EU mid-market update: Big Four central bank governors to speak on Sintra panel at US market open; Trump-Musk feud reignites; US said to narrow trade strategy; OBBB vote-o-rama continues.
Notes/observations
- EU indices and US futures are marginally tipped into the red, ahead of US tax bill vote, trade talks and commentary from Fed Chair Powell at 09:30 ET, on a panel with BOE’s Bailey, ECB’s Lagarde and BOJ’s Ueda at Sintra.
- Europe session so far was data driven, as manufacturing PMIs for June flooded in. Spain had strong beat above all estimates, similar to Swiss, while Italy missed below analyst range. Germany, Euro Zone, France and UK were mostly in line.
- Tesla is down ~>5% in premarket as spat between Trump and Musk heats up again. Musk threatening de-funding Republicans in primaries, called for creation of new party; Trump threatens looking into subsidies given to Tesla and Spacex.
- FT reports that the US is narrowing its trade strategy to lock in phased deals with its most engaged partners by July 9—leaving them subject to a 10% levy while thornier issues are negotiated—yet talks remain hampered by uncertainty over potential sectoral tariffs and court rulings on Trump’s tariff pause.
- Multiple ECB speakers already, with moderate comments on growth and inflation. Euro currency strength was main focus, as de Guindos said council was not worried until $1.20, when it would then be ‘complicated’. Euro has been around 4 year highs since Sept 2021.
- This evening, UK PM Starmer will face a Commons vote on pared-back disability benefit welfare cuts - scaled back after over 120 Labour MPs threatened to rebel, halving the projected £5B savings and marking the government’s third recent policy U-turn.
- Catalysts are weighted to second half of EU session and US open, as panel with Central Bank Gov’s kicks off at 09:30 ET, followed sharply by final reading of US manufacturing PMI at 09:45, then ISM and Jolts at 10:00.
- Asia closed mixed with Nikkei225 underperforming -1.4%. EU indices -0.4% to +0.1%. US futures -0.1% to -0.2%. Gold +1.1%, DXY -0.2%; Commodity: Brent +0.1%, WTI +0.1%; Crypto: BTC -0.7%, ETH +0.2%.
Asia
- China Jun Caixin PMI Manufacturing: 50.4 v 49.2e (moved back into expansion).
- Japan Jun Final PMI Manufacturing: 50.1 v 50.4 prelim (confirmed 1st expansion in 12 months).
- Australia Jun Final PMI Manufacturing: 50.6 v 51.0 prelim (confirmed 6th month of expansion).
- Japan Q2 Tankan Large Manufacturing Index: 13 v 10e; Large Manufacturing Outlook: 12 v 9e.
- Japan Q2 Tankan Large Non-Manufacturing Index: 34 v 34e; Large Non-Manufacturing Outlook: 27 v 29e; Large All Industry Capex Estimate: 11.5% v 10.0%e.
- South Korea Jun Trade Balance: $9.1B v $8.4Be; Exports Y/Y: 4.3% v 5.1%e; Imports Y/Y: 3.3% v 5.6%e.
- China held Politburo meeting and would establish Central Party Coordination Body to "improve efficiency of decision-making".
- China said to be planning to invite US Pres Trump to a military parade scheduled for Sept 3rd in Beijing's Tiananmen Square to mark the 80th anniversary of the end of World War II.
Europe
- ECB's Simkus (Lithuania): Don't know if we'll have all info we need by Sept; Any move on rates more likely towards year-end.
- UK Jun BRC Shop Price Index Y/Y: 0.4% v 0.2%e (highest since May 2024).
Americas
- Fed's Goolsbee (voter): Reiterates doesn't see any prospect of 1970s style stagflation; Definite possibility of inflation and employment getting worse at same time.
- House GOP wanted Senate to make significant changes to their reconciliation bill with a wrap-around amendment at the end of recent vote-a-rama
- Elon Musk: "If this insane spending bill passes, American Party will be formed the next day".
- Treasury Sec Bessent: Remains confident that the tax bill will pass; This is just the start of addressing debt; We're going to bring levels down by bending the curve.
Trade
- Japan Trade Negotiator Akazawa confirmed the two sides [US and Japan] were not on the same page on 'some' matters. Pres Trump said to be planning to send a tariff letter to Japan. PM Ishiba said to consider Pres Trump suggestions that Japan should buy US oil.
- EU said to be planning to approve Trump’s universal tariffs but was seeking exemptions in key sectors such as Pharma, alcohol, semiconductors and commercial aircraft.
- White House NEC Dir Hassett stated that expetced trade frameworks would come after July 4th.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.24% at 540.08, FTSE -0.09% at 8,753.28, DAX -0.42% at 23,827.66, CAC-40 -0.42% at 7,633.34, IBEX-35 +0.10% at 14,004.18, FTSE MIB -0.49% at 39,597.00, SMI -0.13% at 11,893.23, S&P 500 Futures -0.15%].
Market focal points/key themes: European indices opened generally lower and remained downbeat through the early part of the session; Mediobanca shares trade lower after Mediolanum confirmed selling stake. Sodexo in Paris also falling after trimming its guidance.
