EU Mid-Market Update via TradeTheNews

Euro Area confidence continues to improve; France moves into technical recession.

**Notes/Observations** - France Q1 Final GDP revised lower to show the country entering a double-dip technical recession - ECB's rhetoric had turned substantially more dovish over the past week - Focus turns to US PPI data; concerns that Fed’s monetary policy remained too loose to contain accelerating inflation.

Asia: - Japan Apr Jobless Rate: 2.8% v 2.7%e - Japan May Tokyo CPI Y/Y: -0.4% v -0.5%e; CPI (ex-fresh food) Y/Y: -0.2% v -0.2%e - BOJ said to be contemplating a 6-month extension to its Sept deadline for pandemic relief program; could be announced as early as next rate review (Jun 17-18th) - China PBOC sets Yuan reference rate: 6.3858 v 6.4030 prior (Strongest since May 24, 2018) Coronavirus: - Japan Econ Min Nishimura confirmed the govt would seek to extend coronavirus state of emergency in Tokyo and additional prefectures until June 20th.

Europe: - UK PM Johnson said to be considering carbon tax on imports to target heavy carbon emitting industries. Expected to be expanded into agriculture in an effect to protect UK farmers from foreign rivals.

Americas: - Treasury Sec Yellen testified that she did not want inflation embedded in US economy, had to watch current inflation situation very closely. Inflation seen recently was temporary, not endemic; Saw high rates of inflation through end of year - Fed’s Jackson Hole Summit to be held between Aug 27-28th in person (**Reminder: Historically this has been a meeting where Fed Chairs and officials sometimes signaled shifts in policy).

Energy: - Upcoming OPEC+ meeting on June 1st was expected to reaffirm plans to boost oil production in July.


**Equities** Indices [Stoxx600 % at #, FTSE % at #, DAX % at #, CAC-40 % at #, IBEX-35 % at #, FTSE MIB % at #, SMI % at #, S&P 500 Futures %] Market.

Focal Points/Key Themes: ***Equities*** - Consumer discretionary: - Consumer staples: - Energy: - Financials: - Healthcare: - Industrials: - Technology: - Telecom:

***Speakers: - ECB's Schnabel (Germany) reiterated stance that premature removal of ECB support measures would be a grave mistake as both pandemic and economic crisis were far from over. Short-term economic outlook had improved. Financing condition remained favorable and the recent rise in yields due to improved outlook - ECB’s Villeroy (France) stated that saw no reason to extend pandemic support for banking sector beyond 2022 including capital buffers - BOE's Haldane (chief economist): BOE should be prepared to reduce its stimulus - US and EU Leader joint draft statement said to commit to discourage fossil-fuel investment - China Securities Regulatory Commission (CSRC) said to vow to crack down on future market violations and to help manage commodity prices in coordination with other govt bodies.

**Currencies/ Fixed Income** - USD holding steady ahead of the PPI data set for release later today. Dealers had some concerns that Fed’s monetary policy remained too loose to contain accelerating inflation. - ECB's rhetoric had turned substantially more dovish over the past week. Markets expect the ECB to extend the current pace of its bond buying program at its June 10th policy meeting, even though the economy was likely to improve - GBP recent rally stalled as dealers noted some concerns that the UK. Would not be able to fully re-open its economy later in June as the Indian variant case made up the majority of new infections (75%) and the average age of new infections fell to under 30 years.

**Economic data**- (NL) Netherlands May Producer Confidence Index: 8.8 v 6.5 prior - (FI) Finland Q1 GDP Q/Q: -0.1% v +0.4% prior; Y/Y: -1.0% v -1.1% prior - (FI) Finland Apr House Price Index M/M: 2.2% v 0.3% prior; Y/Y: 4.9% v 2.5% prior - (DE) Germany Apr Import Price Index M/M: 1.4% v 1.0%e; Y/Y: 10.3% v 9.9%e - (NO) Norway Apr Retail Sales (with auto/fuel) M/M: +0.3% v -0.3%e - (FR) France Q1 Final GDP Q/Q: -0.1% v +0.4%e; Y/Y: 1.2% v 1.5%e (technical recession) - (FR) France May Preliminary CPI M/M: 0.3% v 0.3%e; Y/Y: 1.4% v 1.4%e - (FR) France May Preliminary CPI EU Harmonized M/M: 0.4% v 0.3%e; Y/Y: 1.8% v 1.8%e - (FR) France Apr PPI M/M: -0.3% v +1.0% prior; Y/Y: 7.3% v 4.6% prior - (FR) France Apr Consumer Spending M/M: -8.3% v -4.0%e; Y/Y: 32.0% v 37.6%e - (ES) Spain Apr Adjusted Retail Sales Y/Y: 41.0% v 29.1%e; Retail Sales (unadj) Y/Y: 38.5% v 18.1% prior - (CH) Swiss May KOF Leading Indicator: 143.2 v 132.0e - (AT) Austria Apr PPI M/M: 1.0% v 1.0% prior; Y/Y: 4.6% v 2.8% prior - (HU) Hungary Mar Average Gross Wages Y/Y: 8.7% v 8.9%e - (TR) Turkey Apr Trade Balance: -$3.1B v -$3.1Be - (TR) Turkey May Economic Confidence: 92.6 v 93.9 prior - (SE) Sweden Q1 GDP Q/Q: 0.8% v 1.1%e; Y/Y: 0.0% v 0.0%e - (SE) Sweden Apr Retail Sales M/M: -1.4% v -1.5%e; Y/Y: 7.2% v 9.1% prior - (SE) Sweden Apr Household Lending Y/Y: 5.7% v 5.7% prior - (CN) Weekly Shanghai copper inventories (SHFE): 207.8K v 221.1K tons prior - (IT) Italy Apr PPI M/M: 1.2% v 1.0% prior; Y/Y: 7.9% v 3.0% prior - (NO) Norway May Unemployment Rate: 3.3% v 3.4%e - (RU) Russia Narrow Money Supply w/e May 21st (RUB): 14.07T v 14.08T prior - (PT) Portugal May Consumer Confidence Index: -16.7 v -21.0 prior; Economic Climate Indicator: +0.5 v -0.8 prior - (EU) Euro Zone May Economic Confidence: 114.5 v 112.3e; Industrial Confidence: 11.5 v 11.5e; Services Confidence: 11.3 v 6.3e; Consumer Confidence (final): -5.1 v -5.1 advance.

