Morning Report – Thursday 25th June

Main Headlines

The ECB will give documents to the German central bank to address objections related to its QE program that were raised last month by the country’s Constitutional Court, Reuters reported. Bundesbank President Jens Weidmann can then present them to the German parliament and government, as last month’s ruling sought. The documents were previously given to the European Court of Justice when it reviewed and approved the ECB’s asset-purchase plans.

Seven U.S. states saw record jumps in virus infections, as the nationwide one-day tally exceeded 38,000 and the rate of increase rose to 1.6% versus the 1.3% average of the preceding week. The news raised doubts about efforts to end lockdowns. In Texas, where cases soared 4.6%, Governor Greg Abbott decried a “massive outbreak” racing across the state. The death toll will reach 180,000 by October, according to the University of Washington.

South Korea’s Kospi led losses across Asian equity markets after the S&P 500 fell 2.6% and the Nasdaq was down for the first session in nine. European stock futures slid along with FTSE 100 and S&P 500 contracts. China and Hong Kong markets were closed for a holiday. Oil fell, treasuries rose and gold edged higher.

Russians will today begin casting their ballots in a seven day vote on sweeping reforms that could clear the way for President Vladimir Putin to stay in the Kremlin until 2036 if re-elected, an exercise that critics call a constitutional coup.

GBP

The pound has continued to trade with a bearish tone, weighed down by uncertainty over Brexit negotiations even after global risk appetite got a boost from positive economic data as countries ease their lockdowns.

EUR

The lifting of restrictions imposed to contain the coronavirus has made German consumers more eager to take out their wallets and more positive about their income prospects, a survey showed this morning. The pandemic is expected to sink Germany into one of its worst recessions and the government has approved two stimulus packages financed with record new borrowing to revive the economy, including lower value-added tax rates from July 1 for six months to boost consumption.

USD

Charles Evans warned that recurring outbreaks will probably hurt U.S. growth and keep unemployment levels elevated for some time to come. Intermittent spikes of infections “might be made worse by the faster-than-expected reopenings,” the Chicago Fed president said. St. Louis chief James Bullard called the pandemic a “major crisis,” though he still expects a strong second-half recovery. The dollar held the upper hand in early trade this morning as an increase in coronavirus cases in the United States and fresh trade tensions undermined hopes for a quick global recovery and prompted investors to trim bets on riskier currencies.

Main Economic Data/Central Banks/Government (All Times BST)

7:00 a.m.: Germany July consumer confidence
8:00 a.m.: Spain May PPI
11:00 a.m.: U.K. June CBI retail sales
12:00 p.m.: Turkey rate decision
12:30 p.m.: ECB minutes
1:30 p.m.: U.S. Initial Jobless Claims, 1Q GDP
1:30 p.m.: ECB’s Schnabel speaks
3:30 p.m.: ECB’s Mersch, Knot speak
6:00 p.m.: BOE’s Haldane speaks