EU PMI data shows optimism about growth as economies gradually reopen
Remarks / Observations
– Euro zone PMI services continue their trend of improvement with the gradual reopening of regional economies (beats: euro zone, United Kingdom, Spain, Italy; online: France, Germany).
– Fears have eased after recent verbal interventions by the FED and the ECB.
– China Mai Caixin PMI Services: 55.1 V 56.2E (13th consecutive extension).
– Final PMI services for Australia in May: 58.0 v 58.2 prelim (confirms the 9th month of expansion).
– Japan final PMI services in May: 46.5 vs. 45.7 prelim (confirms the 16th month of contraction).
– Japanese Prime Minister Suga has said he will likely call an early election in the fall after the Olympics and may come up with a new stimulus package ahead of the election.
– ECB chief Lagarde stressed that strong political support would bridge the pandemic and indeed the economic recovery.
– Chancellor of the Exchequer Sunak (Fin Min) noted that US proposals on global tax reform appeared to meet UK goals.
– Australia’s post-Brexit trade deal will be signed “in a few weeks” (* Note: this would be the UK’s first full-fledged trade deal after Brexit).
Middle East :
– Israeli opposition leader Yair Lapid informed the president that he had formed a coalition with Naftali Bennett for a government. The move would overthrow Prime Minister Netanyahu after 12 years in power.
– US President Biden is expected to amend the blacklist of Chinese military-related companies soon.
– Fed Beige Book noted that overall price pressures have increased further since the last report. Wage growth was subdued while factory output increased further.
– The Fed has said it will start liquidating corporate bond holdings acquired through its emergency lending facility.
– The White House noted that President Biden’s interview with GOP infrastructure contact Senator Capito was “constructive and frank.” They will “reconnect on Friday”.
– US Sen Capito: Encouraged by continued infrastructure talks, she will meet further with Pres Biden on Friday.
– Weekly API crude oil inventories: -5.4 M against -0.4 M previously.
Speakers / Fixed income / FX / Commodities / Erratum
Indices [Stoxx600 -0.13% at 450.76, FTSE -0.66% at 7,061.32, DAX -0.13% at 15,581.80, CAC-40 -0.11% at 6,514.06, IBEX-35 -0.12% at 9,170.00, FTSE MIB -0.05% at 25,366.56, SMI +0.04% at 11,475.05, S&P 500 Futures -0.12%].
Market focal points / Key themes:
European indices opened slightly lower overall and remained in the red as the session progressed despite strong publications from PMI Services; underperforming sectors led by industry and telecoms; Rémy Cointreau in Paris down 2% on the publication of final results and the announcement of the takeover; British telecommunications giant BT Group also fell 3% after a downgrade by analysts. AMC shares listed in Germany are trading up to 20% higher as the Reddit saga continues. expected profits in the next US session include another Reddit Express stock with CrowdStrike, DocuSign and lululemon after the close.
– Consumer discretionary: AMC Entertainment Holdings [AH9.DE] + 12% (momentum), Remy Cointreau [RCO.FR] -2% (profit; redemption).
– Industrial: Vallourec [VK.FR] -5% (capital increase).
– Public services: Groupe Pennon [PNN.UK] + 2% (result; acquisition).
– Telecom: BT Group [BT.A.UK] -3% (analyst share).
– IMF raises Italy’s GDP growth forecast for 2021 from 4.25% to 4.3% and saw 2022 GDP growth at 4.0%.
– EU will sanction Belarus this week about the recent hijacking of the Ryanair flight and the arrest of a journalist.
– Germany Econ Min Altmaier expressed support for extending pandemic state aid to businesses until the end of 2021.
– Central Bank of Russia (CBR) Gov Nabiullina said much of the increase in inflation was due to lasting factors. Higher inflation expectations created additional risks. No need to relaunch additional demand at this time.
