Eurozone New Commercial Vehicle Registrations, ECB Economic
Bulletin; Germany Ifo Index; France Monthly Business Survey; U.K.
Interest Rate Decision, MPC Meeting Minutes; EU Summit; updates
from Carnival, Petrofac, Fresnillo, Wood Group, Capita, 3i, Valeo,
Uncertainty over the latest stimulus views from Fed officials
will likely hold back European stocks on Thursday. In Asia, most
benchmarks struggled for momentum, the dollar, Treasury yields and
oil edged higher, while gold gave back most of Wednesday's
European stocks are set for a steady open on Thursday, as
traders weigh comments from Federal Reserve officials on the
outlook for stimulus after last week's more hawkish policy update
from the central bank.
U.S. shares struggled for direction on Wednesday, a day after
Jerome Powell reassured investors the Fed expects rising
inflationary pressures to prove transitory.
Powell's tone has been echoed by other Fed officials, though
both Atlanta Fed president Raphael Bostic and Fed Governor Michelle
Bowman agreed that with economic growth surging to an estimated 7%
this year and inflation well above the Fed's 2% target, inflation
may take longer than anticipated to fade, according to a Reuters
"I think stocks are in a holding pattern after a very good
Monday and Tuesday," Jeff Mortimer, director of investment strategy
at BNY Mellon Wealth Management, told MarketWatch.
While investors continue to weigh "the power of the reopening,
Fed comments and the underlying earnings strength," Mortimer
expects it to be a couple of choppy months for stocks over the
summer and into the fall, as investors search for more clarity on
the trajectory of inflation.
"We all know that inflation is going to be hot this summer. It's
no secret. The question is how hot will it be next summer."
Investors have begun to examine how long higher prices might
last. "For the next nine to 18 months, we expect inflation to be
'persistent, if transitory,' with higher prints lasting longer than
the few months many expect, but eventually ebbing back," Michael
Kelly, global head of multi-asset at PineBridge Investments, wrote
For equities, Kelly expects no "major correction" in the
eventual "tapering phase" of the Fed's asset purchases, but "rather
a more benign situation in which equities flatline or move sideways
until bottlenecks eventually clear, making asset selection all the
The dollar was stable in Asia despite Fed tapering concerns.
Both Dallas Fed President Kaplan and Raphael Bostic gave
hawkish-biased signals on Wednesday, prompting those worries, said
DailyFX.com, with an upbeat U.S. manufacturing PMI reading
reinforcing the view.
Goldman Sachs said last week's FOMC meeting "has arguably
truncated the risk of a sharp dollar depreciation driven by high
inflation and very low real rates, and should result in a clearer
positive correlation between higher domestic inflation news and
dollar appreciation." The bank said it continues to expect "broad
dollar depreciation over the medium term, due to the currency's
high valuation, the recovering global economy, and still very
accommodative Fed policy."
The Bank of England is fully expected to leave policy unchanged
when it announces a decision Thursday, though bank officials could
admit that consumer price data have overshot estimates, said
"The Monetary Policy Committee could well acknowledge the fact
that the most recent inflation prints had surpassed expectations,
something that will be taken into account when the new economic
forecasts are published in August."
Official U.K. data indicate the economy is on track to record
strong growth over the summer months, despite the recently
announced delay in the lifting of social restriction measures,
Yields for U.S. government debt rose slightly in Asia, extending
Wednesday's gains, after the Fed's Bostic joined Bullard in backing
a late-2022 rate hike plan.
Mr. Bostic, who was speaking on a call with reporters, said he
saw the economy meeting the Fed's criteria for "substantial
progress" in three or four months, at which time the central bank
could consider tapering its monthly asset purchases and nudging
interest rates higher. Bostic is a voting member of the FOMC.
Oil futures were little changed in Asia after they rose
Wednesday on data showing U.S. crude supplies fell for a fifth
IG said the next OPEC+ meeting set for July 1 is under the
spotlight and the cartel may gear up output in the months to come,
thanks to the rollout of Covid-19 vaccines globally boosting fuel
demand as travel normalizes. "They need to calibrate the pace and
magnitude of the hikes however, to prevent hurting prices."
The WSJ has reported sources as saying that OPEC and its allies
are considering boosting collective output by about 500,000 barrels
Gold was lower, with prices giving back most of Wednesday's
gains as the dollar nudged higher. OCBC said the precious metal may
be further pressured if upcoming U.S. durable goods orders data is
stronger than expected.
Base metals fell back, with the three-month LME copper contract
down 1.1% to $9,382 a ton, and the aluminum contract 0.9% lower at
Spot trade volumes for copper appear to have weakened from
earlier in the week, said Huatai Futures, adding the traditional
peak season in downstream manufacturing sectors is nearing its end.
But the medium- to long-term demand for copper will be driven by
new-energy industries and infrastructure investments in China, it
Goldman Sachs said investors should view aluminum as being in
the early stages of a multiyear bull market. Prices are likely to
be fueled by material cost inflation and a drop in supply growth to
its lowest levels in nearly four decades.
The bank has predicted a market deficit of 3 million tons by the
end of 2023 ballooning as high as 9 million tons by mid-decade.
"Companies that can reduce their emission intensity and produce
greener aluminum may attract a valuation premium versus peers."
