EXECUTIVE SUMMARY
- ISRAEL STRIKES DEEP IN LEBANON AFTER ROCKET ATTACK, STOKING FEAR OF WIDER WAR
- UK’S REEVES TO MAKE STATEMENT ON PUBLIC FINANCES
- POST-COVID FACTORY BOOM IS RUNNING OUT OF STEAM
- MADURO DECLARED WINNER OF DISPUTED VENEZUELAN ELECTION
MNI (LONDON) - Figure 1: CAD net short positions hit fresh record low
Figure 1: MNI/Bloomberg/CFTC
NEWS
US (MNI): Biden Supports SCOTUS Term Limits & Amendment to End Pres. Immunity
Writing in a WaPo op-ed, President Joe Biden proposes a constitutional amendment called the 'No One Is Above the Law Amendment', that would remove the immunity for crimes a former president committed while in office. Comes after the Supreme Court ruled earlier in July that a president has broad immunity for crimes committed during their time in office as part of 'official acts'. The ruling resulted in a major backlash from liberals, arguing that it would give the presidency dictatorial powers.
US (WSJ): Post-Covid Factory Boom Is Running Out of Steam
Companies are laying off employees and cutting production to counter falling orders and rising inventories. More U.S. manufacturers are rethinking their plans as they brace for an extended slump in demand. Higher interest rates, rising operating costs, a strengthening U.S. dollar and lower selling prices for commodities are dampening activity at factories across the country. Executives for the makers of long-lasting items such as cars, crop-harvesting combines and washing machines are projecting challenging business conditions for the remainder of the year.
ISRAEL/MIDDLE EAST (WaPo): Israel Strikes Deep in Lebanon After Rocket Attack, Stoking Fear of Wider War
Israel struck Hezbollah targets deep inside Lebanon on Sunday, officials said, the day after a rocket strike from Lebanon killed 12 people, most of them teenagers and children, in the Israeli-occupied Golan Heights, raising the specter of all-out war. Sunday's strikes, on what the Israeli military said were Hezbollah weapons caches and infrastructure, fell short of the furious response Israeli officials threatened after the strike Saturday on a soccer field in the Golan where children were playing. Diplomats worked feverishly Sunday to blunt any Israeli retaliation. Lebanon's government, which would suffer from any escalation, entreated the United States to urge restraint from Israel, Foreign Minister Abdallah Bou Habib told Reuters.
UK (MNI): Reeves to Make Statement on Public Finances Today
Chancellor of the Exchequer Rachel Reeves will make a statement to parliament today (we have heard unconfirmed reports of 15:30BST) on the state of the public finances. There are expected to be four strands to the announcement: first she is widely expected to state that there is a gap of around GBP20bln in the current year (i.e. FY24/25) funding plans - and blame this on the previous government. Second, she is expected to confirm that she will accept the independent pay review bodies' recommendations on public sector pay. Most notably this would include above-inflation (and higher-than-budgeted for) increases of 5.5% for workers such as doctors, nurses and teachers. Third, she is likely to announce a number of immediate spending cuts (or pauses) - with the weekend media reporting that this is likely to be focused on large infrastructure projects.
FRANCE (BBG): French Internet Cables Severed in Latest Attack During Olympics
A number of fiber optic cables carrying broadband service across France’s southern and eastern regions were cut overnight in the latest attack on the country’s infrastructure during the Olympic Games. SFR said five lines were cut overnight and teams are working on repairs, a spokesman for the French telecommunications carrier said. Other carriers, including Iliad SA’s Free and Netalis, also said they were impacted in social media posts. Netalis Chief Executive Officer Nicolas Guillaume said that the telecom company had successfully moved traffic to backup networks early on Monday.
CHINA (BBG): China Grid Giant Plans Record Spending to Ease Power Bottlenecks
China’s main grid operator will raise spending to a record to ease transmission bottlenecks, underscoring Beijing’s push to boost renewable-energy usage and potentially benefiting metals including copper. State Grid Corp. of China, which covers more than 80% of the country, will increase spending 13% to 600 billion yuan ($83 billion) this year, the Economic Information Daily reported, citing a budget plan. That follows an announcement from smaller peer, China Southern Power Grid Co., that it will lift capital spending for network upgrading by more than half by 2027.
