NEWS
MNI POLITICAL RISK ANALYSIS: First Presidential Debate Preview
The first of two 2024 presidential elections will take place on June 27. The debate will be broadcast by CNN and hosted by Jake Tapper and Dana Bash. The debate was negotiated directly by CNN and the Biden and Trump campaigns, ducking the Commission on Presidential Debates for the first time since 1988. The debate will be the most widely watched event of the campaign so far. It will provide the first real opportunity to win votes from the small group of undecided voters who will ultimately determine the winner in November, many of whom may be tuning into the politics of the race for the first time.
Full preview here: https://roar-assets-auto.rbl.ms/files/64947/MNIPOLRISKElectionsWeeklyFirstDebatePreview%20.pdf
MNI POLITICAL RISK ANALYSIS – France Election Preview
In a decision that will have significant repercussions for domestic politics, as well as on the wider European continent, President Emmanuel Macron has called a snap legislative election to take place on 30 June and 7 July. Macron called the election after the right-wing nationalist Rassembelement National (National Rally, RN) won a comfortable victory in France’s election to the European Parliament on 9 June, saying in a national address that “I’ve decided to give you back the choice of our parliamentary future through the vote. I am therefore dissolving the National Assembly.”
Full preview here: https://roar-assets-auto.rbl.ms/files/65004/MNIPOLITICALRISK-FranceElectionPreview.pdf
MNI EUROZONE INFLATION PREVIEW: June 2024
With the ECB’s long-anticipated rate cut on June 6 finally out of the way, the Governing Council’s requirement for further disinflationary progress to make its next reduction puts immediate attention on June’s flash inflation reports due for release between Jun 27-Jul 2. Since the June flash inflation round is split across two weeks, there is not yet a Bloomberg consensus for the Eurozone-wide print. Based on the previews we have seen, analysts expect a 0.1pp deceleration in both core and headline Euro-area inflation in June to 2.8% Y/Y and 2.5% respectively.
Full preview here: https://roar-assets-auto.rbl.ms/files/64996/June2024EZCPIPreview.pdf
RIKSBANK (MNI): Riksbank Holds, Could Cut Two or Three Times in H2
The Riksbank left its policy rate on hold at 3.75% at its June meeting, as widely expected, and delivered dovish guidance, stating that if things unfolded as expected it could cut two or three times in the second half of the year. The Swedish central bank shifted its policy rate path a little lower. It said that despite the recent unexpectedly strong core inflation print, fundamentals pointed to softening inflation and with the krona having ticked up it could ease further. In May its guidance was for two cuts in H2.
ECB (MNI): ECB Sees “Easy Last Kilometre” in the Coming Quarters
The European Central Bank sees reason to be optimistic about inflation in the short term, predicting an “easy last kilometre” in the coming quarters based on a model presented in a paper titled ‘Drivers of Post-pandemic inflation’ that will be discussed in Sintra. The paper notes how the model’s predictions -- based on pre-covid data and thus reflecting pre-covid monetary policy conduct and transmission -- and how the model concurs with the Survey of Professional Forecasters, indicating that ECB’s monetary policy has returned to “its pre-covid normalcy”.
UK (BBG): Starmer Denies Sunak Clear Win He Needed in Final UK Debate
Keir Starmer accused Rishi Sunak of being “out of touch” with voters as the Labour leader promised to fix Britain’s stagnant economy and ailing public services, and the prime minister used the final televised debate to attack his poll-leading rival on taxes ahead of next week’s election. In what was likely to be the last set-piece moment for Sunak to try to prevent a resounding Labour victory on July 4, a snap poll of 1,700 Britons by YouGov showed the two leaders were tied in the at-times spiky debate in Nottingham. That will suit Starmer, whose goal between now and election day is to avoid any unforced errors.
FRANCE (BBG): France’s Hollande Floats Unity Government as the Left Wavers
Former French President Francois Hollande indicated he’d be ready to build a new coalition that could govern if elections deliver a hung parliament as a leftist bloc he’s joined struggles to paper over internal divisions. Hollande said he reentered the political fray in France to run for a seat at the National Assembly with a primary objective of stopping Marine Le Pen’s National Rally from taking power. Polls show her anti-immigration, nationalist party is set to take the largest number of seats, ahead of the left’s New Popular Front that’s in second place and President Emmanuel Macron’s group in third.
