Riksbank holds rates steady but wording suggests more cuts on the way

EU Mid-Market Update: Riksbank holds rates steady but wording suggests more cuts on the way; USD/JPY muted above 160; Awaiting key US data and 1st presidential TV debate.

Notes/observations

- Swedish krona (SEK) moved lower after a dovish hold from Riksbank left the policy rate unchanged at 3.75%, as expected, but changed wording in statement from ‘expect to cut rates twice in H2’ to ‘expect to cut rates two or three times in H2’. Philippines also left rates unchanged.

- Overall, stocks are mixed after Micron/H&M results and FX markets muted as key swath of economic data is expected over next 24 hours, including US Q1 GDP, Jobless Claims, Durable Goods, Trade Balance, Wholesale Inventories, Personal Income/Spending and finally Fed’s favorite gauge, the PCE deflator on Fri. UK assets await Q1 GDP reading tomorrow to provide some guidance for BOE’s first rate cut.

- One of the biggest retailers worldwide H&M said its June sales expected down 6% y/y (v +3% in Q2) citing unstable weather in many of the H&M group's large markets in early June, while German multinational engineering firm Manz cut outlook noting reluctance of European customers to make new investments, particularly in the area of battery production, has increased significantly in recent weeks; Next on the radar for broad macroeconomic and consumer sentiment color would be Nike results tonight.

- For politics, UK election in is exactly 1 week, on July 4th, while French voting begins this Sunday and finishes next week.

- Asia closed lower with Hang Seng underperforming -2.1 %. EU indices are mixed -0.2% to +0.1%. US futures are -0.3%. Gold +0.5%, DXY -0.1%; Commodity: Brent +0.6%, WTI +0.6%; Crypto: BTC -1.0%, ETH -0.2%.

Asia

- Philippines Central Bank (BSP) left Overnight Borrowing Rate unchanged at 6.50%; As expected; Notes August cut "still possible and somewhat more likely".

- Japan May Retail Sales M/M: 1.7% v 0.8%e; Y/Y: 3.0% v 2.0%e.

-Reportedly Japan plans to help Philippines build out its 5G network to counter Chinese tech - Nikkei.

- Japan said to consider easing rules related to corporate debt restructurings - Nikkei.

- US, Japan and South Korea agree on closer ties on key tech, such as resilient chip supplies; To cooperate on export controls and supply chains.

- Japan Cabinet Office (Govt) June Monthly Report: Maintains overall economic assessment; Warns of risks of elevated interest rates in the West affecting weak JPY (yen).

- Mizuho chief desk strategist Omori: Japan needs ‘big surprise’ to curb weak yen.

- Fitch on Australia, mortgage arrears are at the highest level in five years.

- Some Chinese property developers may be dropped from Stock Connect market access scheme - SCMP.

- China said to conduct final review on duties on EU toluidine.

- China Adviser Peng Sen said government should pursue market reforms at 3rd plenum in Ju.

- China Commerce Ministry (MOFCOM): Reiterates objection to EU regulations on subsidies.

Europe

- Sweden Central Bank (Riksbank) left Policy Rate unchanged at 3.75%, as expected; Increases number of potential rate cuts in H2 2024 from "two" to "two or three".

- Former French Pres and left-wing candidate Hollande: Ready to build a new coalition that could govern if elections deliver a hung parliament.

- France Fin Min Le Maire: France collected higher-than-expected tax earnings; Our tax revenues today are good.

- ECB's Lane (Ireland, chief economist): ECB will be agile on rates and keep an open mind.

- ECB's Kazimir (Slovakia): Expect quiet summer on ECB rates; Think we can expect one more rate cut this year.

Americas

- Fed annual bank stress test showed all 31 banks could withstand severe recession.

- Brazil Treasury Sec Ceron: Weakening of Brazilian real, in a way, even helps with collection in near term; Maintains commitment to 2024 fiscal target.

- Mexico Pres-elect Sheinbaum: 2026 review of USMCA trade agreement will be minor; Minimum wage should reach level of two 'basic' food baskets.

Global conflict/tensions

- US aid of $6.5B since Oct 7th reportedly discussed during visit by Israel Defense Min Gallant - WAPO.

Energy

- Treasury Dept: Authorizes some maritime transport transactions linked to Sakhalin-2 energy project and imports into Japan through June 28, 2025 - press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.09% at 514.36, FTSE -0.17% at 8,211.03, DAX +0.09% at 18,180.25, CAC-40 -0.12% at 7,599.66, IBEX-35 -0.44% at 10,982.35, FTSE MIB -0.28% at 33,448.00, SMI +0.13% at 12,027.10, S&P 500 Futures -0.22%].