**Fixed income Issuance** - (DK) Denmark sold total DKK3.84B in 3-month, 6-month, 9-month and 12-month - (IT) Italy Debt Agency (Tesoro) sold total €6.5B vs. €5.5-6.5B indicated range in 5-year and 10-year BTP Bonds - Sold €3.0B vs. €2.5-3.0B indicated range in 0.00% Apr 2026 BTP bonds; Avg Yield: 0.17% v 0.17% prior; Bid-to-cover: 1.36x v 1.43x prior (Apr 29th 2021 under 0.50% Feb 2026 BTP) - Sold €3.5B vs. €3.0-3.5B indicated range in 0.60% Aug 2031 BTP; Avg Yield: 0.94% v 0.88% prior; bid-to-cover: 1.32x v 1.44x prior - (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Apr 2026 CCTeu (floating rate Notes); Avg Yield: -0.07% v -0.06% prior; Bid-to-cover: 1.51x v 1.92x prior.

**Looking Ahead** - Virtual G7 Finance Ministers and Central banks (ECB’s Lagarde on call) - (BE) Belgium May CPI M/M: No est v 0.3% prior; Y/Y: No est v 1.2% prior - 05:20 (EU) Daily ECB Liquidity Stats - 05:30 (IN) India to sell combined INR260B in 2023, 2030 and 2061 bonds - 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2025, 2038 and 2046 Bonds - 06:00 (IE) Ireland Apr Retail Sales Volume M/M: No est v -1.9% prior; Y/Y: No est v 8.5% prior - 06:00 (PT) Portugal Apr Retail Sales M/M: No est v 2.2% prior; Y/Y: No est v -0.1% prior - 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively) - 06:45 (US) Daily Libor Fixing - 07:00 (BR) Brazil May FGV Inflation M/M: 4.0%e v 1.5% prior; Y/Y: 36.9%e v 32.0% prior - 07:30 (IN) India Weekly Forex Reserve w/e May 21st: No est v $590.0B prior - 07:30 (IS) Iceland to sell 3-month and 6-month bills - Sells ISK in 3-month bills; Avg Yield: % v 1.006% prior; bid-to-cover: x v 1.73x prior - Sells ISK in 6-month bills; Avg Yield: % v 1.224% prior; bid-to-cover: x v 1.05x prior Results: Auction Calendar: - 08:00 (ZA) South Africa Apr Monthly Budget Balance (ZAR): -55.0Be v -29.8B prior - 08:00 (UK) Daily Baltic Dry Bulk Index - 08:00 (IN) India announces upcoming bill issuance (held on Wed) - 08:30 (US) Apr Personal Income: -14.2%e v +21.1% prior; Personal Spending: 0.5%e v 4.2% prior; Real Personal Spending (PCE): 0.2%e v 3.6% prior - 08:30 (US) Apr PCE Deflator M/M: 0.6%e v 0.5% prior; Y/Y: 3.5%e v 2.3% prior - 08:30 (US) Apr PCE Core Deflator M/M: 0.6%e v 0.4% prior; Y/Y: 2.9%e v 1.8% prior - 08:30 (US) Apr Advance Goods Trade Balance: -$92.0Be v -$90.6B prior - 08:30 (US) Apr Preliminary Wholesale Inventories M/M: 0.7%e v 1.3% prior; Retail Inventories M/M: -2.0%e v -1.4% prior - 08:30 (BR) Brazil Apr Total Outstanding Loans (BRL): No est v 4.105T prior; M/M: No est v 1.5% prior; Personal Loan Default Rate: No est v 4.1% prior - 09:45 (US) May Chicago Purchase Managers Index: 68.0e v 72.1 prior - 10:00 (US) May Final University of Michigan Confidence: 83.0e v 82.8 prelim - 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Belgium, Switzerland sovereign debt; S&P on Ireland, Turkey sovereign debt) - 13:00 (US) Weekly Baker Hughes Rig Count - (MX) Mexico Apr YTD Budget Balance (MXN): No est v -83.0B prior - (BR) Brazil Apr Total Formal Job Creation: No est v +184.1K prior.

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