ASIA-PAC

Asian equity markets traded mixed as the region digested a slew of tier-1 Chinese data and with the absence of Japanese participants adding to the initial lull. ASX 200 (-0.6%)was negative with the downside led by underperformance in tech and telecoms, while financials also weighed on the index with AMP Capital shares down around 15% after it noted the unlikelihood it will proceed with its life insurance unit sale due to opposition by the RBNZ. Conversely, Hang Seng (+0.3%) and Shanghai Comp. (+0.4%) were pressured at the open after the recent mixed lending and trade data from China, while participants were also cautious as they awaited more tier-1 releases from the world’s 2nd largest economy including Chinese GDP, Industrial Production and Retail Sales. The data then proved to be better than expected as most of the figures topped estimates which inspired a recovery in stocks, although still showed China’s economic growth slipped to 6.2% Y/Y as expected which was the slowest pace since 1992.

PBoC skipped open market operations but injected CNY 200bln via 1yr MLF at rate kept at 3.3%, while it implemented the 3rd phase of RRR cuts for county-level rural commercial banks that would release long-term funds of about CNY 100bln. (Newswires) PBoC set CNY mid-point at 6.8677 (Prev. 6.8662)

Huawei is said to plan deep job cuts in US as it struggles with the US blacklisting, while there were separate reports that US firms may get the go ahead to restart new sales to Huawei in the next 2-4 weeks. (WSJ/Newswires)

China detained another Canadian citizen which is said to add to the high tensions between the two countries. (NYT)

Chinese GDP (Q2) Q/Q 1.6% vs. Exp. 1.5% (Prev. 1.4%). (Newswires) Chinese GDP (Q2) Y/Y 6.2% vs. Exp. 6.2% (Prev. 6.4%); slowest pace of growth since 1992. Chinese Industrial Production (Jun) Y/Y 6.3% vs. Exp. 5.2% (Prev. 5.0%) Chinese Retail Sales (Jun) Y/Y 9.8% vs. Exp. 8.3% (Prev. 8.6%) Chinese China House Prices (Jun) Y/Y 10.3% (Prev. 10.7%)

US

US President Trump will not impose uranium quotas despite assessment by the Commerce Department that US use of foreign uranium raises security concerns. (Newswires)

US President Trump is reportedly considering removing US Commerce Secretary Wilbur Ross, according to NBC citing sources. (NBC)

- After a stinging Supreme Court defeat on adding a citizenship question to the census, according to multiple people familiar with the conversations

- Some White House officials expect Ross to be the next Cabinet secretary to depart, possibly as soon as this summer

UK/EU

UK PM candidate Boris Johnson will seek a UK trade deal with US in first move if he becomes PM. In related news, there were reports that US President Trump’s negotiators signalled that hopes of a post-Brexit trade deal with the US rest on the willingness of the next PM to fall in line with tough American policies against Huawei. (Newswires/Times/Telegraph)

A hard Brexit could be made more likely because European Union leaders have failed to grasp the firming of opinion in Britain, Latvia’s foreign minister has warned. (Telegraph)

Conservative candidate Hunt has declared that he would take on the role of Brexit Secretary himself because it is “too big” a responsibility not to be carried out by the prime minister. (Telegraph)

UK Chancellor Hammond has vowed to oppose a no-deal Brexit from the back benches in a valedictory speech to civil servants last week, according to The Times. (Times)

Direct rule will be implemented in Northern Ireland within the next three months to see through Brexit, ministers believe. (Times)

UK Rightmove House Prices (Jul) M/M -0.2% (Prev. 0.3%). (Newswires) UK Rightmove House Prices (Jul) Y/Y -0.2% (Prev. 0.0%)

German Economy Ministry says that domestic industrial activity remains sluggish with headwinds from foreign demand still being felt. (Newswires)

- Current data suggests a weak general economic trend in Q2 but forces of economic upswing could become more prominent thereafter if the external environment settles

GEOPOLITICS

Iran President Rouhani said Iran is ready and willing to hold talks if US sanctions are lifted and US returns to the 2015 nuclear deal, while there were separate comments from Iran Foreign Minister Zarif that Iran will continue with its oil exports no matter what the conditions. (Newswires)

EQUITIES

European indices have drifted lower in recent trade, but are largely unchanged [Eurostoxx 50 U/C] following on from a mixed Asia-Pac trade as volumes were mired amid the absence of Japan. Sectors are also little inspired, albeit material names benefiting marginally from the boost in base metal prices post-Chinese data. Meanwhile, movers include the likes of Antofagasta (+4.0%) after the Co’s JV with Barrick Gold was awarded USD 5.84bln in damages from a legal dispute with the Pakistani government. Elsewhere, AB InBev (-2.0%) shares declined after the Co. back-tracked on its Hong Kong IPO plans due to little demand from long-term investors, the IPO was meant aid the Co. with its USD 100bln debt pile. Airbus (+0.6%) shares rose in early trade amid a weekend WSJ article which highlighted Boeing’s 737 Max is likely to be grounded until January next year as the jet is yet to satisfy all safety requirements, according to union leaders and officials. Finally, analysts at JPM have raised their 12-month S&P 500 price target to 3200 (Prev. 3000) citing factors including synchronised easing of global central banks, attractive relative valuation, intracycle profit recovering by year-end and a record share buyback to buoy equity demand; for reference, the S&P closed at a record 3013 on Friday. The analysts also expect a partial US-Sino trade deal heading into the US election year, although this has been caveated as their largest single downside risk to the view.