– Russia Dep PM Novak said OPEC + must take into account all factors to make balanced decisions. Iranian oil could be available on the market this summer, but that was not guaranteed. The oil market will return to its pre-crisis level in 2022.
– Indonesia Central Bank Dep Gov Waluyo reiterated the position that BI monetary policy will remain accommodative.
– Gao Feng, spokesperson for the Chinese Ministry of Commerce (MOFCOM) said it has started normal communications with the United States and will work together to resolve some specific issues for producers and consumers at the next step.
– Wang Wenbin, Chinese Foreign Ministry spokesperson reiterated the view that the US blacklist of Chinese companies undermines normal market rules.
Currency / Fixed Income
– The USD was slightly firmer ahead of some key US economic data that could set the tone for FOMC meetings later this month. ADP and claims data will be released later today and non-farm wages will be released on Friday.
– EUR / USD stood below the 1.22 level despite better data from the EU. Dealers noted that fears of a decline in the PEPP eased after verbal interventions by many ECB officials this week. The market looks to the ECB meeting next week and expects a solid debate on the future pace of the pandemic emergency purchase program.
– GBP came out of one-week lows following better PMI Services data to test 1.4180.
– (UK) Russia May PMI Services: 57.5 v 55.1e (5th consecutive extension); Composite PMI: 51.2 vs. 54.0 previously.
– (United Kingdom) Changes in official reserves for May: 1.5 B $ against 1.6 B $ previously.
– (SE) Sweden Apr. Services PMI: 71.7 v 66.6 (12th month of expansion).
– (TR) Turkey May CPI M / M: 0.9% vs. 1.3% e; Y / Y: 16.6% v% v 17.3% e; Core CPI Y / Y Index: 17.0% vs. 18.2% e.
– (TR) Turkey May PPI M / M: 3.9% v 3.3% e; Y / Y: 38.3% against 37.0% e.
– (ES) Spain Mai Services PMI: 59.4 vs. 57.7th (2nd month of expansion and highest reading since August 2015); Composite PMI: 59.2 against 58.0e.
– (ZA) South Africa May PMI (total economy): 53.2 against 52.5th (8th consecutive expansion).
– (HE) Italy May Services PMI: 53.1 vs. 52.3e(1st extension in 10 months); Composite PMI: 55.7v 56.1e.
– (FR) Final PMI services in France in May: 56.6 vs. 56.6e(confirmed 2nd right expansion); Composite PMI: 57.0 versus 57.0e.
– (DE) Final PMI services for Germany in May: 52.8 vs. 52.8e(return to expansion confirmed and highest reading since July); Composite PMI: 56.2 against 56.2e.
– (EU) Eurozone final PMI services in May: 55.2 v 55.1e (confirmed 2nd right expansion); Composite PMI: 57.1 against 56.9e.
– (UK) May Final PMI Services: 62.9 v 61.8e(confirms 3rd month of expansion and highest reading since May 1997); Composite PMI: 62.9 against 62.0e.
Issue of fixed income securities
– (ES) Spain Debt Agency (Tesoro) sold a total of 4.963 billion euros against an indicated range of 4.5 to 5.5 billion euros for the 2026, 2027 and 2040 bonds.
– Sold € 1.826bn of SPGB bonds at 0.0% Jan 2026; Average return: -0.247% against -0.240% previously; bid-to-cover: 1.60xv 2.08x before (May 6, 2021).
– Sold € 1.550bn in 1.45% Oct 2027 SPGB; Average return: -0.025% against +1.525% before; Bid-to-cover: 1.76xv 1.76x before (January 4, 2018).
– Sold € 1.587bn of 1.20% Oct 2040 SPGB bonds; Average return: 1.144% vs. 0.619% previously, hedge offer: 1.68 x vs. 1.82 x previously.
– (ES) Spanish Debt Agency (Tesoro) sold € M vs € 250-750 M range indicated at 0.65% Nov 2027 Inflation Linked Bonds (SPGBei); Real return:% v -1.135% before; Bid-to-cover: xv 1.92x front.
