MNI US OPEN - German National CPI Projected at +2.3% Y/Y

EXECUTIVE SUMMARY

• TRUMP SAYS HE WILL ‘PROBABLY END UP’ DEBATING NEW RIVAL HARRIS
• CHINA TO STEP UP MACROECONOMIC POLICIES – POLITBURO
• MNI PROJECTS GERMAN NATIONAL CPI AT 2.3% Y/Y 
• UK SHOP PRICE INFLATION REMAINS LOWEST SINCE OCT'21

MNI (LONDON) - Figure 1: Euro area growth up 0.6% Y/Y in Q2

Source: Eurostat

NEWS

MNI FED PREVIEW - JULY 2024: September Signals in Spotlight

The Fed will hold rates for an 8th consecutive meeting at its July meeting, putting immediate attention on any signals about rate cuts beginning in September. While inflation and the labor market cooled in the second quarter, providing a clear path to rate cuts by year-end, underlying demand has remained resilient in defiance of what FOMC officials see as “sufficiently restrictive” policy. With the lingering memory of various data "head fakes" in mind on both the upside and downside of the inflation and rate cycles, yet a “soft landing” still seen in reach, the FOMC is likely to express only cautious optimism.

MNI BOJ PREVIEW - JULY 2024: Bond Buying Taper But Close Call on Rate Hike

The Bank of Japan's (BoJ) Policy Board will convene on July 30-31, with markets keenly observing any steps the central bank may take towards monetary policy normalisation. Governor Kazuo Ueda is expected to hold a press conference following the meeting on July 31. At this week’s meeting, the BoJ is anticipated to unveil a detailed plan for reducing the pace of its bond purchases over time. The upcoming plan is expected to outline the specifics of the reductions in terms of magnitude, duration, and flexibility. Market estimates suggest a gradual reduction, potentially cutting monthly purchases by half over two years. This announcement will mark a significant shift in Japanese monetary policy, as the BoJ has been consistently expanding its bond holdings since 2012.

US (BBG): Trump Says He Will ‘Probably End Up’ Debating New Rival Harris

Donald Trump said he expects to eventually debate Vice President Kamala Harris, the presumptive Democratic nominee, after previously declining to commit to appear at a scheduled face-off. “Yes. I’ll probably end up debating,” Trump said in an interview with Laura Ingraham that aired Monday evening on Fox News. He added that “the debates should take place before the votes start being cast.” Some states begin the voting process as early as September. Still, the Republican nominee said that he could “make a case for not doing it.”

US (BBG): Biden Assails Supreme Court for ‘Extremism’ in Reform Push

President Joe Biden assailed the conservative majority of the Supreme Court over its recent rulings, calling for new binding ethics rules and term limits for justices - a sweeping proposal that would fundamentally alter the top US court. “Extremism is undermining the public confidence in the court’s decisions,” Biden said at the Lyndon Baines Johnson Presidential Library in Austin on Monday, casting the changes as necessary to restore accountability to both the presidency and the court. 

US (WSJ): Gains Among Black Voters Put Harris in Play in Georgia

Democrats hope rising enthusiasm among Black voters will help Vice President Kamala Harris put Georgia back in play, looking to reverse Republican presidential nominee Donald Trump’s long-held polling lead in the state.  A week into her campaign for the White House, the expected Democratic presidential nominee is holding a rally in Atlanta on Tuesday night. Democrats are now more bullish on her chances in the southern state, which many had largely written off when President Biden was their party’s pick to take on Trump, the former president who narrowly lost Georgia in 2020.

US (WSJ): Harris Puts Abortion, a Weakness for Trump, at Center of Campaign

Kamala Harris is making abortion rights central to her candidacy for president as Republicans struggle to articulate a winning message on the issue. In contrast with President Biden, who was reluctant to say the word abortion, the vice president has campaigned aggressively on it since the 2022 Supreme Court ruling that eliminated the constitutional right to the procedure. At the White House, she has met with abortion providers and women who have had abortions. Earlier this year, Harris was believed to be the first president or vice president to visit an abortion clinic.

EUROPE (BBG): Paris Braces for Hottest Night in Five Years While London Bakes

Paris will reach 38C (100F) on Tuesday, the hottest since 2022, while night will bring little relief to the Olympic city. By early Wednesday morning, temperatures will only drop to 24C, giving the French capital its hottest night in five years, according to Meteo France and data from Weather Service International. The majority of the country faces yellow or orange heat alerts, with the town of Menton near Monaco recording a minimum of 28C last night.

