Written Commentary
Busier day all round, though national and geopolitics continue to cast a long shadow; German ZEW, US Retail Sales, Import Prices and NAHB survey, and Canada CPI the focal points, Fed’s Kugler to speak, financials dominate earnings, German 5-yr & UK 19-yr
Germany ZEW: upside risk from DAX performance for Expectations, downside risks to Current Situation from politics, desultory economic data
US Retail Sales: auto sales and gasoline prices to drag headline lower, core measures seen eking out small increase
US Import Prices set to fall on energy prices, core seen flat
US NAHB Housing Index seen unchanged, recent fall in mortgage rates unlikely to be captured this month
Yesterday’s CGTN Europe interview on China Q2 GDP and outlook
EVENTS PREVIEW
It’s a busier day for data, events and earnings, even if the overarching political themes of NATO/SCO tensions, the US presidential election, France’s election impasse and China’s stuttering economy and what will emerge from the Third Plenum this week to a large extent reduce the statistical run to little more than passing trivia. Be that as it may, German’s ZEW survey, Canadian CPI, and above all US Retail Sales, Import Prices and the NAHB Housing Market Index may offer some passing food for thought, while the Eurozone also looks to the ECB Q2 Bank Lending survey and the EU EconFIn meeting, with Fed’s Kugler the sole central bank speaker talking about the economy and the policy outlook. US Q2 earnings highlights for the day include: Bank of America, Charles Schwab, Morgan Stanley, State Street and UnitedHealth, while Rio Tinto has gotten this week’s run of Q2 production reports from major mining companies under way. On the government bond auction schedule there are UK 19-yr and Germany 5-yr.
** Germany – July ZEW Survey **
– Given the surge in the DAX over the past month, there are upside risks to the anticipated fall in ZEW Expectations to 41.0 from June’s 47.5, with the consensus clearly implying that political uncertainty will act as a more significant offset to sentiment. The latter will certainly weigh on the Current Situation, which given the desultory run of manufacturing and trade data last week may fall more than the anticipated 1 pt dip to -74.8.
** U.S.A. – June Retail Sales, Import Prices **
– Retail Sales are forecast to fall -0.2% m/m headline, with falling gasoline prices and softer Auto Sales (in part due to a cyber-attack on dealerships) a drag, with core ex-Autos & Gas seen up 0.3% m/m and ‘Control Group’ up 0.2%, the latter following May’s -0.4%, and pointing to a sluggish Personal Consumption contribution to Q2 GDP. Import and Export Prices are both expected to edge lower, underlining that Friday’s PPI was quite heavily distorted by Trade Services, though headline Import Prices may prove to be higher than expected due to the rise in oil prices. The NAHB Housing Market Index is expected to be unchanged at 43, with affordability issues likely to weigh, and any benefit from the recent fall in long-dated UST yields bearing down on mortgage rates unlikely to be felt until next month’s survey.
** Canada – June CPI **
– After a sharp upside outlier in May (0.6% m/m 2.9% y/y), which broke a run of better than expected outturns, Canada’s June CPI is expected to moderate to just 0.1% m/m that would edge the y/y rate down 0.1 ppt to 2.8%, with similar declines expected for both core CPI measures to 2.7% and 2.8% y/y. As with the US, lower gasoline prices should weigh on headline, but the question is whether housing related measures ease in any way. Assuming forecasts are correct, this should keep the BoC on course for a further rate cut.
To view the full report and to sign up for daily market commentary please email admisi@admisi.com
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