Market Focal Points/Key Themes: European indices open mixed; among sectors trending higher are real estate and industrials; sectors inclined lower include consumer materials; on corporate front, H&M trading sharply lower after reporting results and providing weak June sales color; European chip names mostly trade lower after Micron results citing reluctance of European customers to make new investments, particularly in the area of battery production, has increased significantly in recent weeks; Manz shares in Frankfurt also trade lower over 5% after outlook cut; Nokia to divest ASN unit to French state; International Paper’s acquisition of DS Smith clears regulatory hurdle; earnings expected in the upcoming US session include Walgreens Boots Alliance and Nike.

Equities

- Consumer discretionary: H&M [HMB.SE] -12.5% (earnings; June sales color), Watches of Switzerland [WOSG.UK] +9.5% (earnings; affirms outlook), Kering [KER.FR] +5.5% (analyst action), Bunzl [BNZL.UK] +2.0% (raises outlook).

- Healthcare: GSK [GSK.UK] -4.5% (Advisory Committee vote), Novo Nordisk [NOVOB.DK] -0.5% (hiring freeze in some units).

- Industrials: Manz Automation [M5Z.DE] -7.5% (slashes outlook citing reluctance of European customers to make new investments, particularly in the area of battery production, has increased significantly in recent weeks), DS Smith [SMDS.UK] +5.5% (Suzano (Brazil) says will not pursue transaction with International Paper)

-Information Technology: OVHcloud [OVH.FR] +12.0% (earnings), Infineon [IFX.DE] -0.5% (Micron earnings).

Speakers

- Sweden Central Bank (Riksbank) Gov Thedeen: Inflation prospects largely unchanged - post-rate decision press conf.

- ECB's Kazimir (Slovakia): Think we can expect one more rate cut this year; Expect quiet summer on ECB rates.

- ECB's Lane (Ireland, chief economist): ECB will be agile on rates and keep an open mind.

- Philippines Central Bank (BSP) Gov Remolona: Likely to cut rates by 25bps at a time - post rate decision comments.

- Japan Fin Min Suzuki: Will not comment on FX levels; Deeply concerned about FX impact on economy.

- Japan Chief Cabinet Sec Hayashi: Reiterates to refrain from commenting about FX intervention.

Economic data

- (NL) Netherlands Jun Producer Confidence Index: -2.4 v -2.8 prior.

- (FI) Finland Jun Consumer Confidence: -7.6 v -10.3 prior; Business Confidence: -15 v -13 prior.

-(FI) Finland May House Price Index M/M: +1.0% v -0.4% prior; Y/Y: -2.8% v -4.1% prior.

-(NO) Norway May Trend Unemployment Rate: 4.1% v 4.1% prior.

-(DK) Denmark May Retail Sales M/M: +0.5% v -0.5% prior; Y/Y: 2.9% v 0.4% prior.

-(TR) Turkey Jun Economic Confidence: 95.8 v 98.2 prior.

-(SE) Sweden Jun Consumer Confidence: 93.3 v 91.3 prior; Manufacturing Confidence: 99.2 v 98.6 prior; Economic Tendency Survey: 96.3 v 94.1 prior.

-(ES) Spain May Adjusted Retail Sales Y/Y: 0.2% v 0.7%e; Retail Sales (unadj) Y/Y: 0.4% v 2.8% prior.

-(PH) Philippines May Budget Balance (PHP): -174.9B v -195.9B in Mar.

-(EU) Euro Zone May M3 Money Supply Y/Y: 1.6% v 1.5%e.

-(ZA) South Africa Q2 BER Consumer Confidence: -12 v -15 prior.

-(TW) Taiwan May Monitoring Leading Indicator: 35 v 35 prior.

-(IT) Italy Jun Consumer Confidence: 98.3 v 97.0e; Manufacturing Confidence: 86.8 v 88.6e; Economic Sentiment: 94.5 v 95.1 prior.

-(PT) Portugal Jun Consumer Confidence: -17.2 v -18.5 prior; Economic Climate Indicator: 1.9 v 1.9 prior.

-(IS) Iceland Jun CPI M/M: 0.5% v 0.6% prior; Y/Y: 5.8% v 6.2% prior.

-(EU) Euro Zone Jun Economic Confidence: 95.9 v 96.1e; Industrial Confidence: -10.1 v -9.6e; Services Confidence: 6.5 v 6.3e; Consumer Confidence (final): -14.0 v -14.0 advance.

