Tin tức thì trường

• "On Monday, we expect another setback in the Ifo, as that’s suggested by our models as well as by the ZEW survey. Incidentally, Ifo momentum currently suggests German industrial production will keep shrinking at an annual pace of 2% – no relief for the ECB here.
• The recent plunge in the Fed’s Empire state survey and in the Philly Fed suggests that broader US manufacturing sentiment may have deteriorated MUCH further. ISM manufacturing could be heading below ~50 tout de suite. Thankfully, one swallow does not a summer make. We’ll see if the Richmond Fed survey (25 June) and the Kansas Fed survey (27 June) corroborate the negative story told by the Empire, Philly and Dallas surveys.
• Iran has announced it will start breaking the nuclear deal on 27 June. US has furthermore alleged that Iran attacked tanker ships with mines and sent more troops to the region, while Germany’s and France’s foreign ministers have warned that a new war can’t be ruled out.
• Euro-area HICP inflation for June will be unveiled 28 June. Core inflation disappointed both us and the consensus in May. If the June numbers compensate for this undershoot, we could get a number as high as 0.9%. If they do not and the usual seasonal pattern plays out, we could get a 0.8% figure. To be honest, either outcome is unlikely to matter much.
• Finally, there’s that G-20 meeting in Osaka on 28-29 June. Not only will China’s Xi Jinping meet with North Korea’s little Rocket Man, he’s scheduled for a private meeting with the Donald.”

• Says aggressive policy action is required to re-anchor inflation expectations at Fed's target
• Estimates that long-run inflation expectations are currently around 1.7 percent
• Believes the Committee should now take action to re-anchor expectations at 2 percent
• Does not believe a rate cut or two in isolation will do much to boost inflation expectations
• Thinks the Fed should also commit to not raising rates from the new lower level until we see core inflation sustainably reach our target
• Says the Committee has consistently been too optimistic in forecasting inflation returning to 2 percent

The National Association of Realtors (NAR) announced on Friday that the U.S. existing home sales surged 2.5 percent to a seasonally adjusted rate of 5.34 million in May from a revised 5.21 million in April (originally 5.19 million).

Economists had forecast home resales increasing to a 5.25 million-unit pace last month.

According to the report, single-family home sales stood at a seasonally adjusted annual rate of 4.75 million in May, up from 4.63 million in April and down 0.8 percent from 4.79 million a year ago. Meanwhile, existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 590,000 units in May, up 1.7 percent from the prior month and down 3.3% from a year ago.

In y-o-y terms, existing-home sales dropped 1.1 percent in May.

The NAR’s chief economist Lawrence Yun said that May’s jump shows that consumers are eager to take advantage of the favorable conditions. “The purchasing power to buy a home has been bolstered by falling mortgage rates, and buyers are responding.”

Preliminary data released by IHS Markit on Friday indicated that the U.S. private sector growth in June expanded at the weakest pace for over three years.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) stood at 50.1 in June down from 50.5 in May. The latest reading pointed to the weakest rate of expansion in the manufacturing sector since September 2009.

Economists had expected the reading to edge down to at 50.4.

A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction.

According to the report, weaker rates of production growth and employment were the key factors weighing on the headline PMI, alongside the largest decline in stocks of purchases for almost a decade.

Meanwhile, the Markit flash services purchasing manager's index (PMI) decreased to 50.7 this month, down from 50.9 in the prior month. The reading indicated the slowest increase is services sector since the current upturn began in March 2016.

Economists had expected the reading to increase to 51.0.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 50.6 in June, down from 50.9 in the previous month, indicating the slowest expansion in overall business activity since February 2016.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit noted, “Business activity edged closer to stagnation in June, expanding at the slowest rate since February 2016 and rounding off a second quarter in which the survey data point to the pace of economic expansion slipping to 1.4%.”

Nathan Janzen, a senior economist at the Royal Bank of Canada, notes that the Canadian retail sales inched up 0.1% in April and excluding price-effects, sale volumes edged down 0.2% after stronger gains the prior two months.

