Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 2 June 2020 - ADM ISI
- Typical subdued second day of month schedule; digesting RBA, awaiting
UK money and credit data, US Auto Sales; busier day for Eurozone / UK
bond auctions, corporate issuance flood continues; oil in focus ahead
of OPEC+ meeting
- UK Consumer Credit: further sharp contraction expected; credit crunch
bodes poorly for spending
- US Auto Sales: easing of lockdown expected to pace bounce, still a
far cry from 5-yr average pace
- Charts: UK Consumer Credit; US equity issuance 2015 - 2020; WTI Oil vs.
S&P 500 e-mini
- Bloomberg Radio podcast: https://www.bloomberg.com/news/audi...sconnect-between-economic-reality-and-markets
..........................................................................
********************
** EVENTS PREVIEW **
********************
As is often the case on the second working day of the month, the data schedule is none too onerous, with South Korea's final Q1 GDP and Australia's Q1 Current Account & Inventories to digest ahead of UK monetary and credit aggregates, the tail end of the Manufacturing PMIs (delayed due to the Whitsun holiday yesterday) and probably most significantly US Auto Sales. As expected the RBA left its Cash Rate and 3-yr ACGB yield target unchanged at 0.25%, while there are opposition orchestrated demonstrations against government policies scheduled in Italy. A busier day for govt bond supply has auctions in Austria, Germany and the UK. The other focal point beyond political and coronavirus news flow will be oil markets, as they await Russia's decision on extending the OPEC+ cuts (by 1 to 2 months??) ahead of Thursday's meeting, with the API Oil inventories tonight (and EIA report tomorrow) expected to show a further build in crude stocks. Markets remain largely immune to any negative news, be that political or economic as was amply demonstrated yesterday, above all via yet another deluge of corporate issuance (IG $18.15 Bn, HY $1.825 Bn & LatAm $2.5 Bn), and as long as central banks continue to play buyer of last resort and backstop markets, risk premia will effectively remain at zero, and risk appetite enormous given the degree of financial repression in 'safe' asset returns.
In terms of today's data, Korea's marginal upward revision to Q1 GDP and a slightly larger contribution from Net Exports to Australian Q1 GDP due tomorrow prompted little reaction. The UK Consumer Credit numbers bear a lot of scrutiny, given a forecast of an even bigger contraction of £-4.5 Bln following March's £-3.8 Bln, which smashed the GFC record of £-1.17 Bln and thus pointing to a colossal crunch in unsecured credit, even if Mortgage Lending is expected to remain just about in positive territory at £1.1 Bln after surging £4.8 Bln in March - the implications for consumer spending are clearly dire, and it will be interesting to see if the BoE and Treasury efforts to head this off show any positive effects in the May and June data. US Auto Sales are forecast to rebound to 11.0 Mln in May from an all-time low of 8.48 Mln in April, as lockdown measure were eased, but are and will likely remain way off the 17.0 Mln plus average annual pace seen in the past 5 years.
| Inbox | x |
| 08:23 (2 minutes ago) |
|
- Typical subdued second day of month schedule; digesting RBA, awaiting
UK money and credit data, US Auto Sales; busier day for Eurozone / UK
bond auctions, corporate issuance flood continues; oil in focus ahead
of OPEC+ meeting
- UK Consumer Credit: further sharp contraction expected; credit crunch
bodes poorly for spending
- US Auto Sales: easing of lockdown expected to pace bounce, still a
far cry from 5-yr average pace
- Charts: UK Consumer Credit; US equity issuance 2015 - 2020; WTI Oil vs.
S&P 500 e-mini
- Bloomberg Radio podcast: https://www.bloomberg.com/news/audi...sconnect-between-economic-reality-and-markets
..........................................................................
********************
** EVENTS PREVIEW **
********************
As is often the case on the second working day of the month, the data schedule is none too onerous, with South Korea's final Q1 GDP and Australia's Q1 Current Account & Inventories to digest ahead of UK monetary and credit aggregates, the tail end of the Manufacturing PMIs (delayed due to the Whitsun holiday yesterday) and probably most significantly US Auto Sales. As expected the RBA left its Cash Rate and 3-yr ACGB yield target unchanged at 0.25%, while there are opposition orchestrated demonstrations against government policies scheduled in Italy. A busier day for govt bond supply has auctions in Austria, Germany and the UK. The other focal point beyond political and coronavirus news flow will be oil markets, as they await Russia's decision on extending the OPEC+ cuts (by 1 to 2 months??) ahead of Thursday's meeting, with the API Oil inventories tonight (and EIA report tomorrow) expected to show a further build in crude stocks. Markets remain largely immune to any negative news, be that political or economic as was amply demonstrated yesterday, above all via yet another deluge of corporate issuance (IG $18.15 Bn, HY $1.825 Bn & LatAm $2.5 Bn), and as long as central banks continue to play buyer of last resort and backstop markets, risk premia will effectively remain at zero, and risk appetite enormous given the degree of financial repression in 'safe' asset returns.
In terms of today's data, Korea's marginal upward revision to Q1 GDP and a slightly larger contribution from Net Exports to Australian Q1 GDP due tomorrow prompted little reaction. The UK Consumer Credit numbers bear a lot of scrutiny, given a forecast of an even bigger contraction of £-4.5 Bln following March's £-3.8 Bln, which smashed the GFC record of £-1.17 Bln and thus pointing to a colossal crunch in unsecured credit, even if Mortgage Lending is expected to remain just about in positive territory at £1.1 Bln after surging £4.8 Bln in March - the implications for consumer spending are clearly dire, and it will be interesting to see if the BoE and Treasury efforts to head this off show any positive effects in the May and June data. US Auto Sales are forecast to rebound to 11.0 Mln in May from an all-time low of 8.48 Mln in April, as lockdown measure were eased, but are and will likely remain way off the 17.0 Mln plus average annual pace seen in the past 5 years.
Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Held
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Dentalfloss
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Dentalfloss
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