Notes/Observations

- UK Spending data showed that the Treasury paid £8.7B in interest in June (a record) as Inflation helping to drive interest payments on government debt to unprecedented levels (Note: A quarter of government debt is linked to inflation indexes).

- UK government to set out its proposals for post-Brexit arrangements for Northern Ireland (Note: likely put the UK on another collision course with the EU).

- US yields move off recent 5-month lows as risk appetite finds some fresh tailwinds.

- Companies due to report during the NY morning include Anthem, Baker Hughes, Comerica, Interpublic, JNJ, Knight-Swift Transportation, Coca-Cola, Lithia Motors, NASDAQ, Northern Trust, Seagate Technology, Universal Stainless & Alloy Products, Verizon.

Asia

- BOJ June Meeting Minutes (two decisions ago): Members agree to not hesitate to add easing if needed.

- BOJ Dep Gov Amamiya reiterated the overall assessment that the domestic economy picking up as a trend; risks to the economic outlook were skewed to the downside. A chance economic activity might overshoot expectations if vaccinations speed up. Would continue to conduct appropriate policy and reiterated the stance that was prepared to considering additional easing steps depending on economic conditions.

- Japan markets are closed for a holiday on Thursday and Friday (Jul 22-23rd).

Coronavirus

- Currently, about 50% of Australia is in some sort of lockdown or restriction due to COVID.

Europe

- UK Brexit Sec Frost said to outline a strategy that sought to eliminate most of the checks on the Irish Sea border. To warn that Britain could suspend the Northern Ireland protocol if the EU did not give way.

- EU Commission published a proposal that Spanish border guards should be placed along the Gibraltar border.

Americas

- US Senate expected to vote on President Biden’s infrastructure bill.

- Senate Democrats said to be considering a Plan B if bipartisan infrastructure talks fail, adding ~$600B the Reps have already accepted to the Dems $3.5T plan, the overall price tag will be $4.1T.

Energy

- Weekly API Crude Oil Inventories: +0.8M v -4.1M prior (1st build in 9 weeks).

- US said to be close to a deal with Germany to resolve disputes over the Nord Stream 2 pipeline.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +1.08% at 451.42, FTSE +1.40% at 6,977.75, DAX +0.69% at 15,321.30, CAC-40 +1.18% at 6,421.99, IBEX-35 +1.95% at 8,521.00, FTSE MIB +1.54% at 24,479.50, SMI +0.36% at 11,989.21 , S&P 500 Futures +0.39%].

Market Focal Points/Key Themes: European indices open higher across the board and advanced further into the green as the session progressed; better-performing sectors lead by consumer discretionary and materials; the only sector starting the day in the red was industrials; DAX weighed by disappointing earnings from SAP, Daimler; energy sector under pressure following unexpected build in inventories in the US; reportedly CDR looking to make an offer for Morrisons; earnings expected during the upcoming US session include Anthem, Coca-Cola, Comerica, and Harley Davidson.

Equities

- Consumer discretionary: Next [NXT.UK] +9% (trading update), Royal Mail [RMG.UK] -2% (trading update).

- Materials: Akzo Nobel [AKZA.NL] -2% (earnings).

- Healthcare: Novartis [NOVN.CH] +2% (earnings).

- Industrials: Daimler [DAI.DE] -1% (earnings; cites chip shortage issue to persist in H2).

- Technology: ASML [ASML.NL] +4% (earnings), SAP [SAP.DE] -2% (earnings; raises outlook).

- Utilities: Iberdrola [IBE.ES] +1% (earnings).

Speakers

- Germany Fin Min Scholz: Flood assistance around €400M with relief coming out of the current budget.

- Poland Central Bank's Zubelewicz stated that needed to abandon the ultra-loose monetary policy and QE. The goal of bond-buying had been more than achieved Believed that only a rate hike motion from Gov Glapinski could succeed.

- China National Reserve Administration (SRB) said to sell the 2nd batch of base metals on July 29th.

- Philippines Fin Min Dominguez stated that Govt had room to cut banks’ reserve requirement ratio as the economy recovered from the effects of the pandemic.

Currencies/Fixed Income

- USD initially maintained a firm tone in the session continue to be aided by safe-haven flows due to fears the spread of the delta coronavirus variant could derail the global economic recovery. Greenback gave back most of the gains as risk appetite found some tailwinds.

- EUR/USD tested 1.1752 before rebounding to 1.1780 with a focus on Thursday’s ECB decision.

- GBP/USD slumped to test below 1.36 as UK govt was set out its proposals for post-Brexit arrangements for Northern Ireland and likely butt heads with EU on the topic. UK Brexit Sec Frost said to have warned that Britain could suspend the Northern Ireland protocol if the EU did not give way.

Economic data

- (UK) Jun Public Finances (PSNCR): £11.3B v £21.7B prior; Public Sector Net Borrowing: £22.0B v £21.5Be; Central Government NCR: £19.2B v £23.9B prior; PSNB (ex-banking groups): £22.8B v £21.9Be.

- (JP) Japan Jun Final Machine Tool Orders Y/Y: 96.6% v 96.6% prelim.

- (CH) Swiss Jun M3 Money Supply Y/Y: 3.5% v 4.2% prior.

- (IT) Italy May Industrial Sales M/M: -1.0% v 3.3% prior; Y/Y: 40.2% v 105.1% prior.

- (ZA) South Africa Jun CPI M/M: 0.2% v 0.2%e; Y/Y: 4.9% v 4.8%e (4th month within target band).

- (ZA) South Africa Jun CPI Core M/M: 0.3% v 0.2%e; Y/Y: 3.2% v 3.1%e.

- (PL) Poland Jun Real Retail Sales M/M: 3.5% v 8.2% prior; Y/Y: 8.6% v 9.2%e; Retail Sales Y/Y: 13.0% v 13.1%e.

- (PL) Poland Jun Construction Output Y/Y: 4.4% v 7.0%e.

- (PL) Poland July Consumer Confidence: -13.5% v -14.8 prior.

Fixed income Issuance

- (ID) Indonesia opened its book to sell EUR-denominated 8-year bonds; guidance saw +150bps to mid-swaps.

- (CH) Chile opened its book to sell EUR-denominated 5-year and 15-year bonds.

- (DK) Denmark sold total DKK1.96B in 2024 and 2031 DGB Bonds.

Looking Ahead

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

- 05:30 (DE) Germany to sell €1.0B in 1.25% Aug 2048 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell 12-month bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

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

- 06:00 (RU) Russia to sell RUB20B in 6.9% 2031 OFZ bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (US) MBA Mortgage Applications w/e July 16th: No est v 16.0% prior.

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

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

- 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (7-20 years).

- 10:00 (BR) Brazil Jun Tax Collections (BRL): 139.8Be v 142.1B prior.

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

- 13:00 (US) Treasury to sell 20-Year bonds.

- 15:00 (AR) Argentina Jun Trade Balance: $1.0Be v $1.6B prior.

- 15:00 (AR) Argentina May Economic Activity Index (Monthly GDP) M/M: -2.0%e v -1.2% prior; Y/Y: 17.5%e v 28.3% prior.

- 18:00 (NL) Netherlands Jun House Price Index M/M: No est v 2.0% prior; Y/Y: No est v 12.9% prior.

- 21:00 (CN) China Jun Swift Global Payments (CNY): No est v B prior.

- 21:30 (AU) Australia Q2 Business Confidence: No est v 17 prior.

- 21:30 (AU) Australia Preliminary June Merchandise Trade: No est v A$9.7B prior.

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