• “The volume of retail sales did edge lower in April but that was the first dip in three months.   Looking through monthly wiggles, sale volumes were still up 1.2% versus their Q1 average and 2.2% from a year ago.  That year-over-year rate is admittedly modest, but nonetheless the highest since September of last year.
• We still expect consumer spending growth to remain relatively unimpressive – housing markets have stabilized, but an earlier boost to household purchasing power from rapid home price appreciation won’t likely be repeated, and the household saving rate is already very low.
• The more pressing risk to the economic outlook at the moment, though, remains for a potential escalation in the US-China trade spat to generate more significant negative spillovers to the Canadian industrial sector.”

U.S. stock-index futures fell moderately on Friday, after a strong rally in the prior session that helped the S&P 500 notch a record high, as ongoing geopolitical angst between the U.S. and Iran kept investors on edge.

Global Stocks:

Danske Bank's analysts note that the central banks in the euro area and the U.S. sent a clear signal this week that they are getting ready to step on the gas to underpin growth and inflation.

• “The ECB’s Mario Draghi was the first to prepare markets for a change in policy soon. At the ECB Forum in Sintra he struck a very dovish tone saying that ‘in the coming weeks, the Governing Council will deliberate how our instruments can be adapted commensurate to the severity of the risk to price stability’.
• Disappointing growth and inflation figures, sharply falling market inflation expectations and heightened risk from the U.S.-China trade war is behind the shift. We have changed our forecast and now look for the ECB to cut rates by 20bp, introduce a tiering system for interest rates, extend forward guidance, and restart quantitative easing (QE). This could happen in September.
• The Fed joined the dovish choir on Wednesday. Most importantly the Fed removed that it was ‘patient’ and says ‘the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion’ while also stating that uncertainties have increased. We continue to look for a rate cut in July and a total of 75bp of cuts in H2.”

(company / ticker / price / change ($/%) / volume)

Caterpillar (CAT) downgraded to Underweight from Neutral at Atlantic Equities; target $110

Statistics Canada reported on Wednesday that the Canadian retail sales edged up 0.1 percent m-o-m to CAD51.49 billion in April, following a revised 1.3 percent m-o-m climb in March (originally a 1.1 percent m-o-m increase). That was the smallest increase in retail trade since January’s drop of 0.3 percent m-o-m.

The result was below economists’ forecast, suggesting a 0.2 percent m-o-m advance for April.

According to the report, sales rose in 7 of 11 subsectors, representing 74 percent of retail trade.

The April advance was primarily attributable to higher sales at gasoline stations (+1.2 percent m-o-m) and food and beverage stores (+0.4 percent m-o-m).

Excluding motor vehicle and parts dealers, retail sales inched up 0.1 percent m-o-m in April compared to an upwardly revised 1.8 percent m-o-m gain in March (originally a gain of 1.7 percent m-o-m) and economists’ forecast of a 0.3 percent m-o-m rise.

In y-o-y terms, Canadian retail sales jumped 3.7 percent in April, following an unrevised 2.6 percent advance in March.

Analysts at ABN AMRO are expecting the ECB to cut its policy rates, adding to the monetary stimulus already factored into their base case in the form of a re-start of QE.

• “We expect a 10bp cut in all of the ECB’s main policy rates in September of this year, and a second 10bp reduction in Q1 of next year. This would take the ECB’s deposit rate down to a low of -0.6% and the refi rate into negative territory for the first time. We see the ECB’s deposit rate as being the key policy rate as it anchors interbank rates in an environment of excess liquidity.
• The Governing Council has communicated that it will ‘continue to monitor carefully the bank-based transmission channel of monetary policy and the case for mitigating measures’. The reduction in the deposit rate, as well as the refi rate, will directly reduce the cost from commercial banks borrowing from the ECB in TLTRO-III, as well as increasing the cost for banks of keeping excess reserves at the ECB.
• At the June press conference, ECB President Draghi was explicit in asserting that the ECB was willing to cut policy rates as well as re-starting QE and strengthening forward guidance. At the ECB Forum in Sintra, Mr Draghi emphasized that a package of measures had positive re-enforcing effects in 2014-2015, and we think it may go for the same approach this time around.
• We think the ECB’s first move towards stimulus will come at the July meeting. At that meeting, we think the Governing Council will decide to change its forward guidance on policy rates to explicitly hint at the possibility of rate cuts.
• By December, we expect the ECB to announce a EUR 630bn QE package, to be implemented for 9-months from January 2020 at a pace of EUR 70bn per month. The second 10bp rate reduction will follow in Q1 of next year.”

