Asia:
- UN Report: North Korea has not stopped nuclear, missile program in violation of United Nations sanctions
- China PBoC set the Yuan Reference Rate at 6.8513 v 6.8322 priir for its weakest fixing since May 2017
- PBoC advisor, Sheng Songcheng: China did not want a sharp depreciation in the yuan
- Former FX Official: PBoC maximum level of tolerance for the yuan may be the 7.0 handle against the dollar
Europe:
- ECB’s Lautenschlaeger (Germany, SSM member): In favor of rate normalization, worried about banking deregulation
- EU said to be considering softening Ireland backstop powers in order to avoid a no deal Brexit
- UK Trade Minister Liam Fox (pro-Brexit member): Chances of leaving EU with no deal now seen at 60/4
- Italian Treasury intervened in market to buy back bonds- nearly €1.0B of purchases in biggest move since initial debt sell-off in May
- Fitch affirmed Germany sovereign rating at AAA; outlook Stable
- Fitch affirmed Finland sovereign rating at AA+; revised outlook to Positive from Stable
- Fitch raised Czech Republic sovereign rating one notch to AA- from A+; outlook Stable
Americas:
- Venezuela arrests six over drone explosions during President Maduro speech
Energy:
- Weekly Baker Hughes US Rig Count: 1,044 v 1,048 w/w (-0.4%)
Economic Data:
- (DE) Germany Jun Factory Orders M/M: -4.0% v -0.5%e; Y/Y: -0.8% v +3.4%e
- (CZ) Czech Jun Industrial Output Y/Y: 3.4% v 1.5%e, Construction Output Y/Y: 7.5% v 10.1% prior
- (CZ) Czech Jun Retail Sales Y/Y: 1.4% v 2.2%e, Retail Sales ex Auto Y/Y: 2.0% v 4.5%e
- (DE) Germany July Construction PMI: 50.0 v 53.0 prior
- (CN) China Q2 Preliminary Current Account: +$5.8B v -$34.1B prior
- (CH) SNB Total Sight Deposits for Week Ended Aug 3rd: 575.9B v 576.4B prior
- (UK) July New Car Registrations Y/Y: +1.2% v -3.5% prior
- (TW) Taiwan July Foreign Reserves: $458.5B v $457.1B prior
- (EU) Euro Zone Aug Sentix Investor Confidence: 14.7 v 13.4e
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.3% at 388.2, FTSE -0.2% at 7642 DAX -0.6% at 12543, CAC-40 -0.1% at 5472, IBEX-35 -0.3% at 9714, FTSE MIB -0.3 at 2151, SMI -0.1% at 9153 S&P 500 Futures -0.2%]
- Market Focal Points/Key Themes: European Indices trade mostly lower reversing earlier gains in relatively quiet trade ahead of another busy week for corporate earnings. Banking giant HSBC reported results which came largely in line with views but rising expenses and US RMBS settlement weighed on profits, with shares trading slightly lower. Spire Healthcare trades sharply lower on a a profit warning with IWG also trading sharply lower after terminating talks over a potential takeover. PostNL declines after earnings while Linde was among the biggest fallers on the Eurostoxx 600 after the US FTC indicated further requirement may be needed to approve deal with Praxair. Meanwhile SDL, Ultra Electrnics and Tod’s Spa are among names trading higher after earnings. Looking ahead notable earners include Tyson Foods, Henry Schein and Jacobs Engineering.
Movers
- Consumer Discretionary First Group [FGP.UK] +1.1% (Said to consider selling UK rail assets) , William Hill [WMH.UK] +2.1% (Reportedly in talks with Penn Gaming), IWG [IWG.UK] -22% (Terminates acquisition talks, Trading update), Tod’s Spa [TOD.IT] +16% (Earnings)
- Financials HSBC [HSBA.UK] -0.8% (Earnings)
- Industrials Linde [LIN.DE] -5% (FTC may demand more concession in Praxair merger), Post NL [PNL.UK] -6% (Earnings)
- Technology SDL [SDL.UK] +1.8% (Earnings), Ultra Electronics [ULE.UK] +1.2% (Earnings)
- Healthcare Spire Healthcare [SPI.UK] -23% (Profit warning)
Speakers
- ECB’s Nowotny (Austria) said to support a faster normalization of monetary policy –believing that a slow increase in rates would not harm the regional economy
- ECB Economic Bulletin: Current good economic conditions should be used to speed up reforms to strengthen resilience
- Italy Dep PM Di Maio: EU deficit limit could not block the govt program, respecting fiscal rules was not a priority in next budget
- Romania Central Bank (NBR) left its Interest Rate unchanged at 2.50% (not expected)
- Poland Fin Min Czerwinska: 2018 GDP growth seen as peak in the current cycle
- Turkey Central Bank: Core inflation main trend remained elevated. Basic goods was the main contributor to inflation rise
- Hungary Central Bank Dep Gov Nagy: Sovereign ratings could be upgraded as soon as week of Aug 12th
- Fed’s Bullard (dove, non-voter) reiterated Trump comments won’t have an impact on FOMC. Waiting for inevitable recession was wrong
Currencies
- USD continued to register some strength against the major European pairs. Overall analysts noted that a growing trade conflict between the US and China should be positive for the greenback
- Euro remained under pressure with EUR/USD trading in the mid-1.15 neighborhood. The new Italian govt disregard for EU budget rules placing a headwind for the Euro. Italian Reports also circulated that the Treasury recently intervened in market to buy back bonds- nearly €1.0B of purchases in biggest move since initial debt sell-off in May
- Fears of no-deal Brexit was creeping higher and this sentiment weighed upon the GBP. Over the weekend UK Trade Minister Liam Fox (pro-Brexit member) stated that
- China’s Yuan currency was weaker as trade tension were more prevalent than policy tweaks as the Monday fixing was the weakest fix since May 2017
Fixed Income
- Bund Futures trades at 162.07 up 2 ticks after disappointing German factory order data. A move back above 162.75 would target 163.47 then 163.63, with a move below 161.75 targeting 161.45 then 160.45.
- Gilt futures trades at 122.81 up 13 ticks as fears of a no-deal Brexit rise, with continuing upside targeting 123.18 then 124.44, with a move lower seeing initial support at 122.23 then 121.85.
- Monday ‘s liquidity report showed Friday’s excess liquidity fell from €1.907T to €1.905T. Use of the marginal lending facility rose from €276M to €276M.
- Corporate issuance saw high grade issuers raise $12.8B in the primary market last week
Looking Ahead
- (RU) Russia July Light Vehicle Car Sales Y/Y: 11%e v 11% prior – 06:00 (TR) Turkey to sell Bonds
- 06:45 (US) Daily Libor Fixing
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (TR) Turkey July Effective Exchange Rate (REER): No est v 77.1 prior
- 08:00 (RO) Romania Central Bank gov Isarescu to hold post rate decision press conference
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays) – 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (CL) Chile Jun Economic Activity Index (Monthly GDP) M/M: 0.2%e v 0.7% prior; Y/Y: 5.3%e v 4.9% prior, Economic Activity (ex-mining) Y/Y: 1.6%e v 4.7% prior
- 08:55 (FR) France Debt Agency (AFT) to sell combined €3.6-4.8B in 3-month, 6-month and 12-month BTF Bills
- 09:00 (MX) Mexico May Gross Fixed Investment: No est v 10.5% prior
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 11:30 (US) Treasury to sell 3-month and 6-month Bills
- 16:00 (US) Weekly Crop Progress Report
