Boeing confirms to plead guilty

EU mid-market update: French parliament described as hung after unexpected left alliance win. but no absolute majority; Speculations still grow around Pres Biden bid despite the interview; Boeing confirms to plead guilty; Beryl reached Texas as hurricane.

Notes/observations

- 2nd round of French snap parliamentary elections brought one of the least probable outcome: left-wing New Popular Front alliance won, but with no absolute majority, while Le Pen’s right-wing National Rally party seen to finish only third, after Macron's centrist Renaissance party; Macron's PM Attal already announced to resign after one of far-left leaders and former presidential candidate Melenchon said left-wing New Popular Front would apply all of its program (it promised to reverse raising pension age and raise public sector wages); Melenchon also refused any deals with Pres Macron; traders still assess whether high-spending pledges made by far-left would be turned into reality since they did not get absolute majority and thus, France could be entering the period of hung parliament; Euro currently erasing earlier losses against US dollar.

- Remaining on political theme, Pres Biden gave interview and once again “completely ruled out dropping out of the race”; Meanwhile, at least four "more senior" US House Democrats reportedly tell House Minority leader Jeffries (D-NY) that they are privately calling for Pres Biden to step aside; Surprisingly, Bloomberg News/Morning Consult poll over the weekend indicated former Pres Trump leads Pres Biden by only 2ppts (smallest gap since Oct 2023) in key battleground states; It is the 1st comprehensive poll in swing states since debates on June 27th.

- On corporate front, Boeing confirmed to plead guilty to criminal conspiracy to defraud the US over two fatal 737 MAX crashes 5 years ago; The plea would brand the planemaker a 'convicted felon'; Boeing said to pay ~$243M fine, while DOJ will appoint a third-party monitor to oversee the firm's compliance; In other news, Paramount unanimously approved a takeover offer by Skydance Media in $8B deal.

-On energy front, Beryl regained strength to become a hurricane again and currently nearing the middle Texas Coast; Kinder Morgan shut West Clear Lake, Dayton and Texas City natural gas storage and processing facilities in advance.

- Looking further ahead, Q2 earnings season starts by end of this week; Goldman Sachs analysts see consensus for Q2 earnings beats set a higher bar than in previous quarters; Consensus expects +9% y/y EPS growth in Q2, which would be the strongest quarterly growth since Q4 2021.

- Asia closed lower with Hang Seng underperforming at -1.6%. EU indices are +0.1-1.1%. US futures are -0.1-0.0%. Gold -0.6%, DXY 0.0%; Commodity: Brent -1.1%, WTI -1.1%; Crypto: BTC +2.0%, ETH +3.0%.

Asia

-China halted gold buying for 2nd straight month.

-China Jun final Retail Passenger Vehicle Sales Y/Y: -6.7% v -8.0% prelim; NEV sales -28.6% y/y, +6.4% m/m - PCA.

- China could surpass both US and EU on spending on magnetic fusion within three years - WSJ.

-Bank of Japan (BOJ) Quarterly Regional Economic Report (Sakura): Raises assessment of 2 of 9 regions; Downgrades assessment of 2 of 9 regions; Keeps assessment of 5 of 9 regions unchanged.

-BOJ Osaka branch manager: Recent pick-up in global IT cycle is positive for manufacturers in Kinki Western Japan region.

Mid-East

- Reformist candidate Masoud Pezeshkian wins the Iran Presidential election runoff, beating the hard line conservative candidate [**Note: Pezeshkian wants to restart talks with the US over the landmark nuclear deal].

-Axios' reporter Barak Ravid: The head of the Mossad recently returned from Doha from an initial meeting with the mediators. It was determined that next week a team will leave to continue the negotiations. It will be emphasized that there are still gaps between Israel and Gaza.

Ukraine conflict

-Russia missile attack reportedly killed 20 people in Ukraine today - press [**Note: NATO summit to be held in Washington this week].

-US Pres Biden plans a Thursday, July 11th's afternoon news conference, as NATO leaders wrap up a three-day summit in Washington.

-Hungary PM Orban to China Pres Xi: We greatly appreciate your Ukraine peace initiative - state news agency.

Europe

-(EU) Eurozone July sentix investor confidence: -7.3 V -0.5E (back into negative territory; lowest since March).

- French PM Attal offers resignation after Macron party's election defeat and possibility of a hung parliament - press.

- One of far-left leaders and former presidential candidate Melenchon: Left-wing New Popular Front will apply all of its program; Refuses any deals with Pres Macron; Macron's PM Attal must go; Macron's defeat is clearly confirmed; Election score is result of magnificent mobilization effort.

-New UK PM Starmer named new Cabinet and chaired its first meeting; UK newly appointed Chancellor of the Exchequer (Fin Min) Reeves set to deliver speech today around 06:30ET (10:30 GMT).

-Le Pen's National Party confirms to join new European Parliamentary "Patriots" alliance with Hungary's PM Orban group - press.

-German Chemical Industry Association (VCI): Domestic H1 chemical industry sales -1% y/y; Affirms FY24 outlook.

-Poland Central Bank (NBP) Wnorowski: Sees conditions for mulling Polish rate cut in H2 2025.

- Czech Central Bank (CNB) June Minutes: Vote was not unanimous (5-2) to cut by 50bps (dissenters sought 25bps cut).

Americas

-At least four "more senior" US House Democrats reportedly tell House Minority leader Jeffries (D-NY) that they are privately calling for Pres Biden to step aside - US press, citing sources.

-Trump campaign said to be eyeing VP announcement by July 15th and internal talks have focused heavily on Sens. J.D. Vance (R-Ohio) and Marco Rubio (R-Fla.) - WaPo.

-Reportedly backing of Pres Biden among Hill Democrats, especially inside the House Democratic Caucus, is slipping; There’s been "some extravagant" speculation that Schumer and Jeffries would somehow lead a high-level Democratic delegation to the White House and tell Biden he needs to step aside in favor of VP Harris, but that is all wildly premature - Punchbowl.

-Senate Democrats reportedly will Not meet Monday, July 8th to discuss their support for Pres Biden continuing his re-election bid, despite an effort by Sen. Mark Warner (D-Va.) to organize such a meeting - Axios, citing sources.

- Fed futures price 74% chance (v 65% w/w) for a rate cut by Sept 18th's meeting ahead of Powell's testimony and US CPI/PPI data later this week.

Energy

-NHC update on Hurricane Beryl: Min pressure: 982 mb v 992 mb d/d, Max sustained: 80 mph v 65 mph d/d; Makes landfall in Texas (as expected).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.58% at 519.60, FTSE +0.14% at 8,215.34, DAX +0.77% at 18,604.35, CAC-40 +0.81% at 7,737.88, IBEX-35 +0.64% at 11,094.47, FTSE MIB +1.10% at 34,361.00, SMI +0.17% at 12,037.84, S&P 500 Futures -0.02%].

Market focal points/key themes: European indices open generally lower, but quickly turned around to trade in the green in the early part of the session; fallout from French election in focus; sectors inclined to the upside include financials and technology; sectors dragging on indices lower energy and consumer discretionary; oil & gas subsector underperforming following a retracement in the price of Brent over the weekend; Britvic to be acquired by Carlsberg; reportedly Grifols family looking to take company private; earnings expected in the upcoming US session include The Greenbrier.

Equities

- Consumer discretionary: Britvic [BVIC.UK] +4.5% (to be acquired by Carlsberg), Carlsberg [CARLB.DK] +2.5% (acquisition; terminates share buyback), Delivery Hero [DHER.DE] -10.0% (potential fine), Ubisoft [UBI.FR] +6.0% (analyst upgrade).

- Energy: Galp Energia [GALP.PT] -1.5% (trading update).

- Financials: Societe Generale [GLE.FR] +1.0% (French election results), Plus500 [PLUS.UK] -3.0% (trading update).

- Industrials: Maersk [MAERSKB.DK] -5.0% (sees delays from extreme weather along South Africa coast).

Speakers

- (CN) Hungary PM Orban to China Pres Xi: We greatly appreciate your Ukraine peace initiative.

- (KR) South Korea Pres Yoon: South Korea's arms support for Ukraine depends on levels of military ties between Russian and North Korea - press.

- (TH) Thailand Dep Fin Min: Thailand PM to announce final digital wallet details on July 24th.

Currencies/fixed income

Economic data

-(EU) Euro Zone July Sentix Investor Confidence: -7.3 V -0.5e: -7.3 V -0.5E (back into negative territory; lowest since March).

- (SE) Sweden SEB July Swedish Housing-Price Indicator: 51.0 v 52 prior.

- (JP) Japan Jun Eco Watchers Current Survey: 47.0 v 46.1e; Outlook Survey: 47.9 v 46.5e.

- (JP) Bank of Japan (BOJ) Quarterly Regional Economic Report (Sakura): Raises assessment of 2 of 9 regions; Downgrades assessment of 2 of 9 regions; Keeps assessment of 5 of 9 regions unchanged.

- (DK) Denmark May Industrial Production M/M: -6.0% v 10.8% prior.

- (DE) Germany May trade balance: €24.9B v €20.3Be.

- (RO) Romania Q1 Final GDP (3rd reading) Q/Q: 0.7% v 0.4% advance; Y/Y: 0.1% v 0.1% advance.

- (CZ) Czech May Industrial Output Y/Y: -3.2% v -1.2%e.

- (CZ) Czech May Trade Balance (CZK): 13.6B v 28.4Be.

- (CZ) Czech Central Bank (CNB) June Minutes: Vote was not unanimous (5-2) to cut by 50bps (dissenters sought 25bps cut).

- (IS) Iceland June Preliminary Trade Balance (ISK): -39.2B v -21.7B prior.

- (SG) Singapore June Foreign Reserves: $371.7B v $370.5B prior.

- (HU) Hungary June YTD Budget Balance (HUF): -2.656T v -2.549T prior.

Fixed income issuance

- (PH) Philippines sells total PHP20.0B vs. PHP15.0B indicated in 3-month, 6-month and 12-month bills.

- (TR) Turkey sells total TRY11.55B in Bills and floating rate notes (3 tranches).

Looking ahead

-05:30 (DE) Germany to sell combined €4.0B in 3-month and 9-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel to sell bonds.

- 06:00 (TR) Turkey to sell Floating rate bonds.

- 07:00 (BR) Brazil Jun FGV Inflation IGP-DI M/M: No est v 0.9% prior; Y/Y: No est v 0.9% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (CL) Chile Jun CPI M/M: No est v 0.3% prior; Y/Y: No est v 4.1% prior.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 08:30 (CL) Chile Jun Trade Balance: No est v $1.9B prior; Jun Exports: No est v $8.1B prior; Imports: No est v $6.5B prior; Copper Exports: No est v $4.4B prior.

- 08:30 (CL) Chile Jun International Reserves: No est v $45.8B prior.

- 08:30 (CL) Chile Central Bank Traders Survey.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.50%.

- 09:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills.

- 11:00 (US) New York Fed 1-Year Inflation Expectations: No est v 3.2% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:15 (UK) Bank of England Monetary Policy Committee member Jonathan Haskel gives a speech titled "UK inflation: What's done and what's to come?" organised by the ESCoE statistics research group.

- 15:00 (US) May Consumer Credit: No est v $6.4B prior.

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (CO) Colombia Jun CPI M/M: No est v 0.4% prior; Y/Y: No est v 7.2% prior; CPI Core M/M: No est v 0.4% prior; Y/Y: No est v 7.8% prior.

- 19:01 (UK) Jun British Retail Consortium (BRC) LFL Sales Y/Y: No est v 0.4% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v # prior.

- 19:50 (JP) Japan Jun M2 Money Supply Y/Y: No est v 1.9% prior; M3 Money Supply Y/Y: No est v 1.3% prior.

- 20:30 (AU) Australia July Westpac Consumer Confidence: No est v 82.2 prior.

- 21:00 (PH) Philippines May Unemployment Rate: No est v 4.0% prior.

- 21:30 (AU) Australia Jun NAB Business Confidence: No est v -3 prior; Business Conditions: No est v 6 prior.

- 22:00 (TH) Bank of Thailand Governor Sethaput Suthiwartnarueput speaks on the economic outlook at a central bank seminar.