Continued optimism that the global economy can gradually recover from

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Notes / observations

  • Data from PMI services from China and Europe supported risk appetite
  • Several reports circulate that Germany must cancel international travel ban (EU) on 15 June
  • The Italian 10-year syndicate boosts record demand ahead of the ECB decision on Thursday; speculation that the ECB will increase its Pandemic bond buying program
  • Asia:
  • Australia Q1 GDP data records its first recession in almost three decades (Q / Q: -0.3% v -0.4% e; Y / Y: 1.4% v 1.4% e
  • Australia May Final CBA PMI Services: 26.9 v 25.5 prelims (4th consecutive month of contraction
  • China Apr Caixin PMI Services records its highest level since October 2010: (55.0 v 47.3e)
  • Japan May Final PMI Services: 26.5 v 25.3 preliminary (4th consecutive month of contraction)
  • BoJ said to consider doubling the size of its new small business lending facility [vs ~¥30.0T current size]

Coronavirus:

  • Total global cases: 6,382,951; Total deaths: 380.3 k – G7 finance ministers hold conference call on coronavirus measures Wed

Europe:

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  • The recent negotiations on the Covid-19 stimulation of the German government coalition continue until Wed.
  • German IFO Institute: Exports of car manufacturers’ exports improved in May
  • British Prime Minister Johnson reportedly plans to take “direct control” over government’s handling of coronavirus response

America:

  • The U.S. DoD has moved 1.6K army forces to the Washington DC region to support civilian authorities

Middle East / Energy:

  • Weekly stock of crude oil: -0.5M v + 8.7M in advance

SPEAKERS / FIXED INCOME / FX / COMMODITIES / ERRATUM

Equities

  • Index [Stoxx600 +1.17% at 363.96, FTSE +1.27% at 6,299.20, DAX +1.79% at 12,237.05, CAC-40 +1.66% at 4,939.67, IBEX-35 +1.23% at 7,499.00, FTSE MIB +2.27% at 19,402.50, SMI +1.14% at 10,064.55, S&P 500 Futures +0.37%]
  • Market Focal Points / Key Themes: European indices open modestly higher everywhere, moving especially higher as the session progressed; sectors with the best financial and energy sectors; worst presenters include consumer discretionary sectors and the health care IFO says German carmakers are more optimistic about exports; Renault signs credit line with French government; TUI and Boeing conclude agreement to delay delivery of 737 MAX aircraft “; earnings expected in upcoming US session include American Eagle and Campbell’s soup

Equities

  • Consumer discretion: Lufthansa [LHA.DE] + 3% (final earnings), Wizz Air [WIZZ.UK] + 1.5% (earnings), Elekta [EKTAB.SE] -6% (CEO resigns)
  • Materials: Voestalpine [VOE.AT] + 5% (earnings)
  • Industries: Daimler [DAI.DE] + 3% (US car sales), Chemring Group [CHG.UK] + 20% (earnings)

speakers

  • EU trade executives will discuss pharmaceutical duties during the week of June 8. Able to reduce duty on antibodies, vaccines and insulin and seek abolition of duty on medical devices
  • Germany said plans to lift travel ban for EU member states, UK, Iceland, Norway, Liechtenstein and Switzerland from June 15 (** Note: confirms last month’s reports)
  • The German Foreign Minister. Maas: Shutdown measures are gradually scaled back
  • BoE Gov. Bailey has reportedly asked banks to step up plans for the UK to leave the EU without a trade agreement
  • Romanian central bank spokesman Suciu: Can’t afford another interest rate cut
  • Japan’s top cabinet Suga had to pay close attention to the virus impact on jobs and consider minimum wages based on difficult finances
  • Chinese Foreign Ministry spokesman: Any threat to Hong Kong security comes from foreign forces. The latest remarks by British officials interfered with internal affairs. Reiterated that reports of virtual frustrations by the World Heath Organization were untrue

Currencies / fixed income

  • Settlement of flows from port that keep USD and JPY currencies soft
  • EUR / USD continued its steady tone, rising higher for the 7th straight session. The 2 1/2 month high rises above the 1.12 level. Couples test their 100-week moving average with good support build at the 1.10 level. Momentum could take the pair back to the 2020 highs of 1.15. Euro, benefiting from more stimulus talk as the German government’s coalition continued negotiations on its 2nd Covid-19 package. Several reports that Germany would cancel its international travel ban (between the EU) on June 15 as global markets began to reopen.

