Notes/Observations

- Central banks continued to hike to address inflation (Philippines, Norway in session). Moves recirculate recession concerns and raise second thoughts over rate path trajectories.

- Collection of interest rate decisions this morning with both Norway and Philippines hiking 50bps and 25bps respectively, citing inflation as the fundamental target. Indonesia Central Bank left rates unchanged, bringing attention to stagflation fears and a global economic slowdown.

- In data releases, France and Germany missed on manufacturing PMI's, narrowly avoiding what would have been the first contractions in 18-24 months.

- More rhetoric in the UK about recessionary fears from the outgoing CBI president and a standoff with the railway union continues, with reports of a second strike beginning on July 9th.

- Energy storage levels continue to attract attention as Germany enters stage 2 of its emergency gas plan. Europe scrambles to avoid blackouts in winter amid a possibility of a complete Russian gas shutoff.

- Focus lies on high level commentary as economies walk a tight rope between inflation and slowed growth. Negative sentiment took off yesterday after Powell said the rate hikes might lead to a recession.

- In general, Asia closed higher but EU indices are 0.75-1.3% lower. EU bond yields are sharply lower. US futures are mixed. Elsewhere Gold -0.2%, BTC +0.8%, ETH +1.0%, DXY +0.5%, Brent -2.3%, WTI -2.5%.

Asia

- Australia Jun Preliminary PMI Manufacturing registered its 26th month of expansion (55.8 v 55.7 prior).

- Japan Jun Preliminary PMI Manufacturing registered its 17th month of expansion (52.7 v 53.3 prior).

- China President Xi at virtual BRICS Summit vowed to boost economic controls to meet annual target.

- Former BOJ Official Okina noted that ultra low borrowing costs causing a negative spiral of Yen depreciation; Recent Yen moves were very sharp and problematic.

- Japan Former FX Chief Nakao stated that continuing with YCC had many negative effects; Clear that monetary policy was playing role in the weak Yen.

Europe

- UK Treasury said to have told cabinet ministers there will be no new cash for public sector pay rises, any pay rises need to come out of existing budgets.

- UK Conservative party (Tory) said to be prepared to lose both of by-elections in Tiverton & Honiton and Wakefield scheduled for Thurs, Jun 23rd.

Americas

- Fed Chair Powell stated that rate hikes likely would not bring down food prices; Our tools could not impact energy or food inflation. Would never take any size of rate hike off the table (in response to question about potential 100bps raise) There was a possibility our rate rises could cause a recession, but it was not our intention.

- Fed's Barkin (non-voter, hawk): Expect demand pressures to ease as rates rise.

- Fed's Harker stated that would take a while for supply chain issues to heal; I'd like to end the year above 3%. Getting mixed signals in the economy; Some signs that things were cooling which was what we want.

Energy

- Weekly API Crude Oil Inventories: +5.6M v +0.7M prior.

- Germany Econ Min Habeck to make statement on energy security. More press speculation that Germany might declare second stage (out of three) of German gas emergency. Reports circulated that German govt was concerned that Russia could use the maintenance of Nord Stream 1 to shut off gas supplies to Germany.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -1.09% at 401.30, FTSE -0.77% at 7,034.35, DAX -1.29% at 12,975.28, CAC-40 -1.03% at 5,855.71, IBEX-35 -0.93% at 8,069.65, FTSE MIB -1.06% at 21,558.00, SMI -1.06% at 10,416.92, S&P 500 Futures -0.20%].

Market Focal Points/Key Themes: European indices open lower across the board and fell further into the red as the session wore on; loss of risk appetite attributed to EZ consumer confidence numbers; less negative sectors include consumer discretionary and telecom; leading sectors to the downside include energy and materials; reportedly Ted Baker receives new takeover interest; reportedly French government favorable to Thales-Ato tie-up; earnings expected in the upcoming US session include Accenture and Darden Restaurants.

Equities

- Consumer discretionary: Naked Wines [WINE.UK] -30% (earnings), Galliford Try [GRFD.UK] -2.5% (contract).

- Financials: Banca Monte Paschi de Siena [BMPS.IT] -2.5% (cut branches; strategy plan).

- Healthcare: Targovax [TRVX.NO] +26% (FDA grant).

