- U.S.-China trade talks wrapped up on Thursday with no signs of progress
- German Q2 final GDP was unrevised (QoQ: 0.5%, YoY: 2.0%)
- Focus on key speech from Federal Reserve Chair Powell at Jackson Hole
Asia:
- Japan July National CPI Y/Y: 0.9% v 1.0%e; CPI Ex-Fresh Food (core) Y/Y: 0.8% v 0.9%e; CPI Ex-Fresh Food/Energy (core-core) Y/Y: 0.3% v 0.3%e
- Australia Treasurer Morrison to replace Turnbull as PM after winning leadership election by a margin of 45 to 40.
- China Commerce Ministry (MOFCOM) China and the US had ‘constructive’ and ‘candid’ exchange over trade issues; both countries to keep communication on trade
- RBNZ Gov Orr:Reiterates stance that in no rush to raise interest rates; biggest challenge is getting inflation to rise
Europe:
- Italy Interior Min Salvini (also Dep PM): Italy could clash with EU on budget law. Saw the first signs of economic attack against Italy, rehearsal has begun
- UK Foreign Sec Hunt: thinks Parliament will only accept a Brexit deal that’s in accord with the letter and spirit of the referendum
- South Africa Central Bank (SARB) Dep Gov Groepe: To respond if weak Rand currency was sustained and fed through to CPI.
Americas:
- White House official: US-China trade talks in Washington DC concluded; talks included structural issues in China and discussed how to achieve trade fairness
- Fed Kaplan (dove, non-voter): Comfortable with 4 rate hikes in 2018 (Note: implies 2 more to come). Expected 2019 to be a very strong year for US economy
- Fed’s Bostic (dove, voter): FOMC has spent some time discussing the yield curve; Believed yield curve was only one signal among many used for the complex task of forecasting growth
Economic Data:
- (DE) Germany Q2 Final GDP Q/Q:0.5 % v 0.5%e; Y/Y: 2.0% v 2.0%e; GDP NSA Y/Y: 2.3% v 2.3%e
- (DE) Germany Q2 Private Consumption Q/Q: 0.4% v 0.6%e; Government Spending Q/Q: 0.6% v 0.6%e; Capital Investment Q/Q: 0.5% v 0.8%e; Construction Investment Q/Q: 0.6% v 1.8%e; Domestic Demand Q/Q: 0.9% v 0.6%e; Exports Q/Q: 0.7% v 1.4%e; Imports Q/Q: 1.7% v 1.5%e
- (DK) Denmark July Retail Sales M/M: -0.3% v -0.1% prior; Y/Y: 0.5% v 3.1% prior
- (FI) Finland July PPI M/M: 0.4% v 0.7% prior; Y/Y: 6.1% v 6.2% prior
- (FI) Finland July Preliminary Retail Sales Volume Y/Y: +0.9% v -0.3% prior
- (NO) Norway Jun AKU Unemployment Rate: 3.9% v 3.8%e
- (CZ) Czech Aug Business Confidence: 16.4 v 15.4 prior; Consumer Confidence Index: 7.8 v 9.3 prior; Consumer & Business Confidence: 14.7 v 14.2 prior
- (ES) Spain July PPI M/M: 0.4% v 1.0% prior; Y/Y: 4.6% v 4.1% prior
- (AT) Austria Jun Industrial Production M/M: -1.5% v +2.6% prior; Y/Y: 5.0% v 6.9% prior
- (SE) Sweden July PPI M/M: 0.9% v 0.8% prior; Y/Y: 8.4% v 8.0% prior
- (CN) Weekly Shanghai copper inventories (SHFE): 146.6K v 155.1K tons prior
- (PL) Poland July Unemployment Rate: 5.9% v 5.9%e
- (PL) Poland Q2 Unemployment Rate: 3.6% v 4.0%e
- (TW) Taiwan July M2 Money Supply Y/Y: 3.7% v 4.1% prior
- (UK) July BBA Loans for House Purchases: 39.6K v 40.7Ke
Fixed Income Issuance:
- (IN) India sold total INR120B vs. INR120B indicated in 2023, 2028, 2035 and 2046 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.2% at 384.0, FTSE +0.0% at 7564, DAX +0.1% at 12311, CAC-40 +0.2% at 5430, IBEX-35 +0.3% at 9593, FTSE MIB +0.5% at 20704, SMI +0.0% at 9050 S&P 500 Futures +0.2%]
Market Focal Points/Key Themes:
- European Indices trade slightly higher across the board following on from a mixed Asian session and stronger US futures.
- On the corporate front Kingspan, Kongsberg Gruppen are among names trading higher after results, with U-Blox a notable decliner after cutting outlook. Shire trades higher after FDA approval of Takhzyro. On the M&A front, Unicredit trades higher after reportedly hiring Rothchild on potential integration with Socgen; Petrofac also trades higher after divesting its interest in GSA development to Ithaca.
