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MNI EUROPEAN OPEN: Holidays Limit Activity In Asia, UK To Press Pause On Reopening

EXECUTIVE SUMMARY

  • G7 LEADERS AGREE ON VACCINES, CHINA AND TAXING CORPORATIONS (CNBC)
  • ECB'S LAGARDE: TOO EARLY TO DEBATE THE END OF PEPP PURCHASES (Politico)
  • JUNE 21 EASING OF COVID LOCKDOWN RULES DELAYED BY FOUR WEEKS (Times)
  • UK ATTACKS "OFFENSIVE" EU AS BREXIT G7 ARGUMENT ESCALATES (BBG)
  • BENNET SWORN IN AS ISRAEL'S PRIME MINISTER, ENDING NETANYAHU'S 12-YEAR RULE (Haaretz)
Fig. 1: WTI Crude Oil ($/bbl)

Source: MNI - Market News/Bloomberg


UK

CORONAVIRUS: Boris Johnson will appeal to the nation to be patient tomorrow as he announces that the June 21 easing of lockdown restrictions will be delayed by up to four weeks. The prime minister will use a press conference in Downing Street tomorrow evening to set out the delay as the government attempts to hit its target of offering all adults at least one dose of a vaccination by the end of next month. A government source said that Johnson views it as the "final stretch" as he seeks to ensure that as many people as possible are protected before lockdown rules are eased. The prime minister has repeatedly argued that the end of restrictions must be "irreversible". (Times)
CORONAVIRUS: Any lifting of Covid restrictions this month will "fan the flames" of rising infections in England and could lead to similar levels as last winter's second wave within two months, one of the government's leading scientific advisers has said. Prof Andrew Hayward, an adviser on the Sage and Nervtag committees, said the country should be slowing down rather than speeding up its return to normality, before an expected announcement by Boris Johnson on Monday of a delay to the final removal of lockdown restrictions, which was pencilled in for 21 June. (Guardian)

CORONAVIRUS: Boris Johnson has been warned by one of the Government's own advisers that a delay to lifting Covid-19 restrictions will have an "extremely damaging" effect on the economy and mental health. Prof Robert Dingwall, who sits on a series of coronavirus advisory committees, including the New and Emerging Respiratory Threats Advisory Group and the Joint Committee on Vaccination and Immunisation, urged the Prime Minister to press ahead with his original roadmap that should have seen "all legal limits on social contact" removed on June 21. (Telegraph)

CORONAVIRUS: More than 7 million – or one in eight – people in England are living in areas experiencing high Covid rates, close to four times the number just two weeks ago. Many of those affected live in the country's most deprived areas and are facing a combination of high case rates and lower-than-average vaccine uptake, according to the available data. A total of 7,136,244 are living in areas that recorded 100 or more cases per 100,000 population on 5 June, despite the success of the UK's vaccine programme. (Guardian)
BREXIT: Boris Johnson was left infuriated on Saturday when Emmanuel Macron suggested in head-to-head G7 summit talks that Northern Ireland was not part of the UK. The Prime Minister attempted to explain his frustration with the Northern Ireland Protocol by asking Mr Macron what he would do if sausages from Toulouse could not be moved to Paris, according to a UK government source. The French president was said to have retorted by arguing that the comparison did not work because Paris and Toulouse were both part of the same country, incorrectly suggesting Northern Ireland is not within the UK. Mr Johnson expressed bemusement at the remark to aides straight after the meeting and later hinted at the comment when telling Sky News that some leaders needed to get it "into their heads" that the UK was a "single country". (Telegraph)

BREXIT: Boris Johnson's U.K. government doesn't want any of the leaders at the Group of Seven summit to leave Cornwall without knowing just how angry he is with some of them about Brexit. For the second day in a row, Johnson's Foreign Secretary Dominic Raab has taken to broadcast interviews to condemn European "ignorance" about the U.K., as a dispute over post-Brexit trade rules intensifies. He attacked the "lopsided" attitude the European Union is taking to enforcing checks on in goods entering Northern Ireland, a long running sore point between the two sides. (BBG)

