MNI US OPEN - Pelosi Tells Biden Polls Show He Can't Win
EXECUTIVE SUMMARY
- MNI ECB PREVIEW - JULY HOLD, SEPTEMBER CUT
- PELOSI PRIVATELY TOLD BIDEN POLLS SHOW HE CANNOT WIN
- CHINA’S THIRD PLENUM COMMUNIQUE PROVIDES FEW SURPRISES FOR MARKETS
- UK PRIVATE REGULAR WAGE GROWTH SHOWS BIG DROP IN SINGLE MONTH FIGURES
- AUSSIE EMPLOYMENT GROWTH STRONGER THAN EXPECTED
MNI (LONDON) - Figure 1: Australia labour market participation rate (%) unexpectedly increases towards post-COVID highs
![](https://media.marketnews.com/image_3049d20ad8.png)
Source: MNI/Bloomberg
NEWS
MNI ECB PREVIEW - JULY 2024: July Hold, September Cut
With no material developments on the data front since June and various GC members playing up the importance of quarterly projection meetings, the ECB will keep policy rates unchanged this week. Although the ECB has previously shown that its data dependence and meeting-by-meeting approach has a degree of inbuilt flexibility (as was the case when steering markets to expect the June cut), there is no need to pre-commit to a September cut at this juncture. Given the stickiness of domestic inflationary pressures – namely service prices – we continue to caution that a ‘one-and-done’ is a small, but still significant, risk for 2024.
US (BBG): Biden Says in TV Interview Harris Could Lead If Health Declines
Facing persistent questions about his ability to serve, President Joe Biden said he’s willing to relinquish power to Vice President Kamala Harris if he wins a second term but is unable to complete it for health reasons - while discounting the likelihood of that scenario. “Only if I was told that there was some medical condition that I had, and that’s not the case,” Biden said when asked in a BET interview broadcast Wednesday if he would consider being a transitional figure, then turn over the presidency to Harris within two years.
US (BBG): Biden Tests Positive for Covid-19, Scraps Las Vegas Event
Biden Tests Positive for Covid-19, Scraps Las Vegas EventPresident Joe Biden tested positive for Covid-19 on Wednesday, the White House said, forcing him to cancel a speaking appearance in Las Vegas. Biden has “mild symptoms” and plans to return to Delaware “where he will self-isolate and will continue to carry out all of his duties fully during that time,” White House Press Secretary Karine Jean-Pierre said in a statement. The president, who wasn’t wearing a mask, flashed a thumbs-up to reporters and said he felt “good” before boarding Air Force One minutes after his diagnosis was announced. He walked slowly up the stairs while boarding the presidential aircraft.
US (CNN): Pelosi Privately Told Biden Polls Show He Cannot Win
Former House Speaker Nancy Pelosi privately told President Joe Biden in a recent conversation that polling shows that the president cannot defeat Donald Trump and that Biden could destroy Democrats’ chances of winning the House in November if he continues seeking a second term, according to four sources briefed on the call. The president responded by pushing back, telling Pelosi he has seen polls that indicate he can win, one source said. Another one of the sources described Biden as getting defensive about the polls. At one point, Pelosi asked Mike Donilon, Biden’s longtime adviser, to get on the line to talk over the data.
US (BBG): Trump’s Heir Vance Cements Populism’s Hold on Republican Party
Senator JD Vance’s debut speech as the Republican vice presidential nominee was a fiery demonstration of the most powerful assets he offers Donald Trump’s campaign: a stridently populist economic message tailored for key swing states and a symbol of generational change. In his Wednesday address at the Republican National Convention, Vance pledged that he and Trump are done “catering to Wall Street” and will instead “commit to the working man.”
