ON DECK FOR MONDAY, JUNE 6
KEY POINTS:
- Risk-on sentiment has light catalysts
- UK PM Johnson faces confidence vote today
- Oil up after Saudis price discriminate
- Thai CPI smashes consensus, lifts baht
- China’s private PMIs follow state versions upward
- Quiet US, Canadian calendars today
- Global Week Ahead
Please see the full Global Week Ahead publication here. The accompanying slide deck is also in your in-boxes and both were sent on Friday evening. As a reminder, the main events this week are packed into Thursday and Friday with the ECB, US inflation and Canadian jobs; the latter two will arrive simultaneously. Key topics include:
- ECB to tee up stimulus exits
- US inflation is still climbing
- Canadian jobs rebound?
- Chinese CPI to showcase Fed-PBoC divergence
- RBA to deliver another hike
- RBI is in a sudden rush
- Chile, Peru are still raising rates
- BoT has yet to join global tightening
- Russia’s CB to cut on phony ruble strength
- LatAm CPI
Risk-on sentiment is offering a pleasant start to the fresh trading week amid very little new information that is focused upon the UK and oil prices. Chinese stocks are among the leaders with mainland indices up by 1¼% to 2¼% overnight as the pre-announced easing of COVID restrictions is being implemented and cases continue to decline except in HK that saw a weekend surge. US and Canadian equity futures are up by between ½% and 1¼% with European cash markets up by either side of 1% across the main exchanges. Sovereign bond yields are 1–3bps higher in the US, as gilts underperform most markets in a bear flattener move that has 2s 6bps higher. The USD is broadly softer with sterling among the leaders. Oil is climbing a bit again with a gain of under a buck after the Saudis raised prices charged to Asian and some European buyers but kept US prices unchanged.
UK PM Johnson faces a “partygate” confidence vote between 6pm–8pm London time (1–3pmET). A simple majority is needed in order to oust him and trigger a contest for a new leader but most expect him to cling to power.
Overnight calendar-based risk was very light with just China’s private composite PMI jumping 5 points higher to a still contractionary reading of 42.2. It’s weaker than the state composite PMI that arrived a week prior and landed at 48.4. The private PMI is more skewed toward smaller firms than the SOE-heavy state PMIs.
Thai CPI climbed by much more than consensus anticipated (1.4% m/m, 0.6% consensus) which lifted the year-over-year rate to 7.1% (5.9% consensus). Core CPI also climbed 0.3% to 2.3% y/y but was only a tick above consensus. The baht was among the stronger Asian crosses to the USD overnight.
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