ECONOMY: The UK's manufacturing sector is expected to grow twice as fast in 2021 as forecast at the start of the year after an unexpectedly strong rebound in production as companies emerge from the worst of the pandemic. Make UK, which represents 20,000 companies across engineering, manufacturing and industrials, said that output volumes reported in the last quarter were at the highest level since its research began 30 years ago. Employment intentions have also surged and the number of companies planning to increase investment turned positive for the first time since the start of 2020. As a result, Make UK upgraded its growth forecast for manufacturing from 3.9 per cent to 7.8 per cent, above its forecast for GDP of 7.5 per cent. (FT)

UK/AUSTRALIA: Liz Truss, the International Trade Secretary, will press her Australasian counterparts to "turn momentum into results" this week as the UK closes in on post-Brexit agreements with Australia and New Zealand. Ms Truss said British firms stood to gain better access to New Zealand, and consumers face cheaper wine, as she prepared to hold talks with Damien O'Connor, the country's trade minister, in London. Sources close to Ms Truss said she would urge Mr O'Connor to "give us more" on areas such as better access for British service suppliers in New Zealand, and enabling more workers from each country to operate in the other nation. One source claimed that recent progress on a deal with Australia had "put a bit of pressure on New Zealand to play catch-up". (Telegraph)

EUROPE

ECB: Christine Lagarde is working on a version of the European Central Bank that's more like herself — not bound by traditional views of central banking. In an interview at her office on the 40th floor of the ECB's south tower, the bank's president said her institution was "riveted" to its core mission of keeping prices stable but must also reflect a changing world. Speaking as the bank puts the finishing touches to its first strategy review in nearly 20 years, Lagarde made a passionate plea for the ECB to adapt to new challenges, such as the fight against climate change and the rise of digital currencies. She also said the bank had to get better at listening to — and communicating with — European citizens.
  • "We have to take the economy through the pandemic and into a recovery phase, which has now started. We need to really anchor the recovery. We always talk about inflation anchoring and we are not oblivious to that. But the recovery needs to be firm, solid and sustainable. You don't remove the crutches from a patient unless and until the muscles have started rebuilding sufficiently so that the patient can walk on his or her own two legs. The same applies to the economy. We are at a turning point where, bearing in mind alternative variants, we are on that recovery path, heading firmly towards a return to the pre-COVID-19 level. According to our latest projections, we see the euro area economy being back to the pre-COVID-19 level during the first quarter of 2022. That said, I am not suggesting that the pandemic emergency purchase program (PEPP) is going to stop on March 31. We have plenty of flexibility, but in terms of economic outlook we are heading in the right direction."
GERMANY: Green candidate Annalena Baerbock said she'd unleash government aid to help German industry make the country climate-neutral, while acknowledging recent mistakes in her race to succeed Chancellor Angela Merkel. The 40-year-old has suffered a harsh introduction to big-league politics after surging out of the gates following her nomination in April. She now trails in head-to-head matchups against her rivals from Merkel's governing coalition. After failing to fully report her income, Baerbock's missteps took a potentially more damaging turn when it came to light that her official biography had been embellished. The damage has led to calls by some that Baerbock hand the candidacy to Greens' co-leader Robert Habeck. In a speech to delegates on Saturday, she acknowledged "annoying" mistakes but said she's ready to compete with Merkel's CDU/CSU bloc for the leadership of Europe's biggest economy. (BBG)
SPAIN: Thousands of people called Sunday for Spain's government to resign over its plan to issue pardons to a dozen separatist leaders who were convicted for their roles in a 2017 attempt to carve out an independent Catalan state, the boldest secession push in recent Spanish history. The demonstration in Madrid was the largest to date against the left-wing coalition government led by Socialist Prime Minister Pedro Sánchez. It was organized by a civil society group in defense of Spain's unity and held at a central square that has become a symbol for far-right political rallies. (AP)
FINLAND: Finland's conservative National Coalition Party came out on top in the Nordic nation's countrywide local elections. The opposition party garnered 21.3% of the vote, more than it had in the previous municipal vote four years ago. Prime Minister Sanna Marin's Social Democrats were second ahead of Finance Minister Annika Saarikko's Center Party after more than 99% of ballots were counted. In Sunday's election, more than 8,800 people were chosen to 293 councils across the country to decide on issues including zoning plans and primary health care. It was also the first election into which Marin, 35, steered her party as leader. The vote was moved from mid-April to June to prevent the spread of Covid-19. (BBG)
SWITZERLAND: The Swiss shot down a plan to reduce carbon emissions, sending their government back to the drawing board in order to meet its commitment under the Paris Climate Agreement. Voters rejected a higher CO2 levy by 51.6% to 48.4%, swayed by claims the measure was too costly. In a separate vote, they approved of the government's response to Covid-19, including financial aid to businesses. (BBG)
POLAND: A candidate backed by a bloc of pro-European Polish opposition groups comfortably won a race for city mayor in the south-east region that's been a stronghold of the ruling Law & Justice party, an exit poll showed. If confirmed, the result in Rzeszow shows that when united, the opposition can effectively compete against the powerful ruling party, which remains well ahead in nationwide opinion polls midway through its second parliamentary term. (BBG)
UKRAINE: Ukraine is prepared to take legal action against Gazprom to unblock natural gas supplies from central Asia, a move that could ensure it has sufficient domestic supply and transit revenues even if Russia's nearly completed Nord Stream 2 pipeline comes on stream this year. Gazprom controls the flow of gas through its pipelines into Ukraine from central Asia. It has blocked these flows for 15 years and if it does not approve them, the head of Ukraine's state gas company says he is ready to appeal to the EU's competition authorities and take the Russian energy giant to international arbitration. "It will be a game changer because as we all understand there is a huge potential basically to transport central Asian gas through Ukraine to Europe," Yuriy Vitrenko, chief executive of Naftogaz Ukraine, told the Financial Times. (FT)

