MNI US OPEN - US Presidential Odds Swing Further Trump's Way

EXECUTIVE SUMMARY

• BIDEN CALLS ON AMERICANS TO REJECT POLITICAL VIOLENCE AFTER TRUMP RALLY SHOOTING
• CHINA Q2 GDP BELOW EXPECTATIONS, CONSUMER SIDE STILL APPEARS SOFT
• FRENCH AUDITOR SLAMS PLANS TO FIX COUNTRY’S ‘WORRYING’ FINANCES
• EUROZONE INDUSTRIAL PRODUCTION FALLS LESS THAN EXPECTED

MNI (LONDON) - Figure 1: Implied odds of Trump election win boosted following failed assassination attempt

Source: Smarkets

NEWS

US (WaPo): Biden Calls on Americans to Reject Political Violence After Trump Rally Shooting

In an address from the Oval Office on Sunday, President Biden urged Americans to "lower the temperature in our politics" after shots were fired at the stage during former president Donald Trump's rally on Saturday. "Disagreement is inevitable in American democracy. It's part of human nature," Biden said. "But politics must never be a literal battlefield. And, God forbid, a killing field." Trump wrote Sunday on Truth Social, his social media platform, that he was "shot with a bullet that pierced the upper part of my right ear" and that Americans must "stand united."

US (BBG): Trump Called Nikki Haley Asking Primary Rival to Attend RNC

Former President Donald Trump called former UN Ambassador Nikki Haley, his onetime rival in the 2024 race, and asked her to attend the Republican National Convention in Milwaukee, Wisconsin, this week, according to people familiar with the matter.  Trump’s outreach on Saturday after he was wounded in an assassination attempt is seen by those around him as an effort to unify the party, the people said, who were granted anonymity to disclose a private conversation. The former president is seizing on the outpouring of goodwill to make requests of people who may have otherwise balked.

ISRAEL/MIDDLE EAST (WaPo): Israel’s Military, Worn Down By Gaza, Looks Warily Toward War in Lebanon

Israel is "prepared for a very intense operation," Prime Minister Benjamin Netanyahu said on a visit to the Lebanese border last month. Defense Minister Yoav Gallant threatened to take Lebanon "back to the Stone Age." Beneath the posturing, though, there are growing fears within Israel that its soldiers are overstretched and its resources depleted after the country's longest war in decades. Nine months of punishing attacks against Hamas in the Gaza Strip have not vanquished the group, and a politically embattled Netanyahu has yet to outline an exit strategy. In Lebanon, Israel would face a larger, better-armed and more-professional foe, experts warn, and the threat of an even deeper military quagmire.

FRANCE (BBG): French Auditor Slams Plans to Fix Country’s ‘Worrying’ Finances

France’s state auditor warned that current plans to repair “worrying” public finances already lack credibility just as political groups with expansive tax-and-spend policies jockey to form a new government after snap elections. President Emmanuel Macron’s outgoing administration pledged new spending cuts and revenue-boosting measures in April to get back on course with derailed plans to bring the budget deficit within 3% of economic output in 2027.

CHINA (BBG): China’s Oil Refining Volumes Drop Amid Maintenance Closures

China’s average daily oil refining throughput slowed in June, a third month of declines, after more domestic plants shut their operations for maintenance.  The Asian nation processed 58.32 million tons of crude last month, 4.3% lower than a year earlier, government figures showed Monday. That’s equivalent to 14.25 million barrels a day, the lowest average daily volume for a month since December, according to Bloomberg calculations.

BITCOIN (BBG): Bitcoin Rallies as Trump Optimism Powers Crypto After Shooting

Bitcoin jumped the most in almost two months after Donald Trump’s defiant response to an assassination attempt spurred speculation that the pro-crypto former president’s chances of winning reelection have improved. Bitcoin rose as much as 5% on Monday to top $63,000, the biggest daily gain since May 20. Trump said he was shot in the right ear after gunfire erupted at a rally in Pennsylvania on Saturday, an episode that sparked global condemnation of political violence and shook the US presidential campaign.

