EU, Italy Balance of Payments; UK CBI Industrial Trends Survey;
updates from Coca-Cola HBC, DS Smith
Shares in Europe should extend gains early Tuesday, although
caution will remain ahead of the U.S. reopen. In Asia, major
benchmarks were broadly higher, along with Treasury yields, oil and
gold; and the dollar weakened as a risk-on mood boosted regional
European stocks are likely to continue their winning streak on
Tuesday, having advanced for a second straight session on Monday in
the absence of U.S. trading.
U.S. futures were also higher as Wall Street reopens later and
as investors look ahead to comments from Jerome Powell to Congress
on Wednesday and Thursday for clues about the chances of a second
consecutive three-quarter-point interest rate rise in July.
On Monday, Federal Reserve Bank of St. Louis President James
Bullard said the economy appears on track for more expansion this
year, and that the central bank must meet market expectations for
rate rises as part of its effort to rein in inflation.
"U.S. labor markets remain robust, and output is expected to
continue to expand through 2022," Bullard said. But he added,
"Risks remain substantial and stem from uncertainty around the
Russia-Ukraine war and the possibility of a sharp slowdown in
Read: Fed's Bullard Says He Expects Economic Expansion to
Continue This Year
The dollar weakened on improved risk sentiment in Asian markets.
MUFG Bank currency analyst Sophia Ng said this is unlikely to last,
however, as investors remain wary of global growth risks and
China's latest move to impose limited mobility restrictions in
Shenzhen to contain a Covid-19 outbreak.
The Bank of England should raise interest rates more
aggressively to prevent the pound from weakening as that could
exacerbate inflation pressures, according to Catherine Mann, member
of the BOE's monetary policy committee.
A robust rate rise "reduces the risk that domestic inflation
already embedding is further boosted by inflation imported via a
sterling depreciation," Mann said.
The trade-off between inflation and economic activity may become
more challenging due to the U.K.'s sensitivity to global financial
spillovers resulting from robust policy tightening by other major
central banks, she added.
The BOE raised its key rate by 25 basis points to 1.25% last
Thursday, but Mann and two of the nine-member monetary policy
committee voted for a 50 basis-point rise.
Treasury yields were unchanged early Monday after investors
seeking cover from inflation sent 10- and 30-year yields lower for
a third straight session on Friday.
Despite three straight sessions of declines, the 10- and 30-year
rates remained up for the week just ended. Meanwhile, the spread
between 2- and 10-year yields shrank back toward the brink of
inversion and hovered below 6 basis points in a worrisome sign
about the outlook. The 5s30s spread remained inverted, at minus 5.6
After Monday's U.S. holiday, housing data is likely to be
closely watched for indications on the impact monetary tightening
is having on the economy. "The next issue is how sensitive
inflation will be to a significant growth slowdown," said BMO's
Oil futures made further gains early Tuesday, advancing on some
tightness in the market.
Recent Chinese data showing record oil imports for May suggests
that demand is still strong, said OANDA's Jeffrey Halley. "That
remains so around the world, and the squeeze on refined products
like diesel and gasoline remain as tight as ever."
The loss of Emmanuel Macron's parliamentary majority is an early
sign of how Russia's squeeze on European energy prices is raising
the economic and political stakes for European leaders as the
invasion of Ukraine becomes a war of attrition.
Russia began throttling the flow of natural gas to Europe last
week, sending energy prices even higher and raising the specter
that the continent won't have ample supplies of gas to heat homes
and power factories through the winter.
Read: Macron Lost Grip on Parliament Amid Russian Squeeze on
Gold futures edged up in early Asian trade, supported by some
safe-haven demand on current macroeconomic uncertainties. Investors
will likely keep a close watch on Jerome Powell's testimony before
lawmakers later this week, where he will outline his views on
Copper prices were little changed as demand weakens on a
worsening macroeconomic outlook and as supply slowly returns to the
market. Fitch said expectations of weaker economic growth in China
were also weighing on demand for the metal.
Chinese iron-ore futures dipped with sentiment still weak. ANZ
said steel mills conducting maintenance has curbed the demand for
"Expectations of a rebound in the real estate sector have slowly
fallen as renewed outbreaks of Covid-19 lead to further lockdowns.