Citigroup (C) – are due to report earnings at 13:00 BST today, in terms of focus some are highlighting that management guidance around NII is key, rather than the headline prints (EPS Exp. USD 1.81, revenue Exp. USD 18.49bln); emphasis has been placed on the potential need for NII to be guided lower. (Newswires)

FX

NZD/AUD - The Antipodean Dollars continue to outperform, and the latest advances have been made with the aid of better than expected Chinese data in the form of ip and retail sales. However, with GDP in line with consensus and slowing to a 27 year low, it is the Kiwi rather than Aussie that has really extended gains from last week to a 0.6725 high vs its US counterpart and towards 1.0450 in cross terms as Aud/Usd stalls at 0.7035. Note also, Westpac sees more upside for Nzd/Usd in the short term based on the Fed’s dovish tilt, but then a reversal through 0.6600 next month assuming the RBNZ eases again. More immediately, NZ inflation for Q2 looms and the forecast is for firmer CPI prints.

CHF/EUR/JPY/CAD - All narrowly mixed vs the Greenback, but with the Franc also getting a bullish nod via a bank trade recommendation as MS favours going short of Usd/Chf at current levels circa 0.9835 for 0.9730 with a 0.9980 stop, while Eur/Chf hovers closer to the base of a 1.1100-1.1085 range and shrugs off weak Swiss producer/import prices. Meanwhile, the single currency remains trapped in a tight range inside 1.1250-1.1300 vs the Buck and flanked by key chart support and resistance, like the 100 DMA at 1.1255, a 50% Fib at 1.1303 and the 200 DMA at 1.1323. Elsewhere, the Yen is pivoting 108.00 in an equally tight range and with trade/interest hampered by Japan’s Marine Day market holiday, but the Loonie is consolidating recent gains between 1.3042-22 after last Wednesday’s relatively hawkish or neutral BoC hold.

GBP - In stark contrast to yesterday’s Lords result, the Pound is lagging behind G10 peers, and especially the Kiwi. Cable is only just holding 1.2550 after another fade ahead of 1.2600 even though the Dollar is generally soft and the DXY is depressed below 97.000, with the ongoing UK political void weighing on sentiment and Brexit still up in the air as a result.

EM - The Lira is holding up quite well in the face of another Turkish ratings downgrade (1 peg by Fitch to BB-, outlook negative) with Usd/Try meandering between 5.7070-7325 vs a peak of 5.7800 late last Friday when a White House statement about Turkey’s S-400 missile system purchase from Russia was unexpectedly shelved amidst speculation that US President Trump may err on the side of lenience when it comes to any sanctions. Conversely, the Real may come under pressure and Usd/Brl rally from 3.7400 on the back of reports Brazil’s lower house could delay a vote on pension reforms until August (ie after this Friday’s recess) due to proposed amendments that could diminish the financial savings from the new package.

Turkish President Erdogan reportedly said that Turkey will make serious cuts to interest rates, according to Haberturk. And that Turkey is aiming to reduce inflation to a single digit figure by the years end. (Newswires) For reference the next CBRT decision is July 25th.

US President Trump’s team has reportedly agreed on a package of sanctions to be placed on Turkey in response to their reception of the S-400 Russian missile system; with the source stating this is to be announced later in the week. (Newswires)

Brazil's lower house of Congress may not vote on the pension reform bill until next month as tough negotiations over amendments delayed the process and reduced savings derived from the overhaul. (Newswires)

FIXED INCOME

Bunds and Eurozone peers continue to lead the recovery from recent lows, and the former reclaimed 172.00 before losing momentum having bounced further from the 171.49 overnight Eurex low. Market contacts point out that this represented a Fib retracement and the inference is that tech traders/jobbers may have been behind the subsequent rebound, with stops perhaps tripped when near term resistance was breached around 171.79. However, a downturn in EU stocks could be another factor while the sheer scale and speed of the fall in debt/back-up in yields is likely to have contributed or at least added impetus. However, the core German bond faces another chart hurdle around 172.12 and Gilts at 130.89 vs 172.06 and 130.72 at best thus far, while USTs remain below par and the back end is still underperforming ahead of the first of the big bank earnings, Empire State manufacturing and Fed’s Williams.

COMMODITIES

Little to report on the energy front, although WTI and Brent futures remain choppy within a relatively narrow intraday band thus far. The former currently hovers just above the 60/bbl mark whilst the latter remains afloat closer to the 67/bbl, as the benchmarks largely reflect market sentiment in the absence of fresh catalysts. Elsewhere, Hurricane Barry has abated to a tropical depression, with eyes now on any refineries coming back online after the Gulf’s crude output was cut by 70% on Friday amid storm preparations. ING notes that output in the Gulf is likely to return to normal levels over the coming days. Meanwhile, gold prices are little changed amid a steady USD and base metals were bolstered by the mostly upbeat Chinese data overnight. As such copper has reclaimed 2.7/lb to the upside while nickel surged in excess of 3.0% deriving additional strength from supply woes.

BSEE said Gulf of Mexico crude output was cut by 70% on Friday and natural gas output was reduced by 56% due to storm preparations, while the NHC stated on Sunday that Barry weakened to a tropical depression over north-western Louisiana and that life-threatening flooding rains will continue into Monday. (Newswires)

Iraq Southern oil exports averaged 3.42mln BPD so far in July (vs. 3.39mln BPD in June), according to officials. (Newswires)

Kazakhstan oil and condensate production +15.5% M/M to 7.75mln BPD. (Newswires)