Analysts at TD Securities are expecting that Friday's Markit PMI release of the U.S. economy to show manufacturing activity stayed unchanged in June at 50.5 following the notable decline from 52.6 in May.

• “If realized, this would suggest the manufacturing sector could be stabilizing at an expansionary level during the month and should be a good directional predictor for the highly-anticipated June ISM survey released on July 1.”

Anders Svendsen, an analyst at Nordea Markets, notes that the Eurozone PMIs increased slightly in June from low levels, driven by a substantial improvement in France and some improvement in German manufacturing. ECB still needs clear improvement in H2 to regain confidence that inflation will converge to its target.

• “Euro area:

1. Composite PMI rose marginally to 52.1 from 51.8, close to expectations
2. Manufacturing PMI was little changed at 47.8, close to expectations

• Germany:

1. Composite PMI unchanged at 52.6, close to expectations
2. Manufacturing PMI rose almost one index point to 45.4, better than expected

• France:

1. Composite PMI substantially higher at 52.9 up from 51.2, much better than expected
2. Manufacturing PMI substantially higher at 52.0 up from 50.6, much better than expected.

• The stabilization in the German manufacturing sector, as well as the clear improvement in France, should give some modest relief to Euro-area growth concerns.
• The PMI levels still point to growth just below potential but at least and clear improvement in the second half of the year is probably still required for the ECB to regain confidence in the convergence of core inflation towards the inflation target.”

• Signs of weakness are increasing
• Economic rebound is weaker than expected
• Fiscal expansion may be needed
• If inflation path is not sustained, additional stimulus will be required

• The Brexit withdrawal agreement is not open for renegotiation
• Looking forward to working with the next British prime minister

• We're in a world of lower inflation
• U.S. is close to 2% inflation target
• Outlook is for sustained economic expansion
• There is elevated uncertainty in the last six to eight weeks
• Uncertainty on trade is weighing on sentiment
• Says will act appropriately to sustain expansion
• Europe and Japan are well away from where they want to be
• Fed is closer to its goals than other major economies
• FOMC is monitoring closely crosscurrents facing the economy
• There is a broad agreement that case for looser Fed policy has increased
• Fed has the tools necessary to sustain expansion

• Government has to give guarantees to Italian people before providing any guarantees to EU over 2020 budget
• Reform of Bank Of Italy is necessary
• At least 10-15 bln euros are necessary for a flat tax measure
• Italy does not need an additional budget adjustment this year

• Wanted to cut rates as "insurance" against further expected declines in inflation
• Also against the largly expected slowdown in economic growth
• Says that market-based inflation expectations have weakened considerably below the Fed's 2% inflation target
• Feels that factors behind weak inflation unlikely to be transitory

Japan's government on Friday signalled its readiness to pursue flexible fiscal spending next year to offset risks to economic growth.

The risks to the outlook for the world's third-largest economy in the wake of rising trade tensions and a growth slowdown globally could add pressure on the government to boost spending ahead of a planned sales tax hike in October.

In a long-term fiscal policy roadmap approved by cabinet on Friday, the government said it stands ready to take flexible macro-economic policy steps "without hesitation" if a downturn in overseas economies poses risks to Japan's economy.

The pledge came after Bank of Japan Governor Haruhiko Kuroda told on Thursday the government and the central bank must cooperate with each other to achieve sustained growth.

Lan Shen, economist at Standard Chartered, points out that their latest SMEI survey shows no improvement in China’s SME performance in June.

“The headline SMEI – based on our monthly survey of more than 500 SMEs nationwide in China – eased to 54.0 in June from 54.7 in May, with the growth momentum indicator (new orders minus finished-goods inventory) moderating for a third straight month. Weakening domestic demand took a toll on SMEs’ sales and production activity, while their investment appetite remained sluggish. We expect heightened counter-cyclical policy measures introduced since late-June to support domestic investment and consumption in H2-2019. Export-oriented SMEs showed resilient performance in June, mainly due to front-loading of exports, though their expectations on sales and profitability were dampened by the unresolved US-China trade conflict.”

