Written Commentary
- Busier day for second tier data: digesting weak UK BRC Sales, softer Australia confidence surveys; awaiting German ZEW and US NFIB surveys; OPEC and EIA monthly oil reports, China CASDE and US WASDE reports; BoE’s Bailey, ECB’s Villeroy & Fed’s Barkin; German 2-yr and US, US & Dutch 10-yr sales
- Germany ZEW: Expectations and Current Conditions seen falling back to lows; data collection timing potentially a factor for Expectations
- US NFIB survey: modest further fall expected after 3-months of flatlining; still strong labour readings likely to be offset by sales and economy expectations
- US NFIB ‘Expect Better Economy’; US Dollar Index
EVENTS PREVIEW
A rather busier day awaits, even if the data run is mostly surveys rather than hard data, with Japan’s PPI, UK BRC Retail Sales and Australian Business and Consumer Confidence to digest, ahead of the German ZEW and US NFIB surveys, while India looks to CPI and Industrial Production. A busy day for monthly reports in commodity markets has the OPEC Oil Market Report, EIA Short Term Energy Outlook, with the USDA’s World Agricultural Supply and Demand Estimates (WASDE) following hot on the heels of China’s equivalent CASDE. Central bank speak has BoE’s Bailey, ECB’s Villeroy and Richmond Fed’s Barkin. A busy day for govt bond auctions has Germany selling 2-yr, while 10-yr debt is on offer from the Netherlands, UK and USA. In terms of the EIA and OPEC oil reports, the key point is this, oil futures prices may have fallen in recent weeks, because of recession fears, but the physical market is showing little sign of demand destruction for prompt delivery, which continues to show all the signs of very tight physical market. That being the case, the scope for a snap back higher in price terms remains a very strong probability, with a potential turn in the relentless rise of the USD (see chart) perhaps a trigger or at least a facilitator.
** Germany – July ZEW Survey **
After a slightly larger than expected rebound in June, ZEW Expectations are seen dropping back to to -40.5, close to the low following the Russian invasion of Ukraine, with the Current Situation Index also forecast to drop to -3.45 from -27.6. The former tends to mirror the performance of the Dax, thus data collection timing could prove decisive in determining the outcome, given that the Dax did establish a new cyclical low at the start of last week, from which it staged a reasonably sharp rebound. Be that as it may, it should be remembered that the ZEW survey has predicted 9 out of the last 2 recessions, so it’s value is extraordinarily dubious, even if market sensitivity to an outlier will remain high.
** U.S.A. – June NFIB Small Business Optimism **
For many a month, the NFIB survey has been a tale of contradictions, with capital spending plans buoyant, even if starting to ease, labour indicators robust (already published for June), and those seeing higher selling prices at the peak (that of course does not mean that those prices received cover the high prices paid. On the other hand the ‘Expect Better Economy’ ploughs an ever deeper furrow of negativity, lurching from one new record low to the next (see chart). In recent months this has seen a more significant spill-over into ‘Expect Higher Sales’, which stood at -15% in May, just above March’s recent low of -18%, and it is these two measures which demand most attention.
To view the full report and to sign up for daily market commentary please email admisi@admisi.com
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2022 ADM Investor Services International Limited.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