Economic data

  • (CH) Swiss Q1 GDP Q / Q: -2.6% v -2.1% e; Y / Y: -1.3% v -0.9% e
  • (RU) Russia May PMI services: 35.9 v 21.5e (3rd straight contraction); PMI composition: 35.0 v 13.9 advance
  • (NO) Norway Q1 Current account (NOK): 66.1B against 21.5Be
  • (SE) Sweden May PMI Services: 40.9 v 39.0 prior (3rd straight contraction); PMI composition: 40.5 v 38.3 pre
  • (TR) Turkey May CPI M / M: 1.4% v 0.8% e; Y / Y 11.4% v 10.9% e, CPI Core Index Y / Y: 10.3% v 10.1% e
  • (TR) Turkey May PPI M / M: 1.5% v 1.3% before; Y / Y: 5.5% vs. 6.7% in advance
  • (ES) Spain May Services PMI: 27.9 v 25.0e (3rd straight contraction); Composite PMI: 29.2 v 29.0e
  • (ZA) South Africa May PMI (whole economy): 32.5 v 34.8e (13th straight contraction and record low)
  • (IT) Italy May Services PMI: 28.9 v 26.1e (3rd straight contraction); Composite PMI: 33.9 v 28.5e
  • (FR) France May Final Services PMI: 31.1 v 29.4e (confirmed 3rd straight contract); Composite PMI: 32.1 v 30.5e
  • (DE) Germany can change net unemployment: + 238.0K v + 190.0Ke; Unemployment requirements: 6.3% v 6.2% e
  • (DE) Germany May Final Services PMI: 32.6 v 31.4e (confirmed 3rd straight contract); Composite PMI: 32.8 v 31.4e
  • (EU) Euro Zone May Final Services PMI: 30.5 v 28.7e (confirmed 3rd straight contraction); Composite PMI: 31.9 v 30.5e
  • (IT) Italy Apr Provisional Unemployment rate: 6.3% v 9.3% e (** Note: lower reading appears to be method music)
  • (BR) Brazil Apr FIPE CPI (Sao Paulo): -0.2% v -0.3% e
  • (UK) May Final PMI Services PMI: 29.0 v 28.0e; Composite PMI: 30.0 v 29.1e (confirmed 3rd straight contraction)
  • (UK) May Official Reserve Changes: $ 1.0B v $ 1.4B before
  • (NG) Nigeria May PMI (whole economy): 40.7 v 37.1 ahead
  • (EU) Eurozone Apr Unemployment rate: 7.3% vs. 8.2% e
  • (EU) Eurozone Apr PPI M / M: -2.0% v -1.8% e; Y / Y: -4.5% v -4.2% e
  • (BE) Belgium Apr Unemployment rate: 5.6% v 5.3% up front

Issue of fixed income

  • (IT) Italy’s Debt Agency (Tesoro) opened its book to sell new Dec 2030 BTP; guidance set + 12 bps to 2030 BTP; order book over € 85B
  • (IN) India sold total INR vs. INR450B stated in bills of 3 months, 6 months and 12 months
  • (EE) Estonia to sell EUR-denominated 10-year bonds; guidance seen + 55-60 bps for mid-swaps
  • (DK) Denmark sold a total of DKK 5.98B in bonds in 2022 and 2029 DGB
  • (SE) Sweden sold a total of SEK 5.0B vs. SEK 5.0B stated in 2023 and 2029 bonds
  • (NO) Norway sold NOK 2.0.0 vs. DKK 2.0.0 stated in 2025 bonds; Average yield: 0.33% v 1.31% previously; bid-to-cover: 2.79x v 2.52x upfront
  • (UK) DMO sold € 3.25B2.25% Sept 2023 Gilts; Average Yield: -0.002% v + 2.73% Earlier; Bid-to-cover: 2.46x v 1.82x upfront; Tails: 0.3 bps vs. 0.2 bps ahead