National Australia Bank’s analysis team explains that the gold surged to $1390, the highest since August 2013, with the US Federal Reserve adopting a dovish monetary policy stance, highlighting ‘uncertainties’ posed by trade and the economy.

“NAB Economics is forecasting two rate cuts in the second half of 2019. Rising trade tensions and the prospect of further deterioration have led to increased levels of risk aversion, further supporting gold. Conversely, a possible trade deal between the US and China at the upcoming G-20 meeting in Osaka might lead to some easing in the gold price. We have upgraded our end-of-year gold forecasts to $1380, up from $1350, with the prospects of further increases ahead.”

• There is slightly nervous movement in markets

• Will keep closely monitoring markets for now

• Can't forecast direction in which USD/JPY will go

• Fed rate cuts have not been decided yet

• Supports Kuroda and BOJ's monetary policy

• Will act appropriately if there are excessive forex movements

The United States and Japan may need to shore up bank oversight to prepare for economic downturns, the head of the Federal Reserve Bank of Boston warned.

Eric Rosengren, president of the Boston Fed, said in a speech that policymakers in the two major economies should consider whether regulators need more tools, including requiring banks to hold more capital now, to counteract economic risks.

"Japan, like the United States, might benefit from considering an expanded set of macroprudential tools to enhance the financial system's resilience," Rosengren said.

Rosengren, who is voting member of the Fed this year on U.S. interest rates, did not discuss his monetary policy outlook in the speech.

Italy's prime minister said on Friday he was determined to avoid an EU sanctions procedure over the country's growing debt and was due to hold talks with Commission President Jean-Claude Juncker later in the day.

"We have to avert it," Giuseppe Conte told reporters as he arrived for the second day of an EU summit. "It's a difficult situation but I'm confident of a positive solution."

It is unclear if Italy can stop the procedure, which Brussels has said would be warranted on the basis of 2018 data and EU forecasts.

According to the report from IHS Markit, the pace of eurozone economic growth remained subdued in June but edged up for a second successive month to reach a seven-month high. The overall rise in activity was supported by the largest inflow of new business seen since last November, albeit remaining subdued compared to rates of order book growth seen this time last year. Employment growth meanwhile improved marginally, albeit merely running in line with the average seen in the year to date and down on the average seen last year. Looking ahead, companies continued to rein-in their expectations of growth in the coming year, which are running at their lowest since October 2014.

The IHS Markit Eurozone Composite PMI rose to 52.1 in June, up from 51.8 in May to reach its highest since last November. The reading puts growth in the second quarter up slightly on that seen in the first quarter, yet still the second-lowest since the fourth quarter of 2014.

Growth was driven by the service sector, which reported the sharpest rise in business activity since November of last year. In contrast, manufacturing remained in decline, with output falling for a fifth straight month and at a rate marginally steeper than seen in May. While the service sector’s expansion rounded off its strongest quarter since the third quarter of last year, the downturn in manufacturing completed a quarter in which production suffered the sharpest decline for six years

• Flash Eurozone Services PMI Activity Index at 53.4 (52.9 in May). 7 month high.

• Flash Eurozone Manufacturing PMI at 47.8 (47.7 in May). 2-month high.

According to the flash report from IHS Markit, German private sector output rose at a moderate overall pace at the end of the second quarter.

The IHS Markit Flash Germany Composite Output Index – which is based on approximately 85% of usual monthly replies – registered a reading of 52.6 in June, unchanged from May.

• Flash Germany Services PMI Activity Index at 55.6 (May: 55.4). 2 month high

• Flash Germany Manufacturing PMI(3) at 45.4 (May: 44.3). 4-month high.

