MNI US Open: BoE: Sequencing Guidance In Focus

EXECUTIVE SUMMARY:

• ANALYSTS SEE VOTE SPLIT ON BANK OF ENGLAND QE
• ISRAEL IS PREPARED TO ATTACK IN IRAN, GANTZ SAYS (YNET)
• BIDEN SETS U.S. GOAL OF 50% CLEAN CARS AS CARMAKERS ASK FOR HELP
• GERMANY FACTORY ORDERS WERE BETTER THAN EXPECTED IN JUNE
• U.S., FRANCE MULL 3RD BOOSTER VACCINE FOR VULNERABLE

Fig. 1: German Factory Orders Beat Expectations In June

Source: Destatis, MNI

NEWS:

BANK OF ENGLAND (From MNI's BoE Preview): The BoE MPC meeting has the potential to be a key event for the market. Voting dynamics surrounding the Bank's asset purchase facility will be eyed. However, the sequencing review will potentially be much more significant. The MNI Markets team thinks the most likely change to the sequencing guidance will be to remove the Bank Rate threshold altogether, and leave maximum flexibility to the MPC.A split vote on whether to complete the current QE programme is expected today by 16/17 of the analysts who explicitly stated their voting expectations. 4 analysts see 6-2 as their base case, 2 analysts are on the fence between 6-2 and 7-1 while 9 analysts look for 7-1 and one analyst is on the fence between 7-1 and 8-0. There is also not a clear conviction that the sequencing review will be published as part of the August meeting. 5 analysts explicitly look for August, 2 look for November but most note that it could be August or November. The decision will be released at 0700ET/1200BST, with press conference at 0800ET/1300BST.

ISRAEL/IRAN (BBG): Israel is prepared to attack in Iran, Defense Minister Benny Gantz said on Thursday, in answer to a question during an interview broadcast on a local news website. Asked whether Israel is prepared for an attack in Iran, Gantz gave a one-word answer: "'Yes." Asked whether the country's military is also ready for a multifront conflict, that might include Iran, Gantz answered in the affirmative, but added that Israel must continue to develop its capabilities.

U.S. (BBG): President Joe Biden plans to call for half of all vehicles sold in the U.S. to be emission free by the end of the decade, an ambitious goal that automakers say can only be achieved with a bigger government investment in charging stations and other infrastructure. Biden will be joined at the White House Thursday by representatives of the major Detroit automakers and the United Automobile Workers union as he unveils an executive order establishing the the goal for half of all the cars sold to be battery electric, plug-in hybrid electric or fuel cell electric by 2030, according to senior administration officials and a White House fact sheet.

U.S. / COVID (AXIOS): The Biden administration is actively working toward making a recommendation that certain immunocompromised people receive an additional dose of coronavirus vaccine, two sources familiar with the discussions tell Axios. Two shots of Pfizer and Moderna's mRNA vaccines don't generate strong levels of protection in some immunocompromised people. But data suggests a third shot could significantly boost their response. What we're watching: A recommendation is likely to come "very soon," according to a source familiar with internal discussions. A senior Biden official agreed that the recommendation is likely to be issued soon, but said there's no firm timeline.

FRANCE / COVID: As part of an Instagram Q&A session, French President Emmanuel Macron stated that a third COVID-19 vaccine booster shot may only be required for the elderly and vulnerable. There has been rising speculation in many heavily-vaccinated developed nations that a third shot may be required to boost immunity levels going into the autumn and winter.

GERMAN DATA (BBG): German factory orders rose in June, bolstering the recovery in Europe's largest economy as an easing of pandemic restrictions supported business activity across sectors. Demand increased 4.1%, beating the median estimate in a Bloomberg survey. The gain was driven by domestic orders, with investment goods up 14.8%.

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