would buy corporate bonds starting in Sept. Measures to help inflation gradually rise to 2% target but cautioned it would take time to achieve this

- Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference stated that he saw signs of recovery but would take time

- German Dep Foreign Min official noted that new US pipeline sanctions were unacceptable with the move seen as a grave intrusion of EU sovereignty

- German IFO Institute updated its German GDP outlook which forecasted 2020 GDP contracting by 6.7% and saw 2021 GDP growth at 6.4%. it stressed of a gradual recovery of economy after COVID-19 slump

- BoJ's Nakamura reiterated stance that needed to watch both benefits and side effects of policy. Did not believe BOJ was financing debt

- China announced retaliation for US curbs on state media and note that AP, NPR and others must declare staff and finances within 7 days (in line with earlier speculation)

- China PBoC stated that it did not see high inflation or deflation and reiterated view that domestic economy was gradually recovering

 

Currencies/Fixed Income

- FX price action in Europe began the new quarter in a listless manner despite various PMI readings registering pre-pandemic growth rate

- SEK currency (Krona) softened after Sweden central bank ramped up its stimulus and pledged to buy corporate bonds in a bid to stop the domestic economy's slump

- The JPY was firmer as dealers took note the the BOJ bond buying operation for July. Dealers noted that the plan for July purchases paved the way for the Japanese yield curve to steepen further by signaling plans to buy more shorter-maturity bonds. USD/JPY lower by 0.4% at 107.50

 

Economic Data

- (PE) Peru Jun CPI M/M: -0.3% v -0.1%e; Y/Y: 1.6% v 1.7%e

- (DE) Germany May Retail Sales M/M: 13.9% v 3.5%e; Y/Y: +3.8% v -3.2%e

- (UK) Jun Nationwide House Price Index M/M: -1.4% v -0.6%e; Y/Y: -0.1% v +0.9%e

- (RU) Russia Jun PMI Manufacturing: 49.4 v 45.0e (14th month of contraction but highest since May 2019)

- (AU) Australia Jun Commodity Index: 95.8 v 98.9 prior

- (SE) Sweden Jun PMI Manufacturing: 47.3 v 39.2 prior (4th straight contraction)

- (NL) Netherlands Jun Manufacturing: 45.2 v 47.5e (3rd straight contraction)

- (HU) Hungary Jun Manufacturing PMI: 47.0 v 46.0e (4th straight contraction)

- (PL) Poland Jun PMI Manufacturing: 47.2 v 46.1e (20th month of contraction)

- (TR) Turkey Jun PMI Manufacturing: 53.9 v 40.9 prior (1st expansion in 4 months)

- (ES) Spain Jun Manufacturing PMI: 49.0 v 45.1e(4th straight contraction)

- (SE) Sweden Central Bank (Riksbank) left the Repo Rate unchanged at 0.00% (as expected); raise its QE bond buying profram from SEK300B to SEK500B

- (CH) Swiss Jun PMI Manufacturing: 41.9 v 42.1 prior (15th month of contraction)

- (CZ) Czech Republic Jun PMI Manufacturing: 44.9 v 45.0e (19th month of contraction)

- (TH) Thailand Jun Business Sentiment Index: 38.5 v 34.4 prior

- (IT) Italy Jun Manufacturing PMI: 47.5 v 47.8e (20th month of contraction)

- (FR) France Jun Final Manufacturing PMI: 52.3 v 52.1e (confirmed 1st expansion in 5 months and highest reading since Sept 2018)

- (DE) Germany Jun Final Manufacturing PMI: 45.2 v 44.6e (confirmed 18th straight contraction)

- (DE) Germany Jun Unemployment Change: +69.0K v +120.0Ke; Unemployment Claims Rate: 6.4% v 6.5%e

- (EU) Euro Zone Jun Final Manufacturing PMI: 47.4 v 46.9e (confirmed 17th straight contraction but highest reading since Feb 2020)

- (GR) Greece Jun Manufacturing PMI: 49.4 v 41.1 prior (4th straight contraction)

- (NO) Norway Jun PMI Manufacturing: 48.9 v 44.9 prior (4th straight contraction)

- (UK) Jun Final PMI Manufacturing: 50.1 v 50.1e (confirmed 1st expansion in 4 months)

