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US Futures, Global Markets Rebound From Thursday Rout As Yields Rise

Courtesy of ZeroHedge View original post here.

After a mini-rout on Thursday which briefly pushed the S&P into negative-gamma territory below 4,300, European stocks and US equity futures rebounded on Friday as energy and banking shares rose from a sharp selloff that was triggered by growth worries and has put the indexes on track for their biggest weekly fall since mid-June. At 7:30 a.m. ET, Dow e-minis were up 216points, or 0.61%, S&P 500 e-minis were up 18.5 points, or 0.43%. Nasdaq e-minis were down 3.75 points, or 0.02% after a report that Joe Biden is taking aim at big tech by encouraging regulators to reinstate net-neutrality rules. The dollar weakened against a basket of major currencies.

Risk sentiment was also boosted after China announced its first RRR-cut since Jan 2020, confirming fears that its economy is slowing fast. The weighted average reserve rate for all financial institutions now at 8.90%. The PBOC added that they will maintain prudent monetary policy. The move released around CNY 1trl of long-term liquidity, some of which will be utilized to repay the maturing MLF for financial institutions as discussed earlier.

Energy firms such as Exxon, Devon Energy, Schlumberger, and Halliburton between 1% and 1.8% in premarket trading, tracking oil prices. Rate-sensitive banks also gained between 0.9% and 2%, as the 10-year Treasury yield rebounded from 4 months low, breaking an eight-day falling streak. Levi Strauss & Co gained 3.3% as it forecast a strong full-year profit after beating quarterly earnings estimates on improving demand across its markets for jeans, tops, and jackets. U.S.-listed shares of Chinese ride hailing company Didi Global Inc rose 4.5%, for the first time in five days. Here are some of the biggest U.S. movers today:

  • Carver Bancorp (CARV) shares jumped 22% in premarket trading, extending the surge seen on Thursday as retail investors highlighted the firm as a potential short-squeeze target.
  • Gores Guggenheim (GGPI) climbed 5.4% for a second day following a Bloomberg report Thursday that electric-car maker Polestar is in talks to go public through a merger with the blank-check firm.
  • Moving Image (MITQ) rises 18% after soaring 700% in its debut Thursday. Agriforce (AGRI), which also went public yesterday, rallies 115% after its IPO was priced at $5 this week.
  • Toughbuilt (TBLT) shares soar in 40% premarket trading after the building tools maker said its sales via Amazon more than doubled in the first half of the year.

“Any decline in risky asset prices is likely to be limited and short-lived, at least if the delta variant does not totally derail the recovery,” Credit Agricole COB strategists led by Jean-François Paren wrote in a note. “The economic outlook is positive, especially earnings prospects, governments are ready to compensate for any delay in reopening and central banks will remain very dovish, implying a lot of liquidity to buy the dips.”

Markets were roiled this week as a rise in cases of the Delta coronavirus variant crimped risk appetite and led to a flight to safety, with some betting the post-pandemic reflation trade had stalled and secular stagnation was back on the agenda.

“There seems to be the gradual realisation for many that the vaccination programmes alone won’t prove enough to get economies back to their pre-COVID normality, with cases at the global level now ticking up again as the more infectious Delta variant spreads across the world,” said Deutsche Bank analyst Jim Reid.

Meanwhile, offsetting contraction fears is the still ultra-easy monetary policy from many major central banks, although some fear this could yet be curtailed if inflation picks up and policymaker largesse is reined in. “Swings in sentiment and positioning may prove to be powerful in both directions. But ultimately, the data will be key,” said Mark Dowding, chief investment officer at BlueBay Asset Management.

The MSCI World index edged higher, up 0.1%, as gains among many European bourses helped offset overnight weakness in Asia, but remains on course for a weekly fall of around 1%. Europe's Stoxx 600 index rebounded strongly from yesterday's rout, with all sectors in the green. The Eurostoxx 50 rose 1.6%, reversing roughly three quarters of Thursday’s losses. Here are some of the biggest European movers today:

  • Airbus shares rose as much as 4.6% after it delivered 77 jets in June, ramping up the pace of handovers and beating last year’s first-half total.
  • Vectura shares jumped as much as 13% after Philip Morris agreed to buy the U.K. maker of inhaled medical therapies for GBP1.05b, beating Carlyle’s offer. Peel Hunt lowers its price target on the stock to be in line with Friday’s announcement.
  • Bunzl shares rose as much as 4.1%, touching the highest since Nov. 9. The stock’s valuation looks cheap versus historical standards and has “much more upside” from acquisitions and margin sensitivities, Berenberg wrote in a note.
  • BMW shares gained as much as 1.9% after Oddo upgraded the stock to neutral “ahead of a very robust Q2,” saying the company will have lower semiconductor headwinds than peers.
  • Evolution shares roses as much as 3.6%; Pareto said it expects 2Q to be “another record quarter with continued strong underlying growth, especially in the Asian region.”
  • Synlab shares gained as much as 6.3%, the most since May 3, after raising its fiscal year 2021 guidance. Barclays says this will be taken well by the market, but some investors may see the upside as a one-off.
  • European construction stocks gained as analysts at Berenberg and Morgan Stanley both anticipate a very strong reporting season for European construction stocks, buoyed by strong pricing momentum. Stoxx 600 Construction and Materials Index up 1.1% vs Stoxx 600 +1%; sub-index up ~21% YTD

Earlier in the session, MSCI’s broadest index of Asia-Pacific shares outside Japan had briefly touched two-month lows before paring losses to trade down 0.1%. U.S. stock futures pointed to a higher open on Wall Street, up 0.3%. Then, after the close, FTSE China A50 futures rise 1% after the PBOC’s RRR cut. In Australia, stay-at-home orders were introduced in Sydney to combat the spread of the virus. Vietnam also introduced new restrictions. Record deaths were reported across South Asia.

Federal Reserve Bank of San Francisco President Mary Daly told the Financial Times that low vaccination rates in some parts of the world posed a threat to U.S. growth. And speaking of the virus, Pfizer said it plans to request U.S. emergency authorization in August for a third booster dose of its Covid-19 vaccine and said it’s confident it will be effective against the more-virulent delta variant. Elsewhere, South Korea said it would raise curbs on social distancing to the highest level in Seoul for two weeks starting Monday.

In rates, treasuries were under pressure for the first day this week, trading near session lows as the US came online with long-end yields cheaper by about 5bps, underperforming bunds and gilts. Even so, 10Y yields remained on course for one of its biggest weekly slides since June 2020. The 10-year, which breached 1.25% Thursday for the first time since February, is back up to 1.34%, cheaper by ~5bp on the day and lagging bunds by ~3bp in the sector; it remains ~8bp lower on the week as investors lost confidence in predictions that a recovering economy would test the ability of the Fed to control inflation. The yield curve is steeper on the day, 2s10s by ~4bp, 5s30s by ~2bp. Yields across the curve began rising during Asia session after 10- and 30-year clocked multimonth lows Thursday. Supply is in focus as next week’s auction cycle is front-loaded, beginning Monday with both 3- and 10-year offerings, and European stocks and U.S. futures are higher following Thursday’s declines. In Europe, safe-haven German Bund yields ticked higher but were still eyeing the biggest two-week drop since March 2020 as investors eyed a likely longer road to economic recovery.

“The most important issue to consider is the current drop in yields globally, and what this downward trend implies in terms of risk aversion and trade repositioning,” Thomas Flury, Head of FX Strategies at UBS Global Wealth Management, wrote in a note. “So far, we think markets are trapped in some momentum trades, which have little persistence.”

In FX, the dollar was little changed after earlier advancing and the greenback traded mixed against its Group-of-10 peers, with the yen giving back some yesterday’s gains and the Aussie paring losses. The yen was the worst G-10 performer following yesterday’s gains; a rally in Japanese bonds halted as investors became wary of chasing 10-year yields near 0%, especially with the possibility of additional supply. The euro was marginally higher as a short-term bottom may have been established for now, according to options gauges. The pound was little changed against the dollar and the euro, after initially trading slightly softer following data showing the U.K.’s economic recovery lost momentum in May. The Swiss franc held steady after staging the biggest rally in more than three months yesterday. The Aussie rose against the kiwi as leveraged accounts covered short positions following Reserve Bank of Australia Governor Philip Lowe’s speech on Thursday; unless the Covid-19 outbreak is quickly brought under control, Sydney’s lockdown will need to stay in place beyond July 16, according to New South Wales state Premier Gladys Berejiklian.

