Notes/Observations
Awaiting US payroll data; markets for a weaker-than-expected nonfarm report
Overnight
Asia:
Japan Jun Labor Cash Earnings Y/Y: -0.4% v +0.5%e; Real Cash Earnings Y/Y: -0.8% v +0.1%e; data interrupts a 13-month trend of steady small wage gains
Australia Jun Retail Sales saw a slight beat; M/M: 0.3% v 0.2%e; Retail Sales Ex Inflation Q/Q: 1.5% v 1.2%e
RBA Quarterly statement noted that holding policy steady consistent with growth and inflation targets; recent rise in AUD currency had a modest effect on economic forecasts
Europe:
BoE Deputy Gov Broadbent: UK inflation is nearing its peak; likely rates will have to rise more than markets think (in-line with Aug BOE minutes)
Americas:
Special Counsel Mueller reportedly impanels grand jury in Russia probe suggesting that the investigation is growing in intensity and entering new phase and may continue for months to come.
Energy:
Saudi Oil Min reportedly met recently with commodity hedge funds to ask views of oil market and price outlook; sought advice on whether OPEC should target longer-dated prices
Economic Calendar
(DE) Germany Jun Factory Orders M/M: 1.0% v 0.5%e; Y/Y: % v 4.4%e
(DE) Germany July Construction PMI: 55.8 v 55.1 prior
Fixed Income Issuance:
(IN) India sold total INR150B vs. INR150B indicated in 2022, 2029, 2033 and 2055 bonds
(ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in 2029, 2033 and 2046 bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 flat at 3,465, FTSE +0.2% at 7,487, DAX flat at 12,158, CAC-40 +0.1% at 5,136, IBEX-35 +0.1% at 10,561, FTSE MIB -0.2% at 21,748, SMI -0.1% at 9,124, S&P 500 Futures +0.01%]
Market Focal Points/Key Themes: European stocks trading mixed; stronger Euro putting damper on equities; gold and copper rose but didn’t help materials stocks much; oil slightly lower with energy stocks mixed; general theme of sideways trading; political uncertainty affecting risk sentiment; focus on NFP to be released later; upcoming US earnings releases include Cooper Tire, Cigna and Newell Brands
Equities
Consumer discretionary: Pearson PSON.UK -1.3% (earnings), Merlin Entertainment MERL.UK +1.8% (earnings), RPS Group RPS.UK +4.2% (earnings)
Industrials: Aalberts AALB.NL +2.8% (analyst action), Andritz ANDR.AT -8.2% (results)
Financials: Swiss Reinsurance RUKN.CH -0.1% (earnings), Hargreaves Lansdown HL.UK -4.8% (to not pay Div), Royal Bank of Scotland RBS.UK +2.7% (earnings)
Technology: STMicroelectronics STM.FR -1.9% (analyst action)
Telecom: MASmovil MAS.ES -6.3% (analyst action)
Healthcare: Fagron FAGR.BE +6.0% (results)
Speakers
Italy Stats Agency (Istat) Monthly Economic Note: Domestic economy moving in a positive direction
Sweden Think Tank NIER Economic updated its economic outlook which raised 2017 GDP from 2.5% to 3.0%but trimmed 2018 GDP from 2.4% to 2.2%. It also raised its 2017 CPI forecast from 1.7% to 1.9%
South Africa ANC Parliament chief whip Mthembu: Party cannot vote in favor of a motion that would collapse the govt
Indonesia Central Bank stated that it saw room to ease policy if inflation was manageable. Reiterated view that 2017 GDP growth was seen between 5.0-5.4% with growth momentum shifting to Q3
Currencies
FX markets were quiet ahead of the key US payroll data. Overall analysts believe the USD is likely to stay under pressure due to the uncertainty of the effectiveness of the Trump Administration in getting its promises through. Also a headwind for the greenback was reports that the Special Counsel Mueller had impaneled a grand jury in Russia probe suggesting that the investigation was growing in intensity and entering new phase and could continue for months to come.
Fixed Income
Bund futurestrades at 163.28 down 2 ticks consolidating after sharp rises yesterday. Initial resistance stands 163.48 followed by 163.78. Support lies at 163.08 initially with further retracement targeting 162.79.
Gilt futurestrades flat at 126.86 consolidating after a more dovish BoE yesterday which saw Gilts rise above 127 yesterday. A move back higher targets 127.20 then 127.51, with downside support at 126.51.
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.735T down €1B from €1.736T prior. Use of the marginal lending facility fell to €247M from €253M prior.
Corporate issuancesaw $just over $5B come to market via 4 issuers taking weekly issuance to $25.6B. Capital One and Kinder Morgan accounted for the majority of the issuance. For the week ending August 2nd IG Funds reported inflows of $1.49B, while High Yields funds reported inflows of $0.195B
Looking Ahead
(RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.75%
05:30 (ZA) South Africa to sell combined ZAR650M in 2029, 2033 and 2046 bonds
06:00 (IE) Ireland Jun Industrial Production M/M: No est v 2.1% prior; Y/Y: No est v 5.5% prior
06:00 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively)
06:45 (US) Daily Libor Fixing
07:30 (TR) Turkey July Real Effective Exchange Rate (REER): No est v 91.38 prior
07:30 (IN) Weekly India Forex Reserves
08:30 (US) July Change in Nonfarm Payrolls: +180Ke v +222K prior; Change in Private Payrolls: +180Ke v +187K prior; Change in Manufacturing Payrolls: +5Ke v +1K prior
08:30 (US) July Unemployment Rate: 4.4%e v 4.4% prior; Underemployment Rate: No est v 8.6% prior; Labor Force Participation Rate: No est v 62.8% prior
08:30 (US) July Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y2.4%e v 2.5% prior; Average Weekly Hours: 34.5e v 34.5 prior
08:30 (US) Jun Trade Balance: -$44.5Be v -$46.5B prior
08:30 (CA) Canada July Net Change in Employment: +12.5Ke v +45.3K prior; Unemployment Rate: 6.5%e v 6.5% prior; Full Time Employment Change: No est v +8.1K prior; Part Time Employment Change: No est v +37.1K prior; Participation Rate: No est v 65.9% prior
08:30 (CA) Canada Jun Int’l Merchandise Trade (CAD): -1.3Be v -1.1B prior
09:00 (MX) Mexico May Gross Fixed Investment: 2.0%e v -8.6% prior
10:00 (CA) Canada July Ivey Purchasing Managers Index (Seasonally Adj): No est v 61.6 prior; PMI (unadj): No est v 63.9 prior
10:20 (BR) Brazil July Vehicle Production: No est v 212.3K prior; Vehicle Sales: No est v 195.0K prior; Vehicle Exports: No est v 66.1K prior
11:00 (EU) Potential Sovereign ratings following European close
(IS) Israel Sovereign Debt to be rated by S&P
(KW) Kuwait Sovereign Debt to be rated by S&P
(SE) Sweden Sovereign Debt to be rated by Moody’s
(SK) Slovakia Sovereign Debt to be rated by Fitch
(SE) Sweden Sovereign Debt to be rated by Fitch
13:00 (US) Weekly Baker Hughes Rig Count data
14:00 (CO) Colombia Central Bank Monetary Policy Minutes
15:00 (CO) Colombia July PPI Domestic M/M: No est v -0.1% prior; Total PPI M/M: No est v -0.5% prior
Sat
13:00 (CO) Colombia July CPI M/M: No est v 0.1% prior; Y/Y: No est v 4.0% prior
