US oil inventories rose 1.6m barrels, WTI mildly lower

    US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.6m barrels in the week ending August 9, versus expectation of -2.5m barrels decline. At 440.5m barrels, crude oil inventories are about 3% above the five year average for this time of year.

    WTI weakens mildly after the release but remains in range of 50.43/60.93. WTI breached 50.64 support last week but quickly rebounded. However, as upside is limited by 55 day EMA so far, further decline remains in favor. Sustained break of 50.64 could pave the way back to 42.05 low.

    US Ross: Tariff delays not quid pro quo with China

      US Commerce Secretary Wilbur Ross told CNBC that the tariff delay decision were not a trade ‘quid pro quo’ with China. He referred to the delay in 10% tariffs on some Chinese imports until December 15. Instead, it’s just because “nobody wants to take any chance of disrupting the Christmas season”.

      Ross added that “we’ve been doing analysis since the hearings were announced by the USTR”. And, “even though they were only announced as being imposed recently, the analytical work began well before that.”

      Germany Altmaier said can avoid recession with right measures, but government said no need

        German Economy Minister Peter Altmaier warned that the -0.1% contraction in Q2 GDP was a “wake-up call and a warning signal”. He added that “the smouldering trade conflict is taking its toll — and export-focused German industry is feeling it especially keenly”.

        Altmaier also emphasized “We are in a phase of economic weakness but not yet in recession. We can avoid that if we take the right measures.” However, Chancellor Angel Merkel’s spokesman said “the government does not currently see any need for further measures to stabilize the economy – the fiscal policy of the German government is already expansive.”

        Eurozone GDP grew 0.2% in Q2, employment rose 0.2%

          Eurozone GDP grew 0.2% qoq in Q2, unchanged from Q1, matched expectations. Annually, GDP rose 1.1%. For EU 28, GDP grew 0.2% qoq, 1.3% yoy. Eurozone employment rose 0.2% qoq, below expectation of 0.3%. EU28 employment rose 0.2% qoq.

          Also released, Eurozone industrial production dropped -1.6% mom in May, worse than expectation of -1.4% mom. Production of capital goods fell by 4.0%, non-durable consumer goods by 2.8%, durable consumer goods by 1.2%,intermediate goods by 0.8% and energy by 0.2%

          UK CPI rose to 2.1%, core CPI rose to 1.9%

            UK CPI accelerated to 2.1% yoy in July, up from 2.0% yoy and beat expectation of 1.9% yoy. Core CPI also rose to 1.9% yoy, up from 1.8% yoy and beat expectation of 1.8% yoy. Also from UK, RPI slowed to 2.8% yoy, down from 2.9% yoy, matched expectations.

            PPI input rose 0.9% mom, 1.3% yoy, above expectation of 0.6% mom, 0.3% yoy. PPI output rose 0.3% mom, 1.8% yoy, above expectation of 0.1% mom, 1.7% yoy. PPI output core rose 0.4% mom, 2.0% yoy, above expectation of 0.1% mom, 1.7% yoy. House price index rose 0.9% yoy in June, down from 1.2% yoy, missed expectation of 1.0% yoy.

            German GDP contracted -0.1% in Q2, 10-year yield hits new record low

              German GDP contracted -0.1% qoq in Q2, matched expectations. There were positive contributions from domestic demand, with growth in household final consumption and government final consumption. However, gross fixed capital formation in construction declined. Additionally, development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports.

              Full release here.

              German 10-year yield drops to new record low at -0.623 and remains weak for now.

              China industrial production slowed to 4.8%, lowest in 17 year, other data missed too

                In July, industrial production grew merely 4.8% yoy, down from 6.3% yoy and missed expectation of 6.0% yoy. It’s also the slowest growth rate in more than 17 years. Retail sales grew 7.6% yoy, down from 9.8% yoy and missed expectation of 8.6% yoy. Fixed assets investment ex rural grew 5.7% yoy, down from 5.8% yoy and missed expectation of 5.9% yoy. Surveyed unemployment rate rose from 5.1% to 5.3%.

