Original insights into market moving news

[PODCAST] European Open Rundown 8th June 2021

  • Asian equity markets lacked direction following a similar indecisive performance on Wall Street
  • In FX, the DXY holds on to 90.00, EUR/USD remains sub-1.22 and GBP/USD retreats further
  • Reports suggest that the UK's June 21st reopening plans could be delayed by two weeks
  • US Republican Senator Capito was said to not sound too optimistic about talks with President Biden ahead of today’s meeting
  • Looking ahead, highlights include German ZEW, EIA STEO, BoE's Haldane, supply from the UK, Germany and the US


US CDC COVID-19 study showed mRNA vaccines reduce the risk of infection by 91% for fully vaccinated people and 81% for partially vaccinated participants. (Newswires)

Canada is set to ease rules for vaccinated travellers, while it was separately reported that Canada's Ontario province Premier said they will loosen COVID restrictions from June 11th which is three days earlier than planned and will allow non-essential retail to operate at 15% capacity. (Newswires)

US lab report prepared in May last year during the Trump administration concluded the hypothesis that the virus leaked from a lab in Wuhan is plausible and deserved further investigation. (WSJ)

UK lockdown lifting is reportedly set to be delayed by a fortnight, according to reports, citing comments from a cabinet source that stated they expect a delay between two weeks and a month. (The Times)


Asian equity markets lacked direction following a similar indecisive performance on Wall Street where the major indices closed mixed as the absence of any significant catalyst, had participants looking ahead to the key events later in the week including the ECB meeting and US CPI data. ASX 200 (+0.2%) was choppy after stalling at fresh record highs and with early advances in the index pared by weakness in mining names and financials, while mixed NAB Business Survey data also added to the non-committal tone. Nikkei 225 (+0.1%) was initially lifted following the revised Q1 GDP figures which showed a narrower than expected contraction to Japan’s economy, although the gains were then briefly wiped out with the index not helped by the recent currency moves and amid concerns of stealth tapering by the BoJ which refrained from ETF purchases throughout the whole of last month for the first time since Governor Kuroda began QQE in 2013. There was plenty of focus on Eisai which remained untraded but set to hit limit up amid a glut of buy orders after the FDA approved the ADUHELM drug for Alzheimer’s disease which earlier boosted shares in development partner Biogen. Hang Seng (-0.3%) and Shanghai Comp. (-0.5%) were choppy with initial upside limited by the continued China-related tensions with the G-7 expected to reference the Taiwan Strait into its summit statement and express concerns about human rights abuses against Uyghur Muslims, as well as the pro-democracy crackdown in Hong Kong. Furthermore, China was said to be making progress on legislation to counter US sanctions and reports citing Secretary of State Blinken also suggested the US is planning trade talks with Taiwan which is likely to add to the tensions with China. Finally, 10yr JGBs were rangebound amid the indecisive mood across the region and with some concerns of stealth tapering by the BoJ after it refrained from ETF purchases throughout the entire of last month, although there was some mild support following the mixed results of the 30yr JGB auction which showed a slightly higher b/c.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.3909 vs exp. 6.3908 (prev. 6.3963)

US is reportedly planning trade talks with Taiwan which is likely to add to tensions with China, according to reports citing comments from Secretary of State Blinken. (WSJ)

NATO Secretary General Stoltenberg said following a meeting with US President Biden, that China will be an issue when NATO leaders meet and that China does not share our values. (Newswires)

China is said to be moving ahead and making progress on legislation to counter US sanctions. (Newswires)

  • Japanese Revised GDP (Q1) Q/Q -1.0% vs. Exp. -1.2% (Prev. -1.3%)
  • Japanese Revised GDP Annualised (Q1) -3.9% vs. Exp. -4.8% (Prev. -5.1%)


European Commission VP Sefcovic warned the EU would respond swiftly, firmly and resolutely if Britain extends the grace period regarding the Northern Ireland Protocol which expires this month, as ministers in the UK were said to be mulling a unilateral extension for chilled meats. (Telegraph) Separately, the EU is set to present concessions on NI today but will warn Lord Frost that Brussels' "patience is wearing thing" when it comes to the government's confrontational attitude. (Times)

US National Security Advisor Sullivan said President Biden and UK PM Johnson to have a bilateral meeting during Biden's trip to Europe. (Newswires)

Barclaycard said UK May consumer spending rose 7.6% compared to May 2019. (Newswires)

  • UK BRC Retail Sales YY (May) 18.5% (Prev. 39.6%)


The DXY was steady overnight and just about reclaimed the 90.00 level but with price action kept rangebound due to light macro newsflow to spur the greenback and with the Fed in its blackout period. Infrastructure discussions were also seen to have stalled as US Republican Senator Capito was said to not sound too optimistic about talks with President Biden ahead of today’s meeting and stated they were not planning another GOP counteroffer regarding infrastructure, although other reports noted that a bipartisan group of six senators plan to discuss ideas for an infrastructure package with 20 members today in which they are still working on a top line dollar amount with many details in flux. EUR/USD was steady after yesterday’s gains were topped out by resistance at 1.2200 with participants looking towards Thursday’s ECB meeting for drivers of the single currency, while GBP/USD pulled back from yesterday’s best levels with reports suggesting the final phase of the UK lockdown lifting could be delayed by at least two weeks. USD/JPY languished at the softer-end of the 109.00 status owing to the recent USD weakness and indecisive risk tone, while antipodeans were constrained by their high-beta characteristics and mixed NAB Business Survey data in which lower Business Confidence and a downward revision to the previous reading, was offset by record high Business Conditions.