US/RUSSIA (BBG): Russia’s Lavrov Praises Trump, Vance on Ukraine War Stance
Russia’s top diplomat signaled a preference for Republican presidential candidate Donald Trump and especially his running mate JD Vance, praising their vocal interest in cutting a deal to end the war in Ukraine. Although the previous Trump administration imposed “more and more sanctions” on Russia, “at that time, dialogue was underway between us and Washington at the highest levels,” Foreign Minister Sergei Lavrov told reporters at the United Nations headquarters in New York on Wednesday. “Right now, there is no such dialogue.”
FED (BBG): Former Fed Official Kaplan Sees Rate Cut Likely in September
Robert Kaplan, former president of the Dallas branch of the US Federal Reserve, says it’s likely the Fed will cut rates in September in light of progress on inflation, but it probably won’t mark the beginning of a full-fledged rate-cut cycle. Kaplan tells Bloomberg TV there’s a good chance the Fed will conduct another cut in December. The bank will study data at each meeting as it decides the course of policy.
EU (MNI): VdL Delivers Speech to MEPs Ahead of Vote on Second Term
European Commission President Ursula von der Leyen is delivering a speech to the European Parliament plenary session in Strasbourg ahead of the 1300CET (0700ET, 1200BST) vote that will decide if she is confirmed for another term in office. With full attendance, von der Leyen would need 361 votes to be re-elected. The three main moderate blocs combined have 401 MEPs, but given that it is a secret ballot it is expected that a reasonable amount of those on the centre-left will vote against. As such, winning over Green MEPs or conservatives in the ECR could be required.
UK (BBG): Starmer Starts Europe Reset With Trump, Vance on Horizon
Keir Starmer spent the UK election campaign promising to reset a European relationship soured by Brexit. Just two weeks into his tenure, he’s immersing himself in that endeavor as he hosts more than 40 of the continent’s leaders at Winston Churchill’s ancestral home. The Labour prime minister was able to take advantage of the general election’s serendipitous timing to meet with many key allies at last week’s NATO summit in Washington. But the summit of the European Political Community on Thursday - bringing together leaders from inside and outside the EU on British home turf - gives him the opportunity to burnish those nascent ties.
CHINA (MNI): Third Plenum Communique Provides Few Surprises for Markets
MNI (London) China's Third Plenum concludes, and the communique release focuses primarily on deepening reform, establishing better market mechanisms and maintaing market order. There is little outside of expectations from the communique, with the vast majority of headlines well telegraphed and providing few surprises to markets. The timeframes for reform may be of interest - reform tasks to be completed over the next five years, setting up a "high-level" socialist market economic system for 2035. On international trade, there's little mention or reference to tariff escalation or trade concerns with the US, but the plenum does pledge to "effectively respond to external risks and challenges, lead global governance and actively shape a favourable external environment".
CHINA (MNI): July LPR to Hold as Benchmark Change Weighed
MNI (Beijing) China's Loan Prime Rate is likely to remain unchanged in July as the central bank entertains an adjustment to its policy rates system, linking the reference lending rate to a short-term policy benchmark while downgrading the role of the medium-lending facility. The LPR, based on the People’s Bank of China’s MLF rate and quotes submitted by 20 banks, will likely hold at 3.45% for the one-year maturity and 3.95% for the over-five-year tenor next Monday. The LPR last changed in February when the five-year plus maturity fell 25 basis points, while the one-year rate held steady. The PBOC kept the one-year MLF at 2.5% on July 15 for the 11th straight month.
OIL (BBG): OPEC+ Delegates Don’t See Oil-Hike Plan Changing at August Talks
OPEC+ delegates expect the group’s monitoring session next month to be routine, making no changes to plans for a supply hike starting in the fourth quarter. The group led by Saudi Arabia and Russia agreed last month to begin gradually restoring roughly 2.2 million barrels a day of halted crude output from October. When prices immediately slumped, officials stressed that a committee due to gather on Aug. 1 could postpone the hike if necessary.
