MNI China Daily Summary: Monday, July 1

MNI BRIEF: PBOC To Borrow CGBs In Response To Market Situation

MNI BRIEF: Caixin June Manufacturing PMI Hits Three-year High

MNI: PBOC Net Drains CNY48 Bln Via OMO Mon; Rates Unchanged

CHINA PBOC CONDUCTS CNY2 BILLION VIA 7-DAY REVERSE REPOS MON

HICP Steady As Expected; CPI Ticks Lower As State Data Indicated

MNI: GERMANY JUL CPI +2.2% Y/Y

German CPI / HICP due for release at 13:00BST / 14:00CET

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

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Midday Wrap

CREDIT UPDATE
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  • CDX opens -1.5/-6 tighter, S&P futures +0.2% with low vol in pre-market
  • The right-wing nationalist party, RN, won the plurality of the vote as expected but markets have taken a relief rally on some seeing it as less than expected. Attention turns to 2nd round elections (coming Sunday) and likelihood of any RN majority (298 seats required). Our political risk team note President Macron Is calling for a 'republican front' consisting of the centre and left joining to stop a majority. On the 5Y OATS are -5 tighter, BTPs -7 and Euro swap spreads -5.
  • €IG has moved on that and some; exposed financials reversing 12-15bps tighter while corps are mid to high single digit tighter. We see the index net -4-6 in.
  • Movers in HY include Antolin (+1.4-2.7pts) after negotiating loan and revolver extensions with stringent conditions and Atos (-0.5-1.3pts) who finalised restructuring terms on Sunday. Latter will convert €2.8b of existing debt into equity and raise €1.5-€1.675b in new debt from existing bond holders and bank creditors. It's hoping the measures will bring its BS in-line with BB profile/2x by 2026. Existing shareholders seem to be the losers on the share dilution.
  • Bunds are +8bps in the belly, most of it on haven bid unwinding given moves came before the German state inflation prints this morning. Our analyst projected 2.2-2.3% Y/Y for the German National CPI print at 1PM London vs. consensus at 2.3%. It's printed at 2.2%.
  • €IG equity basket is +1% (vs. SXXP+0.6%), financials are +1.5% on French sentiment but 1%+ gains are shared by Energy, Industrials, REITS & Utils. Single names movers are DSV (+6%) and Maersk (+5%) on the latter pulling out of a bid for ~€14b DB Schenker unit. DSV is still a contender.
  • Euro IG primary has Grand City & RATEIT, while €HY continues to march on at pace with Kiko (floater), Applus, Vodafone Spain, Eesti Energia (hybrid) and Phoenix Pharmahandel.
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  • CDX opens -1.5/-6 tighter, S&P futures +0.2% with low vol in pre-market
  • The right-wing nationalist party, RN, won the plurality of the vote as expected but markets have taken a relief rally on some seeing it as less than expected. Attention turns to 2nd round elections (coming Sunday) and likelihood of any RN majority (298 seats required). Our political risk team note President Macron Is calling for a 'republican front' consisting of the centre and left joining to stop a majority. On the 5Y OATS are -5 tighter, BTPs -7 and Euro swap spreads -5.
  • €IG has moved on that and some; exposed financials reversing 12-15bps tighter while corps are mid to high single digit tighter. We see the index net -4-6 in.
  • Movers in HY include Antolin (+1.4-2.7pts) after negotiating loan and revolver extensions with stringent conditions and Atos (-0.5-1.3pts) who finalised restructuring terms on Sunday. Latter will convert €2.8b of existing debt into equity and raise €1.5-€1.675b in new debt from existing bond holders and bank creditors. It's hoping the measures will bring its BS in-line with BB profile/2x by 2026. Existing shareholders seem to be the losers on the share dilution.
  • Bunds are +8bps in the belly, most of it on haven bid unwinding given moves came before the German state inflation prints this morning. Our analyst projected 2.2-2.3% Y/Y for the German National CPI print at 1PM London vs. consensus at 2.3%. It's printed at 2.2%.
  • €IG equity basket is +1% (vs. SXXP+0.6%), financials are +1.5% on French sentiment but 1%+ gains are shared by Energy, Industrials, REITS & Utils. Single names movers are DSV (+6%) and Maersk (+5%) on the latter pulling out of a bid for ~€14b DB Schenker unit. DSV is still a contender.
  • Euro IG primary has Grand City & RATEIT, while €HY continues to march on at pace with Kiko (floater), Applus, Vodafone Spain, Eesti Energia (hybrid) and Phoenix Pharmahandel.