In commodities, oil prices added to overnight gains as U.S inventories declined, but remain on course for a weekly loss. Brent crude was up 67 cents to $74.79 a barrel. U.S. crude added 79 cents to $73.73 per barrel. Gold, another safe-haven asset, was on track for its third straight weekly gain. It was last up 0.1% at $1,804 an ounce.

Looking at the day ahead, the data highlights include UK GDP and Italian industrial production for May, and the final May reading for US wholesale inventories. Central bank speakers include ECB President Lagarde and Bank of England Governor Bailey, along with the ECB’s Hernandez de Cos. Separately, the ECB will also be published the account of their June meeting where it debated reducing bond purchases, while G20 finance ministers and central bank governors will be gathering in Venice.

Market Snapshot

  • S&P 500 futures up 0.3% to 4,326.00
  • STOXX Europe 600 up 0.9% to 455.74
  • MXAP down 0.4% to 201.77
  • MXAPJ down 0.2% to 672.73
  • Nikkei down 0.6% to 27,940.42
  • Topix down 0.4% to 1,912.38
  • Hang Seng Index up 0.7% to 27,344.54
  • Shanghai Composite little changed at 3,524.09
  • Sensex down 0.3% to 52,409.88
  • Australia S&P/ASX 200 down 0.9% to 7,273.29
  • Kospi down 1.1% to 3,217.95
  • Brent Futures up 0.8% to $74.69/bbl
  • Gold spot down 0.0% to $1,802.80
  • U.S. Dollar Index little changed at 92.42
  • German 10Y yield fell -0.6 bps to -0.312%
  • Euro little changed at $1.1841

Top Overnight News from Bloomberg

  • China cut its reserve requirement ratio by 0.5 percentage point in order to boost lending in the economy as growth starts to wane
  • Rising Covid-19 infections are weighing on currencies and stocks in developing nations, which have begun the second half on a weak note after gains in the first. Investors are already turning wary of previous outperformers including the South African rand and Russian ruble, while China’s reserve- requirement cut on Friday is amplifying concerns over growth
  • Bundesbank President Jens Weidmann said the European Central Bank won’t deliberately seek higher inflation rates to make up for previous undershoots, underlining the compromise made between more-hawkish and more-dovish policy makers on their new price-stability strategy
  • French Finance Minister Bruno Le Maire said he is confident the Group of 20 economies will back a deal on international tax, even as his country pushes for a higher minimum corporate rate
  • Corporate bonds are set for their worst week since at least April amid a selloff in risk assets sparked by rising concerns about the impact of Covid-19 variants on global growth
  • The European Central Bank and the Federal Reserve would react similarly to economic shocks even though their goals aren’t identical, Finland’s Governing Council member Olli Rehn said
  • Oil headed for the biggest weekly loss since May as a dispute between Saudi Arabia and the United Arab Emirates clouded the outlook for supply just as the spread of the delta virus variant sapped risk appetite

Quick look at global markets courtesy of Newsquawk

Asia-Pac bourses resumed the downtrend seen across global counterparts where there was an unwinding of the reflation trade amid growth slowdown concerns and Delta variant fears, which dragged Wall Street back from record highs with the declines led by financials as yields continued to retreat for an 8th straight session. ASX 200 (-1.0%) was pressured as tech heavily underperformed the broad weakness across nearly all sectors amid a worsening COVID-19 situation that forced Sydney to impose stricter COVID-19 measures in already locked down areas, while the New South Wales Premier also suggested a potential extension to the lockdown and that the state is facing the biggest challenge since the pandemic began. Nikkei 225 (-0.6%) slumped on the weight of the recent haven flows into its currency and neared a correction after falling almost 10% from the February peak, with sentiment not helped after Japan confirmed an emergency declaration in Tokyo and that fans will be banned for most Olympic events. KOSPI (-1.1%) was also impacted by virus woes including a new record increase in cases for a second consecutive day and the raising of COVID-19 restrictions in Seoul to the highest level for two weeks beginning July 12th. Hang Seng (+0.7%) and Shanghai Comp. (-0.1%) both began subdued amid ongoing regulatory concerns with Beijing said to tighten rules for future foreign listings and after Chinese fitness app Keep pulled its New York IPO plans due to the recent Didi issues. Furthermore, it was reported that the US is to add additional Chinese entities to the economic blacklist regarding human rights in Xinjiang and use of high-tech surveillance as soon as today, although there was an update from S&P Dow Jones Indices regarding sanctions in which it noted several companies including China National Chemical Corp, China National Chemical Engineering, China Shipbuilding Industry, China United Network Communications, CNOOC Finance and CRRC among those eligible for index inclusion, which potentially helped the shift in mood for Hong Kong. Finally, 10yr JGBs were lower in which the benchmark eased back following a near two-week rally, despite the weakness in Japanese stocks and with demand subdued by the lack of BoJ presence in the market today.