CHINA (MNI): China to Hold Key Third Plenum on July 15-18
MNI (Beijing) China's Communist Party will hold its long-delayed third plenum from July 15-18 in Beijing, announced by the Politburo meeting on Thursday, state-run Xinhua News Agency reported. The Central Committee of China’s Communist Party’s third plenums, held every five years, typically set reform on economic, market government function, fiscal policies and urban and rural development for the next 5-10 years. July's meeting will occur nearly a year later than usual.
JAPAN (BBG): Japan’s Suzuki Repeats Warnings After Yen Hits Lowest Since 1986
Japan will take appropriate action as needed to defend its currency as it watches out for sudden, one-sided moves, Finance Minister Shunichi Suzuki told reporters after the yen slid to the lowest level versus the dollar since 1986. “It is desirable for the exchange rate to move in a stable manner,” Suzuki said on Thursday morning. “Sudden, one-sided moves are not desirable. We are strongly concerned about the impact on the economy. We will analyze the background to this move with a high sense of urgency, and take necessary action as needed.”
JAPAN (MNI): Japan’s H’hold Financial Assets Hit Record High
The balance of financial assets held by Japanese households stood at a record high of JPY2,199 trillion at the end of March, up 7.1% y/y and for the 16th straight quarterly rise, preliminary fund circulation data released by the Bank of Japan on Thursday showed. The balance of cash and deposits held by Japanese households at the end of March stood at JPY1,118 trillion, up 1.1% from a year earlier. The balance of cash and deposits accounted for 50.9% of the total financial assets, showing Japanese households continued refraining from buying financial assets.
AUSTRALIA (BBG): Australian PM’s Assange Welcome Sparks Concern Over US Relations
Australia’s Prime Minister Anthony Albanese has been accused of potentially undermining ties with key ally, the US, after he welcomed Julian Assange home with a personal phone call. Assange spoke to Albanese shortly after his plane touched down in Canberra on Wednesday night, the prime minister announced at a press conference. During the call, Assange told Albanese that he had “saved his life,” according to his wife Stella.
MNI CBRT PREVIEW - JUNE 2024: On Hold But Hawkish
The CBRT is widely expected to keep its one-week repo rate unchanged at 50%, presumably having reached the peak of its hiking cycle back in March. Nevertheless, further adjustments to the central bank’s policy toolkit may be forthcoming in order to manage liquidity and improve the transmission of monetary policy. Among sell-side, some analysts expect rate cuts to commence by year-end.
Full preview: https://roar-assets-auto.rbl.ms/files/64978/MNICBRTPrevJun24.pdf
DATA
JAPAN DATA (MNI): Japan May Retail Sales +3.0% Y/Y
JAPAN MAY RETAIL SALES +3.0% Y/Y; APRIL +2.0%
JAPAN MAY RETAIL SALES +1.7% M/M; APRIL +0.8%
Japanese retail sales rose 3.0% y/y in May, quicker from the 2.0% y/y growth reported last month. On a monthly basis, retail sales rose 1.7%, accelerating from the 1.2% increase previously. General merchandise sales increased 5.4% y/y, higher than the 2.1% y/y increase last month, while sales of fabric apparels and accessories falling 0.3%, narrowing from last 1.0% fall. Sales of food and beverages increased 1.0% y/y, after growing 1.5% y/y last month.
FOREX: SEK Slips as Riksbank Raises Risk of Summer Rate Cut
- Antipodean currencies trade well, with AUD and NZD firmer against most others to allow AUD/USD to consolidate the post-CPI gains from this week. Despite the Thursday strength, the pair remains just inside its well-worn range of the past six weeks, keeping the technical parameters unchanged for now: 0.6704/14 to the upside, and the 50-dma of 0.6612 to the downside.
- The USD Index remains above the 106.00 handle, and within range of yesterday's multi-month high printed at 106.130. Firmer-than-expected US data later today or renewed concerns surrounding French politics could tip the dollar again to multi-month highs.
- ECB members Muller, Kazimir and Lane stuck to the recent script in comments to press today, leading markets into a quieter Summer for ECB policy ahead of the September meeting, at which markets currently price a better-than-even chance of the next rate cut.
