EMISSIONS: US Formally Rejects IMO’s Carbon Levy, Retaliates Against Supporters

As noted above, quarterly earnings season kicks off in earnest today, and it's an unusually busy start to the quarter. 9.4% of the S&P 500's market cap is set to report, with the usual early focus on big banks and financials. Our full quarterly earnings schedule found here, including EPS, revenue expectations and full timings: https://mni.marketnews.com/44tWRA8

Highlights are:

• TUES: JP Morgan, Citigroup, BNY Mellon, Wells Fargo, Blackrock
• WEDS: Johnson & Johnson, Bank of America, Morgan Stanley, Goldman Sachs
• THURS: General Electric, Netflix, PepsiCo
• FRI: American Express, 3M, Charles Schwab

Tariffs remain a key buzzword in corporate reports. Heavy industry including General Electric, Snap-On and 3M which be watched for possible impacts, Markets will be particularly focused on any signs of frontloading of corporate purchases, the rate at which firms will passthrough costs to the consumer, and the expected impacts of tariffs on the bottom-line for consumer staples.

Commenting on last week’s price action, Goldman Sachs wrote “yields have yet to reverse the prior week’s underperformance, which we think is a reflection of a narrower path to gilt outperformance. Despite significant front-end rate relief, 10-Year (and long-end) gilts are hovering around the same levels vs. the start of the year”.

• Going into summer, they expect “little news on fiscal policy as parliament goes into recess. A slowdown in issuance and potential relief from the BoE’s next QT decision offers a relatively benign backdrop for the coming months, and with 10s30s reaching fresh local highs, the risk reward is improving for long-end curve flattening”.
• Goldman continue to think “the clearest pathway to lower yields will come from further disinflationary progress and incremental loosening of the labour market, and thus from the front-end”.
• They continue to recommend receiving December MPC-dated OIS, with this week’s data having the potential to drive fresh dovish repricing.
• Meanwhile, they suggest that “the upcoming Mansion House speech is unlikely to provide a major impulse to gilts, with a reemphasis of the fiscal rules, or hints at potential fiscal consolidation potentially a slight positive”.

NOK moves to the top of the G10 leaderboard. No obvious headline trigger for the move but it comes alongside a fresh extension higher for oil and equity futures. NOKSEK is now up 0.5% on the session to 0.9490, its highest since July 7. However, a move beyond the July 3 high at 0.9542 is required to reinstate a bullish theme. 

• Initial support is the July 7 low at 0.9377, clearance of which would expose the June 26 low at 0.9329.
• A reminder that Norwegian June inflation was slightly higher than expected last week, but was still consistent with expectations for a quarterly pace of Norges Bank cuts continuing in September, in our view.
• This week’s Norwegian data calendar is essentially empty, leaving focus on cross-asset dynamics to dictate NOK rates and FX.
• A reminder that NOK liquidity tends to dry up in the summer months with many participants on holiday, which can exacerbate intraday volatility.