Top Asian News

  • HSBC’s Tucker Blasted by IPAC for Refusal to Discuss Hong Kong
  • Bukalapak Targets $1.5 Billion in Biggest Indonesia IPO
  • China Index in Hong Kong Rebounds After Touching Bear Territory
  • China’s Easing Signal Is Fueling a Trade Loathed by Beijing

European equities (STOXX 600 +0.8%) are trading higher across the board in a move that appears to be more of a recovery from yesterday’s heavy losses than one driven by fresh bullish impetus. By way of context, in what has been a choppy week for the region, the Stoxx 600 is on track to see the week out with losses of just over 1% but resides just ~5 points away from its ATH printed on 14th June. Macro drivers are, for the most part, a case of “as you were” with nothing incremental since yesterday’s close and a light docket ahead; aside from the PBoC's RRR cut, though this had been touted earlier in the week. Stateside, ES trades firmer to the tune of 0.3%, NQ is modestly pressured lower by -0.2% while the beleaguered RTY is higher by 1.0% in what has been a bruising week for the index. Sectors in Europe are firmer with outperformance seen in Travel & Leisure, Autos and Basic Resources. Again though, some of these moves have more of an air of recouping lost ground than anything more constructive. Oil & Gas names are lagging peers but are just about positive on the session as energy markets await any further clarity on the OPEC+ front after talks fell apart earlier in the week. In terms of stock specifics, Airbus (+2.7%) is a notable gainer in Europe after noting a pickup in deliveries in June with the plane maker now having delivered 297 airplanes in H1 2021. In the luxury space, Burberry (+2.7%) are seen higher after being upgraded to buy from neutral at Goldman Sachs, with support also seen throughout the luxury space. Volkswagen (+1.7%) could be one to watch with source reports indicating that the Co. will today discuss whether to extend CEO Diess’ contract until 2025.

Top European News

  • France Backtracks on Virus Warning About Spain and Portugal
  • U.K. Travel Ramp Up Puts Border-Control Upgrades to the Test
  • Czech Tycoon Revives IPO Plan for Apollo-Backed Lottery Firm
  • Chip Shortage Weighs on U.K.‘s Recovery as Car Output Plunges

In FX, the Dollar remains off best levels and its new post-FOMC peaks that were set on Wednesday, but has pared some declines against safer havens that outweighed gains vs riskier counterparts during yesterday’s session. The index has settled into tighter range around the 92.500 mark having lost sight of the half round number several times within yesterday's 92.792-239 extremes, and not getting any respite from US data as weekly and continuing jobless claims were both higher than expected. Currently, the index is at the lower-end of the day's range which currently resides sub-92.30. Ahead, only wholesale inventories and sales due in terms of macro releases and no scheduled Fed speakers, so a Monetary Policy report at 16.00BST prepared for Chair Powell’s semi-annual testimonies to the Senate Committee on Banking, Housing, and Urban Affairs, and to House Committee on Financial Services next week could well take centre stage.

  • AUD/JPY – Far from all change, but as good a gauge of how the landscape and general market tone has improved is the fact that the Aussie and Yen have swapped places in the G10 rankings, with the former now topping the table and the latter propping it up. Aud/Usd has secured a firmer grip of the 0.7400 handle with some assistance from resilient copper prices, while Usd/Jpy has rebounded through 110.00 at best having held just above 109.50 on Thursday and then squeezing higher into the 4 pm London fix.
  • CAD/NZD/GBP/EUR/CHF – All narrowly mixed vs the Greenback, as risk appetite picks up a bit more on the back of China’s RRR cut wef July 15 and perhaps earlier than signalled by the Cabinet earlier this week. The Loonie is also gleaning support from a rebound in oil ahead of Canadian labour data with Usd/Cad now eyeing 1.2500 to the downside having faded around 1.2590 only yesterday. Meanwhile, the Kiwi is looking more assured circa 0.6950 in the run up to next week’s RBNZ policy meeting, the Pound has tested 1.3800 irrespective of broadly weaker than forecast UK data in the form of monthly GDP, IP and breakdown, the Euro is consolidating between 1.1826-59 and the Franc has slipped back to pivot 0.9150. Note, decent expiry option interest in Eur/Usd close by may keep the pair capped into the NY cut as 1 bn rolls off at the 1.1850 strike and 1.1 bn at 1.1875.

