Notes/Observations
- Various coronavirus hotspots placing a headwind on risk appetite
- Delay of 6-month review of US-China phase-1 trade agreement seemed to have brought relief that deal remained intact given the harsh rhetoric recently; Analysts viewed delay as positive for risk sentiment, as this would provide China more time to purchase more American goods
- Japan Q2 GDP registered its biggest economic contraction on record
- China PBoC injected fresh liquidity into the banking system in the form of loans
- Next round of Brexit negotiations begin in London this week
- Democratic Party’ holds its nomination convention
- FOMC minutes due out on Wed
Asia:
- US-China six-month review of phase-1 trade agreement was said to have been postponed due to a scheduling issue. No new date set (Note: call was planned for sat, Aug 15th)
- China PBoC injects CNY700B in 1-year MLP operation (Note: amount larger than expected)
- Japan Q2 Preliminary GDP data worse than expectation as the country remain mired in recession with a record contraction (Q/Q: -7.8% v -7.5%E; GDP Annualized Q/Q: -27.8% v -26.9%e
- New Zealand PM Ardern delayed planned NZ Elections by 4 weeks until Oct 17th; To dissolve parliament on Sept 6th
- New Zealand Fin Min Robertson extended mortgage deferral plan to from end Sept until end march
Coronavirus:
- Total global cases 21,613,183 (+3.7% vs. Fri); total deaths: 774.3K8 (+2.6% vs Fri)
- Malaysia said to have detected a strain of the new coronavirus that’s been found to be 10 times more infectious
- Italy govt new rules from Monday will see nightclubs close & mandate masks between 6am-6pm in places close to bars
Europe:
- BOE Haldane (chief economist) noted ina Daily Mail op/ed piece that the foundations for a rapid recovery in the UK economy were already in place. Activity was still well below pre-Covid levels, but the UK had already recovered perhaps half of its losses. Recovery in jobs might take longer, but risks have eased as spending and business activity have picked up
- Germany Fin Min Scholz proposed €10.0B plan to extend the job subsidies in Germany paying up to 60% of salary
- Brexit Negotiations to resume this week in London (to run through Fri, Aug 21st). EU said to have warned UK banks about potential market access delays after Brexit was finalized
Americas:
- President Trump issued new order ratcheting up the pressure on TikTok parent ByteDance; ordered the company to divest itself of any assets used to support the TikTok app in the US within 90 days
- President Trump tweeted that China was buying ‘a lot’ of things like corn and soybeans, they were doing it to keep me happy. Universal mail in voting is going to be catastrophic and make the country a laughing stock around the world – House Speaker Pelosi to call on the House this week to return and vote on a Bill to protect the US Postal Service; Speaker accused President Trump of a campaign to sabotage the election
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.24% at 368.96, FTSE +0.39% at 6,113.55, DAX +0.14% at 12,918.90, CAC-40 +0.15% 4,970.50, IBEX-35 -0.69% at 7,105.00, FTSE MIB -0.17% at 19,993.50, SMI +0.40% at 10,204.17, S&P 500 Futures +0.37%]
- Market Focal Points/Key Themes: European indices open higher across the board but turned to trade mixed later in the session; better performing sectors lead by health care and industrials; underperforming sectors include financials and telecom; Spain and Italy to close nighclubs over spike in covid cases, Sanofi agrees to acquire Principia Biopharma; EU approves Assa Alboy to take stake in Agta; OSE Immunotherapeutics announces positive preclinical covid-19 vaccine results; relatively quiet session on the equities front expected for the US, with JD.com and Nordic American Tankers reporting
Equities
- Consumer staples: Cranswick [CWK.UK] +6.5% (trading update)
- Healthcare: Kiadis Pharma [KDS.NL] +9% (new collaboration), OSE Immunotherapeutics [OSE.FR] +13% (study data)
- Industrials: TORM [TORM.DK] +9% (earnings), Costain [COST.UK[ -3% (trading update)
Speakers
- China Foreign Ministry spokesperson: Ready to work with India to enhance mutual trust. Stated that been repeating facts and truths on Tiktok and the company had done almost everything the US has asked for
- Singapore Dep PM Heng Swee Keat: To extend job support scheme until Mar 2021. o spend additional S$8.0B on support measures
- Hong Kong govt to extend all social distancing measures until Tuesday, Aug 25th
- Iran Oil Ministry: To sell local bonds to help increase oil production by 185K bpd. Could not wait for foreign companies to develop Iranian oil. To maintain 1-2M bpd of spare capacity
Currencies/Fixed Income
- USD was initially softer in early week trading as the US-China six-month review of phase-1 trade agreement was postponed due to a scheduling issue (No new date set). Analysts viewed delay as positive for risk sentiment, as this would provide China more time to purchase more American goods. President Trump tweeted that China was buying ‘a lot’ of things like corn and soybeans to make him happy. Risk sentiment was also aided after China PBoC injected CNY700B in 1-year MLP operation with amount being larger than expected.
- However, continued concerns over various coronavirus hotspots in Europe kept a headwind on risk appetite for the time being.
- EUR/USD continued to be unable to bust above the 1.19 level for fresh cycle highs. Italy govt placed new rules from Monday that would see nightclubs close and mandate masks between 6am-6pm in places close to bars.
- GBP was steady as Brexit negotiations resumed in London this week. EU said to have warned UK banks about potential market access delays after Brexit was finalized
- USD/JPY little changed at 106.45 area despite the record contraction In Japan Q2 GDP. Markets watching to make sure make sure Japan’s economy hit bottom back in Apr-May period. Reports circulated that UK financial services might not know until next year whether it will be able to access the EU market
Economic Data
- (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: -18.1% v -25.9%e
- (PE) Peru July Unemployment Rate: 16.4% v 14.8%e
- (NO) Norway July Trade Balance (NOK): No est v -10.4B prior
- (DK) Denmark July PPI M/M: 0.0% v 3.4% prior; Y/Y: -2.1% v -1.6% prior
- (CZ) Czech July PPI Industrial M/M: 0.1% v 0.0%e; Y/Y: -0.1% v -0.2%e
- (CH) Swiss weekly Total Sight Deposits (CHF): 698.6B v 695.8B prior; Domestic Sight Deposits: 632.4B v 628.5B prior
- (TR) Turkey July Central Gov’t Budget Balance (TRY): -29,7B v -19.4B prior
Fixed Income Issuance
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month bills; Avg Yield: 0.04% v 0.08% prior; bid-to-cover: 2.15x v 2.65x prior
Looking Ahead
- 05:30 (DE) Germany to sell combined €8.0B in 6-month and 12-month Bubills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 9-month bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (IL) Israel to sell Bonds
- 06:00 (RO) Romania to sell RON200M in 3.65% 2031 Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (PL) Poland July CPI Core M/M: 0.2%e v 0.7% prior; Y/Y: 4.2%e v 4.1% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
- 08:30 (US) Aug Empire Manufacturing: 15.0e v 17.2 prior
- 08:30 (CA) Canada Jun Int’l Securities Transactions (CAD): No est v 22.4B prior
- 08:50 (FR) France Debt Agency (AFT) to sell €4.0-6.0B in 3-month, 6-month and 12-month bills (4 tranches)
- 09:00 (CA) Canada July Existing Hone Sales MoM: 20.0%e v 63.0% prior
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (US) Aug NAHB Housing Market Index: 74e v 72 prior
- 11:30 (US) Treasury to sell 13-week and 26-week bills
- 12:00 (RU) Russia July Industrial Production Y/Y: -7.9%e v -9.4% prior
- 14:00 (US) Fed’s Bostic
- 16:00 (US) Jun Net Long-term TIC Flows: No est v $127.0B prior; Total Net TIC Flows: No est v -$4.5B prior
- 16:00 (US) Weekly Crop Progress Report
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.5 prior
- 21:30 (KR) Bank of Korea (BOK) to sSell KRW400B in 6-month bills
- 21:30 (KR) South Korea to sell combined KRW4.15T in 5-year ad 10-year Bonds
- 23:00 (TH) Thailand Central Bank to sell THB75.0B in 3-month and 6-month bills
- 21:30 (AU) RBA Aug Minutes
- 23:00 (NZ) New Zealand July Non Resident Bond Holdings: No est v 49.9% prior
- 23:00 (ID) Indonesia Q2 Current Account Balance: No est v -$3.9B prior
- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
- 23:35 (JP) Japan to sell 30-Year JGB Bonds
- (US) Democratic National Convention (Milwaukee, WI)
