From Marc to Market:
Overview: The global capital markets are off to a quiet start of what promises to be a busy week. Quarter and month-end adjustments, Japan's Tankan survey, the eurozone's preliminary June CPI, the US employment report, and an OPEC+ meeting are featured. The MSCI Asia Pacific Index was little changed amid a mixed regional performance. It had risen in the last four sessions. European shares are paring last week's gains, which saw the Dow Jones Stoxx 600 gain 1.2%. Energy and consumer discretionary sectors are leading today's losses. US futures are little changed. Last week, the S&P 500 and NASDAQ rose to new record highs. The US 10-year yield is holding a little above 1.50%, while European benchmark rates are slightly softer. The dollar is narrowly mixed. Neither sterling nor the Swedish krona have been unhinged by the political developments as they lead the movement against the dollar. Norway, New Zealand, and Canada are seeing their currencies nurse small losses. Emerging market currencies are also mostly heavier, and the JP Morgan Emerging Market Currency Index is posting the second day of small losses following a four-day advance. Gold was turned back from the $1785-$1786 area. It continues to map out a triangle pattern within the range set on June 18 (~$1761-$1797). Crude oil is little changed, with the August WTI contract hovering around $74 a barrel. Iron ore prices are firmer, though copper is off for the third session. The CRB rose 2.2% last week, its fourth weekly gain in the past five weeks.
Asia Pacific
The gap between consumer and producer price increases in China suggested a squeeze on profits, which Beijing reported earlier today. Industrial profits slid to a still an impressive 36% in May from 57% in April. Separately, China ordered Tesla to fix all 285k cars it has sold in the country. Tesla is doing so with a free software update for its autopilot function. Meanwhile, reports suggest India has moved 50k troops to its border with China to around 200k, a 40% increase over the past year.
The US and Taiwan will hold their first trade talks in five years on Wednesday. Supply chain security (semiconductor chips) and digital trade (cybersecurity) are said to be the focus. Last week, Taiwan lifted its ban on US beef and pork, though a referendum is planned in August about US pork, which contains ractopamine, a controversial food additive. Instead of joining a regional trade block, the Biden administration seeks to strengthen bilateral ties in the region. The US national security personnel seem to be the driving force here more than the trade office....
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