Notes/Observations
- Quiet session in Europe
- Recent ECB wage data aids the case for policy exit down the road
- Awaiting release of US Fed Aug minutes and upcoming US-China trade talks
Asia:
- Australian PM Turnbull rejected cabinet resignations in bid to stave off renewed leadership challenge
Europe:
- EU Chief Brexit Negotiator Barnier: Brexit talks were entering final stage; talks to occur continuously from now on. Not working towards a no-deal Brexit but needed to be prepared for one
- UK Brexit Min Raab: Held a positive set of discussions over Brexit; still had significant issues to overcome but confident a deal could be reached in October. Hair raising scare stories’ were far from the truth
Americas:
- US said to announce ‘handshake’ NAFTA deal related to Mexico on Thursday (Aug 23rd). (Note: Mexico said to deny the existence of a ‘handshake’ deal related to NAFTA
- Former Trump Campaign Manager Paul Manafort found guilty on eight counts including tax fraud, bank fraud charges
- Former Trump lawyer Cohen entered guilty plea at court hearing; says he violated campaign law at direction of the ‘candidate’, sought to influence the election
Energy:
- