US Pres Trump guilty of election fraud but market focus remains on Fed's favorite gauge

Notes/Observations

- Mixed trade ahead of US PCE deflator at 08:30 ET. Technology sector is underperforming in Europe after Dell earnings tanked stock ~15% afterhours and weighs on sector in general.

- Flutter of CPI and GDP readings out of Europe tell a similar story of inflation returning to target and GDP staying positive. CPI readings from Euro Zone, France, Netherlands and Austria, and GDP from France, Italy, Turkey and Finland.

- In politics, Former Pres Trump was convicted of election fraud, a first for the US. Sentencing on July 11th. Chapter is clearly yet to be fully written, with a press conference from Trump scheduled at 11:00 ET. Trump remains on top of election polls.

- Asia closed mixed with NZX50 outperforming +2.7%. EU indices are -0.3% to +0.5%. US futures are -0.3% to flat. Gold -0.1%, DXY +0.1%; Commodity: Brent +0.1%, WTI -0.1%; Crypto: BTC +0.7%, ETH +0.1%.

Asia

- China May Manufacturing PMI (Govt Official): 49.5 v 50.5e (1st contraction in 3 months).

- Japan May Tokyo CPI Y/Y: 2.2% v 2.2%e; CPI (ex-fresh food) Y/Y: 1.9% v 1.9%e; CPI (ex-fresh food and energy) Y/Y: 1.7% v 1.8%e.

- Japan Apr Retail Sales M/M: 1.2% v 0.6%e; Y/Y: 2.4% v 1.7%e.

- Japan Apr Jobless Rate: 2.6% v 2.6%e.

- Japan Apr Preliminary Industrial Production M/M: -0.1% v +1.5%e; Y/Y: -1.1% v -1.2%e.

- South Korea Apr Industrial Production M/M: 2.2% v 1.0%e; Y/Y: 6.1% v 4.4%e.

- Australia Apr Private Sector Credit M/M: 0.5% v 0.4%e; Y/Y: 5.2% v 5.2% prior.

Europe

- UK May Lloyds Business Barometer: 50 v 40e (highest since Nov 2015).

Americas

- Fed's Logan (non-voter) stated that Fed had made some substantial inflation progress; Policy might not be as restrictive as believed be.

- Fed’s Bostic (hawk, voter): Outlooks is inflation will come down slowly. Did not see rate cut in July, but open if the data justified one. Fed needed to stay in restrictive stance.

- Fed's Williams (voter) noted that had recently seen a dearth of progress in disinflation data, but did not mean there had been change in trend. Forecasts inflation to reach 2% in early 2026.

- Fed's Goolsbee (non-voter for 2024) noted that the issue now was whether the US would face a traditional tradeoff between inflation and unemployment.

- Former President Trump found him guilty on all 34 charges of falsifying business records according to a Manhattan jury. Looming question is whether conviction would drastically alter his prospects in the 2024 race. Sentencing set for July 11th.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.07% at 516.84, FTSE +0.34% at 8,258.98, DAX -0.13% at 18,489.85, CAC-40 +0.04% at 7,981.56, IBEX-35 +0.04% at 11,343.14, FTSE MIB +0.07% at 34,470.00, SMI +0.55% at 11,935.50, S&P 500 Futures -0.14%].

Market focal points/key themes: European indices open mixed, with a negative bias predominating in the early hours of trading; among sectors inclined to the upside are energy and telecom; sectors trending lower include technology and health care; oil & gas subsector supported following rumors of OPEC+ working on production cut deal; tech stocks dragged in sympathy over disappointing earnings from Dell; UK government reduces holding in NatWest; Synlab receives going private proposal; focus on release of US PCE price index later in the day; no major corporate events expected in the upcoming Americas session.

Equities

- Consumer discretionary: JD Sports [JD.UK] -10.0% (FY results; Q1 trading update).

- Energy: Neoen [NEOEN.FR] +21.0% (continued attention after May 30th news after Brookfield to acquire ~53.32% of the outstanding shares of Neoen at a price of €39.85/shr valuing it at~ €6.1B).

- Healthcare: Synlab [SYAB.DE] +4.5% (delisting offer), Sanofi [SAN.FR] -0.5% (FDA extends Dupixent target date by 3 months; EU CHMP recommends Dupixent).

- Technology: ASML [ASML.NL] -0.5% (Marvell results; JPMorgan lowers stake in US GARP Equity Fund), STMicroelectronics [STM.FR] -0.5% (to build chip facility in Italy, receives EU funding), Capgemini [CAP.FR] -5.0% (two analyst downgrades) - Utilities: Centrica [CNA.UK] +3.5% (analyst upgrade).

Speakers

- ECB's Panetta (Italy, dove) stated that monetary policy would remain restrictive even after several rate cuts; must avoid policy becoming too restrictive and push inflation below target.

- Russia Defense Min Belousov stated that the US was destroying global security architecture and provoking conflicts to maintain its dominance.

- Thailand Central Bank noted that inflation should be positive in May and Q2 GDP YoY growth should be better sequentially.