CORPORATE (BBG): Apple’s India Sales Surge 33% to Record as China Shift Persists

Apple Inc.’s annual sales in India hit a record of almost $8 billion, underscoring a rapidly growing market where the iPhone maker now assembles more of its devices and operates two flagship stores. The India revenue jumped about 33% in the 12 months through March from $6 billion a year earlier, according to a person familiar with the matter. Apple’s pricey iPhones accounted for more than half of the sales, said the person, who asked not to be named as the information isn’t public.

DATA

EUROZONE DATA (MNI): Industrial Production Fell Less Than Expected

• EUROZONE MAY IP -0.6% M/M, -2.9% Y/Y

Eurozone industrial production fell less than expected in May at -0.6% M/M (vs -0.8% consensus, 0.0% revised prior from -0.1%). The annual reading was also better than expected printing -2.9% Y/Y (vs -3.6% consensus, -3.1% prior revised from -3.0%). Although a smaller fall than expected, Eurozone Industrial Production remains  in contractionary territory for the fifth consecutive month on an annual  basis, with it's first negative sequential print since January 2024. The upside surprise in the May monthly print relative to consensus may have  been at least partially driven by Ireland, which saw production rise 6.7% M/M  (contributing more than +0.5% M/M) after falling 3.3% last month. Followed by Italy which saw industrial production rise 0.5% M/M - the first increase  since December 2023.

CHINA DATA (MNI): China Q2 GDP Impacted By Bad Weather - NBS

• CHINA Q2 2024 REAL GDP +0.7% Q/Q VS MEDIAN +1.5% Q/Q
• CHINA Q2 2024 REAL GDP +4.7% Y/Y VS MEDIAN +5.0% Y/Y
• CHINA JUN UNEMPLOYMENT RATE +5.0% VS MAY +5.0%
• CHINA JUN RETAIL SALES +2.0% Y/Y VS MEDIAN +3.3% Y/Y
• CHINA JUN INDUSTRIAL OUTPUT +5.3% Y/Y VS MEDIAN +5.0% Y/Y

MNI (Beijing) China’s Q2 GDP growth was impacted by extreme weather, adding to insufficient domestic demand and domestic circulation blockages, a written statement from the National Bureau of Statistics said on Monday. However looking ahead, China’s favourable conditions outweigh negatives, the statement said, noting physical indicators such as passenger volume and electricity consumption have grown rapidly, while manufacturing has transitioned towards high-quality development.

The Q/Q rise of 0.7% was the weakest since the 2.1% dip in Q2 2022 (last year we saw a 0.8% Q/Q rise). The y/y pace was the slowest since the start of 2023. This is likely to keep stimulus calls alive, particularly in light of recent  credit/inflation data outcomes. In terms of the June monthly activity data it was a familiar trend in terms of outcomes. The weak point came in terms of retail sales, which rose 2.0% Y/Y, versus 3.4% forecast, 3.7% was the prior outcome. Retail spend is back  to the late 2022 pace.

RATINGS: Scope Switched Greece’s Outlook to Positive on Friday, Affirmations Elsewhere

A quick recap of Friday’s notable rating updates:

• Fitch affirmed the European Stability Mechanism (ESM) at AAA; Outlook Stable
• Fitch affirmed the European Financial Stability Facility's (EFSF) Debt at AA-
• Fitch affirmed Latvia at A-; Outlook Positive
• Morningstar DBRS confirmed Austria at AAA, Stable Trend
• Scope Ratings affirmed Greece at BBB-, Outlook changed to Positive
• Scope Ratings affirmed Italy at BBB+; Outlook Stable

