Notes/Observations
- German Jun Trade Balance registers a slightly better surplus but exports highlighted mounting trade tension were starting to bite
- Germany Jun Industrial Production registered another data miss highlights the slowdown in growth momentum ahead.
- UK Halifax data strengthen evidence of uptick in UK house prices
- China July FX Reserves registers its 2nd straight monthly rise
Asia:
- RBA left its Cash Rate Target unchanged at 1.50%; as expected; sees CPI a bit lower in 2018 but higher in 2019-20 period
- Japan Jun Labor Cash Earnings y/y: 3.6% v 1.7%e (multi-year high); Real Cash Earnings y/y: 2.8% v 0.9%e (fastest rise since Jan 1997)
- Japan Jun Household Spending M/M: 2.9% v 1.7%e; Y/Y: -1.2% v -1.4%e (5th straight decline)
- BoJ board said to have considered raising rates before tweaking policy in July. BoJ said to have considered raising rates in Jan 2018, but did not do it amid market turbulence. The moves the BoJ took last week said to be a compromise between board member Amamiya (‘Mr BOJ’) and Gov Kuroda
Europe:
- Germany wants its Economic Ministry to be able to intervene in investments and takeovers if an investor outside the European Union acquires a shareholding of at least 15 percent in a German company
- PM May UK PM May to meet Scotland First Min Sturgeon after Brexit standoff
- UK July BRC Sales LFL y/y: 0.5% v 1.5%e; total sales growth slowed as the heat laid bare the underlying weakness in consumer spending
Americas:
- Mexico Econ Min Guajardo: NAFTA negotiations still have many subjects remaining on the table. To return to Washington for further NAFTA talks in the middle of this week
Energy:
- Iran President Rouhani: the US could not be trusted; Tehran govt had always believed in diplomacy. Opened to talks if US was ‘sincere’ but talks alongside sanctions was meaningless
- White House National Security Adviser Bolton: If Iran blocked the Strait of Hormuz, it would be their ‘worst mistake’
Economic Data:
- (NL) Netherlands July CPI M/M: +1.1% v -0.3% prior; Y/Y: 2.1 v 1.7% prior
- (NL) Netherlands July CPI EU Harmonized M/M: +1.1% v -0.5% prior; Y/Y: 1.9% v 1.6%e
- (DE) Germany Jun Current Account Balance: €26.2B v €20.9Be; Trade Balance: €21.8B v €20.9Be; Exports M/M: 0.0% v -0.3%e; Imports M/M: 1.2% v 0.3%e
- (DE) Germany Jun Industrial Production M/M: -0.9% v -0.5%e; Y/Y: 2.5% v 3.0%e
- (NO) Norway Jun Industrial Production M/M: +4.7% v -1.0% prior; Y/Y: +2/9% v -1.6% prior
- (NO) Norway Jun Manufacturing Production M/M: 0.0% v 0.3%e; Y/Y: 0.6% v 0.5% prior
- (DK) Denmark Jun Industrial Production M/M: +0.3% v -1.5% prior
- (ZA) South Africa July Gross Reserves: $50.5B v $50.6B prior; Net Reserves: $42.3B v $42.5B prior
- (FR) France Jun Trade Balance: -€6.3B v -€5.5Be
- (FR) France Jun Current Account: -€2.6B v -€2.9B prior
- (CH) Swiss Q2 UBS Real Estate Bubble Index: 1.00 v 1.09 prior
- (MY) Malaysia End-July Foreign Reserves: $104.5B v $104.6B prior
- (ES) Spain Jun House transactions Y/Y: 1.8% v 4.7% prior
- (CH) Swiss July Foreign Currency Reserves (CHF): 749.7B v 748.2B prior
- (AT) Austria July Wholesale Price Index M/M: 0.0% v 0.2% prior; Y/Y: 5.9% v 6.3% prior
- (CZ) Czech Jun National Trade Balance (CZK): 15.8B v 15.6Be
- (HU) Hungary Jun Industrial Production M/M: -1.2% v +1.8% prior; Y/Y: 3.1% v 3.8% prior
- (UK) July Halifax House Prices M/M: 1.4% v 0.2%e; Y/Y: 3.3% v 2.7%e
- (SE) Sweden Jun Private Sector Production M/M: 0.3% v 1.4% prior; Y/Y: 4.1% v 4.0%e
- (SE) Sweden Jun Industrial Orders M/M: -5.8% v -1.4% prior; Y/Y: -3.5% v 2.2% prior
- (SE) Sweden Jun Industry Production Value Y/Y: 5.7% v 4.7% prior, Service Production Value Y/Y: 4.1% v 4.3% prior
- (SE) Sweden July Budget Balance (SEK): +15.7B v -17.3B prior
- (TW) Taiwan July CPI Y/Y: 1.8% v 1.5%e; CPI Core Y/Y: 1.5% v 1.3%e; WPI Y/Y: 7.0% v 6.6% prior
- (TW) Taiwan July Trade Balance: $2.2B v $5.1Be; Exports Y/Y: 4.7% v 7.0%e; Imports Y/Y: 20.5% v 10.0%e
- (CN) China July Foreign Reserves: $3.118T v $3.107Te (2nd straight monthly rise)
- (CZ) Czech July International Reserves: $144.6B v $144.2B prior
- (IS) Iceland July Preliminary Trade Balance (ISK): -15.5B v -20.5B prior
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.6% at 391.0, FTSE +0.7% at 7719, DAX +1.0% at 12725, CAC-40 +0.9% at 5526, IBEX-35 +0.5% at 9797, FTSE MIB +1.0% at 21803, SMI +0.5% at 9193 S&P 500 Futures +0.3%]
Market Focal Points/Key Themes:
- European Indices trade higher across the board following on from strong Asian Indices and positive US futures.