                The National Bureau of Statistics of China insisted in a statement that the national economy performed “within the reasonable range” and “sustained generally stable growth while making further progress.” NBS spokesmen Liu Aihua also said the impact of the Sino-U.S. trade war on China’s economy is controllable

                USD/CNH dropped sharply yesterday as Yuan rebounded on news of delay in some US tariffs. But the Yuan quickly lost momentum on today’s big data misses. A short term top was formed after USD/CNH hit 61.8% projection of 6.235e to 6.9800 from 6.6699 at 7.1301, As long as 6.9620 resistance turned support holds, we’d expect recent uptrend to resume sooner or later. Break of 7.1394 will target 100% projection at 0.7414.

                Australia wage price index rose 3.6% qoq, on the back of strong public sector growth

                  Australia Wage Price Index rose 3.6% qoq in Q2, but couldn’t reverse the -4.1% fall in Q1. Annually, Wage Price Index rose 2.3% yoy comparing to Q2 2018.

                  ABS Chief Economist, Bruce Hockman said: “Wage growth continues at a steady rate in the Australian economy on the back of strong public sector growth over the quarter. The most significant contribution to wage growth this quarter came from the public sector component of the health care and social assistance industry, where a number of large increases were recorded in Victoria under a plan to ensure wage parity with other states.”

                  Full release here.

                  Australia Westpac Consumer Confidence rose 3.6%, superficially a surprise

                    Australia Westpac Consumer Confidence rose 3.6% to 100 in August, up from 96.5. Westpac said: “Superficially this result comes as somewhat of a surprise given that the survey was conducted against a turbulent backdrop with global financial markets roiled by escalating trade tensions between the US and China, the ASX down 3.4% and the AUD off 3¢ US since the July survey.” However, it’s came in the “aftermath” of the unexpected -4.7% fall in July, despite back-to-back RBA rate cuts. Also, there was political certainty restoration following the May Federal election.

                    Regarding RBA, Westpac expects the central bank to stand page in September, before delivering another -25bps rate cut in October. Also, there wold be a final -25bps move to take Cash Rate to 0.50% in February. Westpac noted that the “signals from the RBA are quite clear”. And, In its recent Statement on Monetary Policy the RBA lowered its forecasts for inflation, wages and growth, while lifting its forecasts for the unemployment rate. Those forecasts were despite basing them on the technical assumption of adopting market pricing, which anticipates two more rate cuts.

                    Full release here.

                    Yen recovers after limited loss as markets digest delay of US tariffs on China

                      Asian markets open generally higher, following the strong rebound in US stocks overnight. Though, strength is relatively limited as none of the major indices are gaining over 1% at the time of writing. Yen is also paring some of yesterday’s losses and recover broadly. It would take more time to see the real implications of US announcement to delay some tariffs on Chinese imports. The move was generally well received by industry groups. But some analysts criticized that it’s merely an incremental positive sign. It’s too late and insufficient.

                      In short, the tariffs on a 21-page list of products would be delayed until December, subject to further negotiations between US and China. Both sides are continuing telephone conversations in preparation for a meeting in Washington in September. According to Wells Fargo‘s estimation, the tariff delay involves around 60%, or roughly USD 155B worth of goods. The products range from cellphones, laptops and other consumer goods including  baby monitors and strollers, microwaves, instant print cameras, doorbells, high chairs, musical instruments, ketchup dispensers, baby diapers, fireworks, sleeping bags, nativity scenes, fishing reels, paint rollers and food products.

                      In response to the news, Retail Industry Leaders Association said “removing some products from the list and delaying additional 10% tariffs on other products, such as toys, consumer electronics, apparel and footwear, until Dec. 15 is welcome news as it will mitigate some pain for consumers through the holiday season.”

