• Equities took impetus from Ifo beats after mixed/contained APAC trade, Euro Stoxx 50 +0.9%, ES +0.4%
• The USD is modestly pressured with G10 peers firmer but rangebound while core debt has stabilised
• A bipartisan group of US senators has reached an accord on a framework for an infrastructure bill; some remain cautious
• China's Banking and Insurance Regulator official expects China's monthly PPI to reach 10%, adding pressure to consumption
• US negotiators are reportedly gearing up for a resumption in Iranian nuclear talks, which could resume next week
• Looking ahead, highlights include, US Initial/Continued Jobless Claims, GDP (Final, Q1), Durable Goods and New Zealand Trade Balance, BoE Rate Decision, Fed's Williams, Barkin, Bostic, Bullard, Harker, Kaplan; ECB's Schnabel, Panetta, and supply from the US

CORONAVIRUS UPDATE

Australia's New South Wales reports 18 new COVID cases, according to the health department. (Newswires) Yesterday, it was reported that Australia's New South Wales is urgently investigating four mystery COVID cases overnight and the premier has outlined new restrictions of hotspots including in Sydney

ASIA

Asia-Pac bourses saw a mixed and contained session following a lacklustre performance on Wall Street, where the S&P 500 and DJIA closed with modest losses whilst the Nasdaq Composite squeezed out another record close, but off its intraday best of 14,317 for the cash, and 14,315.75 for the NQ. Back to APAC, the ASX 200 (-0.3%) failed to benefit from the strong performance in its tech and mining names, whilst the Nikkei 225 (Unch) remained supported by softness in its currency, but the index is yet to convincingly breach 29k to the upside. The KOSPI (+0.4%) eked mild gains as a rise in June consumer confidence provided some positive omens. Hang Seng (+0.3%) and Shanghai Comp (U/C) traded within recent ranges as the region shrugged off the first increase in the PBoC's liquidity injection since March, albeit modest. In terms of stocks-specifics, Hoshine Silicon Industry shares slumped some 10% after Washington reportedly issued an order that blocks imports of solar panel materials from the Co. Finally, of note for the broader global chip sector, chip-giant TSMC flagged price hikes of 10-20% beginning next year, according to Chinese media. Finally, JGB futures meanwhile trade flat and in tandem with its US and German counterparts.

China's Banking and Insurance Regulator official expects China's monthly PPI to reach 10%, adding pressure to consumption. (Newswires)

China is suing Australia over anti-dumping measures at the WTO. (Newswires)

BoK Governor Lee said that an earlier normalisation of policy should begin this year. (Newswires)

BoJ's Kuroda says the economy is picking up as a trend, but the situation remains severe and that consumption is stagnating while exports and output are increasing steadily. (Newswires)

• PBoC set USD/CNY mid-point at 6.4821 vs exp. 6.4805 (prev. 6.4621); the weakest CNY fix since May 6th
• PBoC injected CNY 30bln via 7-day reverse repos for a net injection of CNY 20bln; rate maintained at 2.20%; the injection increase since March.

US

A bipartisan group of US senators has reached an accord on a framework for an infrastructure bill. The group will be meeting with US President Biden on Thursday to discuss this. (Newswires) US Senators said the Senators and the White House officials have signed off on the top lines and the pay-fors on the infrastructure deal, according to CNN's Raju. (Twitter) White House senior staff made progress towards an outline of a possible agreement, according to the White House aide. (Twitter) US Senator Collins (R) said that there are still details of the infrastructure framework to resolve. (Newswires) US Senate Majority Leader Schumer and House Speaker Pelosi are not endorsing the bipartisan bill outright and still want to see all the details, according to Punchbowl. (Twitter)

Fed's Rosengren (2022 voter) said a robust recovery is underway and the economy is getting close to some estimates of full employment and vaccination rates have topped expectations. Rosengren said financial markets are not pricing assets as if they expected inflation at 3%, whilst inflation risks are heightened but elevated prices will be more moderate next year. Rosengren said many sectors of the economy are still suffering, and he expects inflation slightly above 2% next year. Rosengren is also surprised that overall Average Hourly Wages are not higher, and stated that the Fed has to worry about rising house prices and a boom-bust scenario. Rosengren noted that this is an appropriate time to have a lot of fiscal stimulus; due to vaccines the US probably will not need fiscal stimulus for as long as other countries. (Newswires)

UK/EU

German Ifo Business Climate New (Jun) 101.8 vs. Exp. 100.6 (Prev. 99.2)

• Current Conditions New (Jun) 99.6 vs. Exp. 97.8 (Prev. 95.7)
• Expectations New (Jun) 104.0 vs. Exp. 103.9 (Prev. 102.9)

The UK government is due to deliver its latest travel advice later today. (Sky News)

GEOPOLITICAL

US negotiators are reportedly gearing up for a resumption in Iranian nuclear talks which could resume next week, according to reports. (Newswires)

Russian Kremlin says they consider the incident with a British destroyer as a 'provocation', will continue to respond harshly to such provocations in-line with international law. Separately, the Kremlin says its sees the French and German idea for a summit with the EU and President Putin "positively" and dialogue is needed; however, Lithuania's Foreign Minister has called the Franco-German initiative to strike towards a summit with Russian President Putin 'irresponsible', via FT. (Newswires/FT)

An Iranian atomic facility has been damaged in an attack, despite Iran claiming otherwise. (Jerusalem Post)

EQUITIES

European equities kicked the session off on a firmer footing (Eurostoxx 50 +0.9%) with sentiment bolstered by a marginally better-than-expected German IFO report (Business Climate 101.8 vs. Exp. 100.6) and economists noting that the domestic economy is picking up speed. Stateside, futures have picked up throughout the session (ES +0.4%) in tandem with their European counterparts. In the US, infrastructure talks continue to rumble on, albeit without causing much in the way of intraday price action. The latest updates have noted that a deal on the infrastructure framework has been reached among a bipartisan group of US senators; a meeting between the White House and the bipartisan group has been slated for later today. Back to Europe, sectors are mostly firmer and showing a largely pro-cyclical tilt as Financials, Basic Resources and Autos lead the charge. Travel & Leisure names will be bracing themselves for the latest travel update from the UK, albeit some optimism for the sector has been tempered this week after German Chancellor Merkel urged EU nations to introduce quarantine measures for vaccinated Brits. The most notable corporate update thus far has come from Siemens (-0.5%) who sit at the foot of the DAX with investors unimpressed by its latest strategic blueprint which saw the Co. increase its growth target and launch a EUR 3bln share buyback between 2021-2026. Of note for chip names, reports in Chinese press suggested that TSMC is to hike prices by 10-20% in 2022.

TSMC (2330 TT) is reportedly hiking prices by 10-20% from next year, according to Economic Daily. Co. plans to raise 8-inch and 12-inch wafers by 10% to 20% next year due to strong demand. (Newswires)

FX

NZD/CHF/AUD/EUR - The margins are quite fine, but the Kiwi and Franc are at opposite ends of the G10 table, with Nzd/Usd propped around 0.7050 within circa 0.7070-0.6935 w-t-d extremes, while Usd/Chf hovers nearer the top of its 0.9236-0.9155 range. The former is also outpacing its Antipodean peer ahead of NZ trade data, as the Aud/Nzd cross trades under 1.0750 and Aud/Usd pulls back from nigh on 0.7600 yesterday amidst ongoing Aussie-Chinese trade tensions. On that note, the latest riposte from Beijing has come via the WTO in the form of a lawsuit against Australia over anti-dumping measures. Elsewhere, the Euro is grinding higher vs the Buck in wake of all Ifo survey metrics surpassing expectations and prior readings in June along with relatively upbeat accompanying comments from the German institute, but Eur/Usd remains capped into 1.1950 and perhaps conscious of hefty option expiry interest down below (2 bn running off between 1.1930-20 at the NY cut).

GBP/JPY - Sterling remains firm as the clock ticks down to high noon on Threadneedle Street, albeit not in great anticipation of a boost from the BoE given consensus for no change in policy or material shift in guidance. However, the MPC is widely tipped to be split on QE again with Haldane retaining his dissenting vote at this final meeting, if not joined by any other hawks – check out the Research Suite for a full preview of the event. Cable is currently straddling 1.3975 and staying technically bullish while above the 100 DMA circa 1.3949, while Eur/Gbp is back beneath 0.8550 and close to Wednesday’s multi-month lows around 0.8530. Meanwhile, the Yen has recovered from another retreat through 111.00 to give more credence to the notion that ample supply resides beyond the round number, and probably on behalf of Japanese exporters looking to hedge exposure. Moreover, option expiries at the 111.30 strike (1.12 bn) may keep Usd/Jpy in check and similar size at 110.75 (1.153 bn) underpinned.