- On the earnings front financial names Unicredit and Commerzbank reported results, while German names Deutsche Post trades higher along with Schaeffler, Heidelberger Druck and Wacker Neuson following results, while Beiersdorf, Zalando trade lower.
- Danish Jewelry maker Pandora trades almost 20% lower after cutting its outlook, with Meggit Galenica and Dominos Uk among other notable decliners.
- Looking ahead notable earners include Dean Foods, Crox, Emerson Electric and Aramark Holdings.
Movers
- Consumer Discretionary Pandora [PNDORA.DK] -19.5% (Cuts outlook), Zalando [ZAL.DE] -5.3% (Earnings), Beiersdorf [BEI.DE] -2.1% (Earnings), IHG [IHG.UK] -1.2% (Earnings), Dominos UK -10% (Earnings)
- Financials Uni Credit [UCG.IT] +2.0% (Earnings)
- Industrials Oerlikon [OERL.CH] +10% (Earnings), Meggit [MGGT.UK] -0.9% (Earnings), Shaeffler [SHA.DE] +7.4% (Earnings), Deutsche Post [DPW.DE] +2.0% (Earnings), Wacker Neuson [WAC.DE] +11.3% (Earnings)
Speakers
- Italy Dep PM Di Maio (5-Star party leader): Senior officials to meet on Wed, Aug 8th to discuss the next budget
- China PBoC Policy Adviser stated that govt should further improve targeted RRR cuts and macroprudential assessment mechanism; should use policy interest rate to replace bank lending and deposit rates over time
- China FX Regulator SAFE reiterated that cross-border capital flows to remain stable overall, Financial asset price fluctuation and changes in non-USD currencies led to increase in July FX data. Global trade frictions had risen since the start of 2018 and the fluctuation in CNY currency had increased
Currencies
- Trade tensions remained the predominate theme but the USD saw some consolidation in its recent strength as Treasury bond yields stopped its march north for the time being.
- EUR/USD stayed above the 1.15 handle for the time being and continued its summer trading range. The pair was higher by 0.2%
- GBP/USD was steady but not too far from recent 10-month lows as Brexit concerns remains the key trading catalyst.
Fixed Income
- Bund Futures trades at 162.29 up 4 ticks as the German trade surplus narrowed and industrial production dropped. 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 122.99 up 3 ticks, as Gilts continue to hover around 123 with continuing upside targeting 123.18 then 124.44, with a move lower seeing initial support at 122.23 then 121.85.
- Tuesday ‘s liquidity report showed Monday’s excess liquidity fell from €1.905T to €1.897T. Use of the marginal lending facility fell from €290M to €190M.
- Corporate issuance saw 10 issuers raise $10.5B in the primary market
Looking Ahead
- (IL) Israel July Foreign Currency Balance: No est v $114.8B prior
- 05.30 (UK) Weekly John Lewis LFL sales data
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.3-1.7B in 6-month and 12-month Bills
- 05:30 (ZA) South Africa to sell combined ZAR2.4B in 2032, 2040 and 2048 bonds
- 06:00 (IE) Ireland Jun Industrial Production M/M: No est v 3.2% prior; Y/Y: No est v 7.1% prior
- 06:00 (TR) Turkey to sell Bonds
- 06:30 (EU) ESM to sell €2.0B in 3-month bills
- 07:00 (BR) Brazil Central Bank (BCB) COPOM Minutes
- 07:00 (ZA) South Africa Jun Manufacturing Production M/M: 0.4%e v 1.5% prior; Y/Y: 2.2%e v 2.3% prior
- 07:45 (US) Weekly Goldman Economist Chain Store Sales
- 08:00 (PL) Poland July Official Reserves: No est v $109.0B prior
- 08:00 (RU) Russia announces weekly OFZ bond auction (held on Wed)
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (CL) Chile July Trade Balance: $0.3Be v $0.5B prior; Total Exports: $6.0Be v $6.5B prior; Total Imports: $5.5Be v $6.0B prior; Copper Exports: No est v $3.3B prior
- 08:30 (CL) Chile July International Reserves: No est v $37.0B prior
- 08:55 (US) Weekly Redbook Sales
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (CL) Chile Jun Nominal Wage M/M: No est v -0.2% prior; Y/Y: No est v 3.2% prior
- 09:00 (RU) Russia July Official Reserve Assets: $458.6Be v $456.7B prior
- 09:30 (NZ) Fonterra Global Dairy Trade Auction
- 10:00 (CA) Canada July Ivey Purchasing Managers Index (Seasonally Adj): No est v 63.1 prior; PMI (unadj): No est v 65.1 prior
- 10:00 (US) Jun JOLTS Job Openings: 6.625Me v 6.638M prior
- 10:30 (TR) Turkey July Cash Budget Balance (TRY): No est v -26.7B prior
- 11:30 (US) Treasury to sell 4-Week Bills
- 12:00 (US) DOE Short-Term Crude Outlook
- 13:00 (US) Treasury to sell 3-Year Notes
- 15:00 (US) Jun Consumer Credit: $15.0Be v $24.6B prior
- 15:00 (MX) Mexico Citibanamex Survey of Economists
- 16:00 (AR) Argentina Central Bank (BCRA) Interest Rate Decision: Expected to leave the 7-Day Repo Reference Rate unchanged at 40.00%
- 16:30 (US) Weekly API Oil Inventories