- The Swedish central bank kept headline policy unchanged, however a dovish set of rate path projections and CPI forecasts leant against the SEK, putting EUR/SEK to late June highs, pushing against the broader downtrend in the cross posted off the early May highs. SEK is comfortably the poorest performing currency in G10 headed into the NY crossover.
- The tertiary read of Q1 US GDP is set to cross alonmgside the weekly jobless claims data, although prelim durable goods orders could be more consequential for markets. The central bank speaker slate is far quieter, with no Fedspeak of note, however RBA deputy governor Hauser appears at 1030BST/0530ET.
EGBS: BTP Supply and Looming French Election Weighs On EGBs
- Core/semi-core EGBs are once again lower this morning, with OATs underperforming as Sunday’s election comes closer into view.
- Bund futures are 19 ticks at 131.83, just above the first support at 131.80 (50-day EMA). A clear break of this level would call into question the current technical bull cycle.
- 5/10-year BTP supply will have weighed on futures in the run-up to the 10:00BST bidding deadline. The results saw decent bid-to-covers but the prices were marginally below the pre-auction mids.
- The EC’s June confidence data was mixed, prompting limited market reaction.
- The ECB’s Kazimir struck a hawkish note in supporting just one more ECB cut this year (OIS currently show 44bps of easing through year-end).
- The German 2s10s cash curve has reached its steepest since February, while 10-year peripheral spreads to Bunds are biased wider.
GILTS: Holding Lower, Wider Matters Eyed
Most of the early weakness in gilts holds. Futures -20 at 97.77 vs. early lows of 97.67.
- Next support is seen at the trendline drawn off the May 29 low (97.40).
- The break of the 20-day EMA provides greater risk to the bullish technical backdrop, although the pullback is deemed corrective at this stage.
- Cash yields are 1.5-2.5bp higher, with the 5- to 10-Year zone leading the move.
- The move away from June yield lows extends, leaving multi-month ranges intact.
- SONIA futures are flat to 2.5bp lower. BoE-dated OIS shows 13.5bp of cuts for August, ~42bp of cuts through year end.
- While there hasn’t been a clear driver for today’s move, we note that the firmer-than-expected rounds of Canadian & Australian CPI data has generated plenty of discussion when it comes to the “bumpy” path for the moderation in inflation, with broader focus on tomorrow U.S. PCE reading.
- The BoE FSR is due today, but that shouldn’t be a market mover.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Aug-24 | 5.065 | -13.5 |
| Sep-24 | 5.004 | -19.6 |
| Nov-24 | 4.870 | -33.0 |
| Dec-24 | 4.779 | -42.1 |
| Feb-25 | 4.648 | -55.2 |
| Mar-25 | 4.563 | -63.7 |
| May-25 | 4.447 | -75.4 |
| Jun-25 | 4.362 | -83.8 |
COMMODITIES: Current Bull Phase in WTI Futures Remains Intact
WTI futures are still trading closer to their latest highs and the current bull phase remains intact. The recent move higher has resulted in a break of $80.11, the May 29 high and a key resistance. The clear breach of this hurdle cancels a bearish theme and paves the way for $82.24, a Fibonacci retracement point. Initial firm support to watch is $78.63, the 50-day EMA. A break would be seen as an early potential reversal signal. A bear threat in Gold remains present and the yellow metal continues to trade below resistance. A sharp sell-off on Jun 7 reinforced a short-term bearish theme. Price has again pierced the 50-day EMA, at 2317.7. A clear break of this EMA would confirm a resumption of the reversal from May 20 and open $2277.4, the May 3 low. Clearance of this price point would also strengthen a bearish theme. Initial firm resistance is $2387.8, the Jun 7 high.
- WTI Crude up $0.39 or +0.48% at $81.32
- Natural Gas up $0 or +0.11% at $2.749
- Gold spot up $9.47 or +0.41% at $2307.76
- Copper down $1.25 or -0.29% at $435.25
- Silver up $0.08 or +0.29% at $28.8595
- Platinum down $9.52 or -0.94% at $1005.16
EQUITIES: E-Mini S&P Consolidates Near Recent Highs
The trend condition in Eurostoxx 50 futures remains bullish. The recovery from the Jun 14 low is potentially an early reversal signal highlighting the end of the May 16 - Jun 14 correction. Resistance to watch is at 5039.84, a Fibonacci retracement. Clearance of this level would be a positive development. A reversal lower would signal a resumption of the bearish corrective cycle. This would open 4846.00, the Apr 19 low and a key support. S&P E-Minis are in consolidation mode. The trend condition is unchanged and signals remain bullish with price trading closer to its recent highs. Resistance at 5430.75, the May 23 high and bull trigger, has been cleared. This confirmed a resumption of the uptrend. Note that MA studies are in a bull-mode position, highlighting positive sentiment. Sights are on 5594.66, a Fibonacci projection. Support to watch is 5473.37, the 20-day EMA.
