| ON DECK FOR TUESDAY, JULY 2 |
KEY POINTS:
- Canadian yields spike in catch-up to developments
- Warm Eurozone core CPI keeps ECB bets at bay
- Fed’s Powell to speak at Sintra
- US JOLTS to tease ahead of payrolls
- Post-debate polls show Biden slipping
It’s a relatively quiet start to a holiday shortened week for Canadians and a lighter than usual week for the US ahead of tomorrow’s early close and Thursday’s holiday. Canadian markets are catching up to developments with a spike in yields as the 2-year yield is 5bps higher and the 10 year is 14bps higher.
The macro calendar only has a few things to consider. Stocks are mildly lower this morning, the USD is broadly stronger except versus CAD and sovereign bonds are little changed following yesterday’s EGB sell off after Sunday’s first round of the French elections. French 10s are about 7bps higher since Friday which captures the election effect and closing in on the June 11th high in the aftermath of the EU parliamentary elections. This is the last day for strategic withdrawals by candidates in constituencies to back more centrist prospects and weaker National Rally’s chances of emerging victorious in the second round this coming Sunday.
Warm Eurozone Core Inflation
Eurozone core CPI at 0.3% m/m NSA was warmer than a typical month of June that average 0.1% over the past 20 years. This June was only exceeded by June in 2019 and 2023 (chart 1). Recall that we look at m/m compared to like months over time because the figures are not seasonally adjusted on arrival. This kept the y/y rate unchanged at 2.9% despite base effects and against consensus expectations for a small deceleration. Most of this information was understood through the protracted release of country-specific figures since Friday. Markets continue to price basically no chance at an ECB cut this month and about 17bps of a cut in September.
Fed’s Powell at Sintra
Fed Chair Powell will be on a panel with the ECB’s Lagarde and Brazil’s central bank head Campos Neto this morning (9:30amET). Lagarde spoke last evening at the ECB’s Sintra retreat and didn’t say anything new.
Other Stuff
We’ll also get US JOLTS job openings for May (10amET) as a modest teaser ahead of Friday’s payrolls. Canada updates a little watched manufacturing PMI (9:30amET).
US election polling from Real Clear Politics showed Biden’s chances of winning the election slipping to 45% with Trump at 47%. The 538.com polling composite is shown in chart 2.
The won is among the weaker crosses this morning after South Korean CPI landed softer than expected (-0.2% m/m NSA, +0.1% consensus).
Global Week Ahead Reminder
As a reminder, please see the Global Week Ahead—Ranking the Presidents here. Key topics explored include:
- Ranking the Presidents on the economy and markets…
- EGBs may be on edge after French election
- UK election expected to return Labour to power
- US nonfarm payrolls still resilient?
- ECB’s Sintra often drives euro volatility
- Canada’s job market and the BoC’s exaggerated narrative
- Canadian, US holidays
- The last Eurozone core CPI print before the ECB’s July decision
- Global inflation readings dominate the rest
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