U.S.

FISCAL: Republican Senator Susan Collins of Maine advocated Sunday for a "targeted, responsible" infrastructure package with bipartisan backing as a group of senators attempts to broker a deal with the White House to rebuild the nation's roads, bridges and waterways. "We have five Republicans and five Democrats who got together to hammer out the framework for a targeted, responsible infrastructure package," Collins said in an interview on "Face the Nation." (CBS)
POLITICS: Speaker Nancy Pelosi (D-Calif.) on Sunday said she doesn't "give up on Joe Manchin" after the Democratic West Virginia senator announced last week that he will vote against a sweeping bill to overhaul elections, putting the future of the legislation in question in the evenly split Senate. "I don't give up on Joe Manchin. When he was governor and secretary of state in West Virginia, he initiated many of the initial ideas that are in ... the For the People Act," Pelosi told host Dana Bash on CNN's "State of the Union." (Hill)
POLITICS: Rep. Alexandria Ocasio-Cortez (D-N.Y.) on Sunday said Senate Democrats are "blocking crucial items in a Democratic agenda" as the clock ticks for both parties to come to an agreement on a bipartisan infrastructure package. Ocasio-Cortez's remarks come after a bipartisan group of 10 senators announced an agreement on a "compromise framework" last week to invest $1.2 trillion in infrastructure over the next eight years. When asked by host Dana Bash on CNN's "State of the Union" if she would vote for the measure if the White House said this is the best option on the table right now, the progressive said "this isn't the best that we can get." "I do think that we need to talk about the elephant in the room, which is Senate Democrats, which are blocking crucial items in a Democratic agenda ... I think, for reasons that I don't think hold a lot of water," Ocasio-Cortez continued. (Hill)

POLITICS: Apple informed former Trump White House counsel Don McGahn and his wife that the Justice Department had subpoenaed information about accounts belonging to them in 2018, a person familiar with the matter said Sunday, days after two House lawmakers disclosed they, too, had their information secretly subpoenaed. (AP)