CHINA (BBG): China to Boost Flood Relief Efforts as Heavy Rains Continue
China’s central government has urged regional authorities to step up flood prevention and disaster relief efforts, after heavy rains killed at least 15 people and displaced thousands across the country over the weekend. The Asian nation faces a “severe and complicated” flood control situation this summer, with major waterways like the Yellow River and others likely to overflow amid an active typhoon season, Xinhua state news agency reported, citing a top leadership meeting chaired by President Xi Jinping on July 25.
CHINA (MNI): China Visitor Mobile Payments Surge in H1
MNI (Beijing) Over 5 million overseas visitors to China used mobile payments in the first half of 2024, a fourfold increase year-on-year, as the central bank has been working on upgrading its payment services since this February, according to officials of the People’s Bank of China in a briefing on Friday. Foreign visitor mobile payment transactions in China exceeded 90 million and totaled over CNY14 billion in H1, both seeing a sevenfold increase year-on-year since the PBOC largely increased payment limits and simplified processes for linking overseas bank cards to mobile payment applications, the officials said.
JAPAN (BBG): Japan Expects to Hit Primary Balance Goal After Decade of Delay
Japan expects to hit its primary balance goal in the year starting April 2025, finally achieving the long-standing goal for fiscal health after more than a decade of delays. The primary balance, which excludes net interest payments on public debt, is projected to be around ¥800 billion ($5.2 billion), or about 0.1% of gross domestic product in fiscal year 2025, according to the Cabinet Office’s mid-to-long-term outlook report Monday. This marks an improvement from the ¥1.1 trillion deficit, or -0.4% of GDP predicted in January, and would be the first surplus since the government set the target in 2002.
VENEZUELA (WaPo): Maduro Declared Winner of Disputed Venezuelan Election
Venezuelan President Nicolás Maduro's electoral council declared the authoritarian socialist the winner of Venezuela's election Sunday despite partial results and independent exit polling that suggested opposition candidate Edmundo González had captured twice as many votes. The Venezuelan opposition, which sent thousands of ordinary citizens to monitor voting centers across the country Sunday, swiftly rejected the results and said it had records showing a clear victory by González. The election outcome was immediately challenged by a host of foreign leaders, including U.S. officials.
DATA
UK JUN M4 MONEY SUPPLY +0.5% M/M, +1% Y/Y (MNI)
UK BOE JUN CONSUMER CREDIT GBP1.16 BLN (MNI)
UK BOE JUN SECURED LENDING GBP2.65 BLN (MNI)
UK BOE JUN MORTGAGE APPROVALS 59,976 (MNI)
SWEDEN Q2 GDP +0% Y/Y (MNI)
SWEDEN JUN RETAIL SALES -0.1% Y/Y (MNI)
FOREX: Risk Fades as Markets Adopt Defensive Stance
- Currency markets have adopted a vague risk-off tone early Monday, despite a distinct lack of major external developments or datapoints. The greenback is firmer alongside the JPY, while the EUR and - in particular - GBP are trading poorly.
- The resultant downleg in GBP extended through 1.2850 support as well as the more notable 50% retracement of the July upleg at 1.2830. The move initially triggered by the USD buying phase and the modest risk-off evident in equity futures, but GBP is now underperforming against all others in G10 - with demand for EUR/GBP putting the cross just a few pips below the 50-dma of 0.8461. Clearance here would be the first since early May.
- Despite the fade off the best levels in equity index futures, Wall Street is set for a positive cash open later today, building on the strong close Friday. JPY is the firmest currency in G10, as the short-covering tailwind persists.
- Focus for the rest of Monday trade turns to the public finances statement from UK Chancellor Reeves, supposedly set for around 1530BST/1030ET, at which she's expected to lay out the detail of the "blackholes" in government finances and her plans to fix them across the coming parliament. Reports suggest she is to clamp down on infrastructure and government spending, while potentially raising some selected taxes on pension contributions or capital gains.
BONDS: Strong Start to Busy Central Bank Week
Gilt and Bund futures have started the week on a strong note, each around 50 ticks higher versus Friday’s settlement levels.
- Bund futures are +50 today at 133.22. An earlier breach of last Thursday’s high at 132.92 has exposed the bull trigger at 133.21 (June 14 high).
- A clear breach of this level would reinforce the bullish technical picture, with 133.42 (a Fibonacci projection level) seen next on the upside.
- In Gilts (+53 ticks today at 98.76), next resistance is seen at 98.93 (Jul 18 high) before key resistance at 99.23 (June 21 high).
