All major US and European equity indices closed higher, while APAC markets were mixed. US and most benchmark European government bonds closed lower. CDX-NA and European iTraxx-Closed tighter across IG and high yield. Oil, natural gas, copper, and silver closed higher, while the US dollar and gold were lower on the day.

Please note that we are now including a link to the profiles of contributing authors who are available for one-on-one discussions through our newly launched Experts by IHS Markit platform.

Americas

1. All major US equity indices closed higher; Russell 2000 +1.8%, Nasdaq +0.9%, DJIA +0.8%, and S&P 500 +0.8%.
2. 10yr US govt bonds closed +7bps/1.29% yield and 30yr bonds +6bps/1.94% yield.
3. CDX-NAIG closed -2bps/49bps and CDX-NAHY -8bps/284bp.
4. DXY US dollar index closed -0.2%/92.75.
5. Gold closed -0.4%/$1,803 per troy oz, silver +1.0%/$25.26 per troy oz, and copper +0.2%/$4.27 per pound.
6. Crude oil closed +4.6%/$70.30 per barrel and natural gas closed +2.1%/$3.96 per mmbtu.
7. It is with severe sadness and shock that we have to announce the passing of Neil Murray, IHS Markit's Head of Processed Commodities having previously been editor of what used to be known as Foodnews and a well-respected frequent contributor to the Daily Global Market Summary. Neil suffered a heart attack on Friday evening and passed away in hospital on Monday. He was 63 years old. Julian Gale, who worked with Neil for many years, writes: "Neil was a driving force behind the original Foodnews brand, with an unrivalled expertise in the global Beverages markets on which he reported with a great deal of enthusiasm and passion. He was an excellent business journalist, writing in a clear and incisive style, and subbing/editing to the same high standards. He was conscientious, thorough and accurate. (IHS Markit Food and Agricultural Commodities' Julian Gale)
8. The IHS Markit US Regional Economic Service's recently released state-level forecast for July 2021 features revised population estimates for all states. The forecast includes the new data from the 2020 decennial Census along with revised history from 2011 to 2019 that align with the Census results. The forecast incorporates this new history as well as IHS Markit US macroeconomic experts' updated population forecast, which was released June 2021. (IHS Markit US Regional Economics)
   • Compared with previous Census estimates, the US population for 2020 was raised by just over 2 million persons (0.6%). Most of the increase is attributed to higher levels of immigration than previously reported. Population in most states was revised upward modestly, although Arizona and the District of Columbia saw notable downward revisions to 2020 population. West Virginia is the only state with lower population in 2020 than in 2010.
   • While the new Census estimates raised the starting point for the forecast by 0.6%, a modest decrease in projected population growth resulted in a national population estimate by 2030 that is just 0.4% higher than the previous estimate. The lower growth rate reflects lower assumed birth rates, an increased mortality rate because of COVID-19, and a slightly higher rate of immigration to reflect the new Census history.
   • The US economic forecast remains on solid footing, with projected growth of nearly 8% for the second half of 2021 followed by further gains of around 5% for 2022. As expected, states that experienced steeper losses in output and employment in 2020 are exhibiting relatively high rates of growth in 2021, but the states that were less affected by the pandemic from the start are in better shape in terms of economic output and jobs relative to the beginning of 2020.
9. US beekeepers lost an estimated 45.5% of their managed honey bee colonies in 2020, 1.8 points more than in the previous ear and 6.1 points increase over the average loss rate (39.4%) over the last 10 years, according to Bee Informed Partnership (BIP) in its latest annual loss survey. (IHS Markit Food and Agricultural Commodities' Jose Gutierrez)
   • BIP identified Varroa mite and Queen issues as the main causes of colony loss.
   • The total number of honeybee colonies in the US has remained relatively stable over the last 20 years: around 2.6 million colonies, according to the USDA NASS. However, loss rates remain high, indicating that beekeepers are under substantial pressure to offset losses by creating new colonies every year.
10. Luminar Technologies has acquired its LiDAR chip design partner OptoGration Inc. for an undisclosed amount, according to a company statement. For the past five years, Luminar has worked with OptoGration to jointly develop InGaAs photodetector technology, which is required for manufacturing 1550nm LiDAR. LiDAR sensors are necessary for autonomous vehicle (AV) operation as they measure distance via pulses of laser light and generate 3D maps of the world around them. This acquisition will enable deeper integration with Luminar's existing chip design subsidiary Black Forest Engineering (BFE), which the company acquired in 2017. (IHS Markit Automotive Mobility's Surabhi Rajpal)
11. Intel subsidiary Mobileye has expanded its autonomous vehicle (AV) testing program to New York City (US). Mobileye said it has been testing camera-only subsystem AVs in the city, calling the driving environment "very challenging." The AVs travelled on highly congested streets which included pedestrians, bicyclists, aggressive drivers, double-parked vehicles, construction zones, emergency vehicles, tunnels and bridges, and so forth.(IHS Markit Automotive Mobility's Surabhi Rajpal)
12. Engine maker Cummins and energy company Chevron have announced a memorandum of understanding (MoU) to explore an alliance aimed at developing "commercially viable business opportunities in hydrogen and other alternative energy sources." The two companies said the potential alliance has four objectives: advancing public policy that promotes hydrogen as a decarbonizing solution; building market demand for commercial vehicles and industrial applications powered by hydrogen; developing infrastructure to support the use of hydrogen for industry and fuel cell vehicles; and potentially using Cummins electrolyzer and fuel cell technologies at one or more of Chevron's US refineries. (IHS Markit AutoIntelligence's Stephanie Brinley)
13. Toyota has confirmed plans for a flex-fuel hybrid for Brazil, to slot in below the Corolla and Corolla Cross, with production in Brazil. Local media reports suggest it may be called the Yaris Cross Hybrid, with production at Toyota's Sorocaba plant in 2024, when the vehicle shifts to the TNGA-B platform in Brazil. Reports cite Toyota's CEO for Latin America, Mashahiro Inoue, confirming the move. Inoue is quoted as saying, "Toyota, worldwide, will offer electrified products, whether hybrid, plug-in hybrid or fuel cell. In Brazil we will have a small car with hybrid flex technology. There is the concern with the recharge, an issue that could be resolved in California or in the city of Shanghai. In countries like Brazil, however, it is not yet possible to have a comprehensive battery charging structure. That's why the bet on hybrid flex for the Brazilian market. Brazil adopted ethanol 40 years ago, it's practically carbon neutral, emissions only appear when it is time to produce the fuel. (IHS Markit AutoIntelligence's Stephanie Brinley)