ITALY/CHINA (BBG): Meloni Touts Xi as ‘Key Player’ in Any Ukraine Peace Process 

Italian Prime Minister Giorgia Meloni trumpeted China’s potential for helping bring an end to Russia’s grinding war in Ukraine, as she sought to forge closer ties with the world’s No. 2 economy. While Meloni said Beijing’s backing of the Russian industrial complex was an area of “great friction,” she cited President Xi Jinping’s government as an important stakeholder in finding a solution to the conflict at press briefing in Beijing on Tuesday.

CHINA (MNI): China to Step Up Macroeconomic Policies - Politburo

MNI (Beijing) China will focus on boosting consumption to expand domestic demand, strengthen countercyclical adjustments and reserve, and launch additional policy measures in a timely manner, the state-run Xinhua News Agency reported following the Politburo meeting on Tuesday. Economic policies must promote consumption, increase residents’ income through multiple channels, enhance the spending willingness of low- and middle-income groups, and boost service consumption including tourism, elderly care, childcare and housekeeping, the meeting noted.

VENEZUELA (MNI): Protests Erupt Following Election Rigging Claims

Protests erupted on the streets of the Venezuelan capital Caracas on 29 July amid claims that President Nicolas Maduro and his far-left PSUV stole the 28 July presidential election. Official results claim Maduro won 51% of the vote compared to 44% for main opposition candidate Edmundo Gonzalez. However, the opposition claims that Gonzalez is the real winner, with 6.2mn votes to 2.7mn for Maduro. Gov'ts in North America, Europe, and Latin America have raised doubts about the legitimacy of Maduro's win.

INDIA (BBG): India Keeps Global Funds at Bay With Curbs on Bond Ownership 

India imposed controls on foreign ownership of some newly issued bonds, a surprise move that highlights officials are getting uneasy with the billions of dollars of hot money inflows tied to the inclusion of its debt in a key global index. Overseas investors will no longer have full access to freshly issued Indian government bonds with 14-year and 30-year tenors, according to a statement by the Reserve Bank of India. The change is effective immediately, the RBI said, without citing a reason. Authorities want demand to be concentrated in the front end to improve flexibility of the curve, according to officials with knowledge of the matter.

DATA

GERMAN DATA (MNI): MNI Projects 2.3% Y/Y National CPI, Core CPI 2.9-3.0%

• BADEN-WUERTTEMBERG JUL CPI +0.3% M/M, +2.1% Y/Y (BBG)
• BAVARIA JUL CPI +0.3% M/M, +2.5% Y/Y (MNI)
• BRANDENBURG JUL CPI +0.3%, +2.6% Y/Y (BBG)
• HESSE JUL JUL CPI +0.3% M/M, +1.8% Y/Y (BBG)
• NRW JUL CPI +0.3% M/M, +2.3% Y/Y (BBG)
• SAXONY JUL CPI +0.6% M/M, +3.1% Y/Y (BBG)

From state-level data that equates to 89.1% weighting of the national July flash German CPI print (due at 13:00 BST / 14:00 CET), MNI estimates that national CPI (non-HICP print) rose by around 0.3% M/M (June 0.1%) and 2.3% Y/Y (June 2.2%). Analyst consensus currently stands at 2.2% Y/Y and 0.3% M/M, so there are some upside risks here. Current tracking of Core CPI (ex-energy and food, based on 50% of the  national index) implies around 2.9-3.0% Y/Y (2.9% in June) and 0.3-0.4% M/M  (0.3% in June).

GERMANY Q2 FLASH GDP -0.1% Q/Q (+0.1% FCST, +0.2% PRIOR) (MNI)
GERMANY Q2 FLASH GDP -0.1% Y/Y (+0.0% FCST) (MNI)

FRANCE DATA (MNI): France Flash GDP Firmer Than Expected

• FRANCE Q2 FLASH GDP +0.3% Q/Q, +1.1% Y/Y
• FRANCE JUN CONSUMER SPENDING -0.5% M/M, -1% Y/Y
• FRANCE JUN CONSUMER MANUF SPENDING -0.7% M/M, -1.5% Y/Y

France Q2 Flash GDP came in firmer than expected on both a quarterly and yearly basis at 0.3% Q/Q (vs 0.2% consensus, 0.3% revised prior from 0.2%), and 1.1% Y/Y (vs 0.7% consensus, 1.5% revised prior from 1.3%). Foreign trade growth is estimated to have contributed 0.2% (vs 0.3% in Q1) to Q2 quarterly GDP with imports at 0% Q/Q (vs -0.3% prior), and exports growing 0.6% Q/Q (vs 0.7% in Q1), whilst final domestic demand (excluding stocks) contributed 0.1% to Q2 GDP. Imports were driven down by imports of manufactured products printing -0.4% Q/Q (vs 0.6% prior), according to the press release particularly in the transport equipment segment.