- (ZA) South Africa Jun Manufacturing PMI: 53.9 v 49.8e (2nd straight expansion)

- (DK) Denmark Jun PMI Survey: 52.2 v 54.5 prior

Fixed Income Issuance

- (IN) India sold total INR350B vs. INR350B indicated in 3-month, 6-month and 12-month bills

- (PT) Portugal Debt Agency (IGCP) opened book to sell EUR-denominated 15-year OT bond via syndicate; guidance seen +92bps to mid-swaps

- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2025 and 2031 Bonds

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.75% Sept 2029 Bonds; Avg Yield: 0.59% v 0.53% prior; Bid-to-cover: 3.15x v 2.91x prior

- (UK) DMO sold £3.0B in 0.125% Jan 2028 Gilts; Avg Yield: 0.104% v 0.111% prior; bid-to-cover: 1.84x 2.06x prior; Tails: 0.6bps v 0.7bps prior -

 

Looking Ahead

- (ZA) South Africa Jun Naamsa Vehicle Sales Y/Y: No est v -68.0% prior

- (RO) Romania Jun International Reserves: No est v $40.8B prior

- (IT) Italy Jun Budget Balance: No est v -€25.5B prior

- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 26-week Bills; Avg Yield: % v 0.25% prior; bid to cover: x v 2.31x prior (Jun 3rd 2020)

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

- 06:30 (UK) DMO to sell £2.25B in 0.625% Oct 2050 Gilt

- 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e Jun 26th: No est v -8.7% prior

- 07:00 (UK) Weekly PM Question time in House

- 07:00 (UK) BOE's Haskel

- 07:30 (US) Jun Challenger Job Cuts: K v +397.0K prior; Y/Y: No est v 577.8% prior

- 08:00 (BR) Brazil May PPI Manufacturing M/M: No est v -0.1% prior; Y/Y: No est v 5.3% prior

- 08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -157.4B prior

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

- 08:15 (US) Jun ADP Employment Change: +2.85Me v -2.76M prior

- 08:30 (CL) Chile May Economic Activity Index (Monthly GDP) M/M: No est v -8.7% prior; Y/Y: No est v -14.1% prior; Economic Activity Index (ex-mining) Y/Y: No est v -15.5% prior

- 09:00 (BR) Brazil Jun PMI Manufacturing: No est v 38.3 prior

- 09:45 (US) Jun Final Markit Manufacturing PMI: 49.6e v 49.6 prelim

- 10:00 (US) Jun ISM Manufacturing: 49.7e v 43.1 prior; Prices Paid: 44.6e v 40.8 prior

- 10:00 (US) May Construction Spending M/M: +1.0%e v -2.9% prior

- 10:00 (MX) Mexico May Total Remittances: $3.0Be v $2.9B prior

- 10:00 (MX) Mexico Central Bank Economist Survey

- 10:00 (US) Fed's Evans (non-voter)

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

- 10:30 (MX) Mexico Jun PMI Manufacturing: No est v 38.3 prior

- 11:00 (CO) Colombia Jun PMI Manufacturing: No est v 37.2 prior

- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v -49.6% prior

- 13:00 (MX) Mexico Jun IMEF Manufacturing Index: 42.0e v 39.2 prior; Non-Manufacturing Index: 40.3e v 38.0 prior

- 14:00 (US) FOMC Jun Minutes

- 14:00 (BR) Brazil Jun Trade Balance: $7.0Be v $4.6B prior; Total Exports: $18.3Be v $17.9B prior; Total Imports: $11.2Be v $13.4B prior

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

- 19:00 (KR) South Korea Jun CPI M/M: 0.0%e v -0.2% prior; Y/Y: -0.2%e v -0.3% prior; CPI Core Y/Y: 0.4%e v 0.5% prior

- 19:50 (JP) Japan End-Jun Monetary Base: No est v ¥543.4T prior

- 21:30 (AU) Australia May Trade Balance: A$9.0Be v A$8.8B prior; Exports M/M: -7%e v -11% prior; Imports M/M: -9%e v -10% prior

- 23:30 (TH) Thailand Jun Consumer Confidence: No est v 48.2 prior; Economic Confidence: No est v 40.2 prior

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

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