- A modest dovish repricing of BoE rate cut expectations ahead of Thursday’s meeting has allowed Gilt yields to fall, with 2-year yields almost 6bps lower today (albeit now off intraday lows).
- The German curve has lightly bull flattened, while 10-year peripheral spreads to Bunds are little changed.
- UK Chancellor Reeves’ statement on public finances headlines today’s calendar, with Euro area July inflation, preliminary Q2 GDP reports and the BoE meeting in focus later this week.
- The Fed and BoJ meetings also provide spillover potential on Wednesday.
EQUITIES: E-Mini S&P Extends Moderate Recovery From Last Week's Lows
Eurostoxx 50 futures traded lower Thursday, reinforcing current bearish conditions. The contract has breached 4846.00, the Apr 19 low. A clear break of this level would pave the way for an extension towards 4727.57, the 200 day MA on the continuation chart. Moving average studies are in a bear-mode set-up, highlighting a downtrend. The latest bounce appears to be a correction - for now. 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 a 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 5413.55, 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 801.22 pts or +2.13% at 38468.63 and the TOPIX ended 60.13 pts higher or +2.23% at 2759.67.
- Elsewhere, in China the SHANGHAI closed higher by 0.948 pts or +0.03% at 2891.845 and the HANG SENG ended 217.03 pts higher or +1.28% at 17238.34.
- Across Europe, Germany's DAX trades higher by 10.73 pts or +0.06% at 18428.62, FTSE 100 higher by 72.44 pts or +0.87% at 8358.46, CAC 40 down 28.5 pts or -0.38% at 7489.18 and Euro Stoxx 50 down 7.79 pts or -0.16% at 4854.71.
- Dow Jones mini up 79 pts or +0.19% at 40908, S&P 500 mini up 9.5 pts or +0.17% at 5508.5, NASDAQ mini up 59.75 pts or +0.31% at 19233.5.
Time: 09:50 BST
COMMODITIES: WTI Futures Close to Recent Lows, S-T Bearish Threat Still Present
The recent move lower in WTI futures signals scope for an extension near-term. The contract has traded through both the 20- and 50-day EMAs, reinforcing a short-term bearish threat. A resumption of the bear leg 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. Gold continues to trade below its recent highs. The latest move down is considered corrective, however, the yellow metal has pierced support at the 50-day EMA - at $2361.1. A clear break of this average would signal scope for a deeper retracement. This would open $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. A break would resume the primary uptrend.
- WTI Crude down $0 or 0% at $77.2
- Natural Gas down $0 or -0.05% at $2.005
- Gold spot up $2.72 or +0.11% at $2389.57
- Copper down $4.3 or -1.04% at $408.15
- Silver up $0.1 or +0.35% at $28.0195
- Platinum up $5.35 or +0.57% at $945.73
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 29/07/2024 | - |  GB | Chancellor Reeves statement on Public Finances | |
| 29/07/2024 | 1430/1030 | ** |  US | Dallas Fed manufacturing survey |
| 29/07/2024 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 29/07/2024 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 30/07/2024 | 2301/0001 | * | GB | BRC Monthly Shop Price Index |
| 30/07/2024 | 2330/0830 | * |  JP | Labor Force Survey |
| 30/07/2024 | 0130/1130 | * |  AU | Building Approvals |
| 30/07/2024 | 0530/0730 | *** |  FR | GDP (p) |
| 30/07/2024 | 0530/0730 | ** | FR | Consumer Spending |
| 30/07/2024 | 0600/0800 | *** |  DE | GDP (p) |
| 30/07/2024 | - | US | FOMC Meeting | |
| 30/07/2024 | 0700/0900 | *** |  ES | HICP (p) |
| 30/07/2024 | 0700/0900 | *** | ES | GDP (p) |
| 30/07/2024 | 0700/0900 | ** |  CH | KOF Economic Barometer |
| 30/07/2024 | 0800/1000 | *** |  IT | GDP (p) |
| 30/07/2024 | 0800/1000 | *** | DE | North Rhine Westphalia CPI |
| 30/07/2024 | 0800/1000 | *** | DE | Bavaria CPI |
| 30/07/2024 | 0900/1100 | *** |  EU | EMU Preliminary Flash GDP Q/Q |
| 30/07/2024 | 0900/1100 | *** | EU | EMU Preliminary Flash GDP Y/Y |
| 30/07/2024 | 0900/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 30/07/2024 | 0900/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 30/07/2024 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 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 |