FOREX: Greenback Reverses Opening Gains, AUDNZD Prints Fresh Cycle Highs

• News of the Trump assassination attempt and increased odds of a Trump win in November prompted a 0.15% gap higher for the USD index to start the week. However, a recovery for both equities and core fixed income has prompted the DXY to edge lower through the European session, and tracks close to unchanged levels heading into the NY crossover.
• USDJPY has unsurprisingly posted the largest range across the majors, as volatility remains high in the aftermath of last week’s US data and supposed BOJ intervention. USDJPY reached as high as 158.42 but has since reverted back below the 158 handle to trade around 157.80 at typing. Last week’s lows around 157.40 mark the first area of interest on the downside before more notable support at 156.83, a Fibonacci retracement. 159.75 is the first resistance, the 20-day EMA.
• In similar vein, EURUSD has risen back above 1.0900 and GBPUSD is hovering just below 1.30, a level that would place cable at the highest level since July last year.
• NZD underperforms across G10, falling 0.35% against both the dollar and the AUD. The AU-NZ 2yr swap continues to tick higher, now back at November 2020 levels which continues to bolster the AUD/NZD rally, rising to a fresh cycle high of 1.1135.
• Scandinavian FX also underperforms, with USDNOK trading 0.5% higher on Monday, however, a more notable laggard has been MXN, dropping over 1% given its beta to Trump election odds.
• Looking ahead, the US Empire Survey is due and Fed Chair Powell’s Rubenstein interview is firmly in focus for his last appearance before the FOMC blackout.

EGBS: Bunds Off Intraday Highs After Overnight Gap Lower Retraced

Bund futures are off intraday highs, currently +14 ticks at 131.87. First resistance remains at 132.08 (July 11 high).

• EGB futures gapped lower overnight alongside Tsys in response to the weekend assassination attempt on former President Trump.
• However, European desks opted to retrace that move at the open, aided by a softer European equity backdrop.

• The German cash curve has bull steepened a little, although both 2s10s and 5s30s remain short of early-July highs.
• Eurozone May industrial production was slightly less weak than expected (-0.6% M/M vs -0.7% cons and -2.9% Y/Y vs -3.6% cons), but was not a market mover

• 10-year peripheral spreads to Bunds now trade a little tighter, after opening slightly wider.
• The ECB decision on Thursday headlines this week’s regional calendar, though no change in policy settings are expected. 

GILTS: Early Modest Rally Holds, Data Eyed Later This Week

Gilts hold early, modest rally. Move away from lows in European equities & oil futures cap gains.

• Futures +10 at 98.26. Thursday’s range presents initial support & resistance (97.63/98.53).
• Cash gilt yields 0.5-2.0bp lower.
• Any pressure from Tsys/heightened odds of a second Presidential term for Trump quickly countered at the open.
• Dovish BoE MPC dissenter Dhingra has reiterated her views re: the need for rate cuts, which, when coupled with steepening U.S. Tsy curve, resulted in bull steepening for gilts.
• SONIA futures little changed to +4.0.
• Little net movement in BoE-dated OIS, showing 11.5bp of cuts for Aug & 49bp of easing through year end.
• GBP800mn of short-dated gilt sales from the BoE’s APF are due this afternoon.
• We will release our preview of this week’s UK CPI & labour market data tomorrow.

EQUITIES: Friday's Gains Reinforce Bullish Theme for Eurostoxx 50 Futures

A bull cycle in Eurostoxx 50 futures remains intact and Friday’s gains reinforce the current condition. 5039.84, 61.8% of the May 16 - Jun 14 sell-off, has been cleared. This has resulted in a print above 5082.32, the 76.4% retracement. A clear break of it would be a positive development and suggest scope for an extension of the bull cycle that started Jun 14. This would open 5132.00, Jun 6 high. Initial support is 4997.26, the 50-day EMA. The trend condition in S&P E-Minis is bullish and the contract traded to a fresh trend high once again last week. The continuation higher confirms a resumption of the uptrend and maintains the bullish sequence of higher highs and higher lows. Moving average studies are in a clear bull-mode set-up too and this continues to highlight positive market sentiment. Sights are on the 5713.31, a Fibonacci projection. Firm support is at 5569.65, the 20-day EMA.

• In China the SHANGHAI closed higher by 2.716 pts or +0.09% at 2974.011 and the HANG SENG ended 277.44 pts lower or -1.52% at 18015.94.
• Across Europe, Germany's DAX trades lower by 41.73 pts or -0.22% at 18709.66, FTSE 100 lower by 13.78 pts or -0.17% at 8239.52, CAC 40 down 37.76 pts or -0.49% at 7686.03 and Euro Stoxx 50 down 18.2 pts or -0.36% at 5024.77.
• Dow Jones mini up 163 pts or +0.4% at 40465, S&P 500 mini up 23 pts or +0.41% at 5688, NASDAQ mini up 102.75 pts or +0.5% at 20627.75.

Time: 09:45 BST

COMMODITIES: Gold Remains Constructive, Trades Close to Last Week's Highs

WTI futures remain above last week’s low. The recent bear leg appears to have been a correction. Recent cycle highs reinforced bullish conditions, signalling scope for a continuation of the bull cycle near-term. Moving average studies are in a bull-mode set-up too, highlighting a rising trend. Sights are on $85.27, the Apr 12 high and a bull trigger. Initial firm support to watch is $80.00, the 50-day EMA. Gold remains constructive and last Thursday's rally reinforces short-term bullish conditions. Recent gains resulted in a breach of $2387.8, the Jun 7 high. This undermines a recent bearish theme and a clear break represents a bullish development that opens the key resistance at $2450.1, the May 20 high. Initial support to watch lies at the 50-day EMA, at 2335.9. A clear break of this average would alter the picture and expose $2277.4, May 3 low.

• WTI Crude up $0.11 or +0.13% at $82.27
• Natural Gas down $0.06 or -2.45% at $2.272
• Gold spot down $0.59 or -0.02% at $2410.36
• Copper down $2.7 or -0.59% at $456.85
• Silver down $0.08 or -0.27% at $30.695
• Platinum down $5.1 or -0.51% at $998.52

Time: 09:45 BST

Date	GMT/Local	Impact	Country	Event
15/07/2024	0900/1100	**	EU	Industrial Production
15/07/2024	1230/0830	**	CA	Monthly Survey of Manufacturing
15/07/2024	1230/0830	**	CA	Wholesale Trade
15/07/2024	1230/0830	**	US	Empire State Manufacturing Survey
15/07/2024	1430/1030	**	CA	BOC Business Outlook Survey
15/07/2024	1435/1035		US	San Francisco Fed's Mary Daly
15/07/2024	1530/1130	*	US	US Treasury Auction Result for 13 Week Bill
15/07/2024	1530/1130	*	US	US Treasury Auction Result for 26 Week Bill
15/07/2024	1630/1230		US	Fed Chair Jerome Powell
16/07/2024	0700/0900		EU	ECB's De Guindos in ECONFIN meeting
16/07/2024	0800/1000	**	EU	ECB Bank Lending Survey
16/07/2024	0800/1000	**	IT	Italy Final HICP
16/07/2024	0900/1100	***	DE	ZEW Current Conditions Index
16/07/2024	0900/1100	***	DE	ZEW Current Expectations Index
16/07/2024	0900/1100	*	EU	Trade Balance
16/07/2024	0900/1000	**	GB	Gilt Outright Auction Result
16/07/2024	1215/0815	**	CA	CMHC Housing Starts
16/07/2024	1230/0830	**	US	Import/Export Price Index
16/07/2024	1230/0830	***	CA	CPI
16/07/2024	1230/0830	***	US	Retail Sales
16/07/2024	1255/0855	**	US	Redbook Retail Sales Index
16/07/2024	1400/1000	*	US	Business Inventories
16/07/2024	1400/1000	**	US	NAHB Home Builder Index
16/07/2024	1530/1130	*	US	US Treasury Auction Result for Cash Management Bill
16/07/2024	1845/1445		US	Fed Governor Adriana Kugler
17/07/2024	2245/1045	***	NZ	CPI inflation quarterly