SPAIN DATA (MNI): Spain July Inflation Driven Lower by Electricity Prices

• SPAIN JUL FLASH HICP -0.7% M/M, +2.9% Y/Y
• SPAIN JUL FLASH CPI -0.5% M/M, +2.8% Y/Y
• SPAIN JUL FLASH CORE CPI +2.8% Y/Y

Spanish preliminary July HICP came in significantly lower than expected on the yearly rate at +2.9% Y/Y (vs +3.2% cons; +3.6% prior) and the sequential reading at -0.7 M/M (-0.4% cons; +0.4% prior). The national CPI also came in below expectations at +2.8% Y/Y (vs 3.0% cons; 3.4% prior) and -0.5% M/M (vs -0.3% cons; +0.4% prior). Core CPI came in in line with expectations, at +2.8% Y/Y (vs 2.8% cons; 3.0% prior). The headline rate was driven lower by electricity, food, and (to a lesser extent) leisure and culture prices.

SPAIN DATA (MNI): GDP Outperformance Consistent With Survey Data

• SPAIN Q2 FLASH GDP +0.8% Q/Q, +2.9% Y/Y

Spanish GDP rose 0.8% Q/Q for the second consecutive quarter according to the preliminary Q2 release. Bloomberg consensus had expected a 0.5% Q/Q reading. Spain is thus likely on track to outperform the other three major Eurozone economies again (based on the French Q2 prelim release and the German/Italian consensus prints), consistent with recent PMI data. INE noted that external demand contributed 0.5pp to GDP (with exports growing  1.2% Q/Q and imports falling 0.2% Q/Q), while domestic demand contributed the remaining 0.3pp.

ITALY Q2 FLASH GDP +0.9% Y/Y (+1.0% FCST, +0.6% R PRIOR) (MNI)
ITALY Q2 FLASH GDP +0.2% Q/Q (+0.2% FCST, +0.3% PRIOR) (MNI)

UK DATA (MNI): Shop Price Inflation Remains Lowest Since Oct'21 - BRC-NielsenIQ

• UK JUL BRC SHOP PRICES -0.1% M/M, +0.2% Y/Y

BRC-NielsenIQ Shop Price inflation remained at 0.2% Y/Y in July for the second consecutive month (vs 0.0% consensus) keeping the print at its lowest level since October 2021, whilst Shop Price Inflation fell for the second successive month albeit at a slower pace on a monthly basis by 0.1% M/M (vs -0.2 prior). The Non-Food component remains in deflation in Y/Y terms for the fourth consecutive month at -0.9% Y/Y, albeit slightly less than last month's -1.0% print. Meanwhile, Food Prices continued to disinflate to 2.3%Y/Y (vs 2.5% prior) - the fifteenth consecutive monthly fall and the lowest reading since November 2021.

SWITZERLAND DATA (MNI): July KOF Should Slightly Downwardly Pressure Growth Estimates

• SWISS KOF JUL ECONOMIC BAROMETER 101

The Swiss KOF Economic Barometer slowed down more than expected in July, coming in at 101.0 compared to consensus of 102.5 and an unrevised June print of 102.7, pointing towards the Swiss economy being "likely to continue to grow at a rather moderate pace in the near future". "Above all, the outlook for both foreign demand and consumer demand is worsening", the KOF adds.

JAPAN DATA (MNI): Unemployment Rate Falls, But So Does Job-To-Applicant Ratio

• JAPAN JUNE JOBLESS RATE FALLS TO 2.5% FROM MAY 2.6%

Japan June jobs data showed a slight downtick in the unemployment rate to 2.5%, from 2.6% prior, while the consensus forecast was also 2.6%. The job to applicant ratio was 1.23, versus 1.24 forecast (prior was also 1.24). In terms of the detail, the number people employed rose +250k m/m, following last month's 100k rise. This reverses the negative trend seen through March-April. The participation rate also firmed to 63.7%, a fresh cycle high. Still, the downtick in the new-job-to-applicant ratio was less positive. The chart below shows this index inverted against the unemployment rate.