                      The Consumer Technology Association also welcomed the the delay on some items, but added: “Next month, we’ll begin to pay more for some of our favorite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

                      Stock surges, yen dives as US delay some new tariffs on China to Dec 15

                        US stocks surge sharply while Yen dives after US Trade Representative announced to delay new tariffs on some Chinese products to December 15.

                        The 10% tariffs on approximately USD 300B of Chinese products will still take effect on September 1. However, certain products are removed from the list based on “health, safety, national security and other factors”.

                        Also, tariffs on products including cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing, will be delayed to December 15.

                        DOW rises strongly after the release and is currently up more than 1.5%. Though, sustained break of 55 day EMA (now at 26500, is needed to be the first indication of near term reversal. Otherwise, further decline will remain in favor through last week’s low of 25440.39.

                        US CPI accelerated to 1.8%, core up to 2.2%

                          US CPI rose 0.3% mom in July, matched expectations. Core CPI rose 0.3% mom, above expectations. Annually, CPI accelerated to 1.8% yoy, up from 1.6% yoy, beat expectation of 1.7% yoy. Core CPI accelerated to 2.2% yoy, up from 2.1% yoy and beat expectation of 2.1% yoy.

                          Full release here.

                          Trump said to request Japanese PM Abe to buy farm products

                            Japanese Kyodo news agency reported that Trump is urging Japanese Prime Minister Shinzo Abe to increase purchase of US agricultural products, worthing several hundred millions USD including transport costs.

                            The request came as US and Japan are crafting out a broad trade agreement, reportedly by September. Also, it came as China halted its own purchase of US farm goods as trade tensions escalated recently.

                            Kyodo also said that Trump has specifically asked Japan to by products such as soybeans and wheat. Yet, he preferred such purchases to be outside of the framework of the current trade talks. Japan government is said to be considering its own responses. And one proposal was to by such farm products as food support for Africa.

                            German ZEW dropped to -44.1, significant deterioration in outlook

                              German ZEW Economic Sentiment dropped to -44.1 in August, down from -24.5 and missed expectation of -28.0. That’s the lowest level sine December 2011, and well below long term average of 21.6. Current Situation Index dropped to -13.5, down from -1.1 and missed expectation of -5.9. Eurozone ZEW Economic Sentiment dropped to -43.6, down from -20.3, missed expectation of -21.7. Eurozone Current Situation dropped -3.9 pts to -14.5.

                              “The ZEW Indicator of Economic Sentiment points to a significant deterioration in the outlook for the German economy. The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth. This will most likely put a further strain on the development of German exports and industrial production,” comments ZEW President Professor Achim Wambach.

                              Full release here.

                              UK unemployment rate rose to 3.9%, but wage growth accelerated

                                UK unemployment rate rose to 3.9% in the three months to June, up from 3.8%, above expectation of 3.8%. Unemployment rate came in at 4.1% for men and 3.6% for women, the latter being joint lowest since comparable records began in 1971. For the same period, an estimated 1.33m people were unemployment, 33k fewer than a year ago.

                                On wage growth, estimated annual growth in average weekly earnings for employees increased to 3.7% yoy for total pay (including bonuses), matched expectation and up from May’s 3.5% yoy. Excluding bonuses, weekly earnings rose 3.9% yoy, up from 3.6% yoy and beat expectation of 3.8% yoy.

                                Full release here.

                                UK retailers urge Chancellor Javid to fix broken business rates system

                                  Over 50 retailers in UK sent a joint letter to Chancellor of the Exchequer Sajid Javid, urged him to fix the “broken” business rates system. The letter was coordinated by the British Retail Consortium.

                                  The letter urged four fixes, including a freeze in the business rates multiplier; fixing transitional relief, which currently forces many retailers to pay more than they should; introducing an ‘Improvement Relief’ for ratepayers; ensuring that the Valuation Office Agency is fully resourced to do its job.

                                  Helen Dickinson, Chief Executive of the BRC said:”These four fixes would be an important step to reform the broken business rates system which holds back investment, threatens jobs and harms our high streets. The new Government has an opportunity to unlock the full potential of retail in the UK, and the Prime Minister’s economic package provides a means to do so.