- Technology: Atos [ATO.FR] +7%, Thales [HO.FR] -0.5% (potential merger), Trainline [TRN.UK] -8% (CFO steps down; UK strikes).

Speakers

- ECB Economic Bulletin: Governing Council to make sure that inflation returned to its 2% target over the medium term.

- Norway Central Bank (Norges) Policy Statement noted that the Deposit Rate would most likely be raised further in Aug by another 25bps. Prospects that inflation would remain above target for some time. Faster rate rise now would reduce the risk of inflation remaining high and the need for a sharper tightening of monetary policy further out.

- Norway Central Bank updated its Staff Projections which raised 2022 Underlying CPI(core) from 2.5% to 3.2% and also raised the 2023 Underlying CPI(core) from 2.0% to 3.3%. It cut the 2022 Mainland GDP growth from 4.1% to 3.5% and also cut the 2023 Mainland GDP growth from 1.6% to 1.1%. Lastly, Norges raised the 2022 Key Rate forecast from 0.9% to 2.0% and 2023 Key Rate from 2.0% to 2.5%.

- Norway Central Bank (Norges) Gov Olsen post rate decision press conference noted of the clear need for higher rate to stabilize inflation around target.

- Germany Econ Min Habeck announced that Germany would not yet deploy price adjustment mechanism but would allocate initial €15B loan to help fill gas storage. Reiterated stance that cut in gas supplies was economic attack by Russia President Putin.

- Russia Central Bank (CBR) First Deputy Gov Chistyukhin saws further potential to lower interest rates but would need to keep an eye on the dynamics of inflation and inflationary expectations.

- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference saw domestic economy recovery continuing amid higher exports. Saw inflation continuing to rise with 2022 CPI breaching 2.0-4.0% range but returning there in 2023. Core inflation remained manageable. To stabilize INR currency (rupiah) to be in line with fundamentals and continue to monitor Fx supply and strengthen INR (rupiah) stabilization measures.

- Indonesia Central Bank (BI) Policy Statement noted it would take monetary steps based upon developments; to monitor inflation developments. Continuing to monitor inflation and core inflation expectations.

- Indonesia Central Bank updated its Staff Projections which maintains 2022 GDP growth from between 4.3-5.3% but did raise the 2022 CPI forecast to be above the 2.0-4.0% range.

- Philippines Central Bank Policy Statement noted that upside risks continue to dominate the inflation outlook with inflationary expectations to continue to rise. Inflation could breach the upper end of target range in 2022 but return to target in 2023.

- Philippines Central Bank updated its Staff Projections which raised 2022 CPI from 4.6% to 5.0% and also raised the 2023 CPI from 3.9% to 4.2%.

- China PBOC Vice Gov Chen reiterated view that PBOC had refrained from massive stimulus.

Currencies/Fixed income

- Recession concerns continued to dominate price action. USD found some strength as safe-haven flows continued. Central banks continued to hike to address inflation (Philippines, Norway in session) which weighed upon the growth outlook.

- EUR/USD moved lower after key Jun Preliminary PMI readings for the Euro Area missed consensus expectations.

- GBP/USD moved back below 1.22 level.

- USD/JPY saw more verbal intervention during Asia by former Japanese officials. Pair tested 135.12 before stabilizing.

Economic data

- (UK) May Public Finances (PSNCR): £12.0B v £2.3B prior; PSNB (Ex-Banking Groups): £14.0B v £12.0Be; Net Borrowing: £13.2B v £11.5B; Central Government NCR: £11.5B v £2.4B prior.

- (SE) Sweden May PPI M/M: 1.8% v 1.2% prior; Y/Y: 24.4% v 23.8% prior.

- (NO) Norway Apr AKU Unemployment Rate: 3.2 v 3.1% prior.

- (FR) France Jun Business Confidence: 104 v 105e; Manufacturing Confidence: 108 v 105e ; Production Outlook Indicator: -5 v -11e; Own-Company Production Outlook: 9 v 4e.

- (HU) Hungary May Unemployment Rate: 3.5% v 3.6%e.

- (HU) Hungary Central Bank left the One Week Deposit Rate unchanged at 7.25% (as expected).

- (PH) Philippines Central Bank (BSP) raised the Overnight Borrowing Rate by 25bps to 2.50% (as expected).