Goldman Sachs also said the carbon-free aluminum smelting
technology being developed by Rio Tinto and Alcoa could be worth
billions to the companies as the race to "green" aluminum picks up
Several aluminum producers -- including Norsk Hydro and Rusal --
have already reported getting small green premia on some of their
aluminum sales, in the order of $5-$20/ton. "The realization of a
green premia would make the technology," which Rio Tinto and Alcoa
hope to commercialize by 2024, "strongly NPV positive," said
TODAY'S TOP HEADLINES
Yellen Says U.S. Could Breach Debt Limit Deadline in August if
Congress Doesn't Act
WASHINGTON-The U.S. could run out of room to keep paying the
government's bills some time during Congress's August recess unless
lawmakers raise or suspend the federal borrowing limit before then,
Treasury Secretary Janet Yellen said Wednesday.
Congress in 2019 suspended the borrowing limit, or debt ceiling,
through July 31, 2021. After that, the Treasury Department won't be
able to raise additional cash through the sale of government
securities and would need to deploy emergency measures to keep
paying the government's obligations, as it has in the past.
Fed's Bostic Says Bond Buying Drawdown Near, Sees Rate Rise in
Federal Reserve Bank of Atlanta President Raphael Bostic said
Wednesday he has moved forward his expectations for a central bank
rate rise to next year and that the time is coming soon for the Fed
to pare its bond buying stimulus efforts.
"Given the upside surprises and recent data points, I've pulled
forward my projection for our first move to late 2022," Mr. Bostic
said in a call with reporters. Mr. Bostic said he also expects two
additional increases in the federal-funds rate in 2023. The Fed
official had recently said he expected the first increase in
Google, Facebook Pressure Falls Short as Major Antitrust
Measures Advance in House Committee
WASHINGTON-A House committee approved far-reaching legislation
to curb the market dominance of tech giants, including Alphabet
Inc.'s Google and Facebook Inc., but much of the effort faced
intensive lobbying by affected firms that slowed the committee's
work and foreshadowed a pitched battle in the Senate.
In a package of six bills, the most significant measure to pass
by late Wednesday requires that the largest internet platforms make
it easier for users to transport their data to other platforms and
even communicate with users on other platforms. The bill-known as
the Augmenting Compatibility and Competition by Enabling Service
Switching, or Access, Act-would give the Federal Trade Commission
extensive new powers to set individualized standards for the tech
giants. It passed, 25-19.
Biden to Deter Forced Labor With Ban on China's Solar Panel
WASHINGTON-The Biden administration plans to broaden its
campaign against the use of forced labor in China's Xinjiang region
by imposing penalties on some companies that produce raw materials
used to make solar panels, according to people familiar with the
Under the plan, to be announced Thursday, U.S. Customs and
Border Protection would bar imports of metallurgical-grade silicon
mined by Hoshine Silicon Industry (Shanshan) Co., as well as
products made from it, unless the company can prove the material
isn't produced with forced labor, these people said.
Infrastructure Negotiators Agree to Framework for Package
WASHINGTON-Members of a bipartisan group negotiating a roughly
$1 trillion infrastructure proposal said they had crafted a
framework for an agreement, and lawmakers plan to meet with
President Biden on Thursday to try to complete a deal.
The Democrats and Republicans emerged from a meeting with top
White House officials Wednesday saying work would continue on some
Race Between Covid-19 Vaccines and Delta Variant Plays Out in
LONDON-The highly transmissible Covid-19 Delta variant is
generating rapidly rising caseloads in the U.K., but smaller
increases in hospitalizations and fatalities, in a hopeful sign
that mass vaccination can prevent a repeat of the heavy toll of
sickness and death seen earlier in the pandemic.
The other message is one of caution. Epidemiologists say the
U.K.'s experience shows how easily the variant can spread even
within populations where vaccine uptake is high. That underscores
the risk of further outbreaks of Covid-19 in the U.S. and other
advanced economies, as well as the urgency of widening and
accelerating vaccination programs.
EU Aims to Beef Up Cybersecurity Amid Ransomware Boom
The European Union is aiming to step up international
cybersecurity collaboration through a joint unit intended to serve
as a hub for intelligence and a first-responder to major hacks.
The announcement came a day after a top U.S. official said
Washington would work more closely with Brussels to counter a spate
of ransomware attacks that have crippled critical infrastructure in
CDC Advisory Group Says 'Likely Association' Between mRNA
Covid-19 Vaccines and Rare Myocarditis Cases
Centers for Disease Control and Prevention advisers said
Wednesday that there is a "likely association" between
Pfizer-BioNTech and Moderna's mRNA Covid-19 vaccines and an
inflammatory heart condition in some younger individuals, but noted
that cases were rare and that most patients quickly felt
The CDC and other health authorities still recommend Covid-19
vaccination for those age 12 and above, given the greater risk from
Covid-19, which itself can cause myocarditis and other
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Expected Major Events for Thursday
04:30/NED: 1Q GDP - 2nd estimate
05:00/FIN: May PPI
06:00/EU: May New Commercial Vehicle Registrations in Europe
statistics (EU27 + EFTA3)
06:45/FRA: Jun Monthly business survey (goods-producing
07:00/CZE: Jun Business cycle survey (consumer/business
07:00/SPN: 1Q Final GDP
07:30/SWE: May PPI
08:00/GER: Jun Ifo Business Climate Index
08:00/POL: May Unemployment
08:00/ICE: May Labour Force Survey
11:00/UK: Agents' Summary of Business Conditions
11:00/UK: UK interest rate decision
12:00/POL: May Broad money M3
13:00/BEL: Jun Business Confidence Survey
15:59/UKR: 1Q Unemployment
16:59/SPN: 1Q Quarterly Balance of Payments
23:01/UK: Jun UK Consumer Confidence Survey
23:01/UK: May UK monthly automotive manufacturing figures
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(END) Dow Jones Newswires
June 24, 2021 00:30 ET (04:30 GMT)
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