-(IT) Italy May PPI M/M: +0.3% v -1.4% prior; Y/Y: -4.9% v -8.0% prior.

Fixed income issuance

-New Zealand sells total NZ$500M vs. NZ$500M indicated in 2030, 2033 and 2037 bonds.

-Denmark sells total DKK300M in 3-month and 6-month bills.

-Italy Debt Agency (Tesoro) sells €1.75B vs. €1.25-1.75B indicated range in Apr 2032 bonds.

-Italy Debt Agency (Tesoro) sells total €7.0B vs. €6.0-7.0B indicated range in 5-year and 10-year BTP bonds.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 05:30 (ZA) South Africa May PPI M/M: 0.5%e v 0.5% prior; Y/Y: 4.9%e v 5.1% prior.

- 05:30 (UK) BOE releases financial stability report and FPC summary.

- 05:30 (UK) BOE financial stability report.

- 06:00 (AU) Reserve Bank of Australia (RBA) Hauser.

-06:00 (IL) Israel Apr Manufacturing Production M/M: No est v -0.3% prior.

- 07:00 (CA) Canada Jun CFIB Business Barometer: No est v 56.4 prior.

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave the One-Week Repo Rate unchanged at 50.00%.

- 07:00 (BR) Brazil Jun FGV Inflation IGPM M/M: 0.9%e v 0.9% prior; Y/Y: +2.5%e v -0.3% prior.

- 07:00 (BR) Brazil Central Bank Quarterly Inflation Report.

- 08:00 (MX) Mexico May Unemployment Rate: 2.7%e v 2.6% prior.

- 08:00 (MX) Mexico May Trade Balance: -$2.1Be v -$3.7B prior.

- 08:15 (EU) ECB’s Elderson.

- 08:30 (US) Q1 Final GDP Annualized Q/Q: 1.4%e v 1.3% prelim; Personal Consumption: 2.0%e v 2.0% prelim.

- 08:30 (US) Q1 Final GDP Price Index: 3.0%e v 3.0% prelim; Core PCE Q/Q: 3.6%e v 3.6% prelim.

- 08:30 (US) Initial Jobless Claims: 235Ke v 238K prior; Continuing Claims: 1.828Me v 1.828M prior.

- 08:30 (US) May Preliminary Durable Goods Orders: -0.5%e v 0.6% prior; Durables (ex-transportation): 0.2%e v 0.4% prior; Capital Goods Orders (non-defense/exaircraft): 0.1%e v 0.2% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.2%e v 0.4% prior.

- 08:30 (US) May Advance Goods Trade Balance: -$96.0Be v -$99.4B prior.

- 08:30 (US) May Preliminary Wholesale Inventories M/M: 0.1%e v 0.1% prior; Retail Inventories M/M: 0.4%e v 0.7% prior.

- 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to cut 2-Week Repurchase Rate by 25bps to 5.00%.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Jun 21st: No est v $596.2B prior.

- 10:00 (US) May Pending Home Sales M/M: +0.6%e v -7.7% prior; Y/Y: No est v -0.8% prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 10:30 (AU) RBA's Dep Gov Hauser.

- 11:00 (US) Jun Kansas City Fed Manufacturing Activity: -4e v -2 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 11.00%.

- 19:00 (KR) South Korea May Industrial Production M/M: 0.1%e v 2.2% prior; Y/Y: 3.1%e v 6.1% prior; Cyclical Leading Index Change: No est v 0.1% prior.

-19:01 (IE) Ireland Jun Consumer Confidence: No est v 65.7 prior.

- 19:01 (UK) Jun Lloyds Business Barometer: 45e v 50 prior.

- 19:30 (JP) Japan May Jobless Rate: 2.6%e v 2.6% prior; Job-To-Applicant Ratio: 1.26e v 1.26 prior.

- 19:30 (JP) Japan Jun Tokyo CPI Y/Y: 2.3%e v 2.2% prior; CPI (ex-fresh food) Y/Y: 2.0%e v 1.9% prior; CPI (ex-fresh food and energy) Y/Y: 1.7%e v 1.7% prior.

- 19:50 (JP) Japan May Preliminary Industrial Production M/M: 2.0%e v -0.9% prior; Y/Y: 0.0%e v -1.8% prior.

- 21:30 (AU) Australia May Private Sector Credit M/M: 0.4%e v 0.5% prior; Y/Y: No est v 5.2% prior.

- 22:00 (SG) Singapore May M2 Money Supply Y/Y: No est v 3.1% prior; M1 Money Supply Y/Y: No est v 7.6%.

- 23:30 (JP) Japan to Sell 3-Month Bills.