Mini Program: Daily summary of investment bank/institutional views

1. Wells Fargo: Non-farm data once again confirms that the US economy is slowing down

Scott Wren, senior global market strategist at Wells Fargo, said the June non-farm report was what the Fed wanted to see. It was a favorable number that showed the economy was slowing down and wage growth was slowing down amid rising unemployment. Wage growth below 4% was what the Fed wanted to see. This once again confirmed that the U.S. economy was slowing down.

2. UOB: The risk of a downside for the US 10-year Treasury yield is greater

Quek Ser Leang, global economics and market research strategist at UOB, said that based on the weekly chart, the US 10-year Treasury yield is expected to fluctuate in the range of 4.137%-4.622% in the near term. Although the possibility of further increases in yields cannot be ruled out, the mild upward momentum suggests that any increase in yields is highly unlikely to be significantly higher than the 4.622% level, as the downward trend line connecting the highs of October 2023 and April 2024 and the highs of May are close to 4.622%. In addition, the bottom of the weekly Ichimoku Kinko Hyoku cloud at 4.137% remains a key support level. Overall, the downside risk to yields seems greater.

3. ING: The prospect of a Fed rate cut is expected to boost Asian currencies

Asian currencies consolidated in early trading but are expected to strengthen as the prospect of a rate cut by the Federal Reserve boosts appetite for risky assets. In a research note, ING economists said that the U.S. jobs report released last Friday seemed to be seen by the market as further evidence that the economy is cooling. The market seemed to view the report as good news for expectations of a rate cut, the economists added.

4. Royal Bank of Canada: US CPI data will determine the future direction of monetary policy

Mark Dowding, chief investment officer at Royal Bank of Canada's BlueBay Asset Management, said the U.S. CPI data will be important in assessing the impact on future monetary policy. "We believe the recent decline in CPI is likely to stall in the third quarter, with inflation remaining around 3%," he said in a report. Against this backdrop, he said the Fed could cut rates in September if activity data continues to weaken, but that is not a foregone conclusion. "From this perspective, we think the market is pricing in roughly appropriate easing in September, with expectations for easing currently around 70%," Dowding said.

5. JPMorgan Chase: It is difficult to predict the rise and fall of French stocks, but the yield gap between French and German bonds is likely to widen

Vincent Juvyns, global market strategist at JPMorgan Asset Management: It's hard to predict whether French stocks will rise or fall on Monday, but I think the spread with Germany is likely to widen in the coming weeks. The European Commission and rating agencies want (French) spending cuts of 20 billion to 30 billion euros, but the government will actually have to deal with a party that wants to increase spending by 120 billion. This could lead to tensions in the market in the coming weeks. As long as the new government does not clarify its fiscal stance, the market may demand higher spreads.

6. MUFG: GBP/USD is expected to rise to 1.2980 by the fourth quarter

MUFG Bank said that the prospects for improved economic conditions and political stability in the UK after the Labour Party's general election victory could lead to a stronger pound. Derek Halpenny, an analyst at the bank, said that the Labour Party's majority could bring a "positive political stability growth premium" to the UK economy at a time when the energy price shock fades, real income returns to positive growth, and economic growth begins to accelerate. Businesses should have more confidence, which will help investment spending. In addition, relations between the UK and the EU should also gradually improve. As a result, MUFG expects that by the fourth quarter, the pound will rise to 1.2980 against the dollar from the current 1.2792, and the euro will fall to 0.8400 against the pound from 0.8460.

7. Commerzbank: Germany's economy may only recover modestly in the second half of the year

Ralph Solveen, an economist at Commerzbank, said that German industrial production fell 2.5% month-on-month in May, with manufacturing down 2.9% and construction down 3.3%. However, energy-intensive industries grew slightly in a weak environment, suggesting that the easing of the burden of high energy prices is helping the German economy. Nevertheless, the industrial output data increases the possibility that the German economy will see at best only a modest recovery in the second half of the year after a slight increase at the beginning of the year.

8. TD Securities: A left-wing victory could push French bond spreads above 80 basis points

James Rossiter, head of global macro strategy at TD Securities, wrote that the "shocking result" of France's left-wing coalition winning a majority in parliamentary elections could "easily" push the 10-year Treasury spread above 80 basis points. On Friday, the spread closed around 66 basis points. However, he added that any further rise in the spread could be short-lived as markets will have to reassess the composition of the government. "Ultimately, a government in limbo could see spreads potentially hovering around 70 basis points. An ineffective government (hung parliament) and rising debt risk in the country will certainly not do the euro any favors in the coming months." TD Bank maintains a long position on 10-year French government bonds.

9. TD Securities: The contradictory employment and wage data highlight the policy difficulties of the Bank of Canada

Strategists at TD Securities see an unexpected decline in overall employment in Canada last month, coupled with stronger wage growth, as a challenge for the Bank of Canada ahead of this month's policy decision. The acceleration in wage growth could raise concerns about persistent inflationary pressures in the core services sector, especially after a surprise rise in the CPI in May, although the strategists say the central bank has shown confidence in wage growth. The rise in unemployment should increase expectations that wages will soften going forward. Their increased wages benefited from a large base effect in June last year. All in all, they say the central bank will continue to take wage gains at its comfort level, so they continue to expect another 25 basis point rate cut on July 24.

10. Pansen Macro: The new British government may respond to public service challenges by increasing borrowing

Wood, chief UK economist at Panson Macro, said in a report that public borrowing is likely to increase under the new British government to fund more public services. He said: We believe that the new chancellor of the exchequer, Rachel Reeves, will borrow more money in the short term to boost ailing public services and cut health service waiting lists, rather than limit government spending to a real growth rate of 1.0% per year.

11. Deutsche Bank: Labour's rule may make the Bank of England more cautious in cutting interest rates

Analyst Tom Rees said that in the next month or two, the outlook for interest rates in the UK will become more uncertain, and investors will look for clues on what ambitious plans the Labour Party will take on fiscal policy in the UK autumn budget and spending review. Sanjay Raja, chief UK economist at Deutsche Bank, said that Labour's relaxation of fiscal policy may lead the Bank of England to take a "more cautious and gradual path of interest rate cuts."

Article forwarded from: Jinshi Data