Original insights into market moving news

[PODCAST] European Open Rundown 23rd July 2021

  • Asian stocks traded mixed with the region indecisive following on from a choppy performance stateside
  • The DXY consolidated beneath 93.00, EUR/USD and GBP/USD trade on 1.17 and 1.37 handles respectively
  • ECB's Weidmann and Wunsch opposed the Bank's new rate guidance, according to sources
  • GOP Senator Collins said the bipartisan infrastructure deal release is to be on Monday at the earliest
  • Looking ahead, highlights include Flash Eurozone, UK & US PMIs, CBR Rate Decision, Canadian Retail Sales. Earnings from Danske Bank, American Express and Honeywell


NIH's Dr. Fauci said there is no data to indicate that a booster is needed after a shot of the Johnson & Johnson (JNJ) COVID-19 vaccine, while the Advisory Committee on Immunization Practices workgroup said it supports the continued use of the Johnson & Johnson's (JNJ) vaccine despite warnings of low risks of rare GBS from the shot. Furthermore, the workgroup gave preliminary support for booster doses to immunocompromised people although are waiting for regulatory action before providing a formal recommendation and there were separate comments from an FDA official that they are actively exploring all options to provide access to additional COVID-19 vaccine doses. (Newswires)

Italian Health Minister said the government is extending the state of emergency until December 31st and will link virus curbs to hospital occupancy. (Newswires)

New Zealand PM Ardern confirmed her decision to suspend quarantine-free travel with Australia for a minimum of eight weeks. In relevant news, Australia's New South Wales Premier Berejiklian said they will not be able to lift Sydney restrictions on July 30th and that the situation for some parts of the city are considered as a national emergency. (Newswires)


Asian stocks traded mixed with the region indecisive following on from a choppy performance stateside and with the continued absence of Japanese participants, as well as rising COVID-19 cases adding to the subdued mood. ASX 200 (-0.1%) swung between gains and losses with strength in tech, healthcare and consumer stocks offset by weakness in the top-weighted financials and commodity-related sectors, while the mood was also kept tentative by New Zealand PM Arden’s announcement to pause the trans-Tasman travel bubble for eight weeks and after New South Wales Premier Berejiklian flagged an extension to the Sydney lockdown beyond July 30th. KOSPI (+0.1%) was positive as earnings took centre stage including the nation’s largest bank KB Financial Group which topped forecasts for Q2 net, although gains for the index were limited by rampant infections which has forced the government to extend social distancing rules for another two weeks. Hang Seng (-1.0%) and Shanghai Comp. (-0.7%) were negative whereby healthcare led the declines across defensives and property developers were pressured after Chinese banks tightened mortgage lending in various cities, while local authorities also bolstered measures aimed at curbing home prices. In addition, tensions continued to linger ahead of US Deputy Secretary of State Sherman’s visit to China from Sunday with the US said to be disappointed by China's response to the WHO plan for a phase two probe of COVID origins and stated that this is not a time for China to be stonewalling.

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 6.4650 vs exp. 6.4671 (prev. 6.4651)

White House said the US is disappointed in China's response to the WHO plan for a phase two probe of COVID origins and stated that other nationals are also calling on China to be engaged in a phase two probe, while it added that it is clear China is not living up to its obligations and that this is not a time for China to be stonewalling. (Newswires)

Certain Chinese banks have reportedly tightened mortgage lending in various cities such as Guangzhou and Chengdu, while local authorities have bolstered measures aimed at curbing home prices. (Newswires)


DUP Leader Donaldson threatened that Northern Ireland ministers will unilaterally suspend checks on goods coming in from Britain if PM Johnson agrees to an unacceptable Brexit deal. (The Times)

ECB's Weidmann and Wunsch opposed the Bank's new rate guidance and several more voiced some objections due to the length of commitment and a lack of clarity, according to sources. Furthermore, some ECB policymakers wanted to include the asset purchase programme in the guidance and aim for "at least" 2% inflation not just 2%, while the ECB held a lengthy discussion on whether an inflation overshoot would be intentional or incidental and a third policymaker, who also voiced significant objections, had to leave the meeting early and was not present at the final tally. (Newswires)

  • UK GfK Consumer Confidence* (Jul) -7 vs. Exp. -8.0 (Prev. -9.0)


