Greetings, 

We begin with the Eurozone where the economic data remains mixed.

1. The final French second quarter GDP unexpectedly showed a small contraction. 

2. However, the third quarter is looking up for France as the services sector activity improves more than expected. French manufacturing, unfortunately, is still in contraction mode.

 

Source: @MarkitEconomics

3. German service sector expansion, on the other hand, unexpectedly stalled.

Source: @MarkitEconomics,@tEconomics

Source: @MarkitEconomics

4. The Eurozone as a whole sees firmer manufacturing activity - driven by Germany ...

Source: @MarkitEconomics,@tEconomics

 ... but the composite (manufacturing and services) activity softens. The second chart below shows the breakdown.

Source: @fastFT, Read full article

Source: Natixis, @joshdigga

5. Increasingly Germany is expected to face labor shortages as the population ages. Will the new wave of refugees help? The government certainly hopes so.

Source: Morgan Stanley, @joshdigga

6. Nonperforming loan balances at Italian banks are starting to contract, although remain greater than in much of the Eurozone. 

Source: ‏Goldman Sachs, @joshdigga

7. Eurozone banks continue to deleverage.

Source: ‏Goldman Sachs, @joshdigga

Given Eurozone-based corporations' reliance on bank financing (as opposed to capital markets in the US), all this bank deleveraging resulted in the corporate sector deleveraging as well (second chart below).

Source: ‏Goldman Sachs, @joshdigga

Source: ‏Goldman Sachs, @joshdigga

8. The Portugal-Germany spread remains elevated.

9. The trade-weighted euro continues to appreciate, which has to be frustrating for the ECB. This trend will hurt exporters and is likely to add to the Eurozone's disinflationary pressures.

Source: Bloomberg

In other European developments, speculative accounts seem to be cutting back on their record short British pound exposures.

Source: Investing.com

1. Let's shift to emerging markets where we see speculative accounts ramping up their net short Mexican peso exposure. A bet on Donald Trump?

Indeed, there seems to be a relationship between Mr. Trump's poll data and the peso.

Source: ‏HSBC, @joshdigga

2. Brazil's inflation is expected to ease sharply over the next year after the recent strengthening of the real.

Source: SocGen, @joshdigga

 3. Brazil continues to shed jobs. Recovery will remain tepid until the nation's labor markets stabilize.

Source: S&P Global Ratings, @joshdigga

4. Colombia's rate hikes seem to be over for now.

Source: S&P Global Ratings, @joshdigga

5. Saudi bank shares remain under pressure as investors worry about liquidity.

6. Spooked by Duterte's rhetoric, investors have been pulling money out of the Philippines.

Source: @business,  ‏@Tmp_Research, Read full article here

7.  After its post-coup review, Moody's decided to downgrade Turkey to junk. The lira is selling off in response.

Source: Moody's

Source: myfxbook.com

1. As discussed before, investors are sensing economic stabilization in Taiwan, as foreign equities inflows accelerate.

Source: ‏HSBC, @joshdigga

2. Hong Kong government bond yields hit new multi-year lows.

1. Continuing with Asia, speculative accounts remain very long the yen. The second chart below shows the breakdown of the positioning - which seems to be driven by hedge funds.

 

Source: ‏HSBC, @joshdigga

2. The BoJ remains relatively light in its holdings of the very long JGBs. Some suggest that this tenor profile will persist as the central bank attempts to keep the yield curve sufficiently steep to support the banking sector.

Source: HSBC, @joshdigga

3. Based on the BoJ's accounting method, the central bank's capital has been wiped out by the losses from its massive JGB portfolio. Of course, central banks can continue operating with negative equity.

Source: Barclays Research, @joshdigga

4. At the last meeting, the BoJ decided to rationalize how it purchases equity ETFs. Here is an overview.

Source: BoJ; h/t Flip

1. Turning to Australia, business credit growth seems to be stalling.

Source: Goldman Sachs, @joshdigga

2. Job vacancies in Victoria and Queensland have suddenly pulled back.

Source: Goldman Sachs, @joshdigga​

1. Now on to Canada, where inflation surprised to the downside.

 

2. Canada's retail sales unexpectedly declined.

Further reading

3. Separately, Canada's consumer debt burden continues to climb.

Source: S&P Global Ratings, @joshdigga​

4. Corporate debt has risen sharply as well - much of it driven by the oil boom.

Source: BMO, @joshdigga​

Source: BMO, @joshdigga​

However, unlike the household sector, corporate leverage remains moderate despite higher debt levels.

Source: BMO, @joshdigga​

1. In the United States, Eric Rosengren (Boston Fed) argues that while not raising rates may push unemployment even lower, the tighter labor markets will ultimately overheat the economy. That, in turn, will force sharp rate hikes later, pushing the economy into a recession. Therefore leaving rates too low is not healthy for the labor markets in the long-run.

Source: Boston Fed, Read full speech

2. Related to the above, the chart below would suggest tightness in the labor markets. However, wage growth has remained tepid - supposedly as a result of the large pool of workers who are gradually reentering the job market.

Source: S&P Global Ratings, @joshdigga

3. Bond yield forecasts in the US have been revised down every year but one over the past decade. Will the forecasts follow the same path next year?

Source: BofAML, @joshdigga​

1. Globally, public infrastructure spending has been weak in the developed world, especially in many European nations.

Source: Morgan Stanley, @joshdigga

Source: Goldman Sachs, @joshdigga

2. Global trade activity has been declining as evidenced by the Panama Canal's revenue trajectory.

Source: S&P Global Ratings, @joshdigga

Source: OECD, @joshdigga 

1. In commodities, Aluminum had a very good week.

Source: Bloomberg

2. Lumber prices jumped as US new home sales rose to the highest level since 2007.

1. In the energy markets, Russia said that OPEC is unlikely to focus on output cuts, sending oil prices sharply lower on Friday.

Source: Reuters, Read full article

2. US oil rig count continues to gradually rise. The second chart below provides the breakdown of the increases.

 

Source: Goldman Sachs

3. Some energy companies remain vulnerable due to the combination of high breakeven costs and high leverage.

Source: Citi, @joshdigga

In fixed income markets, we are back to the falling volatility regime. Here is the Merrill Lynch Option Volatility Estimate (MOVE) index. As discussed before, this is the sort of trend that will incentivise the Fed to raise rates later this year.

1. In the equity markets, Twitter has put itself up for sale, sending shares sharply higher.

Source: Google

2. Finally, here are the recent trends in North American sectors' hedge fund flows.

Source: Morgan Staanley, @joshdigga

1. Turning to Food for Thought, this is how many people could die from antibiotic-resistant infections annually in about 30 years. 

Source: @wef, @Tmp_Research; Read full article here

2. Views on globalization.

Source: OECD June 2016 Economic Outlook database, Pew Research Center​, @joshdigga

3. Playing more video games and feeling good about it.

Source: @paul1kirby, @AnaSwanson, Washington Post, @Tmp_Research; Read full article here

Source: @paul1kirby, @AnaSwanson, Washington Post, @Tmp_Research; Read full article here

4.  Politicians should pay more attention to voters with disabilities - which is one-in-four Americans. 

Source: @FactTank, @Tmp_Research; Read full article here

5. Data breaches in perspective.

Source: @PostGraphics, @Tmp_Research; Read full article here