Europe/Middle East/Africa

1. All major European equity indices markets closed higher; Spain +2.5%, Italy +2.4%, France +1.9%, UK +1.7%, and Germany +1.4%.
2. 10yr European govt bonds closed mixed; Italy flat, France/Spain +1bp, Germany +2bps, and UK +4bps.
3. iTraxx-Europe closed -1bp/48bps and iTraxx-Xover -9bps/237bps.
4. In the Eurozone, credit standards on loans to enterprises and households remained largely unchanged in the second quarter of 2021, but credit demand among businesses and households increased in line with the robust recovery in both business and consumer confidence. (IHS Markit Economist Lilit Gevorgyan)
   • According to the European Central Bank's (ECB) latest bank lending survey (BLS), conducted among 142 banks during 14-29 June, the number of banks reporting a tightening of credit standards was almost identical to the number of banks reporting an easing of credit standards.
   • The net percentage of banks reporting a tightening of credit standards declined to -1 from +7 in the first quarter. This marks a change from significant credit standard tightening in 2020, and then at a milder rate in the first quarter of this year.
   • Credit standards for loans to small and medium-sized enterprises (SMEs) remained largely unchanged in the second quarter, but they eased for large firms (from +5 to -3).
   • Banks felt more confident in lending despite still uneven industrial activity across the eurozone, linked to the global supply-chain bottlenecks.
   • Continued fiscal and monetary support since the outbreak of the pandemic for both businesses and households explains their stable assessment of credit risk perceptions in the second quarter.
   • The lenders confirmed that the third series of the targeted longer-term refinancing operations (TLTRO III), as well as the ECB's Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP), had a positive impact on their activity.
   • Credit standards for housing loans were also broadly unchanged (from -2 to -1), according to the BLS. A brighter economic outlook and competition among housing loan lenders put pressure on banks to ease credit standards in this category.
   • Risk perceptions slightly increased, having a moderate tightening impact on credit standards for consumer credit. Nonetheless, banks' increased tolerance eased lending standards.
   • Banks' overall terms and conditions for new loans to enterprises also eased during the second quarter (from 0 to -5). Equally, terms and conditions for housing loans and consumer credit also eased. Both were due to competitive pressures.
   • On the credit demand side, the second-quarter results show an increase among firms (from -15 to +8) and especially households (from -7 to 35). Low interest rates and government support measures have made credit more attractive.
5. BMW has said that all its plants in Germany are currently being affected by the automotive semiconductor shortage and that as a result of the issue it has 10,000 cars in its inventory that are not completed. According to a Reuters article, BMW also stated that it has already incurred 30,000 units of combined lost production in 2021 because of the semiconductor issue. (IHS Markit AutoIntelligence's Tim Urquhart)
6. AkzoNobel says net income in the second quarter of 2021 more than doubled on a year-on-year (YOY) basis to €261.0 million ($307.5 million), on revenue up 26.0% YOY to €2.51 billion. The company's performance was driven by strong end-market demand, a 26.0% YOY increase in sales volumes, and prices that were 4.5% higher YOY, it says. (IHS Markit Chemical Advisory)
   • EBITDA was up 58.0% YOY to €469.0 million, beating analysts' consensus estimate of €433.6 million provided by Vara Research (Frankfurt, Germany). Operating income grew 86% compared with the prior-year period to €384.0 million, beating consensus of €335.4 million.
   • Raw material inflation continued to intensify in the second quarter, driving the cost of sales up, the company says. Thierry Vanlancker, AkzoNobel's CEO, said during an analysts' call earlier today that raw materials prices are expected to continue rising in the second half of the year, peaking in the third quarter. "In view of the ongoing raw material inflation, we continue to take firm and necessary actions on pricing initiatives and maintaining our cost discipline, while remaining focused on serving our customers," Vanlancker says.
   • The company's decorative paints business saw revenue grow 13.0% YOY to €720.0 million, driven by "strong demand across all regions," AkzoNobel says. Europe and South America delivered continued "strong performance," while most parts of Asia returned to growth, it says. The business's operating income rose 41.0% YOY to €238.0 million.
   • The performance coatings business posted a 48.0% YOY increase in revenue to €345.0 million, with volumes up 30.0%, attributed mainly to "strong performance" in powder coatings and automotive and specialty coatings, AkzoNobel says. The marine and protective segment of the business showed further signs of recovery, it notes. Operating income more than doubled YOY to €186.0 million, it says.
7. According to data released by the Bulgarian National Statistical Institute (NSI), industrial output grew by 15% year on year (y/y) in May, down from a surge of 24% y/y in April. The slower growth momentum was due to a weaker performance of the manufacturing sector, +17% y/y in May against 29% y/y in April. (IHS Markit Economist Dragana Ignjatovic)
   • Within manufacturing, the strongest performance was recorded for the production of transport vehicles, electrical equipment, and machinery. Basic metals suffered a dramatic decline, falling 0.2% y/y in May. Industrial output grew by 7.5% y/y in the first five months of 2021.
   • The Bulgarian National Bank (BNB) has released the latest balance of payments data for May, showing a weakening in external demand. The current account moved into deficit in May, falling EUR101.6 million y/y to total a shortfall of EUR98.9 million. The sharp deterioration is largely due to a nearly six-fold increase in the trade deficit, as export growth of 38% y/y was surpassed by a 51% y/y rise in imports. While the pace of import growth has remained broadly unchanged from April, exports have weakened. In addition, the services surplus fell nearly 10% y/y in May amid ongoing travel restrictions. On the positive side, the current transfers surplus, which includes remittances from Bulgarians living abroad, rose to EUR106 million in May.
   • In another NSI release, consumer prices continued to accelerate in June, rising by 2.7% y/y, from 2.5% y/y in May. The sharpest price increases in June were registered in transport (+13% y/y) and housing utility (+3.5% y/y) prices because of the elevated global commodity prices. In month-on-month (m/m) terms, consumer prices fell by 0.2% in May. In the first half of 2021, consumer prices rose by an average 1.2% compared with the same period of 2020.

