UNITED STATES

US stocks closed lower on Friday as the June flash PMI dropped to 50.1 from 50.5 in May and tensions with Iran heightened after it struck down a US drone. The S&P lost 0.13% while the NASDAQ shed 0.24%. Despite a weak Friday with a close 0.13% down, the DOW is on course for the best June in over 80 years if it can guard its month-to-date gains. Notable records are also on the line for the NASDAQ and S&P with best performance for June on the cards since 2000 and 1955 respectively. Yield on 10Y USTs closed 2.5bps higher at 2.054.

UNITED KINGDOM

Boris Johnson maintained his ‘media blackout’ on issues of controversy involving him by refusing to respond to questions over an altercation that occurred at the apartment he shares with his partner in the early hours of Friday: the noise that accompanied the altercation was such that it prompted a neighbour to call the police. As seems the norm with his support, the moderator at the Birmingham hustings was heckled with cries of “move on” when he tried to press Boris into addressing the issue remains the frontrunner for the Tory leadership; another journalist was jeered when she asked Boris about his previous comments regarding women in burqas. While he remains the frontrunner in most polls despite the issue, supporters of his rival Jeremy Hunt will be hoping this will be yet another implosion in his bid as was the case in 2016. The pound closed higher against the dollar at 1.2737 while yield on 10Y UKTs was up 4bps to 0.844%.

EUROPEAN UNION

The euro-zone economy showed some signs of picking up in June, albeit only marginally and is likely not to ease lingering concerns regarding growth. The IHS Markit PMI survey pointed to a growth of only 0.2%, driven by services while manufacturing continued to underperform. While the performance of major economies France and Germany is improving (Germany had a slightly higher than expected PMI of 52.6), fears are the rest of the bloc is heading towards stagnation according to the IHS Markit report. The euro was higher against the dollar at 1.1369 while yield on 10Y DBRs was up 3bps to -0.2862%.

ASIA

Asia stocks were trading in the green in afternoon trading on the back of increased optimism for a thawing in US-China trade talks. Chinese state media reported that President Xi Jinping will attend the G20 summit, the first official confirmation of his attendance. The NIKKEI was up 0.13%, the HANG SENG gaining 0.09% while the CSI was up 0.08%.

TURKEY

President Recep Erdogan’s AKP failed to win the rerun of the Istanbul elections meaning the city will no longer be under their control for the first time in 25 years. While CHP’s Ekrem Imamoglu’s victory in March had been narrow, preliminary results showed he had won by a greater margin on Sunday prompting AKP candidate and former Prime Minister Binali Yildirim to concede defeat even before results became official. The result will be particularly hard for Erdogan who has long warned his party that losing Istanbul means losing Turkey. The lira was trading as high as the low 5.71 to the dollar having closed at 5.8173 on Friday while TURKEY 47s closed lower at 81.335.

LATAM

Mexico ratified the US-Mexico-Canada Agreement (USMCA), the deal that replaced NAFTA, even though the US and Canada are yet to do the same. The agreement will update terms of trade to include sectors such as e-commerce that did not exist when NAFTA was agreed in 1994. The ratifying of the deal in the US Congress may prove difficult as Democrats, who control one of the two Houses of Congress may not be willing to give Donald Trump legislative victory at the start of his election race. The peso closed lower at 19.1245 to the dollar while MEXICO 47s closed lower at 99.112.

RUSSIA

Russian wages grew at a faster pace than expected in May, a report from the Federal Statistics Service said on Friday. Adjusted for inflation, wages grew 2.8% YoY in May compared to a median estimate of 1.3% in a Bloomberg survey. Retail sales also exceeded expectations with a rise of 1.4%. This followed President Putin’s remarks during a call-in TV show on Thursday where he said incomes are starting to recover. The ruble closed weaker at 63.0229 to the dollar as did RUSSIA 47s at 110.815.