AUSTRALIA DATA (MNI): Non-House Approvals Struggle to Recover

• AUSTRALIA MAY BUILDING APPROVALS -6.5% M/M, -3.7% Y/Y
• AUSTRALIA JUN DWELLING APPROVALS -3.7% Y/Y
• AUSTRALIA JUN DWELLING APPROVALS -6.5% M/M

Australia has a housing shortage and the June building approval data signalled that the situation is not improving as scarce labour and material continue to weigh on the sector. The number of dwellings approved fell 6.5% m/m after rising 5.7%, with both private houses and multi-dwelling units contracting but it was the latter, which is very volatile, which drove the disappointment. Bright spots were the second straight month of positive 3-month momentum and  private homes up 11% y/y. But the ABS notes that FY24 recorded the lowest number of new dwellings approved since FY12.

FOREX: JPY on Backfoot, While NZD Undergoes Corrective Bounce

• JPY is the poorest performer against all others in G10 early Tuesday, with markets gearing, positioning and shaping up for a particularly busy few sessions this week. USD/JPY is holding a moderate bounce off last week's lows, with the pair now just over 250 pips off the pivot support (and critical level) of 151.94. Market drivers so far today have been few and far between, with generally buoyant equity markets providing a mild risk-on backdrop. 
• The US curve is a touch steeper, aiding the USD Index's strength above the weekly lows. A confluence of resistance sits just ahead, with yesterday's multi-week high, the 100- and the 50-dma all layered between 104.752 and 104.894.
• NZD trades well, rising against most others as markets retrace a very small part of the currency's recent downdraft. The overall trend condition remains resolutely negative, and bulls will need to build a base off the recent low, and key support, of 0.5858/52. Clearance below here, however, resumes the bear trend drawn off the early July highs, and targets 0.5774 and below. 
• Headed through Tuesday trade, Germany's national prelim CPI print could draw some focus. The various regional prints are supportive of consensus that looks for a 0.3% M/M rise and a steady pace of 2.2% for the Y/Y. US July consumer confidence data is also set to cross - however markets will likely keep their focus on risk events later in the week - unsurprisingly the high frequency of CB decisions across Wednesday and Thursday - including the BoJ, Fed and BoE. 

BONDS: Softer Following Heavy Eurozone Data Calendar, Gilts Underperform

Bunds slightly outperform Gilts this morning, but both futures remain lower versus yesterday’s settlement levels (Bunds -10 ticks, Gilts -20 ticks).

• Although Spanish flash July inflation was lower-than-expected, Bunds retraced modest gains after the German state-level inflation data suggested modest upside risks to the national print due at 1300BST/1400CET.
• Preliminary Q2 GDP prints were a mixed bag, with German growth softer than consensus, Spanish and French growth stronger, and Italy in-line. Overall, Eurozone Q2 GDP was estimated at 0.3% Q/Q (vs 0.2% cons, 0.3% prior).
• Supply will have also factored into this morning’s price action, with heavy Italian supply likely weighing on EGBs and the 10-year 4.25% Jul-34 Gilt re-open pressuring Gilts.
• The Italian supply was well digested, with improved bid-to-covers across the re-openings, while the Gilt re-opening was the first since the June syndicated launch.
• German and UK cash yields are each around 1bp higher across the curve, while 10-year peripheral spreads to Bunds are slightly tighter.
• This week’s key risk events are still upcoming, with the Fed and BoJ decisions tomorrow and the BoE on Thursday. before the US jobs report on Friday.

EQUITIES: Bearish Threat in Eurostoxx 50 Futures Remains Present

Eurostoxx 50 futures traded lower last Thursday, and a bearish threat remains present. The contract has traded through 4846.00, the Apr 19 low. A clear break of this level would pave the way for an extension towards 4739.87, the 200 day MA (cont). Moving average studies are in a bear-mode set-up, highlighting a downtrend. The latest bounce appears to be a correction. Initial firm resistance to watch is 4980.00, Jul 23 high. S&P E-Minis traded lower last week and the move down resulted in a break of both the 20- and 50-day EMAs. This reinforces the short-term bearish cycle and signals scope for an extension near-term. Note that the move down is considered corrective. Potential is seen for a move towards 5396.09, the lower band of a MA envelope, ahead of 5370.62 a Fibonacci retracement. Key short-term resistance is 5629.75, the Jul 23 high.