OTHER

G7: Leaders of the Group of Seven wealthy nations staked their claim Sunday to leading the world out of the coronavirus pandemic and crisis, pledging more than 1 billion coronavirus vaccine doses to poorer nations, vowing to help developing countries grow while fighting climate change and backing a minimum tax on multinational firms. At the group's first face-to-face meeting in two years, the leaders dangled promises of support for global health, green energy, infrastructure and education — all to demonstrate that international cooperation is back after the upheavals caused by the pandemic and the unpredictability of former U.S. President Donald Trump. (CNBC)
G7/CHINA: Group of Seven leaders on Sunday scolded China over human rights in its Xinjiang region, called for Hong Kong to keep a high degree of autonomy and demanded a full and thorough investigation of the origins of the coronavirus in China. After discussing how to come up with a unified position on China, leaders issued a highly critical final communique that delved into what are for China some of the most sensitive issues, including also Taiwan. The re-emergence of China as a leading global power is considered to be one of the most significant geopolitical events of recent times, alongside the 1991 fall of the Soviet Union that ended the Cold War. (RTRS)
G7/TAIWAN: Taiwan will be a "force for good" and continue to seek even greater international support, the presidential office said, after the Chinese-claimed island won unprecedented backing from the Group of Seven of major democracies. The G7 leaders on Sunday scolded China over human rights in Xinjiang, called for Hong Kong to keep a high degree of autonomy and underscored the importance of peace and stability across the Taiwan Strait. Taiwan presidential office spokesman Xavier Chang said this was the first time the G7 leaders' communique has stressed the importance of peace and stability in the strait and first time since its founding there was "content friendly to Taiwan", expressing deep thanks for the support. (RTRS)
G7/IMF: The International Monetary Fund is exploring creation of a new trust that could allow its members to lend their IMF reserves to more countries, including middle-income countries vulnerable to climate change, IMF chief Kristalina Georgieva said on Sunday. Georgieva said leaders of the Group of Seven rich economies had given the IMF a 'green light' to keep working on the plan, and China - the world's second largest economy - had also expressed interest, along with middle-income countries that stand to benefit from such a fund. (RTRS)

NATO: NATO will continue to build its military capabilities and employ a "wide combination of different tools" to counter Russian aggression, but it doesn't aim to "mirror" its rival power, the organization's chief told CNBC Sunday. "NATO's approach to Russia is based on what we call a dual track approach, defense and dialogue," NATO Secretary General Jens Stoltenberg told CNBC's Hadley Gamble from Brussels. "And that's exactly what we do when we now have implemented the biggest reinforcements of our collective defense since the end of the Cold War, and will continue to strengthen our collective defense with high readiness, more troops, and increased investment in our defense." (CNBC)

GEOPOLITICS: Australian frigates will join a British carrier strike group in naval exercises in the Indo-Pacific in a show of strength against China as the world's wealthiest democracies vow to confront Beijing's economic coercion. Prime Minister Scott Morrison discussed the deeper military co-operation with United States President Joe Biden and British Prime Minister Boris Johnson in a meeting — on the sidelines of the Group of 7 summit in Britain — aimed at uniting liberal democracies against threats to open trade.(Sydney Morning Herald)

BOJ: MNI BRIEF: BOJ Sees Gradual Spending Rise, Small Upside Risk

  • Bank of Japan officials foresee a gradual recovery in private consumption with limited upside risk from increased vaccination rates but they are finding it difficult to predict the pace of the pickup in pent-up demand and its impact on consumer prices, MNI understands - on MNI MainWire and email now, for more details please contact sales@marketnews.com.

JAPAN: Japanese Prime Minister Yoshihide Suga gained the support of U.S. President Joe Biden and other Group of Seven leaders for Tokyo's hosting of the Olympics next month, in a boost for the premier's plans to push ahead with the event despite virus concerns. "President Biden affirmed his support for the Tokyo Olympic Games moving forward with all public health measures necessary to protect athletes, staff and spectators," the White House said in a statement following a conversation between the two leaders on the sidelines of the G-7 summit in the coastal Cornwall region of the U.K. The weekend statement also referred to Biden's pride in the U.S. athletes who will be taking part. The final communique from the G-7 leaders also mentioned their support for the holding of the Olympic and Paralympic Games Tokyo in a safe and secure manner "as a symbol of global unity in overcoming Covid-19." (BBG)

SOUTH KOREA: South Korea's daily new virus cases dropped below 500 Sunday for the first time in four days due to fewer tests over the weekend, and health authorities plan to exempt people who were fully vaccinated overseas from mandatory two-week isolation from July. (Yonhap)