- Looking ahead notable earners include retailers Hibbert, Footlocker and Buckle.
Movers
- Technology U-Blox [UBXN.CH]-17% (Earnings, cuts outlook)
- Industrials Kongsberg Gruppen [KOG.NO]+11.5% (Earnings), Kingspan [KGP.UK]+6.8% (Earnings)
- Financials Unicredit [UCG.IT] +0.4% (Reportedly hired bankers on potential deal with SocGen)
- Healthcare Shire [SHP.UK]+2.6% (FDA Approval of TAKHZYRO), Bachem -4.2% (Earnings)
- Energy Petrofac [PFC.UK]+1.2% (Divestment)
Speakers
- Sweden Central Bank (Riksbank) Dep Gov Jochnick: Inflation was rising and close to the 2% target. Reiterated that that rate path pointed to hike by end-2018 with probability of an Oct hike
- Norway Sovereign Wealth Fund expert committee believed that it should remain invested in oil stocks
- President Trump reportedly said to offer Italy help with buying government bonds (no details on how it would be done).
- Australia’s new PM Morrison stated that would consider new cabinet over the weekend and pledged that the new ministry to be sworn in next week. To name Josh Freydenberg as the new Treasurer. No plan for elections any time soon (**note: Elections must be held by May 2019).He added that his govt immediate priority was the drought
- China Finance Min Liu Kun reiterated stance that will continue ‘hitting back’ at the US over trade. To increase fiscal spending to support workers hurt by trade frictions
Currencies
- Major FX pairs were relatively quiet with focus on the upcoming key speech from Federal Reserve Chair Powell at the Jackson Hole symposium.
- EUR/USD was slightly higher at 1.1565 area. The in-line German Q2 GDP data did little to prompt any fresh bets on currencies. Dealers eyeing the weekly close in the pair to determine whether the bearish H&S formation remained intact.
- GBP/USD poised to register its 1st w/w rise in six weeks as UK Gov officials were sounding more upbeat on the possibility of achieving a Brexit agreement. Pair holding above 1.2830 just ahead of the NY morning.
- EUR/SEK moved lower as Riksbank Dep Gov Jochnick added a hawkish tilt to the 1st potential rate hike. Jocknock saw Oct as a possibility compared to the Board view of a hike before year-end. EUR/SEK trading at 10.5250
- AUD/USD staged a relief rally after political clouds cleared with Scott Morrison (former Treasurer) winning a Liberal leadership challenge to become Australia’s PM
Fixed Income
- Bund Futures trades at 163. down 10 ticks retracing some of the move as European Indices trade higher. Resistance moves to 163.82 then 164. A downside break of 163.00 sees 162.69 initially.
- Gilt futures trades at 123.29 down 6 ticks following the move in Treasuries. Continued support at 123.12, with a continued move higher targeting 123.93 then 124.00.
- Friday ‘s liquidity report showed Thursday’s excess liquidity fell from €1.873T to €1.856T. Use of the marginal lending facility rose from €61M to €68M.
- Corporate issuance saw JP Morgan raise $1.3B in the primary market. For the week ended Aug 15th Lipper fund flows reported IG funds show inflows of $1.8B.
Looking Ahead
- 05:30 (ZA) South Africa to sell ZAR600M in I/ L 2029, 2038 and 2046 bonds
- 06:00 (UK) DMO to sell €5.5B in 1-month, 3-month and 6-month bills (£2.0B, £2.0B and £1.5B respectively)
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.3%e v 0.7% prior
- 07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 84.2 prior
- 08:00 (CL) Chile July PPI M/M: No est v %1.9 prior
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) July Preliminary Durable Goods Orders: -1.0%e v +0.8% prior; Durables Ex-Transportation: 0.5%e v 0.2% prior; Capital Goods Orders (Non-defense/ex-aircraft): 0.5%e v 0.2% prior; Capital Goods Shipments (Non-defense/ex-aircraft): 0.3%e v 0.7% prior
- 09:00 (BE) Belgium Aug Business Confidence: -0.5e v 0 (nil) prior
- 09:00 (MX) Mexico Q2 Final GDP Q/Q: -0.1%e v -0.1% prelim; Y/Y: 2.8%e v 2.7 % prelim; Nominal GDP Y/Y: 7.5%e v 6.4% prior
- 09:00 (MX) Mexico Jun IGEA Economic Activity Index (Monthly GDP) Y/Y: 1.6%e v 2.2% prior
- 09:00 (MX) Mexico Q2 Current Account Balance: -$4.1Be v -$0.7B prior
- 10:00 (US) Fed Chair Powell speech at Jackson Hole symposium
- 11:00 (EU) Potential Sovereign ratings after European close (Iraq Sovereign Debt to be rated by S&P and Sweden and Romania Sovereign Debt to be rated by Moody’s)
- (SE) Sweden Sovereign Debt to be rated by Moody’s
- 13:00 (US) Weekly Baker Hughes Rig Count data