The PMI data signalled that growth during the second quarter as a whole was the strongest since the third quarter of 2018. New work has risen only twice in the first six months of 2019. The latest expansion was also weak overall, albeit the best since last November. New export orders at goods producers fell for the tenth month running, albeit at the slowest pace since January. Private sector employment in Germany rose for a record sixty-eighth consecutive month in June. The rate of job creation remained stronger than the long run series average, but was unchanged from May’s three-year low. Cost pressures at private sector companies eased in June, notably at manufacturers. Average purchase prices at manufacturers fell at the fastest rate since April 2016. This drove overall input cost inflation across both manufacturing and services down to a 34-month low.  Finally, German private sector companies were less confident of output growth over the next 12 months. Overall sentiment was the weakest since October 2014 as confidence in the service sector took a hit during the latest period.

Analysts at TD Securities point out that for data today, we have the Eurozone’s flash PMIs for June.

“It was looking like we had reached a floor with Germany's manufacturing PMI, as it stabilised with a 44-handle for the last three months in a row. With US-EU auto tariffs having been delayed and US-Mexico tariffs having been averted, we had hoped to see some upward movement, but the disappointing ZEW report earlier this week leaves a big question mark around that view. With the ZEW polling financial market participants and the PMI polling purchasing managers, we could still see some divergence. But our forecast for an uptick to 45.5 in June (mkt: 44.6) is a bit more of a long shot. For the French services PMI, we look for a steady reading of 51.5 (mkt: 51.6).”

Karen Jones, analyst at Commerzbank, notes that the EUR/USD pair is seeing a strong rebound off support at 1.1176, the March low.

“The market appears to have stabilised and again is well placed to test the 200 week ma at 1.1348 and the 200 day ma at 1.1350. To really ignite upside interest, we suspect a close above 1.1350 is needed to target initially the 1.1570 2019 high. We regard recent lows at 1.1110/06 as an interim turning point and continue to view the market has basing longer term. Support at 1.1110/06 is regarded as the break down point to the 2018-2019 support line at 1.1027 and the 1.0814 78.6% Fibonacci retracement.”

The impact of additional U.S. tariffs on the Chinese economy will be very limited, the head of the banking and insurance regulator, Guo Shuqing, wrote in an article in the People's Daily newspaper on Friday.

Guo, also the top Communist Party official at the People's Bank of China, said fluctuations in the yuan exchange rate were normal in the short term but over a longer horizon the currency would not continue to lose value given China's economic fundamentals.

Dominick Stephens, chief economist at Westpac, expects the RBNZ to leave the OCR on hold next week and suggests that it will probably reiterate that it has an easing bias.

“The RBNZ will express concern about deepening risks to the global economy. The increasing likelihood that other central banks will reduce interest rates will also be mentioned. The domestic outlook has not changed much, but these global risks increase the likelihood that the RBNZ will cut again. We are now forecasting an August OCR cut. The consequent drop in mortgage rates gives us even more reason to expect an upturn in the housing market and the New Zealand economy over the year ahead.”

Bank of England Governor Mark Carney has said that a no-deal Brexit should be a choice taken with "absolute clarity" about what it would mean for Britain's economy.

Carney, who has previously warned about the economic impact of a no-deal Brexit, made the comment in an interview with the BBC.

The two contenders to replace Theresa May as the next British prime minister have said they are prepared to take the country out of the European Union without a transition deal, if necessary.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1437 (3818)

$1.1392 (4420)

$1.1374 (596)

Price at time of writing this review: $1.1298

Support levels (open interest**, contracts):

$1.1239 (2644)

$1.1194 (3092)

$1.1147 (3729)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 5 is 68600 contracts (according to data from June, 20) with the maximum number of contracts with strike price $1,1300 (4420);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2839 (1079)

$1.2809 (850)

$1.2787 (389)

Price at time of writing this review: $1.2707

Support levels (open interest**, contracts):

$1.2626 (1622)

$1.2585 (1363)

$1.2541 (1937)

Comments:

- Overall open interest on the CALL options with the expiration date July, 5 is 17580 contracts, with the maximum number of contracts with strike price $1,3000 (3030);

- Overall open interest on the PUT options with the expiration date July, 5 is 15389 contracts, with the maximum number of contracts with strike price $1,2500 (2254);

- The ratio of PUT/CALL was 0.88 versus 0.87 from the previous trading day according to data from June, 20

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.