  • Australian NAB Business Confidence (May) 20 (Prev. 26, Rev. 17)
  • Australian NAB Business Conditions (May) 37 (Prev. 32)


WTI crude futures retreated beneath support near USD 69.00/bbl with prices pressured by the cautious risk tone and after recent optimistic comments by OPEC Secretary-General Barkindo failed to spur prices in which he noted that OPEC+ compliance was 114% in April (vs 113% via earlier sources) and that OECD stocks fell by 6.9mln/bbl in April, while he expects further draws in the coming months and noted that the oil market is continuing to react positively to OPEC+ decisions including the increase in output from May. On the geopolitical front, IAEA said they have not made significant progress in talks with Iran and US Secretary of State Blinken stated that it remains unclear whether Iran is willing and prepared to do what is necessary to come back into compliance with the nuclear deal, while focus for the complex shifts to the monthly oil market reports and the latest inventory date beginning with the private stockpile figures later today. Gold was lacklustre following a brief reclaim of the USD 1900/oz level amid a steady greenback and copper trickled lower amid the broad indecision across overnight markets.

FBI announced that US investigators have recovered millions of dollars in crypto paid in ransom to Colonial Pipeline hackers and FBI Deputy Director Abbate said they have been investigating Russia-based Darkside since last year, while US Deputy Attorney General Monaco commented that ransomware and digital extortion pose a national security threat to the US. (Newswires)


US National Security Adviser Sullivan said President Biden spoke with Ukraine's Zelenskiy on Monday and said he looks forward to welcoming him to the White House this summer. Furthermore, it was stated that US will stand for up Ukraine's sovereignty in a meeting with Putin, while Sullivan said there will be responses by the US if Russia’s harmful and disruptive actions against the US continue. There were also comments from Zelenskiy's Office which stated that President Biden said Ukraine's position will be noted when discussing strategic issues in NATO and other events, while Zelenskiy told Biden there is still a high concentration of Russian troops and heavy weapons close to Ukraine's border. (Newswires)

US National Security Adviser Sullivan said President Biden will discuss with Turkish President Erdogan the situation in the Eastern Mediterranean, Syria, Nagorno-Karabakh, and the human rights file. (Newswires)


Treasuries marginally pared some of their rally from Friday as bond supply and CPI come into focus. By settlement, 2s +0.8bps at 0.157%, 3s +0.9bps at 0.312%, 5s +0.9bps at 0.793%, 7s +0.8bps at 1.238%, 10s +0.9bps at 1.569%, 20s +1.3bps at 2.169%, 30s +1.1bps at 2.250%; TYU1 were very light. 5yr TIPS -2.1bps at -1.767%, 10yr TIPS +2.5bps at -0.845%, 30yr TIPS +1.5bps at -0.062%. SOFR and EFFR unchanged at 1bp and 6bps, respectively. Some desks had attributed the light selling partly to the fresh Yellen comments saying that higher interest rates would be good for the country if they were needed, but it's also worth viewing the pullback in light of the strong rally on Friday after the disappointing NFP. One desk noted short-covering as the US session got underway, bringing prices somewhat off their lows, although dealers were better sellers ahead of this week's supply: 3s, 10s, and 30s. There was also some pressure on the curve amid the double-digit roster of corporate IG deals in the dollar market today - several of which were expected to swap, seeing spreads narrow at the front-end amid receiver flows. Aside from supply, given the Fed blackout window, most rates participants are looking ahead to Thursday, where we are expecting both US CPI and the latest ECB meeting. T-note (U1) futures settled 3 ticks lower at 132-03+.

White House said it was still working to schedule President Biden meeting with Senator Capito on infrastructure either on Monday or Tuesday and noted that the time is not 'unlimited' for an infrastructure deal but added that there is more than one path forward. However, there were later comments from US Senator Capito that they are not planning another GOP counteroffer on infrastructure and that she will not speak to President Biden until this Tuesday. (Newswires/Twitter)

US Republican Senator Capito was said to not sound too optimistic about talks with President Biden and noted the goalposts keep moving, while she suggested that the White House position was that the GOP offer is "still not enough and that they're looking at other ideas", according to NBC News' Kapur. (Twitter)

A bipartisan group of six senators plans to discuss ideas for an infrastructure package with 20 members on Tuesday although they’re still working on a top line dollar amount and with many details in flux, according to CNN's Raju. (Twitter)

US Commerce Secretary Raimondo said the global shortage of semiconductors will remain a daily challenge for the next year or so. (Newswires)

Amazon (AMZN) is set to be included as part of the list of companies affected by global tax agreement on large firms and cloud-services could be in rules if treated separately although the tax mechanism details are still under discussion, according to sources. (Newswires)