Domestic Bonds

Eurozone PMI data generally improves as virus restrictions relax

Remarks / Observations

– Eurozone June Preliminary PMI data mixed but remaining in expansionary territory (Beats: Germany, Eurozone, United Kingdom; Misses: France); Price action Moderate markets were anticipating an improving economic outlook as virus restrictions eased.

– Another emerging European central bank expects a hawkish hike (Czech rates saw their rates rise by 25bp; following Hungary’s decision on Tuesday).


– Australia Jun Preliminary PMI Manufacturing recorded its 13th month of expansion (58.4 vs. 60.4 previously.

– Japan’s preliminary manufacturing PMI in June recorded its 5th month of expansion (51.5 vs. 53.0 previously).

– RBA Assist Gov Ellis noted that the objective of the policy parameters was to support a return to full employment and inflation in line with the objective.

– The minutes of the April BOJ meeting (there are two meetings) reiterated the position that the national economy should recover, supported by increased external demand.


– The UK government is expected to remove mask requirements and social distancing on July 19, given the downward trend in COVID cases.


– EU and UK officials are reportedly close to a truce in the Brexit trade dispute involving checks on goods entering Northern Ireland.

– British Prime Minister Johnson apparently has no plans to grant a referendum on Scottish independence before the 2024 election.

– UK Shadow MPC calling on BOE to cancel QE £ 50bn due to signs of rising inflation and robust growth.

– The Central Bank of Turkey (CBRT) Gov Kavcioglu has committed to protect the currency TRY (Lira) and was in talks with 4 counterparts for new swap deals and adjust the reserve requirement rules after the talks.


– The testimony of Fed Chairman Powell noted that the Fed would wait for real inflation as the trigger for any rate hike; would not increase rates preventively or in response to a very high employment rate.

– US President Biden has said he is pushing for high-level meetings with Chinese officials. Biden discussed meetings between U.S. Secretary of State Blinken and China Foreign Min Wang for next week at the G20 meeting.


– Weekly API crude oil inventories: -7.2 M against -8.5 M previously.

Speakers / Fixed income / FX / Commodities / Erratum


Indices [Stoxx600 -0.32% at 454.94, FTSE +0.05% at 7,093.50, DAX -0.59% at 15,543.80, CAC-40 -0.53% at 6,576.58, IBEX-35 -0.16% at 9,039.00, FTSE MIB -0.16% at 25,275.50 , SMI -0.31% at 11,944.97, S&P 500 Futures +0.01%].

Market focal points / Key themes: European indices generally open lower, but then turned into mixed trading; the best performing sectors include materials and technology; underperformers led by telecommunications and consumer discretionary; Swiss Re reduces its stake in Phoenix; Heineken increases its stake in United Breweries in India; the expected benefits for the next US session include IHS Markit, Winnebago and KB Home.


Consumer discretionary: Pernod Ricard [RI.FR] + 3% (raises the outlook).

Finance: Bank of Ireland [BIRG.IE] -5% (the government sells its stake), Berkeley Group [BKG.UK] -1% (gains).

Health: Abivax [ABVX.FR] + 12% (positive test results).


From Guindos of the ECB (Spain) said he expected very significant growth in the second half of the year in the region.

Italy PM Draghi noted that recent data suggested that national GDP growth would exceed expectations. The pick-up in inflation is considered transitory but deserves attention. Believed that the fundamentals suggested maintaining an expansionary fiscal policy. Faster growth to help reduce the debt burden.

Office of German Chancellor Merkel said it supports the 2022 net borrowing at 100 billion euros (in line with recent press speculation).

Sweden NIER Think Tank updated its forecast which raised both its growth and inflation outlook. Increase 2021 GDP growth forecast from 3.7% to 4.4% and 2022 GDP growth forecast from 3.4% to 3.5%. He raised the CPIF 2021 from 1.8% to 1.9% and the CPIF 2022 from 1.5% to 1.7%.

Central Bank of Russia Zabotkin (Head of Monetary Policy): The neutral rate is above the 5.0-6.0% range. Inflation expectations were decisive for the neutral rate.

Member of the Central Bank of Poland Zyzynski said he would not consider a token hike at this time.

– Central Bank of Thailand Policy Statement reiterated to preserve the political space for the appropriate time and continue to prioritize the economy. He viewed the procurement and deployment of vaccines as the key to recovery and prepared to use the right tools when needed. The THB (baht) currency was weaker than its regional peers; to monitor the effects.

The Central Bank of Thailand has updated its staff forecast which reduced GDP growth in 2021 from 3.0% to 1.8%, citing a drop in tourist arrivals. It also reduced its GDP growth in 2022 from 4.7% to 3.9%. He kept the 2021 and 2022 headline CPI at 1.2%.

Currency / Fixed Income

– USD moves away from recent highs after Fed Chairman Powell testified on Tuesday and downplayed inflation risks. The greenback had strengthened following the Fed’s hawkish surprise last week.

– EUR / USD was slightly higher as PMI readings remained in expansionary territory. Overall price action was subdued as markets had anticipated an improving economic outlook as virus restrictions eased in Europe in recent weeks. Brokers noted that the pair may face strong resistance at the 1.20 level as the ECB is unlikely to send any strong messages about reducing stimulus measures despite better data in the region.

– GBP / USD was moving back towards the 1.40 area ahead of Thursday’s BOE decision. Currency GBP aided by hawkish rumor that QE could be cut as the Shadow MPC asked BOE to cancel the £ 50bn QE due to signs of rising inflation and a robust growth.

– The currency CZK (crown) appreciated for the third day in a row as the Czech Central Bank was due to start a tightening cycle.