- BOJ announced Bond purchases for July which maintained amounts and frequencies of purchases.

Currencies/fixed income

- USD was slightly softer with focus on upcoming Core PCE data later today. The reading cme just ahead of the Fed blackout period of its upcoming rate decision. A softer reading likely to open the door for risk appetite and provide headwinds for the dollar. The greenback has benefited from perceived policy divergence as Fed speak reiterated theme of rates staying 'higher for longer'.

- EUR/USD drifted higher on the baclk of hotter EU inflation data to test 1.0840 by mid-session. Nonetheless ECB still likely to be prepared to ease at next week's policy decision.

- USD/JPY holding below 157 level as Japan CPI reading for Tokyo came in-line with consensus. Data for now impeding expectations that BOJ would tighten policy earlier and more than the market expected.

Economic data

- (NL) Netherlands May Preliminary CPI Y/Y: 2.7% v 2.7% prior.

- (NL) Netherlands May Preliminary CPI EU Harmonized M/M: 0.3% v 0.1%e; Y/Y: 2.7% v 2.5%e.

- (FI) Finland Q1 GDP Q/Q: +0.2% v -0.8% prior; Y/Y: -1.2% v -1.5% prior.

- (FR) France Q1 Final Private Sector Payrolls Q/Q: 0.3% v 0.2% prelim; Total Payrolls: 0.3% v 0.0% prior.

- (DE) Germany Apr Retail Sales M/M: -1.2% v -0.3%e; Y/Y: 1.8% v 2.5%e.

- (DE) Germany Apr Import Price Index M/M: 0.7% v 0.5%e; Y/Y: -1.7% v -1.8%e.

- (UK) May Nationwide House Price Index M/M: 0.4% v 0.2%e; Y/Y: 1.3% v 0.9%e.

- (ZA) South Africa Apr M3 Money Supply Y/Y: 5.8% v 6.9% prior; Private Sector Credit Y/Y: 3.9% v 4.5%e.

- (CH) Swiss Apr Real Retail Sales Y/Y: +2.7% v -0.2% prior.

- (HU) Hungary Apr PPI M/M: -0.9% v +0.1% prior; Y/Y: -2.0% v -3.0% prior.

- (HU) Hungary Mar Final Trade Balance: €1.6B v €1.5B prelim.

- (FR) France Q1 Final GDP Q/Q: 0.2% v 0.2% prelim; Y/Y: 1.3% v 1.1% prelim.

- (FR) France May Preliminary CPI M/M: 0.0% v 0.1%e; Y/Y: 2.2% v 2.4%e.

- (FR) France May Preliminary CPI EU Harmonized M/M: 0.2% v 0.1%e; Y/Y: 2.7% v 2.6%e.

- (FR) France Apr PPI M/M: -3.6% v -1.0% prior; Y/Y: -6.8% v -8.3% prior.

- (FR) France Apr Consumer Spending M/M: -0.8% v +0.2%e; Y/Y: 0.2% v 1.4%e.

- (AT) Austria May Preliminary CPI M/M: 0.0% v 0.1% prior; Y/Y: 3.3% v 3.5% prior.

- (CZ) Czech Q1 Preliminary GDP (2nd reading) Q/Q: 0.3% v 0.5% advance ; Y/Y: 0.2% v 0.4% advance.

- (TR) Turkey Q1 GDP Q/Q: 2.4% v 1.6%e; Y/Y: 5.7% v 5.8%e.

- (TH) Thailand Apr Current Account Balance: $0.0B v $0.5Be; Overall Balance of Payments (BoP): +$0.9B v -$0.1B prior; Trade Account Balance: $0.3B v $1.0B prior; Exports Y/Y: +5.8% v -10.2% prior; Imports Y/Y: 6.4% v 5.2% prior.

- (IN) India Forex Reserve w/e May 24th: $646.7B v $648.7B prior.

- (TH) Thailand May Foreign Reserves w/e May 24th: $225.1B v $226.0B prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 321.7K v 300.9K tons prior.

- (IT) Italy Q1 Final GDP Q/Q: 0.3% v 0.3% prelim; Y/Y: 0.6% v 0.6% prelim.

- (ES) Spain Mar Current Account Balance: €3.3B v €1.9B prior.

- (NO) Norway May Unemployment Rate: 1.9% v 1.9%e; Unemployment Rate (unadj): 2.0% v 1.9%e.

- (NO) Norway Central Bank (Norges) Jun Daily FX Purchases: 550M v 550M prior.

- (CZ) Czech Apr M2 Money Supply Y/Y: 7.0% v 6.9% prior.

- (RU) Russia Narrow Money Supply w/e May 24th (RUB): 18.20T v 18.31T prior.

- (UK) Apr Net Consumer Credit: £0.7B v £1.4Be; Net Lending: £2.4B v £0.4Be.

- (UK) Apr Mortgage Approvals: 61.1K v 61.5Ke.

- (UK) Apr M4 Money Supply M/M: 0.1% v 0.7% prior; Y/Y: 0.6% v 0.4% prior; M4 (ex-IOFCs) 3-month Annualized: 4.6% v 3.1% prior.

- (PT) Portugal May Preliminary CPI M/M: 0.2% v 0.5% prior; Y/Y: 3.1% v 2.2% prior.

- (PT) Portugal May Preliminary CPI EU Harmonized M/M: 1.1% v 1.1% prior; Y/Y: 3.9% v 3.0%e.

- (HK) Hong Kong Apr Retail Sales Value Y/Y: -14.7% v -6.3%e; Retail Sales Volume Y/Y: -16.5% v -9.1%e.

- (HK) Hong Kong Apr M3 Money Supply Y/Y: +0.5% v -0.4% prior; M2 Money Supply Y/Y: +0.5% v -0.4% prior; M1 Money Supply Y/Y: -9.9% v -11.4% prior.

- (EU) Euro Zone May Advance CPI Estimate Y/Y: 2.6% v 2.5%e; Core CPI Y/Y: 2.9% v 2.7%e.

- (IT) Italy May Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 0.8% v 0.7%e.

- (IT) Italy May Preliminary CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 0.8% v 0.7%e.

- (BE) Belgium Q1 Final GDP Q/Q: 0.3% v 0.3% prelim; Y/Y: 1.3% v 1.3% prelim.

- (IS) Iceland Q1 GDP Q/Q: -0.9% v +0.9% prior; Y/Y: -4.0% v +0.6% prior.

- (GR) Greece Mar Retail Sales Value Y/Y: +5.2% v -9.8% prior; Retail Sales Volume Y/Y: +10.9% v -3.5% prior.

Fixed income issuance

- (IN) India sold total INR230B vs. INR290B indicated in 2029, 2034 and 2064 bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2046 and 2058 Bonds.

- 06:00 (PT) Portugal Q1 Final GDP Q/Q: 0.7%e v 0.7% prelim; Y/Y: 1.4%e v 1.4% prelim.

- 06:00 (PT) Portugal Apr Industrial Production M/M: No est v 2.6% prior; Y/Y: No est v 3.5% prior.

- 06:00 (IT) Italy Mar Industrial Sales M/M: No est v 2.0% prior; Y/Y: No est v -1.7% prior.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.5B respectively).

- 06:30 (IN) India Apr Fiscal Deficit (INR): No est v T.

- 07:30 (IN) India Apr Eight (Key) Infrastructure Industries: No est v 5.2% prior.

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- 08:00 (ZA) South Africa Apr Trade Balance (ZAR): 8.1Be v 7.3B prior.

- 08:00 (IN) India Q1 GDP Y/Y: 7.0%e v 8.4% prior; GVA Y/Y: 6.2%e v 6.5% prior; Preliminary FY24/25 Annual Estimate Y/Y: 7.9%e v 7.6% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Apr Personal Income: 0.3%e v 0.5% prior; Personal Spending: 0.3%e v 0.8% prior; Real Personal Spending (PCE): 0.1%e v 0.5% prior.

- 08:30 (US) Apr PCE Deflator M/M: 0.3%e v 0.3% prior; Y/Y: 2.7%e v 2.7% prior.

- 08:30 (US) Apr PCE Core Deflator M/M: 0.3%e v 0.3% prior; Y/Y: 2.8%e v 2.8% prior.

- 08:30 (CA) Canada Mar GDP M/M: 0.0%e v 0.2% prior; Y/Y: 0.7%e v 0.8% prior; Q1 Quarterly GDP Annualized: 2.2%e v 1.0% prior.

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

- 09:00 (CL) Chile Apr Retail Sales Y/Y: 3.6%e v 0.7% prior.

- 09:00 (CL) Chile Apr Commercial Activity Y/Y: No est v -2.9% prior.

- 09:00 (CL) Chile Apr Industrial Production Y/Y: 4.3%e v 0.7% prior.

- 09:00 (CL) Chile Apr Manufacturing Production Y/Y: 6.9%e v -2.1% prior.

- 09:00 (CL) Chile Apr Total Copper Production: No est v 437.8K prior.

- 09:45 (US) May Chicago Purchase Manager’s Index (PMI): 41.1e v 37.9 prior.

- 11:00 (MX) Mexico Apr Net Outstanding Loans (MXN): No est v 6.113T prior.

- 11:00 (CO) Colombia Apr National Unemployment Rate: No est v 11.3% prior; Urban Unemployment Rate: 10.9%e v 10.8% prior.

- 11:00 (EU) Potential sovereign ratings after European close.
Greece (Fitch), France (S&P), Italy (Moody’s)

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 18:15 (US) Fed's Bostic gives Commencement Speech.

- 20:00 (KR) South Korea May Trade Balance: $4.2Be v $1.5B prior; Exports Y/Y: 15.4%e v 13.8% prior; Imports Y/Y: 2.5%e v 5.4% prior.

- (PE) Peru May CPI M/M: 0.2%e v -0.1% prior; Y/Y: 2.3%e v 2.4% prior.