- Japan's NIKKEI closed lower by 325.53 pts or -0.82% at 39341.54 and the TOPIX ended 9.25 pts lower or -0.33% at 2793.7.
- Elsewhere, in China the SHANGHAI closed lower by 26.673 pts or -0.9% at 2945.852 and the HANG SENG ended 373.46 pts lower or -2.06% at 17716.47.
- Across Europe, Germany's DAX trades higher by 5.85 pts or +0.03% at 18159.84, FTSE 100 lower by 12.15 pts or -0.15% at 8213.73, CAC 40 down 19.97 pts or -0.26% at 7589.54 and Euro Stoxx 50 up 0.72 pts or +0.01% at 4916.76.
- Dow Jones mini down 97 pts or -0.25% at 39444, S&P 500 mini down 11.75 pts or -0.21% at 5531.75, NASDAQ mini down 54.75 pts or -0.27% at 19957.
| Date | GMT/Local | Impact | Country | Event |
| 27/06/2024 | 0900/1100 | ** |  EU | EZ Economic Sentiment Indicator |
| 27/06/2024 | 0900/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 27/06/2024 | 1100/0700 | *** |  TR | Turkey Benchmark Rate |
| 27/06/2024 | 1215/1415 | EU | ECB's Elderson speech on Banking Supervision at Allen & Overy | |
| 27/06/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 27/06/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 27/06/2024 | 1230/0830 | *** | US | GDP |
| 27/06/2024 | 1230/0830 | * |  CA | Payroll employment |
| 27/06/2024 | 1230/0830 | ** | US | Durable Goods New Orders |
| 27/06/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/06/2024 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 27/06/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 27/06/2024 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/06/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/06/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/06/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 27/06/2024 | 1900/1500 | *** |  MX | Mexico Interest Rate |
| 27/06/2024 | 2000/1600 | US | Topic of meeting | |
| 28/06/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 28/06/2024 | 2330/0830 | * | JP | Labor Force Survey |
| 28/06/2024 | 2350/0850 | ** | JP | Industrial Production |
| 27/06/2024 | 0100/2100 | US | Trump-Biden Debate | |
| 28/06/2024 | 0600/0700 | *** |  GB | GDP Second Estimate |
| 28/06/2024 | 0600/0700 | * | GB | Quarterly current account balance |
| 28/06/2024 | 0600/0800 | ** |  DE | Import/Export Prices |
| 28/06/2024 | 0600/0800 | ** |  SE | Retail Sales |
| 28/06/2024 | 0645/0845 | *** |  FR | HICP (p) |
| 28/06/2024 | 0645/0845 | ** | FR | PPI |
| 28/06/2024 | 0645/0845 | ** | FR | Consumer Spending |
| 28/06/2024 | 0700/0900 | *** |  ES | HICP (p) |
| 28/06/2024 | 0700/0900 | ** |  CH | KOF Economic Barometer |
| 28/06/2024 | 0755/0955 | ** | DE | Unemployment |
| 28/06/2024 | 0800/1000 | ** | EU | ECB Consumer Expectations Survey |
| 28/06/2024 | 0900/1100 |  IT | Flash inflation | |
| 28/06/2024 | 1000/0600 | US | Richmond Fed's Tom Barkin | |
| 28/06/2024 | 1230/0830 | ** | US | Personal Income and Consumption |
| 28/06/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 28/06/2024 | 1345/0945 | *** | US | MNI Chicago PMI |
| 28/06/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 28/06/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 28/06/2024 | 1600/1200 | *** | US | USDA Acreage - NASS |
| 28/06/2024 | 1600/1200 | ** | US | USDA GrainStock - NASS |
| 28/06/2024 | 1600/1200 | US | Fed Governor Michelle Bowman | |
| 28/06/2024 | 1640/1240 | US | San Francisco Fed's Mary Daly | |
| 28/06/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |