OECD Cuts Global Growth To Weakest Since Financial Crisis

Notes/Observations

• Norway unexpected raises rates, SNB and BoJ keep rates on hold as expected
• OECD cuts its world economic growth forecasts due to rising trade tensions, Brexit concerns and political uncertainty

Asia:

• BoJ leaves rates unchanged; Maintains pledge to ease policy without hesitation if there is risk economy could lose momentum to hit price goal -Indonesia cuts rates as expected, while Taiwan holds rates
• Hong Kong Monetary Authority Chief Chan: Sees downward pressure in Q3 growth citing political unrest and trade war; interest rate level not high in general; USFed cut may not have direct impact on rates in Hong Kong

Europe/Mideast:

• Norway Central surprisingly raised rates 25bp saying rate likely remain at this level coming period
• SNB keeps rates on hold, reiterating Swiss Franc remains overvalued, Adjusting the basis for calculating negative interest

Brexit:

• UK has reportedly submitted proposals in writing to the EU in an attempt to gain a breakthrough in talks
• Ireland’s Foreign Min says there is still no breakthrough yet with DUP on Brexit, with credible proposals needed

Americas: –

• US Fed cuts rates as expected; Sustained expansion is likely while uncertainties about the economic outlook remained

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.47% at 391.24, FTSE +0.33% at 7,338.35, DAX +0.43% at 12,443.08, CAC-40 +0.66% at 5,657.97, IBEX-35 +0.95% at 9,117.95, FTSE MIB +0.82% at 22,127.50, SMI -0.01% at 10,017.50, S&P 500 Futures -0.14%]
• Market Focal Points/Key Themes: Equities European Indices trade higher following a mostly mixed session in Asia and slightly lower US Index futures, as markets continue to absorb effects of several key rate decisions, including the Fed, BoJ and SNB ones. On the earnings front, shares of retail firm Next falling 4% on LSE followings its weaker earnings and affirmed outlook. One of the world’s largest producers of spirits and beers Diageo issued AGM update, currently trades mostly flat while IG Group, Just Group, Saga and Rocket Internet are among notable risers on earnings and trading updates. On the corporate front shares of UK-listed Charles Taylor trade sharply higher, rising almost 40% on cash offer made by LMP Bidco. Elsewhere shares of industrial company Bauer fell 20% on profit warnings yesterday after European close. Looking ahead notable earners include Darden Restaurants.
• Consumer discretionary: Next [NXT.UK] -4% (earnings), Swatch [UHR.CH] +2% (Swiss watch sales)
• Financials: Charles Taylor [CTR.UK] +38% (offer), IG Group [IGG.UK] +9% (sales; Chairman steps down), Just Group [JUST.UK] +4% (new CEO), Saga [SAGA.UK] +1% (earnings)
• Industrials: Diageo [DGE.UK] -1% (trading update), Kier Group [KIE.UK] -4% (earnings), Bauer [B5A.DE] -20% (profit warning), Bauer [B5A.DE] -20% (profit warning)
• Technology: Rocket Internet [RKET.DE] +2% (earnings)

Speakers

• (JP) Bank of Japan (BOJ) Gov Kuroda: reiterates Japan’s economy expanding moderately as trend
• (UK) Brexit Secretary Barclay: UK believes backstop can be replaced; to meet EU Chief negotiator Barnier on Friday, Sept 20th
• (NO) Norway Central Bank (Norges) Gov Olsen (post rate conference): Still bigger probability for rates going up than down
• (SE) Sweden Central Bank (Riksbank) Dep Gov Floden: we have had a few clearer signals of a slowdown in Sweden
• (FR) France Foreign Min Le Drian: Not very credible that Yemen rebels attacked Saudi oil facilities
• (FI) Finland PM Rinne: Has talked about setting a deadline for Boris Johnson to submit proposals on the Irish backstop before September 30th
• (SG) Singapore Fin Min Heng: We are ready to do what is necessary to support economy; RCEP trade deal will be a ‘huge agreement’
• (IE) Ireland Foreign Min Coveney: No breakthrough yet with DUP on Brexit, need credible written proposals from the UK

