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Breakfast Bites - Mixed start to Second Half

France Elections, PMIs in Focus; JPY and Chinese Yields hit new low

Rise and shine everyone and Happy 2nd half of the year.

July is historically a strong month for the S&P 500, if we look at seasonality so traders are gearing up for a solid month ahead.

We have three major central bank meetings this month - the ECB, the BoJ and the Fed. And China gears up for their Third Plenum which is the long-term policy and reform meeting they hold every 5 years.

In more near-term news, the Euro and EU stock futures rose on speculation that despite the National Rally’s Marie taking a large number of seats there are doubts that she will take the majority. (Final first-round results should be known by tomorrow).

For economic data, manufacturing PMI readings across most of Europe were largely in line with expectations, with slight upward revisions for France, Germany, and the Eurozone final figures. Notably, Norway and Hungary saw contractions for the first time in 8 and 6 months, respectively. German state CPI readings suggest that the national figure, due at 08:00 ET, may come in below consensus, with North Rhine-Westphalia, the largest component, reporting a 2.2% year-over-year increase

The Yen hit fresh record lows against the Euro and is again threatening to reach new 38-year lows against the USD, and the discussion of intervention continues.

China’s Yields on the other hand, hit record lows and the Government is now considering selling Chinese Government Bonds in the open markets. Pessimism about the domestic economy continues to weigh on yields.

US Equity Futures are trading higher in the pre-market now. Most of the Mag 7 opened lower but have since recovered, except Nvidia. Yields are marginally higher, while the US Dollar Index is slightly lower. Commodities are higher; Bitcoin is flat.

One data point to look out for today: the US Manufacturing PMI - both from S&P Global and ISM.

Manufacturing PMIs from Around the World

A whole host of manufacturing PMIs were released today, and most Asian countries are showing sequential expansion. ⤵️

  • South Korea: June PMI Manufacturing: 52.0 vs. 51.6 prior (2nd straight expansion)

  • India: June Final PMI Manufacturing: 58.3 vs. 58.5 prelim (36th straight expansion)

  • Taiwan: June PMI Manufacturing: 53.2 vs. 50.9 prior (3rd month of expansion)

  • Thailand: June PMI Manufacturing: 51.7 vs. 50.3 prior (2nd straight expansion)

  • Malaysia: June PMI Manufacturing: 49.9 vs. 50.2 prior (2nd straight expansion)

  • Vietnam: June PMI Manufacturing: 54.7 vs. 50.3 prior (3rd month of expansion)

  • Indonesia: June PMI Manufacturing: 50.7 vs. 52.1 prior (33rd month of expansion)

  • Philippines: June PMI Manufacturing: 51.3 vs. 51.9 prior (10th month of expansion)

  • Japan: June Final Manufacturing PMI: 50.0 vs. 50.1 prelim (Confirms 2nd straight expansion)

  • China: June Caixin PMI Manufacturing: 51.8 vs. 51.5E (Highest since May 2021 and the 8th month of expansion)

  • China: June Manufacturing PMI (Govt Official): 49.5 vs. 49.5E (2nd straight contraction)

  • Australia: June Final PMI Manufacturing: 47.2 vs. 47.5 prelim (Lowest since 2020 and confirms 5th month of contraction)

Chart of the Day

S&P 500’s record count in the first half of 2024 was exceeded only once this century.


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)

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