ISRAEL: Security Cabinet To Meet 18:00 Local To Decide On Gaza Takeover Plan
The security cabinet meets at 18:00 local time (11:00ET, 16:00BST) to sign off on Prime Minister Benjamin Netanyahu's plan for the Israeli Defence Forces (IDF) to move into Gaza City and the centre of the strip in an operation that will essentially see Israeli forces fully occupy Gaza. The Times of Israel reports that despite misgivings voiced by military officials and opposition from some ministers, the plan is likely to win majority approval.
- Chief of the General Staff Eyal Zamir is set to put forward his own plan, which centres on an encirclement of Gaza City, to avoid potential risk to the remaining hostages held by Hamas.
- Netanyahu's plan is set to give the residents of Gaza City several weeks to conduct a full evacuation to camps in central Gaza. This would be followed by a full occupation of the city. Afterwards, the IDF would turn towards the camps in central Gaza, where it has not engaged in ground operations to date. The entire operation would involve 4-6 divisions, representing a significant proportion of the IDF's entire troop numbers, and take several months.
- Channel 12 reports "Zamir is expected to warn in the discussion that occupying the Strip, especially without a clear decision on "the day after," could become complicated and bring about the opposite result from that aimed at by [the PM], and even told his associates in recent days that "occupying the Strip would put Israel in a black hole."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FRANCE DATA: Import and Export Trends Sluggish Post Covid (1/2)
While the French goods trade deficit to GDP is broadly back in line with pre-covid levels (~3%), the downward trend in both exports and imports is reflective of a broader sluggishness in activity. Weak demand is constraining imports, while trade uncertainty and soft partner demand is limiting export growth.
- The trade deficit was E7.8bln in May according to Ministry of Commerce data, up from E7.7bln in April. Exports (ex-military equipment) fell 0.3% M/M to E48.8bln. Export growth has been negative on an NSA sequential basis for four of the last 5 months (March was an exception with +5.3% M/M growth).
- Meanwhile, imports (ex-military equipment) fell 0.2% M/M to E56.7bln, following a 3.0% M/M fall in April. Imports were down 1.7% Y/Y in May (vs -2.6% in April, +3.4% in March), consistent with weak domestic consumption and industrial production trends seen in recent months.
- Net exports pulled Q/Q real GDP down by 0.7pp in Q1. Recent export weakness suggests a similar drag may also be seen in Q2.
GERMAN DATA: Trade Balance Extends Real-Terms Downtrend
The German trade surplus increased in May to E18.4bln (seasonally-adjusted, vs E15.5bln cons; E15.7bln prior, revised from E14.6bln). Both exports (-1.4% M/M vs -0.5% cons; -1.7% prior, revised from -1.6%) and imports (-3.8% M/M vs -1.7% cons; 2.2% prior, revised from 3.9%) declined.
In real terms, as a % of nominal GDP on a 12-month rolling basis, the trade balance series extended its current downtrend, at 5.1% as of May, 0.9pp below levels seen around a year ago (vs 8.0% 2015 high, 2.1% 2022 low, bottom left chart).
- Across countries, an export drop to the US is consistent with the firmer tariff stance in the country. Exports to China meanwhile also dropped, sitting close to their post-pandemic lows, suggesting that an April jump might have been a one-off (mid-left chart).
- May German factory orders data showed the series holding up comparatively well from the foreign side - that could suggest some rebound in exports over the next months.
- Lower imports across the board of constituencies (mid-right chart) seen in May can be indicative of low domestic demand in the month.
- IFO export expectations fell in June, to -3.9 (-3.0 May), remaining well subdued on a historical comparison.
- "The United States has offered an agreement to the European Union that would keep a 10 percent baseline tariff on all EU goods, with some exceptions for sensitive sectors such as aircraft and spirits", Politico quoted an EU diplomat overnight - arguably, that would be quite favourable conditions for the bloc.
OUTLOOK: Price Signal Summary - Bear Threat In Oil Futures Still Present
- On the commodity front, a recent move lower in Gold resulted in a breach of the 50-day EMA, and a trendline drawn from the Dec 30 ‘24 low and connected to the Feb 28 low. A clear break of both trend tools would signal scope for a deeper correction, and open $3245.5, May 29 low. Note that the latest recovery highlights a possible false trendline break. A resumption of gains would refocus attention on $3451.3, the Jun 16 high. The bear trigger lies at $3248.7, the Jun 30 low.
- In the oil space, WTI futures maintain a softer tone following the reversal from the Jun 23 high, and recent gains appear corrective. Support to watch is the 50-day EMA, at $64.96. It has been pierced, a clear break of it would signal scope for a deeper retracement. This would expose $58.87, the May 30 low. Initial resistance to watch is $71.20, the 50.0% retracement of the Jun 23 - 24 high-low range. Key resistance is at $78.40, the Jun 23 high.
