White House Economic Adviser Kudlow said US-China talks are continuing and that the US expects China to begin the purchase of US crops very soon. (Newswires)

Senior US administration officials agreed that China violated sanctions by importing Iranian oil last month and are now mulling secondary sanctions in a move that would strain US-China trade talks. (Politico)



ECB minutes stated that there should be no room for complacency in the fall of market inflation expectations and that costs of negative rates outweighed by benefits, but this might not hold for lower rates or longer horizons. The minutes stated there was agreement on need to change stance and demonstrate a determination to act, while there was broad agreement the ECB needs to be ready and prepared to ease further if required in which potential measures include extending or strengthening guidance, resuming asset purchases and cutting rates. (Newswires)

ECB’s Coeure said the protracted period of low inflation has caused concerns among financial market participants that current subdued underlying price pressures will persist in the medium term and the Governing Council is taking these concerns seriously. (Newswires)

IMF sees undershooting of EZ's inflation objective and calls for prolonged monetary accommodation, while it added that the ECB should consider new asset purchase program if further accommodation is required. IMF also suggested that the ECB should shorten maturity of new TLTRO's, offering less generous pricing terms than in TLTRO II to avoid banks increasing their sovereign exposure. (Newswires)



OPEC monthly report stated that OPEC crude production fell 68k bpd in June to 29.83mln bpd according to secondary sources and that crude output decreased mostly in Iran, Libya and Angola, while production increased in Nigeria and Saudi Arabia. Furthermore, 2019 oil demand growth is forecast at around 1.14mln bpd which was unchanged from the prior report and guides 2020 global oil demand to rise by 1.12mln bpd. (Newswires)

US Gulf of Mexico crude oil production has been cut by 53% (1mln BPD) due to Storm Barry according to the US government, while NHC stated that a hurricane warning was issued for parts of the Louisiana coastline. (Newswires)



Israeli officials said UN inspectors found evidence of illicit nuclear activity in an Iranian warehouse which Israeli PM Netanyahu had claimed in an address to the UN last September was used to store nuclear equipment and material. (Axios)



Fed's Williams (Voter, Hawkish) said the economy is in a good place but added the Fed must be ready to adjust policy to sustain the expansion and that inflation is below target which could feed into inflation expectations. Williams further commented that arguments for adding accommodation have strengthened over time in which he noted uncertainties around trade and global growth have not improved, while he added that expectations of rate cuts are showing up in easier financial conditions although he sees rates currently as neutral. (Newswires)

Fed's Barkin (Non-Voter, Hawkish) said it is "tricky" to try to use low rates to boost inflation and suggested inflation is running low as well as steady and not a concern for businesses or consumers. Barkin also suggested that it is hard to make the case for both stepping on the gas or stepping on the brakes and that small rate moves are unlikely to do much to move businesses' settled pricing routines, while big rate moves risk providing 4% inflation. However, Barkin later commented that research shows if you are going to do something on rates it is better to do something sooner than later and that he can see the case for an insurance rate cut but that case for a rate cut to re-centre inflation doesn't feel strong enough. (Newswires)

Fed's Bostic (Non-Voter, Dove) said he wants to keep an open mind for the July meeting and not front run a rate call, while he added that low readings on inflation are "noisy" and other data suggests the Fed is close to its 2% target not moving away from it. Bostic also commented that the central bank is in a good position right now on jobs and inflation but also noted it is clear risks to the economy have grown compared to the prior year including trade and weak global growth. (Newswires)



CVS Health (CVS) and Cigna Health (CI), amongst other companies within the pharmacy benefit management space, jumped higher after the Trump administration opted to withdraw a bill to end drug plan rebates. A number of analysts pointed out that this ruling was also a slight negative for drug makers; Pfizer (PFE) and Merck & Co. (MRK) were subsequently under pressure. Eli Lilly (LLY) also fell, but for its own reasons, after its biomedicine head announced plans to quit in August. Delta Airlines (DAL) moved higher after promising earnings, in which the co. beat on both the top and bottom-line, as well as raising guidance, bringing rivals such as Southwest Airlines (LUV), American Airlines (AAL) and United Continental Holdings (UAL) higher. Fastenal (FAST) shares plummeted after the co. missed on top and bottom-line earnings and expressed concern over a slowing in activity levels relative to Q1. Bed, Bath & Beyond (BBBY) fell after the co. reported Q2 weak comp sales for Q2. Amgen (AMGN) fell after the co. said it plans to enforce a court decision against Praluent in Germany. Humana (HUM), Anthem (ANTM) and DaVita (DVA) all moved higher after SVB Leerink commented positively. L Brands (LB) was under pressure again, extending losses in a week where the CEO Wexner relationship with Jeffrey Epstein has been under scrutiny. Walmart (WMT), Costco (COST) and Target (TGT) were buoyed after the three were initiated with a buy at Goldman. Notable stocks moving higher on positive broker moves include; Abercrombie & Fitch (ANF) upgraded at Wedbush, Spirit Realty Capital (SRC) upgraded at Morgan Stanley, Willis Towers Watson (WLTW) upgraded at Wells Fargo, Weight Watchers (WW) upgraded at JPM, Nvidia (NVDA) upgraded at Cascend. Notable stocks under pressure after negative broker moves include; TakeTwo (TTWO) downgraded at Jefferies, Alcoa (AA) downgraded at Deutsche Bank, FleetCor Technologies (FLT) downgraded at Morgan Stanley, Iron Mountain Inc (IRM) downgraded at BofA. S&P 500 0.2% AT 2999.91, NASDAQ-100 -0.1% AT 7896.78, DOW JONES 0.9% AT 27088.08.

The curve bear-steepened after CPI came in above expectations, diminishing arguments for a 50bps rate cut at the Fed’s July 31st policy meeting, while hawkish Fedspeak from Barkin and Bostic added to the downside, with traders largely having discounted the Powell comments, which were pretty much a copy and paste of Wednesday’s testimony. The 30-year auction was poorly received, tailing by a huge 2.6bps on very soft cover, seeing yields edge higher in its wake. At settlement major curve spreads were wider: 2s30s +41bps, 2s5s +3bps, 2s10s +4bps. US T-note futures (U9) settled 14+ ticks lower at 126-31+.

11 Jul 2019 - 22:50- ForexResearch Sheet- Source: Newswires

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