– (FR) The French Debt Agency (AFT) sold a total of € 10.99bn against an indicated range of € 10.0bn to 11.0bn in 2031, 2044, 2055 and 2072 bonds.
– Sold 6.27 billion euros in 0.0% oats Nov. 2031; Average return: 0.16% against 0.13% previously; Bid-to-cover: 1.98xv 1.73x before (May 6, 2021).
– Sold € 1.803 billion in oats 0.50% June 2044; Average yield: 0.74%; bid-to-cover: 1.79x (no history).
– Sold 1.612 billion euros in oats at 4.00% in April 2055; Average return: 0.95% against 0.32% previously; Bid-to-cover: 2.07xv 1.77x before (November 5, 2020).
– Sold 1.308 billion euros in oats 0.50% June 2072; Average yield: 1.11%; bid-to-cover: 1.88x (no history).
– (EU) Daily liquidity statistics from the ECB.
– 05:30 (HU) The Hungarian Debt Agency (AKK) sells bonds.
– 5:30 a.m. (IN) India will sell INR320B Combined Bonds in 2026, 2033, 2035 and 2050.
– 05:50 (HU) One week deposit rate offer from the Central Bank of Hungary.
– 6:45 am (US) Correction of the daily Libor.
– 07h00 (MX) Mexico May Consumer confidence: no est v 42.4 before.
– 07:00 (ZA) South Africa Apr Electricity production Y / Y: No is v 1.8% before; Y / Y electricity consumption: Not estimated at 3.0% before.
– 7:30 am (United States) Job cuts at Challenger in May: no version prior to -22.9K; Y / Y: No is v -96.6% before.
– 08h00 (UK) Daily Baltic Dry Bulk Index.
– 8:15 am (United States) ADP job change in May: + 650Ke against + 742K before.
– 8:30 am (United States) Q1 Final Nonfarm Productivity: 5.5% ev 5.4% preliminary; Unit labor costs: -0.4% ev -0.3% prelim.
– 8:30 am (US) Initial jobless claims: 388Ke v 406K before; Continuing complaints: 3.62MB vs. 3.642M before.
– 09h00 (UK) Russia Gold and forex reserve with May 28: no estimate against 600.9 billion dollars previously.
– 09:45 (US) Mai Final Markit PMI Services: 70.1ev 70.1 prelim; Composite PMI: No is v 68.1 prelim.
– 9.45 a.m. (NL) Elderson of the ECB (Netherlands, SSM).
– 9.45 a.m. (UK) BOE purchases £ 1.147 billion as part of the Gilt APF (7-20 year) purchase transaction.
– 10:00 (US) May ISM Services Index: 63.0ev 62.7 before.
– 10:30 am (US) Weekly EIA natural gas inventories.
– 11:00 am (US) Weekly DOE oil inventories.
– 11:30 am (US) The Treasury will sell 4 and 8 week bills.
– 12:00 (CA) Canada to sell 5 year tickets.
– 12:00 (UK) Speech by BOE Gov Bailey.
– 12:30 p.m. (US) Fed’s Bostic.
– 1:50 p.m. (US) Harker from the Fed.
– 3:05 p.m. (US) Fed feuds at SIFMA conference.
– 6:45 p.m. (NZ) New Zealand T1 volume of all T / T buildings: + 3.0% ev -1.5% before.
– 19:30 (JP) Japan Apr Y / Y household expenditure: 8.7% ev 6.2% before.
– 9:00 p.m. (PH) Philippines May CPI M / M: Not estimated against 1.4% before; Y / Y: 4.5% ev 4.5% before.
– 11:30 p.m. (TH) Thailand May CPI H / M: -0.8% ev + 1.4% before; Y / Y: 3.4% ev 3.4% before; CPI Core Y / Y: 0.5% ev 0.3% before.