Greetings,

We begin with Thursday's central bank activity globally.

1. Mark Carney's speech hinted at near-term easing by the BoE.

Source: WSJ

The British pound sold off sharply in response to Carney's remarks ...

Source: @barchart​

... while the FTSE 100 hit a 10-month high. 

2. It seems that the ECB may be considering revising the rules governing the proportion of member countries' bonds bought as part of QE. Rather than just focusing on the size of each economy, more weight could be given to the country's debt outstanding. Such allocation, of course, benefits the most indebted countries such as Italy.

Source: Bloomberg

Italian and Spanish debt rallied sharply in response, with yields hitting new lows.

 

3. Taiwan's central bank cut rates again with Brexit viewed as being damaging to exports.

4. Not all central banks are easing. Mexico's central bank hiked rates to defend the peso and reduce the risk of inflation (the peso was hammered after the EU Referendum results came out).

The peso strengthened vs. the dollar in response to the rate hike.

Source: @barchart

1. Turning to the UK, the 10-year government bond yield fell to record lows.

Source: @fastFT

2. How will the UK finance this massive current account deficit as foreign investment declines going forward? Domestic demand will have to contract.

3. Economists scramble to downgrade economic growth forecasts for the UK.

Source:  ‏@DavidInglesTV

4. UK consumer confidence dropped sharply after the referendum.

Source: YouGov

1. Switching to the Eurozone, Germany continues to enjoy the lowest unemployment rate in decades.

Source: Deutsche Welle 

2. This chart shows the German government bond yield curve. 

3. The Eurozone inflation is back in positive territory. Here is the breakdown.

Source: Natixis

4. Are the deflationary pressures abating in France?

5. Italy, on the other hand, is still firmly in deflation. 

6. Italian 5yr government bond auction cleared at 33 basis points, a record low. Amazing.

7. The final item on the Eurozone is this chart of Ireland's 5yr bond yield over the past month. The spike you see is Brexit related - and now the yield is at a record low (negative).

Speaking of record low yields, here is the Swiss 30-year government bond.

1. Switching to Japan, the BoJ's inflation target remains elusive.

Source: Goldman Sachs

2. Japan's labor shortages seem to be worsening - the chart below shows the jobs/applications ratio.

Australian property price increases seem to be dominated by Sydney and Melbourne.

Source: Goldman Sachs

1. Turning to China, the nation's manufacturing sector continues to contract.

Source: @MarkitEconomics

2. Chinese corporate bond market defaults are on the rise.

Source: ‏@SeanMiner

3. China's property markets are still appreciating at a decent clip.

Source:@Callum_Thomas

1. In other emerging markets (EM) developments, a recent JPMorgan report shows EM companies struggling with flagging productivity as wages rise.

Source: @FT, JPMorgan

Source: @FT, JPMorgan

2. Nigeria's foreign reserves continue to decline.

Source: @‏tEconomics

3. Chile’s unemployment rate rises to the highest level in almost 5 years.

Source: ‏@barchart

4. South African private credit growth slows as interest rates rise and demand wanes.

5. South Africa's trade surplus hit a new record - significantly surpassing projections.

Source:  ‏@JohannBiermann1

6. The Russian 10yr government bond yield continues to fall.

Source: Investing.com

Back in North America, Canada's merchandise trade balance looks quite weak.

Source: Scotiabank

1. In the United States, the Goldman Sachs Analyst Index (GSAI) spikes, indicating strengthening economic activity.

Source: Goldman Sachs

2. The Chicago PMI (manufacturing and non-manufacturing activity in the Chicago Region) jumped in June.

It's a bit of a mixed bag as Chicago area employment contracts at the fastest pace in over six years while new orders rise sharply. Companies are not yet confident in the sustainability of this business improvement to start hiring.

Source: @philip_uglow1

3. This is Macquarie's forecast for the US wage growth. It's difficult not being skeptical of such forecasts given how disappointing US wage growth has been in recent years (with many forecasts completely missing the mark). Is it different this time?

Source: Macquarie

4. Freddie Mac's national 30-yr mortgage rate average drops below 3.5% for the first time since 2013.

 

5. The Fed's RRP program uptake for the quarter-end was not as large as some had expected.

1. Turning to the energy markets, OPEC's output hits another record according to Reuters.

Source: Reuters

2. Nonetheless, Texas oil companies have turned more optimistic about their future (as oil prices rose).

Source: Dallas Fed, @MarathonWealth 

3. US natural gas prices keep climbing. 

Source: @barchart

1. In other commodity markets, the silver rally continues (discussed yesterday). 

Source: @barchart

2. With coffee, sugar, milk and orange juice all rising sharply, a least my corn flakes will be cheaper. According to Bloomberg, "U.S. farmers planted more corn than they intended in March, sowing the third-highest crop since World War II and surprising analysts who had expected a decline. Prices fell to the lowest since April."

Source: @barchart​

In the M&A world, Mondelez (a large snack manufacturer) has made a takeover bid for Hershey.

Source: Google

According to the WSJ, "Manhattan apartment sales tumbled, and brokers say the drop signals a significant correction."

Source: ‏WSJ

Today some $2 billion is due on Puerto Rico's debt. About half of that is not going to be paid. 

Source: @business

Here is one of the many reasons PR is in such trouble.

Source: WSJ

Finally, we have our second contribution from Sam DeRosa-Farag titled "Rising Corporate Leverage and its Impact on Asset Returns". You can see/download the full presentation here.

 

Source: Sam DeRosa-Farag

Turning to Food for Thought, we have 5 items this morning:

1. Diminished mobility in the US.

Source: @uscensusbureau, ‏@paul1kirby

2. Longer hours for the same pay.

Source: ‏@wef

3. The persistent US skills gap: according to the WSJ, "nearly 3/4 of jobs gained in the recovery went to people with bachelor’s degrees or higher."  

Source: @jeffsparshott

4. Being a member of China's Communist party just isn't as lucrative as it used to be.

Source: @fastFT 

5. This is for our friends in the UK.

Source