30 June 2021
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Chinese PMI slips in June

The official Chinese manufacturing PMI for June fell to 50.9 from 51 a month earlier while the services PMI slipped to 53.5, down from closer to 55 a month earlier.

By Edward Bell

  • China’s official manufacturing PMI for June fell to 50.9 from 51 a month earlier while the services PMI slipped to 53.5, down from closer to 55 a month earlier. While the numbers are still in the plus 50 expansion territory they nevertheless do signal a slowdown in activity from recent highs. China’s government has been introducing measures to try and dampen down fast price growth, particularly for industry.
  • Economic confidence in the Eurozone rose to 117.9 for June, its highest level in more than 20 years as the economy benefits from the reopening of services thanks to a turn around in vaccine distribution. Consumer sentiment managed a fifth consecutive monthly gain along with better expectations for employment. After a paltry start to the year when the economy shrank 1.3% y/y, the Eurozone is expected to see a strong bounce in activity in Q2 with consensus estimates pinning growth at almost 13%.
  • Inflation in Germany came in at 2.3% y/y for June, down from 2.5% a month earlier. The data was slightly slower than expected but nevertheless is still at multi-year highs. The last time inflation was above 2% for a sustained period was in 2010-11 when the economy was recovering from the global financial crisis. We would still expect the ECB to look through the relatively elevated inflation prints from major eurozone economies—bloc-wide inflation is expected later this week—and maintain its policy of asset purchases at an elevated pace. EURUSD was already selling off ahead of the data print and has now pushed below the 1.19 level.
  • In the US, the Conference Board index of consumer confidence rose to 127.3 in June, up from 120 in May. That was stronger than the market expected and likely reflects consumers’ belief that as that more and more of the country has access to vaccines then the timeline for all restrictions to be lifted is nearing. Consumers were also upbeat on the availability of jobs, a mirror image of employers who are struggling to hire in some cases.

Today’s Economic Data and Events

10:00 UK GDP y/y Q1 final: estimate 06.1%

13:00 EZ CPI y/y June: estimate 1.9%

16:30 USD ADP Employment change June: estimate 600k

Fixed Income

  • Treasury markets were bid slightly overnight. Moves on the front end of the curve were minimal with yields off by less than 1bp on the 2yr UST while 10yr yields saw more intraday moves, rising up to nearly 1.51% at the start of the US sessions before giving back those moves higher and closing down around 1bp lower at 1.4697%.
  • Emaar priced a 10yr USD sukuk at a yield of 3.7%. The total raised was USD 500m.
  • Qatar Petroleum will price a multi-tranche USD issue today with initial guidance at a 5yr T+80bps, 10yr at T+120bps and a 20yr at T+145bps. A Formosa tranche is initially set at T+155bps. 


  • The dollar was bid higher overnight as the spread of the Delta variant of Covid-19 weighs on near-term growth prospects and risk assets generally. The DXY index rose 0.18% to 92.05 with much of the gains coming at the expense of EURUSD which fell 0.23% to 1.19 even as consumer confidence in the Eurozone remains strong.
  • USDJPY continued to drift lower, closing at 110.53, down 0.09%. While there are few positive macro impulses in Japan’s economy at present the yen may be a beneficiary of a broader risk-off move should concerns about the Delta variant grow more widespread.
  • GBPUSD fell 0.34% overnight to 1.38, its lowest daily close since April. The number of Covid-19 cases in the UK is on the rise again even as the country has had a widespread vaccine programme.


  • While travel and aviation stocks remained under pressure throughout Europe, the continent’s equity indices had a fairly positive day yesterday. Germany’s DAX led the pack with a 0.9% gain, with more muted 0.1% and 0.2% expansions for the CAC and the FTSE 100 respectively. \
  • In the US it was the NASDAQ which continued to see the strongest upward moves with a 0.2% gain on the back of an ongoing tech rally taking it to a new record close. The S&P 500 and the Dow Jones both closed almost flat (up 0.03% each), but even this was enough for a new record by the S&P.
  • Within the region, the DFM continued to drift lower with a -0.4% fall. The EGX 30 lost -1.5%, but the ADX (0.2%) and the Tadawul (0.4%) both secured gains.


  • Oil prices nudged higher with gains of around 0.1% each in both Brent and WTI futures. Brent is trading at around USD 75/b in early trade today while WTI is in the mid USD 73/b range. OPEC+ announced it was delaying its joint ministerial monitoring committee by a day until Thursday, the same day as the full ministerial OPEC+ meeting. There may be some disagreement on how much oil OPEC+ could return to markets from August onward and the delay may give time for senior leaders to communicate their views on the oil market.
  • The API reported another large draw in crude stocks with inventories down more than 8m bbl last week. However, there was a move upward in both gasoline and distillate numbers. The official EIA data is out later today.

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Written By

Edward Bell Head of Market Economics

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