CAD/USD - The Loonie remains tethered to the 1.2300 handle vs its US rival and still deriving a degree of traction from firm oil prices awaiting Canadian manufacturing sales for potential independent direction, but the Greenback appears more likely to glean fundamental impetus from a packed agenda including prime data, more Fed speakers and 7 year supply. In the interim, chart levels could be key and influential for the DXY as the index holds in a tight range (91.873-700) following its failure to maintain 92.000+ status and midweek shave with 91.500 that is just shy of the 200 DMA.

SCANDI/EM - Buoyant crude benchmarks are also giving the Nok, Rub and Mxn some support, but hampering the Try’s recovery efforts even though Turkish consumer sentiment has improved in similar vein to the mood in manufacturing. Meanwhile, the Krw is on the front foot after BoK Governor Lee stated a preference for starting to normalise policy in 2021 and earlier than previously envisaged. Ahead, several Brazilian releases for the Brl to digest and Mexican unemployment before the Banxico rate verdict.

Notable FX Expiries, NY Cut:

• EUR/USD 1.1900 (700M), 1.1910 (524M), 1.1920-30 (2.0BLN), 1.1950 (512M), 1.1975 (640M), 1.2000 (826M), 1.2020 (300M), 1.2045-50 (570M), 1.2100 (450M)
• USD/JPY 109.95-00 (2.2BLN), 110.25-30 (740M), 110.60 (600M), 110.75 (1.153BLN), 111.00 (535M), 111.30 (1.12BLN), 111.75 (1.2BLN), 112.00 (400M)
• AUD/JPY 82.45 (1.1BLN), 84.75 (1.1BLN)

FIXED

UK bonds appeared rather reluctant fallers or more resilient from the outset, and have subsequently clawed back all and more of their early Liffe declines to trade 14 ticks ahead vs 9 ticks adrift. However, this still represents an extremely confined range around the 127.45 prior close as the clock ticks down to midday when the MPC takes centre stage with policy decisions and voting details plus the latest set of minutes. Conversely, Bunds remain underwater, albeit back above 172.00 having extended losses to 29 ticks at 171.88 at one stage and US Treasuries are fractionally softer in advance of a busy PM agenda comprising top tier data in the form of durable goods, final Q1 GDP, trade and jobless claims before another batch of Fed speakers, KC Fed manufacturing and the final auction of the week (Usd 62 bn 7 year notes) that normally goes down well with indirect bidders, but follows pretty weak 2 and 5 year sales.

COMMODITIES

A relatively uneventful and uninspiring session for the crude space thus far with WTI and Brent August’21 futures somewhat choppy throughout the morning but very much rangebound after flat APAC trade. Currently, the benchmarks post gains of circa. USD 0.10/bbl and are around the mid-point of today’s range which is much more contained than the parameters of yesterday’s session, for instance. Fresh newsflow explicitly for the complex has been light and as such its very much a case of waiting for next week’s OPEC+ gathering given the weeks source reports and updates on the geopolitical front. On this, attention around Iran is heightened as the IAEA agreement expires today ahead of a reported resumption in nuclear talks with the US from next week. Moving to metals, spot gold and silver have been erring firmer but remain in close proximity to unchanged levels deriving some impetus from the downbeat USD once again though upside is perhaps capped as yields are slightly higher. Base metals are pressured this morning with increasing attention on commodities broadly in China given inflation concerns. Elsewhere, UBS looks for a copper recovery in the next 6-12 months believing the market could be undersupplied by 603k/T and 461k/T in 2021 and 2022 respectively; for context, Glencore’s CEO said.

Citi sees Brent crude averaging USD 77/bbl in Q3 2021 and USD 78/bbl in Q4; Citi sees a market deficit even if Iranian sanctions are suddenly lifted. (Newswires)

UBS expects copper to recover to USD 11k/MT over the next 6-12 months; the market could be undersupplied by 603k/T and 461k/T in 2021 and 2022 respectively. (Newswires)