Equities
- Consumer discretionary: Sainsbury [SBRY.UK] -0.5% (Q1 trading update, affirms FY25/26 guidance), Sodexo [SW.FR] -3.5% (Q3 revenue, cuts FY25 guidance to lower end of range).
- Financials: Mediobanca [MB.IT] -3.0% (Mediolanum sells shares), Standard Chartered [STAN.UK] -1.5% (receives $2.7B lawsuit over 1MDB scandal - FT).
- Healthcare: Cosmo Pharmaceuticals [COPN.CH] +5.0% (sets out 2030 vision).
- Industrials: Tesla (Frankfurt listed) [TSLA.DE] -5.5% (Musk-Trump spat heats up again, Musk threatening de-funding Republicans in primaries; Trump threatens looking into subsidies given to Tesla, Spacex etc), Stellantis [STLA.NL] -1.0% (Trump administration still considering imposing tariffs on critical sectors - FT), Renault [RNO.FR] -0.5% (To change the way it accounts for its stake in Nissan; Sees €9.5B hit from new Nissan accounting treatment), Mpac Group [MPAC.UK] -26.0% (trading update).
Speakers
- ECB’s Nagel (Germany) noted policy is in neutral territory; currently in calm waters on inflation but should not be complacent. Reiterated uncertainty warrants meeting by meeting approach. ECB could afford a wait and see attitude. Noted that the Euro currency was not 'exceptionally high' against US dollar.
- ECB’s Lane (Ireland, chief economist) noted that inflation looked to be around target.
- ECB de Guindos (Spain) noted that Euro at around $1.17 was perfectly acceptable, even $1.20 was something we could overlook, but more than that it would get 'complicated'. Euro economy was not good. Growth in Q2 and Q3 would be close to zero. An additional cut was not going to help economy to improve, we need certainty.
- ECB's Wunsch (Belgium) noted that risks were more tilted to the downside for both inflation and growth; if needed to make a move on rates its they would be lower.
- ECB’s Escriva (Spain) stated that the s Symmetric 2% inflation target should remain ECB priority.
- ECB’s Centeno (Portugal, dove) noted that still had some concerns around economy.
- ECB's Kazaks (Latvia) noted that any further rate adjustments would be nothing big and more about signaling.
- BOE Gov Bailey stated that had to watch for inflation persistence; Labor market was softening. Reiterated path of rates gradually downwards.
- South Africa Central Bank (SARB) Gov Kganyago stated that was comfortable with inflation trajectory; Inflation target review should be done very soon. Policy was restrictive but was fairly close to neutral.
- BOJ Board Member Masu stated that wanted to see data from BOJ staff for policy. Did not have any strong disagreements to BOJ's view that underlying inflation is still short of 2%. Not in a situation where BOJ could rush rate hikes but should act cautiously.
Currencies/fixed income
- USD continued to wobble even after its worst half-year performance since the early 1970s.
- EUR/USD approaching the 1.18 level as various ECB members noted that they had no issues with the current strong currency.
- USD/JPY at 143.10 area on the back of USD weakness.
- USD/CHF at a decade low as the pair tested below 0.79
- 10-year German Bund yield at 2.55% and 10-year Gilt yield at 4.42%. 10-year Treasury yield: 4.19%
Economic data
- (NL) Netherlands Jun Preliminary CPI Y/Y: 3.1% v 3.1%e; CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 2.8% v 2.8%e.
- (NL) Netherlands May Retail Sales Y/Y: 2.2% v 3.9% prior.
- (NL) Netherlands Jun Manufacturing PMI: 51.2 v 49.0 prior (1st expansion in 4 months).
- (UK) Jun Nationwide House Price Index M/M: 0.8% v 0.1%e; Y/Y: 2.1% v 3.1%e.
- (RU) Russia Jun Manufacturing PMI: 47.5 v 50.2 prior (moved back into contraction).
- (CH) Swiss May Real Retail Sales Y/Y: 0.0% v 0.9% prior.
- (SE) Sweden Jun PMI Manufacturing: 51.9 v 53.6 prior (11th month of expansion).
- (HU) Hungary May Trade Balance: €0.7B v €1.3B prior.
- (AT) Austria Jun Preliminary CPI M/M: +0.5% v -0.1% prior; Y/Y: 3.3% v 3.0% prior.
- (HU) Hungary Jun Manufacturing PMI: 48.8 v 50.5e (2nd month of contraction).
- (PL) Poland Jun Manufacturing PMI: 44.8 v 48.0e (2nd month of contraction).
- (TR) Turkey Jun Manufacturing PMI: 46.7 v 47.2 prior (15th month of contraction).
- (ES) Spain Jun Manufacturing PMI: 51.4 v 50.5e (2nd month of expansion).
- (CH) Swiss Jun PMI Manufacturing: 49.6 v 44.0e; PMI Services: 48.5 v 56.3 prior.
- (CZ) Czech Jun Manufacturing PMI: 50.2 v 48.5e (1st expansion in 37 months).
- (TH) Thailand Jun Business Sentiment Index: 48.6 v 46.7 prior.
