All eyes are on Tomorrow’s Super Thursday with the ECB Monetary Policy Meeting, Comey’s testimony, UK elections and US Jobless claims. Hold on tight! The FED will be on stage next Wednesday 14 June for a vibrant performance according to consensus. The greenback may look like a wounded animal, beware of survival reaction and expect a last bounce before diving into the deep ocean waters.
In Germany, after two solid monthly increases, industrial orders dropped by 2.1% m-o-m in April (consensus: -0.3%) due to the lack of bulk orders. This is at odds with the record-high levels of business sentiment indicators. Whilst chances that production activity may improve in the coming months, it is getting more and more unlikely that the hard data will achieve the growth rates implied by the leading indicators, especially as the latest release suggests that the global manufacturing PMIs might already have peaked.
UK General Election approaches: Opinion polls now suggest a tighter contest in tomorrow’s election than first expected. The UKIP vote’s potential fragmentation and a repeat of Brexit voting patterns appear to be the wildcards for this election result, and possible key positives for the Conservative Party.
In South Africa, the economy slumps into recession for the second time in 8 years, GDP contracting by 0.7% in Q1 2017 when consensus had been for 1% growth. USD/ZAR has bounced on its key support area at 12.60 for a likely move north towards 14.00.
Interest rates: Broad-based rally by sovereign bonds yesterday. In the Eurozone, core debts outperformed their peripheral counterparts. OAT outperformed Bund, with 10-year yields easing by 5.5bp and 3.5bp, respectively.