LOOK AHEAD: Monday Data Calendar

MNI London: Reuters has reported that China has unveiled, "a 520 billion yuan ($72.3 billion) package of tax breaks over four years for electric vehicles (EVs) and other green cars..."

• Reuters: "Analysts said the cap on the purchase tax exemption would help drive growth of cheaper models that are mainly produced by domestic firms rather than premium vehicles from foreign makers."
• The package may impact German auto exports which slumped in Q1 2023 and comes in the wake of Chinese Premier Li Qiang's trip to Germany where he, "called for preserving existing supply chains and expanding cooperation on issues like smart manufacturing, electric cars and technological exchange," according to Politico.
• The IW institute in Cologne published a report yesterday noting that German exports to China dropped 26% year-on-year in Q1 2023, stating: “There appear to be strong disruptions playing out in the automotive sector, especially regarding China’s increasing importance as an exporter of electric cars.”
• Oilprice.com notes that the "slump in car and engine exports accounted for nearly half of the total drop in German exports to China."

• The Norges Bank's model-based policy approach and sensitivity to the weaker local currency should tilt the Bank to conducting a 'double' hike of 50bps this week. Core inflation is re-accelerating, wage settlements remain elevated and a tight labour market suggests continued pressures ahead. Lastly, the resilient housing market justifies a faster pace of tightening in Norway.

• Most of these factors would justify a 25bps step for June, however the May CPI-ATE release will have changed the thinking of the board, and should result in sharply higher near-term inflation and rate path projections, as well as a lower assumption for the I-44 NOK exchange rate.
• Full MNI Preview including summary of sell-side views here: https://roar-assets-auto.rbl.ms/files/54229/MNINBP...

• RES 4: 115-19 High May 18
• RES 3: 115-00 High Jun 1 and a key resistance
• RES 2: 114-06+ / 114-15+ High Jun 6 / 50-day EMA
• RES 1: 114-00 High Jun 13
• PRICE: 112-29+ @ 16:43 BST Jun 21
• SUP 1: 112-12+ Low Jun 14 and the bear trigger
• SUP 2: 112-00 Low Mar 10
• SUP 3: 111-14+ Low Mar 9
• SUP 4: 110-27+ Low Mar 2 and key support

Treasury futures are consolidating. The contract remains in a downtrend and last week’s move lower confirmed a continuation of the current bear cycle. Support at 112-29+, the May 26 / 30 low has been cleared. This signals scope for 112-00, the Mar 10 low. Further out, bearish price action suggests scope for a move towards 110-27+, the Mar 2 low and a key support. Gains are considered corrective. Initial firm resistance is at 114-00, the Jun 13 high.