- (IT) Italy Jun Manufacturing PMI: 48.4 v 49.5e (15th month of contraction).
- (FR) France Jun Final Manufacturing PMI: 48.1 v 47.8 prelim (confirmed 29th month of contraction).
- (DE) Germany Jun Final Manufacturing PMI: 49.0 v 49.0 prelim (confirmed 36th month of contraction).
- (DE) Germany Jun Unemployment Change: +11.0K v +15.0Ke; Claims Rate: 6.3% v 6.4%e.
- (EU) ECB May Consumer Expectation Survey: 1-year ahead CPI Expectations: 2.8% v 3.1%e; 3-year ahead CPI Expectations: 2.4% v 2.5% prior.
- (EU) Euro Zone Jun Final Manufacturing PMI: 49.5 v 49.4 prelim (confirmed 36th month of contraction).
- (NO) Norway Jun PMI Manufacturing: 49.3 v 51.2 prior.
- (GR) Greece Jun Manufacturing PMI: 53.1 v 53.2 prior.
- (UK) Jun Final Manufacturing PMI: 47.7 v 47.7 prelim (confirmed 9th month of contraction).
- (NG) Nigeria Jun PMI (whole economy): 51.6 v 52.7 prior.
- (EU) Euro Zone Jun Advance CPI Estimate Y/Y: 2.0% v 2.0%e; CPI Core Y/Y: 2.3% v 2.3%e.
- (ZA) South Africa Jun Manufacturing PMI: 48.5 v 43.1 prior.
Fixed income issuance
(ES) Spain Debt Agency (Tesoro) sold total €5.38B vs. €5.0-6.0B indicated range in 6-month and 12-month bills.
(- UK) DMO sold £2.0B in 1.5% July 2053 Green Gilts; Avg Yield: 5.169% v 4.976% prior; bid-to-cover: 3.20x v 3.20x prior.
Looking ahead
- (IT) Italy Jun Budget Balance: No est v -€11.4B prior.
- (RO) Romania Jun International Reserves: No est v $65.4B prior.
- (ZA) South Africa Jun Naamsa Vehicle Sales Y/Y: No est v 22.0% prior.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:25 (CH) Switzerland to sell 3-month Bills.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.0B in 3-month, 6-month and 12-month bills.
- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2038, 2040 and 2053 bonds.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 06:00 (PT) Portugal May Retail Sales M/M: No est v -1.0% prior; Y/Y: No est v 0.1% prior.
- 06:00 (PT) Portugal May Industrial Production M/M: No est v 1.2% prior; Y/Y: No est v -2.2% prior.
- 06:40 (DE) ECB's Schnabel (Germany ) chairs Panel in Sintra.
- 08:00 (CZ) Czech Jun Budget Balance (CZK): No est v -170.5B prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 08:30 (CL) Chile May Economic Activity Index (Monthly GDP) M/M: 0.5%e v 0.6% prior; Y/Y: 3.7%e v 2.5% prior.
- 08:55 (US) Weekly Redbook LFL Sales data.
- 09:00 (BR) Brazil Jun Manufacturing PMI: No est v 49.4 prior.
- 09:30 (EU) ECB Lagarde, Fed Chair Powell, BOE Gov Bailey, BOJ Gov Ueda, BOK Gov Rhee.
- 09:45 (US) Jun Final S&P Manufacturing PMI: 52.0e v 52.0 prelim.
- 10:00 (US) Jun ISM Manufacturing: 48.7e v 48.5 prior.
- 10:00 (US) May JOLTS Job Openings: 7.300Me v 7.391M prior.
- 10:00 (US) May Construction Spending M/M: -0.2%e v -0.4% prior.
- 10:30 (US) Jun Dallas Fed Services Activity: No est v -10.1 prior.
- 11:00 (CO) Colombia Jun PMI Manufacturing: No est v 52.6 prior.
- 11:00 (MX) Mexico Jun Manufacturing PMI: No est v 46.7 prior.
- 11:00 (PE) Peru Jun CPI M/M: +0.1%e v -0.1% prior; Y/Y: 1.7%e v 1.7% prior.
- 11:00 (MX) Mexico May Total Remittances: $5.2Be v $4.8B prior.
- 11:00 (MX) Mexico Central Bank Economist Survey.
- 11:30 (US) Treasury to sell 6-week bills.
- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v -0.2% prior.
- 14:00 (MX) Mexico Jun IMEF Manufacturing Index : No est v 47.4 prior; Non-Manufacturing Index : No est v 49.4 prior.
- 16:30 (US) Weekly API Crude Oil Inventories.
- 19:00 (KR) South Korea Jun CPI M/M: +0.1%e v -0.1% prior; Y/Y: 2.1%e v 1.9% prior; CPI (ex-food/energy) Y/Y: 2.0%e v 2.0% prior- 19:50 (JP) Japan
Jun Monetary Base Y/Y: No est v -3.4% prior.
- 21:30 (AU) Australia May Building Approvals M/M: +4.0%e v -5.7% prior; Private Sector Houses M/M: No est v 3.1% prior.
- 21:30 (AU) Australia May Retail Sales M/M: +0.5%e v -0.1% prior.
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