In FX markets, the DXY consolidated beneath the 93.00 level following the prior day’s choppy trade. On the infrastructure front, GOP Senator Collins said the bipartisan infrastructure deal release is to be on Monday at the earliest and Democrat Senator Manchin suggested that the infrastructure deal is 99% done, but he is not yet on board with the USD 3.5tln budget and House Speaker Pelosi also reiterated that the House will not take up the bipartisan infrastructure bill until the reconciliation bill is passed by the Senate. EUR/USD was flat after the prior day’s post-ECB whipsawing. Source reports later noted that ECB policymakers Weidmann and Wunsch held out against the new guidance and that some policymakers wanted to include its asset purchase programme in the guidance, as well as aim for "at least" 2% inflation not just 2%. GBP/USD traded flat amid ongoing issues concerning the Northern Ireland Protocol and fears over labour and food shortages amid the "pingdemic". USD/JPY was marginally positive but with gains limited by the absence of Japanese participants for Sports Day and with the Tokyo 2020 Olympics Opening Ceremony to take place later today. Antipodeans were uneventful with AUD/USD flatlining after soft PMI data from Australia and a relatively unchanged PBoC reference rate setting, while NZD/USD lacked firm direction after the RBNZ officially suspended its LSAP programme as expected.

  • Australian Manufacturing PMI (Jul P) 56.8 (Prev. 58.6)
  • Australian Services PMI (Jul P) 44.2 (Prev. 56.8)
  • Australian Composite PMI (Jul P) 45.2 (Prev. 56.7)


Commodities were mixed in what was a rangebound session for the complex amid the tentative risk tone and with the recent rebound in WTI crude futures halted by resistance at the USD 72/bbl level. Nonetheless, oil prices remain near this week's best levels after having fully retraced Monday's sell-off and although news catalysts was light overnight with COVID-19 concerns also lingering, there were some notable comments yesterday from Russia that they could start preparing for a petrol export ban from next week if fuel prices on exchanges remain at their current levels. Gold prices were little changed just slightly above the USD 1800/oz level as the greenback consolidated during Asia trade, while copper prices marginally benefitted and are on track for a 4th consecutive gain but with upside limited by indecisive risk tone and mixed price action for Chinese commodities with Dalian iron ore futures dampened by China's recent efforts to reduce steel output.

CME raised natural gas Henry Hub futures maintenance margins to USD 2475/contract from USD 2250/contract. (Newswires)

China will review anti-dumping measures for steel imports from Japan, South Korea and the EU following the expiry of anti-dumping tariffs that were in place for five years. (Newswires)


Treasuries bull-flattened by a few bps after disappointing data and knock-on strength from EGBs post ECB. 2s -0.8bps at 0.200%, 3s -1.3bps at 0.375%, 5s -2.1bps at 0.711%, 7s -1.9bps at 1.016%, 10s -1.9bps at 1.263%, 20s -2.9bps at 1.822%, 30s -3.1bps at 1.899%; TYU1 volumes were average. 5yr TIPS -3.4bps at -1.812%, 10yr TIPS +1.2bps at -1.049%, 30yr TIPS +0.4bps at -0.291%. SOFR and EFFR both unchanged at 5bps and 10bps, respectively. Lows for the session in T-Notes at 133-27+ (1.32% in cash 10s) were made as the ECB statement was released, taking cues from the knee-jerk sell-off in Bunds. However, as the dust settled bidders resurfaced for Bunds, and with them USTs, as some dovish details were scoured over, i.e. the ECB's lack of progress on inflation. The buying for duration caught a transatlantic impulse as a disappointing rise in US initial jobless claims hit wires as Lagarde began her presser. USTs continued their upward run into the NY stock open, with one desk noting chunky short-covering and buys from one hedge fund. T-Notes hit their apex (134-15/1.23% in cash 10s) as Europe departed, just as cyclical stocks reached their trough (measured by the Russell 2000). Prices then pared modestly into the afternoon and settlement, with little noticeable price action on the back of the earlier cyberattack fears, nor from the solid 10yr TIPS auction. T-note (U1) futures settled 4+ ticks higher at 134-08.

US Senate Banking Committee Chair Brown said he cannot say if he would back Fed Chair Powell's re-nomination and that he likes Powell's monetary policy work but not regulation, while US Senator Warren said she is concerned about regulations being weakened in response to a question on Fed Chair Powell. (Newswires)

US Treasury Secretary Yellen told the World Bank and other development banks to increase focus on climate adaptation and they discussed ways to mobilize more private-sector capital to combat climate change. (Newswires)

US Senator Collins said the bipartisan infrastructure deal release is to be on Monday at the earliest, while it was later reported that she noted there are three or four issues which need to be resolved but is optimistic that by working through the weekend, they will be able to have a proposal on Monday. (Newswires/Fox)

US Commerce Secretary Raimondo said the US is doing a lot on the chip shortage and is developing plans to spend USD 52bln on semiconductor supply. (Newswires)