• Japan's NIKKEI closed higher by 57.32 pts or +0.15% at 38525.95 and the TOPIX ended 5.22 pts lower or -0.19% at 2754.45.
• Elsewhere, in China the SHANGHAI closed lower by 12.545 pts or -0.43% at 2879.3 and the HANG SENG ended 235.43 pts lower or -1.37% at 17002.91.
• Across Europe, Germany's DAX trades higher by 53.96 pts or +0.29% at 18374.95, FTSE 100 lower by 43.39 pts or -0.52% at 8248.9, CAC 40 up 23.39 pts or +0.31% at 7467.23 and Euro Stoxx 50 up 23.31 pts or +0.48% at 4838.7.
• Dow Jones mini up 39 pts or +0.1% at 40810, S&P 500 mini up 9.25 pts or +0.17% at 5512.25, NASDAQ mini up 41 pts or +0.21% at 19252.

Time: 09:50 BST

COMMODITIES: Last Week's Move Lower in Gold Considered Corrective

A bear threat in WTI futures remains present and the contract has traded lower this week. The recent breach of both the 20- and 50-day EMAs, reinforces the bear theme. A continuation lower would open $72.23, the Jun 4 low and the next key support. For bulls, a reversal higher would instead refocus attention on the key resistance points at $83.58, the Jul 5 high, and $84.36, the Apr 12 high. The latest move down in Gold is considered corrective, however, the yellow metal has pierced support at the 50-day EMA - at $2362.0. A clear break of this average would signal scope for a deeper retracement towards $2277.4, the May 3 low and a key support. For bulls, a reversal higher would refocus attention on $2483.7, the Jul 17 high, and a bull trigger. Clearance of this hurdle would resume the primary uptrend.      

• WTI Crude down $0 or 0% at $75.83
• Natural Gas up $0.01 or +0.34% at $2.043
• Gold spot up $6.23 or +0.26% at $2390.07
• Copper down $2.35 or -0.58% at $406.2
• Silver up $0.03 or +0.11% at $27.894
• Platinum up $3.75 or +0.39% at $956.6

Time: 09:50 BST

Date	GMT/Local	Impact	Country	Event
30/07/2024	1200/1400	***	DE	HICP (p)
30/07/2024	1255/0855	**	US	Redbook Retail Sales Index
30/07/2024	1300/0900	**	US	S&P Case-Shiller Home Price Index
30/07/2024	1300/0900	**	US	FHFA Home Price Index
30/07/2024	1300/0900	**	US	FHFA Home Price Index
30/07/2024	1400/1000	***	US	Conference Board Consumer Confidence
30/07/2024	1400/1000	**	US	housing vacancies
30/07/2024	1400/1000	***	US	JOLTS jobs opening level
30/07/2024	1400/1000	***	US	JOLTS quits Rate
30/07/2024	1430/1030	**	US	Dallas Fed Services Survey
30/07/2024	1530/1130	*	US	US Treasury Auction Result for Cash Management Bill
31/07/2024	2350/0850	**	JP	Industrial Production
31/07/2024	2350/0850	*	JP	Retail Sales (p)
31/07/2024	0130/0930	***	CN	CFLP Manufacturing PMI
31/07/2024	0130/0930	**	CN	CFLP Non-Manufacturing PMI
31/07/2024	0130/1130	**	AU	Retail Trade
31/07/2024	0130/1130	***	AU	CPI inflation
31/07/2024	0130/1130	***	AU	CPI Inflation Monthly
31/07/2024	0200/1100	***	JP	BOJ Policy Rate Announcement
31/07/2024	0600/1400	**	CN	MNI China Liquidity Index (CLI)
31/07/2024	0600/0800	**	DE	Import/Export Prices
31/07/2024	0645/0845	***	FR	HICP (p)
31/07/2024	0645/0845	**	FR	PPI
31/07/2024	0755/0955	**	DE	Unemployment
31/07/2024	0900/1100	***	EU	HICP (p)
31/07/2024	0900/1100	***	IT	HICP (p)
31/07/2024	1000/1200	**	IT	PPI
31/07/2024	1100/0700	**	US	MBA Weekly Applications Index
31/07/2024	1215/0815	***	US	ADP Employment Report
31/07/2024	1230/0830	***	US	Employment Cost Index
31/07/2024	1230/0830	***	CA	Gross Domestic Product by Industry
31/07/2024	1230/0830	***	US	Treasury Quarterly Refunding
31/07/2024	1345/0945	***	US	MNI Chicago PMI
31/07/2024	1400/1000	**	US	NAR Pending Home Sales
31/07/2024	1430/1030	**	US	DOE Weekly Crude Oil Stocks
31/07/2024	1800/1400	***	US	FOMC Statement