Macro-News Round-Up

🇨🇳 China released macroeconomic data early this morning. Both fixed asset investment and industrial production came out weaker than expected, 4% versus 4.2% and 5.6% versus 6.2% respectively. May industrial output growth lagged forecasts, adding to pressure on authorities to support the economy. Retail sales beat estimates due to holidays but property investment declined further, showing policy support has yet to gain traction. Exports helped bolster manufacturing but consumption and investment were hampered by the ongoing real estate downturn. Property data worsened with investment and new home prices down sharply, highlighting the sector’s drag on activity. 

🏦 Central banks seem to be reconsidering their options. Six months ago, major central banks appeared poised to jointly pivot to looser policy through global rate cuts that would stimulate borrowing. Modest easing steps have been taken by the ECB and Bank of Canada, but other moves like the BoE hold have been delayed. Our predictions for central bank actions have proven more accurate than market pricing, which overestimated the scope and pace of loosening. Central banks are carefully managing a delicate trade-off between curbing inflation and avoiding excessive tightening that hurts growth. 

🔥 Here we have shared different indicators that seem to point to a return of inflation in the coming months. The WCI index of container freight costs, the BDI index of shipping costs, the CRB index of generalised commodity prices. All of them showing a clear upward trend in recent months.

🇫🇷 Early Asian trade saw a decline in French bond futures due to mounting anxiety over the impending snap parliamentary elections. Bloomberg, in an article today, confirms what we warned in last week’s reports. If Marine Le Pen’s National rally can extend its lead in the polls to cement a majority, it would pose a fundamental challenge to the European Union leaders.

🇬🇧 Bloomberg has also made reference to the upcoming UK elections. Keir Starmer’s Labour opposition maintained its lead in surveys conducted by the Sunday Telegraph and the Observer following the release of the election manifestos by Britain’s two major parties last week. Survation’s seat-by-seat analysis indicated that Labour was poised to win a sizable majority, with the Conservatives only taking home 72 of the 650 seats in the House of Commons—down from 365 in the previous election in 2019. It was predicted that Nigel Farage’s Reform UK would win seven. 

📈 Markets: 

🇺🇸 Mini SP500 futures remain at the new highs reached last week, holding sideways in the 5500 point area. The Nasdaq 100, however, seems to be advancing today, even a bit beyond last week’s highs, and a few hours ago it was above the 19,700 level for a while. In Europe, all signs point to a continuation of last week’s declines. Confirming the decoupling between the stock markets. The Dax 40 futures have tried to recover the falls, rising above 18,100 points, however, at the moment it is still retreating and trying to stay above 18,000 points.

💲 In currencies, the dollar continues to show strength, recovering from last week’s declines. The dollar index DXY is now trading above 105.50 points. The EURUSD has fallen back down to 1.0750 and is trying to stay above 1.07 at the moment.

🛢️ In commodities, crude oil remains near $83 Brent, up from around $77 where it fell in the first week of June. Gold remains relatively calm at 2340 dollars per ounce.

📈 On the bond front, the US 2-year bond remains with a yield above 4.70, a key support since April, when hope for a Fed rate cut was lost. On the other hand, the German bond, which had also risen on the assumption that there would be no rate cut in Europe, with its yield trading above 3%, has fallen and is now hovering around 2.75%.

🇸🇬 Singapore is set to become a leading global gold hub as trading shifts eastward, according to the World Gold Council. Singapore’s proximity to over 25% of world gold mining supply centers and Asia’s central banks enhances its position. China’s PBOC is the largest central bank buyer of gold as it expands reserves, underscoring Asia’s importance. Singapore could become a viable alternative to London and New York for central bank gold vaulting. Removal of sales tax on investment gold in Singapore and establishment of refineries strengthen its infrastructure.

🌎 Geopolitics: 

🇨🇳 G7 leaders discussed protecting domestic industries from China’s overcapacity without causing a trade war. The EU’s new tariffs on Chinese EVs were supported as addressing subsidies after investigation. Restricting critical mineral exports by China threatens supply chains in key industries. The US imposed new sanctions on Chinese semiconductor suppliers aiding Russia’s war industry. 

🇺🇦 Russia makes its first public ceasefire proposal to Ukraine since its May 2022 peace offer, which was initially accepted by the Kiev government but rejected after political pressure from Boris Johnson. On this occasion, it is no longer offered to withdraw troops from the occupied territory as initially offered: “Ukrainian troops must withdraw completely from the Donetsk and Lugansk People’s Republics, from the Kherson and Zaporozhye regions … and will also be officially notified about the rejection of plans for NATO membership. From our side immediately, literally in the same minute, the order will be given for a ceasefire and the start of negotiations”. The demands were swiftly rejected by Ukraine as tantamount to surrendering sovereignty and admitting defeat.

Economic Calendar:


China: Fixed Asset Investment, Industrial Production, Chinese Industrial production, Chinese Unemployment Rate.
Lagarde Speaks, Wages in Euro zone.


EU: Core CPI, CPI,
ZEW Economic Sentiment.
US: Retail Sales, Industrial Production.


Japan: Export, Monetary Policy Meeting, Trade Balance.
UK: Core CPI, CPI, PPI Input.


PBoC Loan Prime Rate.
German: PPI.
BoE Interest Rate Decision.
US: Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Atlanta GDP, Crude Oil inventories.


Japan: National Core, PMI.
UK: Core Retail Sales, Retail Sales, Manufacturing PMI, Services PMI.
US: Manufacturing PMI, Services PMI, Existing Home Sales, Fed Monetary Report.