CORPORATE (BBG): TSMC Hikes Revenue Outlook to Reflect Heated AI Demand
Taiwan Semiconductor Manufacturing Co. lifted projections for 2024 revenue growth after quarterly results beat estimates, reflecting its confidence in the longevity of the global AI spending boom. The chipmaker for Apple Inc. and Nvidia Corp. now expects sales to grow more than the maximum mid-20% it had guided toward previously. For the current quarter, TSMC forecasts revenue of as much as $23.2 billion, above analysts’ projections. And it narrowed its forecast for capital spending to the high end of its outlook to $30 billion to $32 billion, from as low as $28 billion previously.
DATA
UK DATA (MNI): UK Labour Market Slows Ahead of BOE Meet
- UK MAY AVE WEEKLY EARNINGS +5.7% YY
- UK MAY AVE WEEKLY EARNINGS EX-BONUS +5.7% YY
- UK JUN CLAIMANT RATE +4.4%
- UK JUN CLAIMANT CHG +32300
The UK labour market continues to slow, with the number of vacancies still falling and unemployment rising, the Office for National Statistics said Thursday. Earnings growth remains relatively strong although lower than a few months ago, rising 5.7% year-on-year over the last three months. The UK unemployment rate was estimated at 4.4% in March to May 2024, above estimates of a year ago, an increase across the latest quarter. The data was largely in line with Bank of England projections and will do little to move the views of the nine policymakers on the MPC.
Looking in more detail at the private sector regular wage data, there was quite a soft single month print for May (with only negligible revisions to prior months). This put the single month figure at 4.9% Y/Y in May (it has been 5.8-5.9% between January and April this year). In fact looking at the growth in pay for this cohort versus 3 months ago there is only a 1.6% increase - this compares to a 2.2% increase seen last month for the April vs January (previous cohort) and is more in line with the 1.5% increase seen in the March cohort (vs December).
AUSTRALIA DATA (MNI): Aussie Employment Grows Stronger Than Expected
- AUSTRALIA JUN EMPLOYED PERSONS CHANGE 50.2K
- AUSTRALIA JUN F-T EMPLOYED PERSONS CHANGE 43.3K
- AUSTRALIA JUN UNEMPLOYMENT RATE +4.1%
- AUSTRALIA JUN LABOR PARTICIPATION RATE +66.9%
The Australian unemployment rate held steady at 4.0% y/y in June, while employment gained 50,176, higher than the estimated 20,000 jobs, data from the Australian Bureau of Statistics showed. The seasonally adjusted rate printed at 4.1%, in line with expectations. "The participation rate in June was only 0.1 percentage point lower than the historical high of 67.0 per cent in November 2023,” noted Bjorn Jarvis, head of labour statistics at the ABS.
JAPAN DATA (MNI): June Exports Rise Despite Slow Auto Shipments
- JAPAN POSTS JPY224.0 BLN TRADE SURPLUS IN JUNE
- JAPAN JUNE EXPORTS +5.4% Y/Y; MAY +13.5%
Japan's exports posted their seventh straight y/y rise in June, up 5.4%, driven by semiconductor manufacturing equipment orders and despite a slowdown of automobile shipments, data released by the Ministry of Finance showed on Thursday. The result fell within the Bank of Japan’s latest assessment that exports have been more or less flat. Automobile consignments rose 2.3% in June following 13.6% in May and exports of semiconductors manufacturing equipment rose 37.9% in June from May's 45.9%.
JAPAN DATA (MNI): Japan Corp Loan Demand Rises - BOJ Survey
Japanese corporate bank financing demand rose over the last three months following sales and capital investment increases and lower access to funding tools, according to the senior loan officer opinion survey on bank lending practices released by the Bank of Japan on Thursday. The index for corporate fund demand - calculated by subtracting the number of banks reporting a decline in lending from the number of those reporting an increase - rose to +6 in July from +4 in April.
