Notes/Observations

- Risk aversion continued in Chinese stock as govt crackdown on tech and education sectors weight on sentiment for a 3rd session.

- Spread of the Covid-19 Delta variant is another factor on risk appetite.

- Tokyo said to register over 3,000 new coronavirus cases for a new daily record.

Asia

- South Korea Q2 Preliminary GDP registered its fastest annual pace in 10-years (QoQ: 0.7% v 0.8%e; Y/Y: 5.9% v 6.1%e); not derail the BOK’s plan to normalize.

- Inter Korea communication lines said to have been reopened [first time in 14 months]. South Korea Unification Ministry noted that North Korean leader Kim and South Korean President Moon had exchanged letters since April to communicate on the issue of restoring inter-Korean relations.

Coronavirus

- UK Govt said to consider easing rules for entry into the country from EU and the US this week. Ministers were also considering removing France from the Amber plus list.

- UK Govt scientists said to be reviewing 77 countries including Germany and Italy to potentially move to the green list. Many long-listed destinations may not “make the cut”.

- White House stated that the US would not to lift travel restrictions on the back of increasing US coronavirus cases and the Delta variant.

- Vaccination or weekly testing to become mandatory for employees of New York City and California.

Americas

- White House and senators from both parties said to be scrambling to pull their infrastructure talks back from the point of collapse, a sudden turnabout after key negotiators expressed confidence they were nearing a final deal.”

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.72% at 457.84, FTSE -0.87% at 6,964.15, DAX -0.86% at 15,484.85, CAC-40 -0.62% at 6,537.53, IBEX-35 -0.79% at 8,706.00 , FTSE MIB -0.90% at 25,067.50, SMI -0.45% at 11,995.43, S&P 500 Futures -0.41%].

Market Focal Points/Key Themes: European indices open lower across the board; telecom and materials sectors among those better positioned; underperforming sectors include consumer discretionary and energy; Just Eat shareholder urging the sale of assets; Sodexho to combine childcare unit with Grandir; Ferrovial sells environmental business to PreZeroearnings expected during the upcoming US session include Telecom Italia, UPS, Arch Resources and Boston Scientific.

Equities

- Consumer discretionary: LVMH [MC.FR] +1% (earnings), Greencore Group [GNC.UK] +4% (trading update), Edenred [EDEN.FR] -4% (earnings).

- Financials: Randstad Holding [RAND.NL] -2% (earnings).

- Industrials: Dassault Systems [DSY.FR] +4% (earnings; raises outlook), Reckitt [RKT.UK] -8% (earnings).

- Technology: Logitech [LOGN.CH] -5% (earnings).

- Telecom: Royal KPN [KPN.NL] +1.5% (earnings; buyback).

Speakers

- ECB's Panetti (Italy) wrote an op-ed piece noting that Europe should allocate capital to growth sectors.

- ECB's Holzmann (Austria) stated that he did have reservations about the ECB guidance as it gave too much uncertainty for policy decisions. To discuss policy at the September meeting when given the new Staff Projections.

- BOJ Gov Kuroda stated that govt played a key role in responding to climate change. He stressed that climate change could potentially have a huge impact on the economy, prices, and financial developments in the long run. BOJ must take learning by doing approach in dealing with climate change.

Currencies/Fixed Income

- Continued equity sell-off in China/Hong Kong provided some safe-haven buying into the USD and JPY related pairs. Continued rising virus inflection in the Far east also was wreaking havoc on sentiment. Dealers noted that Any dip in economic activity would justify the stance of major central banks to keep their hugely accommodative policies in place for longer.

- Fed will begin its 2-day meeting ahead of Wed’s policy decision.

- Amazon denied reports that they would accept Bitcoin this year, also denied it planned to launch a crypto coin in 2022.

Economic data

- (FI) Finland July Consumer Confidence: 4.4 v 4.6 prior; Business Confidence: 17 v 19 prior.

- (FI) Finland Jun Unemployment Rate: 7.6% v 9.6% prior.