Currencies/Fixed Income

• USD: The USD index spiked higher yesterday to around 98.68 as the US cut interest rates by 25bp as expected and 7/17 policy makers voted for an additional cut. The index has since retraced all its losses trading near the 98.30 level. Traders look to the levels on the upside at 98.75 and 98.00 to the downside.
• GBP/USD: The cable saw a day of whip saw trading as CPI data from the UK came in slightly weaker. The comments also from Juncker and Barnier of the EU sent the cable trading lower. Today after the UK saw inline retail sales it is now trading higher. Levels to the upside are in the region of 1.2525 and downside at 1.244.
• EUR/NOK: The NOK strengthened against the Euro to around 9.80 and has since given its gain back. Norway voted unanimously to hike rates by 25bp to 1.50% and expects this rate to remain at current levels in the coming period assuming the UK leaves the EU with a withdrawal agreement EUR/CHF: The Euro swissy sold of strongly strengthening the swissy to 1.096 as the Swiss Central Bank left rates unchanged and adjusting the basis for calculating negative interest rates.

Economic Data

• (CH) SNB LEAVES SIGHT DEPOSIT RATE UNCHANGED AT -0.75%; AS EXPECTED
• (NO) NORWAY CENTRAL BANK (NORGES) RAISES DEPOSIT RATE BY 25BPS TO 1.50%; NOT EXPECTED
• (TW) TAIWAN CENTRAL BANK (CBC) LEAVES BENCHMARK INTEREST RATE UNCHANGED
• (ID) INDONESIA CENTRAL BANK (BI) CUTS 7-DAY REVERSE REPO 25BPS TO 5.25%; AS EXPECTED
• (UK) AUG RETAIL SALES (EX-AUTO/FUEL) M/M: -0.3% V -0.3%E; Y/Y: 2.2% V 2.3%E
• (EU) Euro Zone July Current Account (Seasonally Adj): €20.5B v €18.4B prior
• (PL) Poland Aug Sold Industrial Output M/M: -6.0% v -3.8%e; Y/Y: -1.3% v 1.3%e
• (PL) Poland Aug PPI M/M: 0.2% v 0.3%e; Y/Y:0.7 % v 0.8%e

Fixed Income Issuance

• (ES) SPAIN DEBT AGENCY (TESORO) SELLS TOTAL €3.97B VS. €3.5-4.5B INDICATED RANGE IN 2021, 2029, 2032 AND 2035 BONDS
• (FR) FRANCE DEBT AGENCY (AFT) SELLS TOTAL €8.998B VS. €7.5-9.0B INDICATED RANGE IN 2023, 2025 AND 2026 BONDS
• (IE) Ireland Debt Agency (NTMA) sells €500M vs. €500M indicated in 6-month Bills; Avg Yield: -0.55% v -0.22% prior; Bid-to-cover: 3.97x v 2.70x prior

Looking Ahead

• 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.75%; Expected to maintain Asset Purchase Target at £435B and Corporate Bond Target at £10B
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Philadelphia Fed Business Outlook: 10.5e v 16.8 prior
• 08:30 (US) Q2 Current Account Balance: -$127.4Be v -$130.4B prior
• 08:30 (US) Initial Jobless Claims: 213Ke v 204K prior; Continuing Claims: 1.67Me v 1.670M prior
• 08:30 (CA) Canada Aug Teranet House Price Index (HPI) M/M: No est v 0.7% prior; Y/Y: No est v 0.4% prior; House Price Index (HPI): No est v 226.57 prior
• 08:30 (CA) Canada Aug ADP Payroll Estimates: No est v +73.7K prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (RU) Russia Gold and Forex Reserve w/e Sept 13th: No est v $532.7B prior
• 09:00 (BR) Brazil Sept CNI Industrial Confidence: No est v 59.4 prior
• 09:00 (ZA) South Africa BER Expectation Survey
• 09:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to leave Interest Rate at 6.50%
• 10:00 (US) Aug Leading Index: -0.1%e v +0.5% prior
• 10:00 (US) Aug Existing Home Sales: 5.38Me v 5.42M prior
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 15:00 (AR) Argentina Q2 GDP Q/Q: No est v -0.2% prior; Y/Y: +0.4%e v -5.8% prior
• 15:00 (AR) Argentina Q2 Unemployment Rate: No est v 10.1% prior