FOREX: GBP/AUD Offered on Diverging Jobs Data
- AUD is the marginal outperformer, adding to gains on the back of the higher-than-expected job gains data overnight. Additionally, the participation rate unexpectedly ticked higher, to rise back toward the post-COVID and alltime highs. This helped bolster expectations for a rate hike as soon as August from the RBA, with solid topside option interest in AUD/USD also adding to the theme. AUD/JPY has rallied well off lows, piercing back above the 50-dma level this morning.
- UK labour market data left only a modest ripple in market pricing, however showed a softer-than-expected outlook for wages. The August BoE meeting remains a key market focus, with most sell-side analysts seeing the data as playing into the 50/50 theme for whether a first rate cut comes in August, or at the next Policy Report meeting in November. OIS markets price around ~12bps of easing at this stage. GBP/AUD is lower by 0.3% on the diverging reports.
- China's third plenum concluded, with the central committee reaffirming their focus on reform and improving market dynamics. Demand stimulation was also a popular theme, and may have contributed to some modest CNH sales following the release.
- The ECB rate decision is seen coming in unchanged, with no strong signal for a September cut - however this remains the market's base case, with a 25bps cut close to fully priced for that meeting. Weekly US jobless claims data, appearances from Fed's Goolsbee, Logan and Daly also cross, ahead of a campaign rally and notable speech from former President Trump at the RNC convention in Milwaukee, likely after the market close.
BONDS: Gilts Outperform EGBs Following UK Labour Market Data
Bund futures remain close to intraday lows following this morning’s Spanish and French supply, though remain weaker on the day. Gilt futures outperform after this morning’s domestic labour market data.
- The aformentioned supply passed through relatively smoothly despite both Spain and France selling at the top of the target range, though mixed internal metrics prevented a meaningful recovery in Bund and OAT futures, which are -19 and -15 ticks lower respectively.
- Gilt futures outperform following this morning’s labour market data, currently +1 at 98.48.
- Single-month UK wages rose 4.9% Y/Y in May (vs 5.8/5.9% between January and April this year), helping to keep an August BoE cut in the balance.
- The German and French cash curves have bear steepened, while Gilt yields are -0.5bp to +0.5bp, twist steepening.
- 10-year peripheral spreads are generally little changed.
- The ECB decision is due at 1315BST, though rates are expected unchanged with few new policy signals delivered.
EQUITIES: Move Lower in Eurostoxx 50 Futures This Week Undermines Bullish Theme
A bull cycle in Eurostoxx 50 futures remains intact. However, the move lower this week does undermine this theme. Price has traded through the 50-day EMA, exposing the next support at 4903.00, the Jul 2 low. Clearance of this level would expose 4846.00, the Apr 19 low and a key reversal point. For bulls, a move higher and a break of 5087.00, the Jul 12 high, would again highlight a bullish theme. The trend condition in S&P E-Minis is bullish and yesterday’s move lower appears to be a correction. The continuation higher last week and this week’s cycle high, confirms a resumption of the uptrend and maintains the bullish sequence of higher highs and higher lows. MA studies are in a clear bull-mode set-up too, highlighting positive market sentiment. Sights are on 5741.34, a Fibonacci projection. Firm support is at 5597.81 the 20-day EMA.
- ]Japan's NIKKEI closed lower by 971.34 pts or -2.36% at 40126.35 and the TOPIX ended 46.58 pts lower or -1.6% at 2868.63.
- Elsewhere, in China the SHANGHAI closed higher by 14.278 pts or +0.48% at 2977.133 and the HANG SENG ended 39 pts higher or +0.22% at 17778.41.
- Across Europe, Germany's DAX trades higher by 8.8 pts or +0.05% at 18430.63, FTSE 100 higher by 59.88 pts or +0.73% at 8242.03, CAC 40 up 28.94 pts or +0.38% at 7587.6 and Euro Stoxx 50 up 6.71 pts or +0.14% at 4890.96.
- Dow Jones mini down 25 pts or -0.06% at 41479, S&P 500 mini up 15.25 pts or +0.27% at 5654.25, NASDAQ mini up 110 pts or +0.55% at 20110.25.