The promise of more economic support in China failed to boost
sentiment in the iron ore market."
TODAY'S TOP HEADLINES
Fed's Bullard Says He Expects Economic Expansion to Continue
Federal Reserve Bank of St. Louis President James Bullard said
the economy appears on track for more expansion this year, and that
the central bank must meet market expectations for rate rises as
part of its effort to rein in inflation.
"U.S. labor markets remain robust, and output is expected to
continue to expand through 2022," Mr. Bullard said in materials for
a presentation in Spain. But he added, "Risks remain substantial
and stem from uncertainty around the Russia-Ukraine war and the
possibility of a sharp slowdown in China."
Hong Kong Continues Selling U.S. Dollars to Defend Currency
Hong Kong has sold more foreign-exchange reserves to maintain
its longstanding peg to the U.S. dollar, bringing its total outlay
this year to US$9.54 billion.
The Hong Kong Monetary Authority, the city's de facto central
bank, said it sold US$665 million of U.S. currency in New York
hours Monday. That followed the US$6.63 billion it sold last
Activists Target Nelson Peltz's Trian Over U.K. Fund
A group of investors is agitating for change at a London-listed
investment vehicle managed by shareholder activist Trian Fund
Management LP, arguing that the company has deviated from its
original purpose when it went public nearly four years ago.
The group, made up of Invesco Ltd., Janus Henderson Investors UK
Ltd., Pelham Capital Ltd. and Global Value Fund, said Monday it is
calling on the company's board to convene an extraordinary general
meeting of its shareholders and swap out current directors.
Israel Heads for New Elections as Coalition Moves to Dissolve
TEL AVIV-Israel's prime minister, Naftali Bennett, said Monday
he would move to dissolve Parliament and call for the country's
fifth election in three years, marking the end of the most diverse
ruling coalition in Israel's history.
Mr. Bennett said Foreign Minister Yair Lapid, a former news
anchor turned centrist politician, would lead the country in the
interim period, which could last several months. The two leaders,
from opposite sides of the Israeli political spectrum, joined
forces last year to oust then-Prime Minister Benjamin Netanyahu.
The prospect of new elections gives Mr. Netanyahu, the country's
longest-serving prime minister, a fresh shot at regaining
France's Macron Lost Grip on Parliament Amid Russian Squeeze on
PARIS-The loss of French President Emmanuel Macron's
parliamentary majority is an early sign of how Russia's squeeze on
European energy prices is raising the economic and political stakes
for European leaders as the invasion of Ukraine becomes a war of
Mr. Macron's party lost dozens of seats in the National Assembly
to candidates backed by far-left firebrand Jean-Luc Melenchon and
far-right leader Marine Le Pen. Both politicians seized on
record-level inflation to portray Mr. Macron as a leader who paid
more attention to his role on the diplomatic stage, dealing with
the war in Ukraine, than to voters struggling to make ends
Israel Expands Operations Against Iranian Nuclear, Military
Israel is intensifying its campaign to thwart Iran's nuclear,
missile and drone programs with a series of covert operations
targeting a broader range of key targets, said people familiar with
The new moves are the latest evolution of a strategy that has
been dubbed the Octopus Doctrine by Israeli Prime Minister Naftali
Bennett, who aims to bring Israel's battle against Iran onto
Iranian territory after years of targeting Iranian agents and
Tehran's proxies outside the country in places such as Syria.
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Expected Major Events for Tuesday
05:00/FIN: May Labour force survey, incl unemployment
06:00/SWI: May Trade Balance
08:00/POL: May Average gross wages
08:00/EU: Apr Euro area balance of payments
08:00/POL: May PPI
08:00/POL: May Industrial Production Index
08:00/POL: May Agricultural prices
08:00/ICE: May Harmonized CPI
09:00/ITA: Apr Balance of Payments
09:00/MLT: May RPI
10:00/UK: Jun CBI Industrial Trends Survey
17:59/POR: Apr Balance of Payments
22:00/NED: May House Price Index
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(END) Dow Jones Newswires
June 21, 2022 00:18 ET (04:18 GMT)
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