- (FI) Finland Jun Preliminary Retail Sales Volume Y/Y: 3.6% v 4.8% prior.

- (DK) Denmark Jun Retail Sales M/M: -0.4% v +0.8% prior; Y/Y: 6.6% v 6.1% prior.

- (SE) Sweden Jun Trade Balance (SEK): 10.3B v 3.6B prior.

- (SE) Sweden Jun Household Lending Y/Y: 6.2% v 6.0% prior.

- (EU) Euro Zone Jun M3 Money Supply Y/Y: 8.3% v 8.2%e.

- (TW) Taiwan Jun Monitoring Indicator: 40 v 41 prior.

- (GR) Greece May Unemployment Rate: 15.9% v 17.1% prior.

Fixed income Issuance

- (ID) Indonesia sold total IDR13.15T vs. IDR12.0T target in Islamic bills and bonds (sukuk).

- (UK) DMO sold £3.0B in 0.375% Oct 2026 Gilts; Avg Yield: 0.334% v 0.465% prior; bid-to-cover: 2.50x v 2.69x prior; Tail: 0.4bps v 0.2bps prior.

- (IT) Italy Debt Agency (Tesoro) sold €B vs. €3.25-3.75B indicated range in 0% Jan 2024 BTP; Avg Yield: -0.29% v -0.19% prior; bid-to-cover: 1.37x v 1.34x prior.

Looking Ahead

- (NG) Nigeria Central Bank Interest Rate Decision: Expected to leave Interest Rate unchanged at 11.50%.

- 05:15 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2026, 2030, and 2044 bonds.

- 06:00 (FR) France Q2 Total Jobseekers: No est v 3.561M prior.

- 06:00 (UK) July CBI Retailing Reported Sales: 20e v 25 prior; Total Distribution Reported Sales: No est v 40 prior.

- 06:00 (TR) Turkey to sell 2022, 2025, and 2027 bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (MX) Mexico Jun Trade Balance: $2.0Be v $0.3B prior.

- 07:00 (MX) Mexico IGAE Economic Activity Index (Monthly GDP) M/M: +0.3%e v -0.2% prior; Y/Y: 23.9%e v 22.3% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to raise Base Rate by 15bps to 1.05%; Expected to raise Overnight Deposit Rate by 15bpds to +0.10%.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Jun Preliminary Durable Goods Orders: 2.1%e v 2.3% prior; Durables (ex-transportation): 0.8%e v 0.3% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.8%e v 0.1% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.8%e v 1.1% prior.

- 08:30 (BR) Brazil Jun Current Account Balance: $3.8Be v $3.8B prior; Foreign Direct Investment (FDI): $2.5Be v $1.2B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) May FHFA House Price Index M/M: 1.6%e v 1.8% prior.

- 09:00 (US) May S&P/Case-Shiller House Price Index (20-City) M/M: 1.50%e v 1.62% prior; Y/Y: 16.20%e v 14.88% prior.

- 09:00 (US) May S&P/Case-Shiller House Price Index (Overall) Y/Y: No est v 14.59% prior.

- 09:00 IMF World Economic Outlook (WEO): 2021 GDP currently seen at 6.00%.

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate decision statement.

- 09:45 (UK) BOE buys £1.147B in APF Gilt purchase operation.

- 10:00 (MX) Mexico Weekly International Reserve data.

- 10:00 (US) July Consumer Confidence: 123.9e v 127.3 prior.

- 10:00 (US) July Richmond Fed Manufacturing Index: 20e v 22 prior.

- 13:00 (US) Treasury to sell 5-Year Notes.

- 16:30 (US) Weekly API Oil Inventories.

- 17:00 (KR) South Korea July Consumer Confidence: No est v 110.3 prior.

- 19:01 (UK) July BRC Shop Price Index Y/Y: No est v -0.7% prior.

- 21:30 (AU) Australia Q2 CPI Q/Q: 0.7%e v 0.6% prior; Y/Y: 3.7%e v 1.1% prior.

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