Look forward to

  • (UR) Ukraine May Official Reserve Assets: No value $ 25.7B before
  • (UK) EU-UK negotiations on future conditions
  • G7 Finance Ministers hold a conference call on coronavirus measures
  • 05:30 (DE) Germany sells € 4.0 B in 0.00% APR 2025 BOBL
  • 05:30 (GR) Greece Debt Agency (PDMA) to sell € 1.0B in 26-week bills
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
  • 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays) –
  • 06:00 (IE) Ireland May Unemployment rate: No est v. 5.4% in advance
  • 06:30 (UK) DMO sells £ 1.5B in 1.625% October 2054 Gilts; Average yield:% v 0.495% earlier; Bid-to-cover: x v 2.60x in advance; Tails: bps v 0.2 bps ahead (May 6, 2020)
  • 6:45 (USA) Daily Libor Fixing
  • 07:00 (US) MBA mortgage applications w / e May 29: No est v 2.7% before
  • 07:00 (MX) Mexico May Domestic Car Sales: No est v 34.9K before
  • 07:00 (UK) Weekly PM Question time in the house
  • 07:45 (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (3-7 years)
  • 08:00 (BR) Brazil Apr Industrial Production M / M: -30.1% e v -9.1% in advance; Y / Y: -34.3% e v -3.8% in advance
  • 08:00 (UK) Daily Baltic dry mass index
  • 08:15 (US) May ADP Unemployment change: -9.00Me v -20.24M in advance
  • 08:30 (CA) Canada Q1 Labor Productivity Q / Q: + 2.0% e -0.1% upfront
  • 08:45 (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (7-20 years)
  • 09:00 (BR) Brazil May PMI Services: No est v 27.4 in advance; PMI composition: No est v 26.5 prior
  • 09:00 (SG) Singapore May Purchasing Leaders Index (PMI): 45.0e v 44.7 ahead; Electronic Sector Index: No est v 42.8 in advance
  • 9:45 AM (US) May Final Markit Services PMI: 37.3e v 36.9 Prelim; Composite PMI: No est v 36.4 prelim
  • 9:45 AM (UK) BOE buys £ 1.5B in APF Gilt purchase transaction (20+ years)
  • 10:00 (USA) May ISM Non-Manufacturing Index: 44.4e v 41.8 prior
  • 10am (US) Apr Factory Orders: -13.4% e v -10.4% upfront (revised from -10.3%); Factory orders (ex-transport): No est v -3.6% before (revised from -3.7%)
  • 10:00 AM (US) Apr Final permanent order item: -17.2% e v -17.2% prelime; Duration (ex-transport): -7.4% e v -7.4% provisional; Orders for capital goods (non-defense / ex-aircraft): -5.8% or -5.8% preliminary ratio; Shipments of capital goods (non-defense / ex-aircraft): Not calculated at -5.4% provisionally
  • 10:00 AM (CA) Bank of Canada interest rate: Expected to keep interest rate unchanged at 0.25%
  • 10:30 (US) Weekly DOE Inventories
  • 11:00 (DK) Denmark May Foreign reserves (DKK): No est at 450.9B
  • 13:00 (NZ) New Zealand May QV house prices Y / Y: No value 7.1% in advance
  • 19:00 (KR) South Korea Apr Current account balance: No value $ 6.2B in advance; Balance of Goods (BOP): No value is $ 7.0B before
  • 20:01 (IE) Ireland May PMI services: No est v 13.9 in advance; PMI composition: No est v 17.3 prior
  • 21:00 (NZ) New Zealand May Commodity prices M / M: No est v -1.1% in advance
  • 9pm (AU) Australia to sell $ 2.0B in 2023 bonds
  • 21:30 (AU) Australia Apr trade balance (A $): 7.5Be against 10.6B before; Exports M / M: -14.0% e v + 15.0% previously; Import M / M: -6.0% or -4.0% earlier
  • 21:30 (AU) Australia Apr Final retail sales M / M: -17.9e v -17.9% so far
  • 23:30 (TH) Thailand May CPI M / M: + 0.7% or -2.3% before; Y / Y: -3.35e v -3.0% earlier; CPI Core Y / Y: 0.3% e 0.4% upfront
  • 23:35 (JP) Japan sells 30-year JGB bonds



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