SOUTH KOREA/JAPAN: Japan called off agreed-upon talks between President Moon Jae-in and Japanese Prime Minister Yoshihide Suga during the Group of Seven (G-7) meeting in Britain due to Seoul's regular exercise to defend its easternmost islets of Dokdo, a foreign ministry official said Monday. Seoul and Tokyo had reached a tentative agreement to hold a "pull-aside" meeting between their leaders on the sidelines of the G-7 session in the seaside resort of Carbis Bay in Cornwall, the official said. The three-day gathering ended Sunday. "From the beginning, our side, with an open mind, expected Japan to respond," the official said on condition of anonymity. (Yonhap)

ISRAEL: The new Bennett-Lapid government won the Knesset confidence vote, with 60 voting for, 59 against and one abstaining. Having received the confidence of the Knesset, the new government, with Yamina's Naftali Bennett as prime minister, will now be sworn in, unseating Benjamin Netanyahu after 12 years in office. The coalition consists of eight parties – Yair Lapid's Yesh Atid, Naftali Bennett's Yamina, New Hope, Labor, Meretz, United Arab List, Kahol Lavan and Yisrael Beiteinu. A rotation agreement has been agreed upon by Bennett and Lapid in which Bennett will serve as prime minister for two years with Lapid as foreign minister. Later, Lapid will assume the premiership for the following two years with Bennett as interior minister. (Haaretz)

RUSSIA/U.S.: The US sanctions on a number of transactions with Russia's sovereign debt, announced back in April, formally come into force on Monday. US President Joe Biden signed an executive order to impose sanctions on Russia on April 15. Particularly, the United States prohibits its companies from directly acquiring Russian debt liabilities issued by the Central Bank, the National Wealth Fund and the Finance Ministry after June 14, 2021. (TASS)

RUSSIA/U.S.: American President Joe Biden intends to clearly indicate the conditions of better relations between Moscow and Washington at the summit with Russian leader Vladimir Putin in Geneva on June 16. "This is not a contest about who can do better in front of a press conference to try to embarrass each other. It's about making myself very clear what the conditions are to get a better relationship are — with Russia," he said at a press conference following the G7 summit in the seaside resort of Carbis Bay in Cornwall, UK on Sunday. (TASS)

RUSSIA/U.S.: Russian President Vladimir Putin said the main goals of his summit meeting this week with U.S. President Joe Biden will be establishing personal contacts and direct dialog, and creating a mechanism to foster further interaction, according to an interview with Russia's state television channel VGTRK. He signaled there's room for cooperation on environmental issues. The Russian president also said the June 16 meeting could help create the conditions to discuss security issues between the two countries and that he would only consider extraditing alleged cyber-criminals if the U.S. would extradite alleged criminals sought by Russia. (BBG)

CANADA/U.S.: Canadian Prime Minister Justin Trudeau said on Sunday he has spoken with U.S. President Joe Biden about how to lift pandemic-related border restrictions between the two countries but made clear no breakthrough has been achieved. (RTRS)

TURKEY: Turkish President Tayyip Erdogan said he and U.S. President Joe Biden must use a meeting on Monday to move on from past troubles, including a bitter dispute over Ankara's purchase of Russian S-400 missiles. Before travelling to Monday's NATO summit in Brussels, Erdogan said he expected an "unconditional approach" from Washington when he sat down with Biden for their first face-to-face session since last year's U.S. elections. He said he would also raise the White House's recognition of the 1915 massacres of Armenians in the then Ottoman Empire as "genocide", a move which had infuriated Ankara, and the U.S. removal of Turkey from an F-35 fighter jet programme. (RTRS)

BRAZIL: A trio of corporate sponsors — Mastercard, Ambev and Diageo — have pulled their brands from the Copa America football competition in Brazil. (FT)

PERU: Peru's socialist party and presidential candidate Pedro Castillo have cheered their likely victory in the Andean country's tightly-contested election, despite right-wing rival Keiko Fujimori's pledge to fight on until the last vote is counted. Castillo, a former teacher, is leading with 50.14% of the vote with 99.935% of ballots tallied, with the route back for Fujimori, who has made unfounded allegations of fraud, looking increasingly unlikely - barring an unexpected late twist. "The people have already chosen their path," Castillo told hundreds of his followers on Saturday night in Lima and asked the authorities to wrap up the count as fast as possible. (RTRS)