In commodities, Crude benchmarks are bid this morning posting gains in excess of 1.0% given the broader risk tone after yesterday’s heavy losses; however, the magnitude of today’s move is relatively slim when compared with what we have seen this far this week. For instance, WTI has printed a range of just over USD 6.0/bbl this week, and we are currently around this mid-point of this range. Newsflow explicitly for the complex has been very minimal. As such, the benchmarks are tracking the broader risk tone while participants remain attentive for any OPEC+ updates, specifically between the UAE and Saudi/Russia. Moving to metals, spot gold and silver are marginally firmer though performance is quite rangebound thus far with gold holding a few dollars above the USD 1800/oz mark compared to the session low of USD 1796.8/oz and Monday’s weekly trough of USD 1783.3/oz. Elsewhere, base metals are buoyed by broader risk appetite rather than any specific macro driver in a continuation of APAC performance where the metals were largely resilient to the tentative macro tone.

US Event Calendar

  • 10am: May Wholesale Trade Sales MoM, prior 0.8%
  • 10am: May Wholesale Inventories MoM, est. 1.1%, prior 1.1%

DB's Jim Reid concludes the overnight wrap

My penance for having my dream day on Sunday (golf am, golf pm, and football evening) while the family go on a short break, is a trip to “Go Ape” tomorrow. This is where you strap in high up in the tree canopy and try not to stumble and test the safety ropes. We are going with a family of 4 kids, including one baby and both sets of parents have agreed that one person out of us will stay with the baby. I’m weighing up whether an hour stint on the ground looking after someone else’s baby is better or worse than being strapped in at altitude. I’m leaning towards gambling that the baby will be asleep for an hour and offering to look after them. A high stakes roll of the dice.

For markets yesterday, the main theme was once again what you could call the “deflation of reflation before staycation” trade, with the risk-off tone sparking a large selloff in global equities alongside further declines in sovereign bond yields. Up to now, equities had been largely immune from the risk-off tone among investors, and indeed the S&P 500 hit an all-time high the previous day, but growing anxiety about future growth prospects led to big declines among cyclical and covid-sensitive assets by the close. And more broadly, there seems to be the gradual realisation for many that the vaccination programmes alone won’t prove enough to get economies back to their pre-Covid normality, with cases at the global level now ticking up again as the more infectious delta variant spreads across the world.

Looking at those moves in more depth, yields on 10yr Treasuries fell another -2.4bps to 1.293% yesterday, which is their lowest closing level since mid-February, as well as their 8th consecutive move lower, marking the longest decline in yields since August 2019. 10yr inflation breakevens were down -4.1bps to 2.23% at the end of the session, which is more than -35bps beneath the 2.594% peak they hit just a couple of months ago after that first bumper CPI release in the US. The Federal Reserve Bank of San Francisco president Mary Daly has said in an interview with FT that the growing downside risk to the global economy due to the spread of the delta variant is one of the reasons for the decline in yields. She said that the news in the U.S. is positive but less so globally, adding that “markets respond to those things, and that can of course lower yields because they’re pricing in the risk there”. There has been some respite overnight with 10yr US yields back up +3.9bps. For European sovereign bonds, the broader risk-off tone led to a divergent performance between core and periphery, with yields on 10yr bunds falling -0.9bps, whereas those on Italian (+2.2bps) and Spanish (+1.8bps) debt moved higher.

For equities there was an even bigger rout however, particularly in Europe, where the STOXX 600 (-1.72%) suffered its worst day of 2021 so far, whilst other bourses including the DAX (-1.73%), the CAC 40 (-2.01%) and the FTSE MIB (-2.55%) experienced major slumps of their own. The US saw comparatively smaller moves, but even there, the S&P 500 (-0.86%), the NASDAQ (-0.72%) and the Dow Jones (-0.75%) saw notable losses, with cyclical industries including transportation (-3.03%) and Materials (-1.36%) leading the S&P lower. One of the worst performing industries were banks (-1.97%) as the yield curve flattened sharply with the US 30yr Treasury yield falling to 5-month lows, having traded under 1.90% briefly after being over +50bps higher in mid-March.