- (FR) France Jun Preliminary Manufacturing PMI: 51.0 v 54.0e (19th month of expansion but lowest reading since Nov 2020); PMI Services: 54.4 v 57.5e; PMI Composite: 52.8 v 55.9e.

- (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo Rate unchanged at 3.50% (as expected).

- (DE) Germany Jun Preliminary Manufacturing PMI: 52.0 v 54.0e (confirms 24th month of expansion); PMI Services: 52.4 v 54.5e; PMI Composite: 51.3 v 53.0e.

- (EU) Euro Zone Jun Preliminary Manufacturing PMI: 52.0 v 53.8e (24th month of expansion); PMI Services: 52.8 v 55.5e; PMI Composite: 51.9 v 54.0e.

- (NO) Norway Central Bank (Norges) raised Deposit Rate by 50bps to 1.25% (more-than-expected).

- (PL) Poland Jun Consumer Confidence: -43.8 v -38.4e.

- (TW) Taiwan May Unemployment Rate: 3.7% v 3.7%e.

- (TW) Taiwan May Industrial Production Y/Y: 4.5% v 4.5%e.

- (UK) Jun Preliminary Manufacturing PMI: 53.4 v 53.6e (25th month of expansion); PMI Services: 53.4 v 52.9e; PMI Composite: 53.1 v 52.4e.

- (IS) Iceland May Wage Index M/M: % v 1.6% prior; Y/Y: % v 8.5% prior.

Fixed income issuance

- None seen.

Looking ahead

- (DE) ECB’s Nagel (Germany).

- (EG) Egypt Central Bank Interest Rate Decision: Expected to raise Deposit Rate by 100bps to 12.25%; No est on Lending Rate (currently at 12.25%).

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

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

- (CO) Colombia May Retail Confidence: No est v 39.0 prior; Industrial Confidence: No est v 10.3 prior.

- 06:00 (UK) Jun CBI Retailing Reported Sales: -3e v -1 prior; Total Distribution Reported Sales: No est v 13 prior.

- 06:00 (CZ) Czech Republic to sell CZK5.0B in 1-month Bills.

- 06:00 (RO) Romania to sell RON300M in 4.75% Oct 2034 Bonds.

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 14.00%.

- 07:00 (MX) Mexico Apr Retail Sales M/M: 0.3%e v 0.4% prior; Y/Y: 4.3%e v 3.8% prior.

- 08:00 (PL) Poland May M3 Money Supply M/M: 0.6%e v 0.2% prior; Y/Y: 8.2%e v 8.2% prior.

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

- 08:30 (US) Initial Jobless Claims: 226Ke v 229K prior; Continuing Claims: 1.32Me v 1.312M prior.

- 08:30 (US) Q1 Current Account Balance: -$275.0Be v -$217.9B prior.

- 08:30 (CL) Chile Central Bank (BCCh) Jun Minutes.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Jun 17th: No est v $594.6B prior.

- 09:45 (US) Jun Preliminary S&P/Markit Manufacturing PMI: 56.0e v 57.0 prior; PMI Services: 53.5e v 53.4 prior; PMI Composite: 52.8e v 53.6 prior.

- 10:00 (US) Fed Chair Powell semi-annual testimony in House.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Weekly DOE Oil Inventories.

- 11:00 (US) Jun Kansas City Fed Manufacturing Activity Index: 15e v 23 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

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

- 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to raise Overnight Rate by 75bps to 7.75%.

- 15:00 (AR) Argentina Q1 GDP Q/Q: 1.0%e v 1.5% prior; Y/Y: 6.1%e v 8.6% prior.

- 15:00 (AR) Argentina Q1 Unemployment Rate: No est v 7.0% prior.

- 19:01 (UK) Jun GfK Consumer Confidence: -40e v -40 prior.

- 19:30 (JP) Japan May National CPI Y/Y: 2.5%e v 2.5% prior; CPI Ex-Fresh Food (Core) Y/Y: 2.1%e v 2.1% prior; CPI Ex-fresh food/energy (Core-Core) Y/Y: 0.8%e v 0.8% prior.

- 19:50 (JP) Japan May PPI Services Y/Y: 1.7%e v 1.7% prior.

- 22:35 (CN) China to sell CNY 2-year Bonds.

- 22:35 (CN) China to sell 3-month Bills.

- 22:30 (JP) Japan to sell 3-Month Bills.

All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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