MALAYSIA: The government is studying the possibility of relaxing the standard operating procedure under the present lockdown should daily Covid-19-positive cases drop below 4,000. Senior Minister Datuk Seri Ismail Sabri Yaakob said the matter was, however, subject to advice from the Health Ministry. The government, he said, would be holding a special meeting to discuss the plan to emerge from the full implementation of the movement control order. (Star)

CRYPTOCURENCIES: Bitcoin jumped above $39,000 after Elon Musk said Tesla Inc. would resume transactions with the cryptocurrency when mining is done with more clean energy. The transactions will start back up "when there's confirmation of reasonable (~50%) clean energy usage by miners with positive future trend." Musk also reiterated the electric-car maker had sold about 10% of its Bitcoin holdings to demonstrate the token's liquidity. (BBG)
LNG: Six top western energy firms are vying to partner in the vast expansion of Qatar's liquefied natural gas output, industry sources said, helping the Gulf state cement its position as the leading LNG producer while several large projects around the world recently stalled. Exxon Mobil, Royal Dutch Shell, TotalEnergies and ConocoPhillips, which are part of Qatar's existing LNG production were joined by new entrants Chevron and Italy's Eni in submitting bids on May 24 for the expansion project, industry sources told Reuters. (RTRS)

CHINA

POLITICS: Chinese President Xi Jinping has ordered all-out efforts to rescue the injured after a gas explosion in central China's Hubei Province on Sunday morning. Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, asked authorities to console the families of the victims and investigate the accident in a timely manner. The gas explosion at about 6:40 a.m. in a community trade market in the city of Shiyan left 12 people dead and 37 seriously injured. (Xinhua)
CORONAVIRUS: Officials in the southern Chinese city of Guangzhou will be held to account over an ongoing outbreak of the coronavirus. A task force of municipal and provincial Communist Party disciplinary officials had been set up to investigate possible dereliction of duty among Guangzhou cadres, Southern Daily reported on Sunday. "[The investigation] will be held in accordance with regulations, party discipline and law to hold negligent senior cadres and officials to account," the report cited Guangdong disciplinary watchdog notice as saying. (SCMP)

OVERNIGHT DATA

JAPAN APR, F INDUSTRIAL OUTPUT +15.8% Y/Y; FLASH +15.4%
JAPAN APR, F INDUSTRIAL OUTPUT +2.9% M/M; FLASH +2.5%
JAPAN APR CAPACITY UTILISATION +1.1% M/M; MAR +5.6%
NEW ZEALAND MAY SERVICES PMI 56.1; APR 61.2

The PSI for May was 56.1 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Although this was down 5.1 points from its highest ever result in April, it was still above its long term average of 53.9. BusinessNZ chief executive Kirk Hope said that the drop in the level of expansion for May was not unexpected, given the significant level of activity seen in April. "New Zealand continues to follow global trends with strong New Orders/Business (62.1) and Activity/Sales (58.7). However, Supplier Deliveries (45.1) remains solidly in contraction." BNZ Senior Economist Doug Steel said that "while the current strength in the PSI (and PMI) says good things for economic growth over coming quarters, the obvious supply side stresses suggests significant upward pressure is building on inflation." (BNZ)