Against this backdrop, the main other story yesterday was the announcement of the ECB’s long-awaited Strategy Review, where the biggest headline was that the Governing Council would now have a symmetric 2% inflation target over the medium term, rather than the previous target of “below, but close to, 2%”. There were also some words sounding more tolerant of above-target inflation, with the statement saying that in order to maintain the symmetry of the inflation target, then “especially forceful of persistent monetary policy measures” could be required when close to the lower bound to avoid low outcomes becoming entrenched, and this could “imply a transitory period in which inflation is moderately above target.”

Our European economists led by Mark Wall viewed the ECB’s move as moderately dovish, given the commitment to lower for longer rates that is formally embedded in the monetary policy statement. Their baseline is the ECB will confirm on 9 September that PEPP net purchases won’t continue beyond March 2022 but the low medium term outlook for inflation means the PEPP stimulus will be at least in part replaced by additional non-pandemic stimulus. See their note here to see their full review.

Among the other changes from the review are that the ECB will now take into account inflation measures with initial estimates of the cost of owner-occupied housing, to better reflect what households experience. They also announced a climate change action plan that will see it further incorporate climate change considerations into the monetary policy framework, including the development of new models and analysis that monitors the impact of climate change on the economy and monetary policy transmission, alongside climate stress tests of the Eurosystem balance sheet in 2022. Although a minor part of the release yesterday maybe this will become a bigger story over the years ahead if countries end up spending big to invest in the climate. It will be hard for the ECB not to help them given this mandate change.

Sentiment continues to remain weak overnight in Asia with the Nikkei (-1.79%), Shanghai Comp (-0.69%) and Kospi (-1.67%) all down. Also not helping sentiment is overnight news from Reuters that the US will add at least 10 Chinese entities to its economic blacklist as soon as today over alleged human rights violations by China in the Xinjiang region. As an exception the Hang Seng (+0.65%) is up. S&P 500 futures (-0.24%) have dipped while those on the Stoxx 50 are broadly flat. In terms of overnight data releases, China’s June PPI came out in line with expectations at +8.8% yoy while CPI came in 0.1pp lower than expectations at +1.1% yoy.

In terms of the latest on the pandemic, the main news yesterday was that the Tokyo Olympics wouldn’t have spectators for events taking place in the capital after a fresh resurgence in Covid-19 cases. Previously there had been hopes for some limited capacity, with the plan to limit numbers to the smaller of 10,000 or 50% of the venue’s capacity. Overnight, South Korea has decided to raise virus restriction in Seoul to the highest level and has ordered night-time entertainment businesses to close. Vietnam has also instituted a stay at home order for 15 days in Ho Chi Minh City while also cutting domestic flights to and from the city. Here in the UK meanwhile, there was a continued slowing in the rate of case growth, which are now up by “only” +35% in the last 7 days, and less than half what it was last Friday. That said, there are signs that the latest wave is beginning to show up more seriously in hospitalisation figures, with the latest data showing that the numbers admitted to hospital are up by more than +50% on the previous week. The Biden administration noted that the US is not ready to lift restrictions on foreign travelers to the country, waiting to see how global cases continue to develop. The government is currently working with the EU, UK, Mexico and Canada on timelines to lift the bans, with the other regions either already accepting US tourists or expecting to in the coming weeks. Turning to vaccines, Pfizer has said that it will request US emergency authorization in August for a booster dose of its Covid-19 vaccine and added that the company is confident it will be effective against the more-virulent delta variant. Separately, the US CDC and FDA said in a joint statement overnight that people who are fully vaccinated against Covid-19 don’t need a booster shot at this time.

Looking at yesterday’s data, the weekly initial jobless claims from the US for the week through July 3 came in at 373k (vs. 350k expected), which was just +2k up from their post-pandemic low of 371k the previous week. The continuing claims number also fell to a post-pandemic low of their own at 3.339m (vs. 3.350m expected). Separately in Europe, the German trade surplus narrowed to €12.3bn in May (vs. €15.1bn expected).

To the day ahead now, and the data highlights include UK GDP and Italian industrial production for May, and the final May reading for US wholesale inventories. Central bank speakers include ECB President Lagarde and Bank of England Governor Bailey, along with the ECB’s Hernandez de Cos. Separately, the ECB will also be publishing the account of their June meeting, while G20 finance ministers and central bank governors will be gathering in Venice.


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