BRAZIL: Outstanding Loans Rise 0.7% M/m in June

• In the equity space, the trend theme in S&P E-Minis is bullish and the latest pullback appears corrective. Note that MA studies are in a bull-mode position and this continues to highlight a dominant uptrend. Yesterday’s rally highlights a possible bullish engulfing candle - a reversal signal. If correct, it signals the end of the recent correction. Key support lies at 7292.25, the Jun 11 low. A continuation higher would open 7693.75, the Jun 2 high and M/T bull trigger.
• The trend structure in EUROSTOXX 50 futures remains bullish - MA studies are in a bull-mode position, highlighting a dominant uptrend. A key short-term resistance at 6174.00, the May 25 high, has recently been breached. This confirmed a resumption of the primary uptrend. Sights are on the 6400.00 handle next. Firm support to watch lies at 6087.44, the 50-day EMA. Support at the 20-day EMA is at 6216.86.

Reuters reports that Germany is "demanding" the EU cut EUR400bln from its proposed EUR1.8-2 trillion long-term budget (the 'multiannual financial framework'), running from 2028 to 2034. The article claims that an internal German gov't document called the current plans "unaffordable", and that "as it stands, an agreement is impossible." 

• The current MFF, running 2021-27, totalled EUR1.3 trillion. Even with the proposed German cut, the next MFF would already be 27% larger than the current one according to Reuters. Berlin's contribution would top EUR50bln.
• Reuters: "Chancellor Friedrich Merz has urged member states to seal a deal this year to ensure planning certainty before the budget takes effect in January 2028, especially with major elections looming in France, Poland and Italy in 2027."
• Ireland takes over the chair of the rotating presidency of the Council of the European Union tomorrow (1 July). While this does not provide Ireland with any additional voting power or rights, it will enable Dublin to set the agenda on EU Council meetings. While the ostensible focus is on areas such as competitiveness and EU values, the gov't has been unofficially tasked by other EU states with getting an agreement on the MFF in place by end-2026.
• There remain significant divisions between the European Parliament (advocating a maximalist EUR2 trillion budget), the Commission (sitting somewhere in the middle around EUR1.8 trillion), and the Council, where both 'frugals' and advocates of a larger budget will look to have their say. Notably, the Parliament cannot propose amendments to the budget, but simply approve or reject it. 

• Financing needs estimated at E30.6bln (E2.2bln higher than the last update).
• OT issuance target unchanged from original E24.0bln estimate (versus E20.6bln for 2025). E15.5bln has been issued to the end of June: 65% of the total for the year).
• There is no guidance over the number of auctions for the quarter. There were originally 9 auctions planned for the year (2 held in Q1, 8 in 2025) and 3 syndications expect (1 held in Q1. 3 in 2025). Auctions continue to be held on the second or fourth Wednesday of the month.
• E1.4bln expected from MTN transactions of which E0.6bln raised so far (original target of E2.5bln for 2026; none in 2025).
• Bills issuance to be a net E4.2bln increase (E5.1bln on last update) -  with BT auctions on the third Wednesday of the month (with the option to also use the first Wednesday of the month if needed but not taken up for Q2). The 2025 outturn saw bill net issuance of E1.4bln against expectations of E2.9bln in the last update.
• EU funding is expected at E3.1bln up from E2.2bln previously (with E0.3bln already received; E0.5bln in 2025) with retail debt increasing net E2.0bln (E1.3bln executed so far; previous target E0.9bln).