Economic data

– (E) Central Bank of Thailand (BoT) left the benchmark interest rate unchanged at 0.50% (as expected).

– (FR) Preliminary PMI manufacturing France June: 58.6 against 59.0e (7th month of expansion); PMI services: 57.4 against 59.5e; Composite PMI: 57.1 against 59.0e.

– (DE) Germany June Preliminary Manufacturing PMI: 64.9 against 63.0th (12th month of expansion); Services PMI: 58.1 against 55.7e; Composite PMI: 60.4 against 57.6e.

– (EU) Eurozone preliminary manufacturing PMI in June: 63.1 vs. 62.3e (12th month of expansion); PMI services: 58.0 v 58.0e; Composite PMI: 59.2 against 58.8e.

– (ZA) South Africa May CPI H / M: 0.1% v 0.1% e; Y / Y: 5.2% against 5.2% e (3rd consecutive month with the annual rate in the target).

– (ZA) South Africa May CPI Core M / M: 0.0% against 0.0% e; Y / Y: 3.1% against 3.2% e.

– (PL) Poland June Consumer confidence: -14.8 vs. -11.8e.

– (TW) Taiwan Mai Industrial Production Y / Y: 16.5% vs. 13.1% e.

– (UK) June Preliminary Manufacturing PMI: 64.2 v 64.0e (13th extension in a row); Services PMI: 61.7 against 62.8e; Composite PMI: 61.7 vs. 62.5e.

– (IS) Iceland May wage index M / M: 0.4% against 0.3% previously; Y / Y: 7.5% against 7.4% previously.

Issue of fixed income securities

– (IF) Slovenia opened its portfolio to sell 10-year durable bonds denominated in EUR via a syndicate; forecasts saw + 15bps at mid-swaps.

– (IN) India sold a total of INR360B against INR360B shown in the 3 month, 6 month and 12 month invoices.

– (SE) Sweden sold SEK 15.0 billion against SEK 15.0 billion shown in the 3-month invoices; Average return: -0.2013% against -0.1867% previously; Bid-to-cover: 2.03xv 2.40x front.

– (UK) DMO sold £ 400 million in gilts indexed to inflation at 0.125% in November 2065; Real return: -1.981% previously; Bid-to-cover: xv 2.35x front.

Look ahead

– 5:25 am (EU) Daily liquidity statistics from the ECB.

05:30 (DE) Germany will sell 2.5 billion euros in 0% Bunds in May 2036.

– 05:30 (HU) Hungarian Debt Agency (AKK) to sell 12 month bonds.

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

– 06h00 (IE) Ireland May Unemployment rate: No compared to 5.8% previously.

– 06:00 (UK) Russia will auction OFZ 2029 and 2041 bonds.

– 6:45 am (US) Correction of the daily Libor.

– 7:00 am (US) MBA mortgage applications w / e June 18: none is 4.2% v before.

– 07h00 (MX) Mexico Apr Retail sales M / M: -0.4% ev + 3.6% before; Y / Y: 31.2% ev 2.5% before.

– 07:00 (UK) Weekly PM Question Time at home.

– 08h00 (UK) Daily Baltic Dry Bulk Index.

– 8:30 a.m. (United States) First quarter current account balance: – $ 206.2 compared to – $ 188.5 billion previously.

8:30 am (CA) Canada Apr Retail sales M / M: -5.0% ev + 3.6% before; Retail sales (excluding auto) M / M: -4.5% ev + 4.3% before.

08:30 (CZ) Decision of the Czech Central Bank (CNB) on interest rates: Expected to increase 2-week redemption rate by 25 basis points to 0.50%.

– 9:00 a.m. (US) Fed Bowman at the Fed Economic Resilience Conference.

9.45 am (United States) June Preliminary Markit PMI Manufacturing: 61.5 ev 62.1 before; PMI services: 70.0ev 70.4 before; Composite PMI: No earlier version than version 68.7.

– 9.45 a.m. (UK) BOE buys £ 1.147 billion in a deal to buy Gilt APF (7-20 years).

10:00 am (US) New home sales in May: 867Ke v 863K before.

10:30 a.m. (US) DOE Weekly Oil Inventories.

– 11:00 a.m. (US) Fed’s Bostic discusses systemic racism.

– 11:30 am (US) The Treasury sells 2-year FRN.

– 12:00 (CA) Canada to sell 30-year bonds.

– 12:00 (UK) Russia May Industrial production Y / Y: 10.5% ev 7.2% before.

– 12:00 (EU) Lagarde from the ECB at the event.

– 1:00 p.m. (US) The Treasury will sell 5-year notes.

– 3:00 p.m. (AR) Argentina GDP Q1 Q / Q: 2.3% ev 4.5% before; Y / Y: + 2.4% in EV -4.3% previously.

– (CO) Colombia May Industrial confidence: No is v -5.1 before; Retail Trust: No earlier version than version 25.6.

– 4:30 p.m. (US) Fed Rosengren on the economy.

– 5:00 p.m. (KR) South Korea Jun Consumer confidence: no est v 105.2 before.

– 19:50 (JP) Japan May PPI Y / Y services: 1.5% ev 1.0% before.

– 11:00 p.m. (TH) The Central Bank of Thailand will sell THB 30 billion in 2 years.

– 11:30 p.m. (TH) Thai customs trade balance in May: $ 0.8 against $ 0.2 million previously; Y / Y exports: 33.5% ev 13.1% before; Y / Y imports: 53.7% ev 29.8% before.

– 11:35 p.m. (JP) Japan will sell 20-year JGB bonds.