                                  Japan: South Korea fails to show how we fall short of export control measures

                                    Japan criticized South Korea’s removal of the country from export whitelist today, as trade tension continued to intensify. South Korea announced to move Japan into a newly created export category, for the latter’s frequent violation of basic rules.

                                    Japanese Industry Minister Hiroshige Seko said South Korea has failed to show how Japan had fallen short of international export control measures. He added, “from the start, it is totally unclear under what basis South Korea can say that Japan’s export control measures don’t meet the export control regime.”

                                    On the other hand, South Korean President Moon Jae-in said today that “the Japanese government made a decision to exclude South Korea from white-listed countries, following export restrictions… It is disappointing and regrettable in light of the two countries’ shared efforts for friendship and cooperation.”

                                    Australia NAB business conditions dropped to 2, further RBA easing and fiscal support expected

                                      Australian NAB Business Confidence rose from 2 to 4 in July. On the other hand, Business Conditions dropped from 4 to 2. In particular, Employment Conditions dropped sharply from 5 to 0.

                                      Alan Oster, NAB Group Chief Economist said “the decline in business conditions since early 2018 has been broad-based and has continued to track at below average levels in recent months.” And, “this is concerning, because while conditions remain positive, it points to a significant loss in momentum in the business sector”.

                                      Business confidence “ticked-up” but is “also below average”. While there were some positive signs with a post-election lift in confidence, this bounce now looks to have been short lived with confidence also tracking at below average levels in the two months since the election”

                                      And, “with a significant loss of momentum in activity, and inflation indicators remaining weak, the survey points to the need to the need for further stimulus in the economy. Indeed, we expect a further easing in interest rates from the RBA and think that some greater fiscal support will be needed from the government to kickstart growth”.

                                      Full release here.

                                      RBA Kent: Monetary policy effect on Australian Dollar broadly working as usual

                                        RBA’s Assistant Governor Christopher Kent said the transmission of monetary policy in Australia to financial conditions is “working in the usual way”. Change in RBA’s policy stance has underpinned the decline in risk-free rates along the yield curve. It has also contributed to a decline in the cost of funding in corporate bond markets, supported equity prices, and lowered the cost of funding for banks. Much of the reduction in banks’ funding costs has been passed through to business and household borrowers. Also, decline in interest rates has contributed to the depreciation of the Australian dollar.

                                        On the exchange rate, Kent noted Australian dollar had depreciated over that period when commodity prices had been rising. And, that implies the effect of monetary policy on exchange rate has been “broadly working as usual”. He also pointed to noticeable decline in Australian interest rates relative to those of major advanced economies. And, “this lower return on Australian assets would no doubt have contributed to a decline in the value of the Australian dollar.”

                                        Kent’s full speech here.

                                        Singapore slashes 2019 growth forecasts to 0.0-1.0%, uncertainties and risks increased

                                          Singapore Ministry of Trade and Industry downgraded 2019 growth forecast to 0.0-1.0%, and expect growth to come in at around mid-point of the forecast range. That’s notably lower from prior estimate of 1.5-2.5%, after Q2 GDP contracted by -3.3%. The Ministry noted in the statement that “GDP growth in many of Singapore’s key final demand markets in the second half of 2019 is expected to slow from, or remain similar to, that recorded in the first half.”.

                                          Also, “uncertainties and downside risks in the global economy have increased since three months ago”. The risks firstly include US new tariffs on USD 300B in Chinese imports. Secondly, a “a steeper-than-expected slowdown” of China, as precipitated by US tariffs, could lead to a “sharp fall” in Chinese import demands and “negatively affect the region’s growth”. Thirdly, risk of no-deal Brexit “has increased with the recent change in UK’s political leadership.” Fourthly, there are risks from uncertainties in Hong Kong, the trade dispute between Japan and South Korea, as well as geopolitical tensions in North Korea and the Strait of Hormuz.

                                          Full release here.