Time: 09:50 BST
COMMODITIES: WTI Futures Extend Recovery From Weekly Lows
WTI futures initially traded lower this week marking an extension of the corrective cycle. However, the contract has recovered from Tuesday’s low and this signals the end of a corrective phase. Note that support at the 50-day EMA, at $79.43, remains intact. This average represents an important pivot level and a clear break would highlight a stronger reversal. Initial key resistance to watch is $83.58, the Jul 5 high. The trend condition in Gold remains bullish and this week’s gains reinforce current conditions. The yellow metal has breached key resistance and the bull trigger at $2450.1, the May 20 high. This confirms a resumption of the medium-term uptrend and opens the $2500.00 handle next. Moving average studies are in a clear bull-mode set-up, highlighting a rising trend. Initial support is at $2382.6, the 20-day EMA.
- WTI Crude up $0.4 or +0.48% at $83.32
- Natural Gas up $0 or +0.15% at $2.039
- Gold spot up $8.51 or +0.35% at $2467.3
- Copper down $2.75 or -0.62% at $438.1
- Silver up $0.19 or +0.62% at $30.4595
- Platinum up $8.71 or +0.87% at $1007.52
Time: 09:55 BST
Date | GMT/Local | Impact | Country | Event |
18/07/2024 | 1215/1415 | *** | ![]() | ECB Deposit Rate |
18/07/2024 | 1215/1415 | *** | ![]() | ECB Main Refi Rate |
18/07/2024 | 1215/1415 | *** | ![]() | ECB Marginal Lending Rate |
18/07/2024 | 1230/0830 | *** | ![]() | Jobless Claims |
18/07/2024 | 1230/0830 | ** | ![]() | WASDE Weekly Import/Export |
18/07/2024 | 1230/0830 | ** | ![]() | Philadelphia Fed Manufacturing Index |
18/07/2024 | 1245/1445 | ![]() | ECB Monetary Policy Press Conference | |
18/07/2024 | 1415/1615 | ![]() | ECB's Lagarde presents MonPol decision on podcast | |
18/07/2024 | 1430/1030 | ** | ![]() | Natural Gas Stocks |
18/07/2024 | 1530/1130 | * | ![]() | US Bill 08 Week Treasury Auction Result |
18/07/2024 | 1530/1130 | ** | ![]() | US Bill 04 Week Treasury Auction Result |
18/07/2024 | 1605/1205 | ![]() | San Francisco Fed's Mary Daly | |
18/07/2024 | 1700/1300 | ** | ![]() | US Treasury Auction Result for TIPS 10 Year Note |
18/07/2024 | 1745/1345 | ![]() | Dallas Fed's Lorie Logan | |
18/07/2024 | 2000/1600 | ** | ![]() | TICS |
19/07/2024 | 2301/0001 | ** | ![]() | Gfk Monthly Consumer Confidence |
19/07/2024 | 2330/0830 | *** | ![]() | CPI |
18/07/2024 | 2345/1945 | ![]() | Fed Governor Michelle Bowman | |
19/07/2024 | 0600/0700 | *** | ![]() | Retail Sales |
19/07/2024 | 0600/0700 | *** | ![]() | Public Sector Finances |
19/07/2024 | 0600/0800 | ** | ![]() | PPI |
19/07/2024 | 0800/1000 | ** | ![]() | EZ Current Account |
19/07/2024 | 1230/0830 | * | ![]() | Industrial Product and Raw Material Price Index |
19/07/2024 | 1230/0830 | ** | ![]() | Retail Trade |
19/07/2024 | 1440/1040 | ![]() | New York Fed's John Williams | |
19/07/2024 | 1700/1300 | ** | ![]() | Baker Hughes Rig Count Overview - Weekly |
19/07/2024 | 1700/1300 | ![]() | Atlanta Fed's Raphael Bostic |