NEW ZEALAND APR NET MIGRATION +1,037; MAR +619

MARKETS

SNAPSHOT: Holidays Limit Activity In Asia, UK To Press Pause On Reopening

Below gives key levels of markets in the second half of the Asia-Pac session:
  • Nikkei 225 up 176.45 points at 29124.91
  • ASX 200 is closed
  • Shanghai Comp. is closed
  • JGB 10-Yr future down 4 ticks at 151.85, yield up 0.4bp at 0.039%
  • Aussie bonds are closed
  • US 10-Yr future unch, at 132-27, yield up 1.01bp at 1.462%
  • WTI crude up $0.39 at $71.3, Gold down $15.52 at $1862.02
  • USD/JPY up 10 pips at Y109.76
  • G7 LEADERS AGREE ON VACCINES, CHINA AND TAXING CORPORATIONS (CNBC)
  • ECB'S LAGARDE: TOO EARLY TO DEBATE THE END OF PEPP PURCHASES (Politico)
  • JUNE 21 EASING OF COVID LOCKDOWN RULES DELAYED BY FOUR WEEKS (Times)
  • UK ATTACKS "OFFENSIVE" EU AS BREXIT G7 ARGUMENT ESCALATES (BBG)
  • BENNET SWORN IN AS ISRAEL'S PRIME MINISTER, ENDING NETANYAHU'S 12-YEAR RULE (Haaretz)

BOND SUMMARY: Core FI Tread Water, Holidays Limit Activity In The Region

Core FI tread water as the weekend news flow failed to provide any meaningful impetus, while activity was limited by public holidays in Australia, China, Hong Kong and Taiwan. T-Notes were rangebound and last change hands at 132-27. Cash U.S. Tsy curve bear steepened, with yields last seen 0.4-1.2bp higher. Eurodollar futures trade +0.25 to -0.5 tick through the reds. There is little of note on the U.S. docket today, with Fed officials already in their blackout period ahead of Thursday's FOMC monetary policy decision.

  • JGB futures reopened on a slightly softer footing, but traded sideways thereafter. The contract last operates at 151.85, 4 ticks shy of prior settlement. Cash JGB yields were marginally mixed across the curve. The BoJ are set to deliver their latest monetary policy decision this Friday, with national CPI data also due on that day.

EQUITIES: Market Closures Subdue Proceedings

Markets in Australia, China, Hong Kong and Taiwan were closed today which kept liquidity thin and the economic docket light. Markets that were open were higher though moves were muted. Bourses in Japan rose around 0.3% while in South Korea markets hovered around neutral. In the US futures are in positive territory, creeping higher as US yields inch up ahead of the FOMC rate announcement later this week.

OIL: Adds To Recent Gains

After a positive day on Friday oil has added to gains to start the week, breaking above Friday's highs. WTI is up $0.32 from settlement at $71.23/bbl while Brent is up $0.32 at $73.01/bbl. Crude futures rose just shy of 2% last week as markets assessed positive demand cues from the US and Europe. This week focus will fall on talks over the Iran nuclear deal ahead of an Iranian election on June 18.

GOLD: Falls Further

The yellow metal has lost further ground on Monday after declining throughout the session on Friday. Gold last trades down $12.89 at $1,864.63 as US yields inch higher ahead of the FOMC rate announcement later this week. The decline brings into focus the $1856.2, Jun 4 low, a break of the level would reinforce recent bearish concerns following the strong selling pressure on Jun 3. Below opens the 50-day EMA at $1840.1, also seen as a key support area.

FOREX: Market Holidays Limit Activity In Asia

Market holidays in Australia, China, Hong Kong and Taiwan limited activity in the region, with NZD leading gains in G10 FX space, even as New Zealand's PSI fell from a record high. CAD also edged higher, as crude oil traded on a slightly firmer footing, but AUD and NOK struggled to pick up any momentum.

  • The DXY inched higher, as participants prepared for Thursday's announcement of the latest monetary policy decision from the FOMC. Despite firming a tad, the index rejected Friday's high.
  • USD/CNH rose past the CNH6.4000 mark, which capped gains last Friday, reaching its best levels since Jun 4.
  • Sterling looked through a number of press reports noting that PM Johnson will today announce a four-week delay of the lifting of Covid-19 restrictions in England.
  • The global data docket is very light today, with ECB's Schnabel & de Cos, BoE's Bailey & Riksbank's Floden set to deliver speeches.

FOREX OPTIONS: Expiries for Jun14 NY cut 1000ET (Source DTCC)

  • EUR/USD: $1.2150(E1.1bln). $1.2200(E1.3bln-EUR puts)
  • USD/CHF: Chf0.8800($600mln-USD puts)
  • AUD/USD: $0.7750-65(A$943mln), $0.7940(A$1.3bln-AUD puts)

UP TODAY (Times GMT/Local)


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