Asia-Pacific

1. All APAC equity indices closed mixed; Australia +0.8%, Mainland China +0.7%, Japan +0.6%, Hong Kong -0.1%, and South Korea -0.5%.
2. Meat prices have fallen back again in China after briefly being stabilized by government moves to build up pork reserves. After rising at the start of July, wholesale pork prices decreased in the subsequent two weeks to stand at CNY20.90 per kg (USD3.23/kg) on 16 July - down 52% y/y and the second lowest figure recorded since mid-2019. Live hog prices increased slightly to CNY16.60 per kg - up slightly on the previous week but still more than 50% down on this time last year, according to China's National Reform and Development Commission (NRDC) The increase lifted the hog-to-grain price ratio to 5.1 to 1. When prices fell below 5:1 last month, the NRDC triggered a high-level warning and said the government would start buying up pork to put in state reserves. This continued today (21 July), when the Ministry of Commerce announced that a third batch of pork would be purchased under the intervention scheme. Because of high feed costs, pork producers can still expect to make heavy losses at current price levels. (IHS Markit Food and Agricultural Commodities' Max Green)
3. Japan's trade balance recorded a surplus of JPY383 billion (USD3.5 billion) on a non seasonally adjusted basis in June. The seasonally adjusted balance recorded a deficit of JPY90 billion for the first deficit in five months. Exports continued to rise solidly with a 48.6% year-on-year (y/y) increase following a 49.6% y/y rise in the previous month. Imports rose by 32.7% y/y after a 27.9% y/y increase in the previous month. (IHS Markit Economist Harumi Taguchi)
   • The robust increase in exports was due largely to low base effects because of a plunge a year earlier in line with the global lockdowns. The drivers were exports to the US (up 85.5% y/y) and to the European Union (up 51.1% y/y), while exports to Asia remained solid at 37.1% y/y. Major contributors to the increase were exports of autos, auto parts, steel and iron, and semiconductors. Despite high y/y growth, auto export volume remained below the pre-pandemic level.
   • The solid rise in imports largely reflected higher prices for energy and other commodities, as growth for import volume rose only a moderate 8.2% y/y, up from 6.9% y/y in the previous month. Major contributors to the increase were crude oil, petroleum products, and non-ferrous metal products, reflecting faster rises in import prices. Imports of autos and mobile phones also contributed to the overall increase.
4. Hyundai has reached a tentative pay deal with its domestic unionized workers, reports the Maeil Business Newspaper. The deal includes a KRW75,000 (USD65.20) increase in monthly basic pay, 200% of base salary plus KRW3.5 million in performance-based bonuses, KRW2.3 million of incentives for quality enhancement efforts, five Hyundai Motor stocks, as well as 200,000 points for day-time shifts for two consecutive days and KRW100,000 in gift coupons. To ensure job security, the two sides have signed a special agreement to respond to the industrial shift to future mobility, with a focus on the roles of factories and research and development (R&D) centers at home and mutual efforts. The two plan to go all out to improve the profitability of conventional engine vehicles and achieve timely production based on market demand, with the aim of better responding to the shift to electric vehicles and new business opportunities with continuous investment in domestic plants, highlights the report. However, the automaker rejected the labor union's demand that it extend the retirement age and reinstate dismissed workers. The tentative agreement is subject to final approval in a ballot of union members on 27 July. (IHS Markit AutoIntelligence's Jamal Amir)
5. The Times of India reported on 20 July that there has been a steep increase in the cost of importing pharmaceutical raw materials during the COVID-19 pandemic in 2020/21. The cost of active pharmaceutical ingredients (APIs) reportedly surged by an average of over 50% when compared with pre-pandemic levels, according to the source. In some cases, API costs reportedly soared by almost 140%. The highest cost rises are associated with India's dependence on importing APIs from China, supply disruptions and increased demand for materials used in the manufacture of fever and pain relief medicines, and other COVID-19-related demand increases. (IHS Markit Life Sciences' Eóin Ryan)
6. In a recently announced joint statement between the US Treasury and the State Bank of Vietnam, an agreement has been reached with Vietnam vowing to refrain from competitively devaluing its currency. Vietnam has also pledged that it will increase the transparency of its monetary and exchange rate policies. (IHS Markit Economist Jola Pasku)
   • After being included on the watchlist for alleged currency manipulation in 2019, Vietnam was labelled an alleged currency manipulator by the US Treasury at the end of 2020. The decision came as Vietnam allegedly fulfilled all three criteria used by the US to determine a currency manipulator: a current-account surplus of more than 2% of GDP, a greater than USD200-billion bilateral trade surplus with the US, and foreign-exchange intervention worth more than 2% of GDP.
   • In a gear shift with the change of the new US administration, Vietnam was dropped from the currency manipulator list in April 2021. However, the US Treasury has claimed that Vietnam has reportedly surpassed its thresholds for the designation under a 2015 law.
   • Following the finalization of the agreement, the US Trade representatives will engage closely with Vietnam to ensure the successful implementation of the new agreement and address the alleged imbalances found in the previous administration's investigation.

Posted 21 July 2021 by Ana Moreno, Director, Product Development, IHS Markit and

Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.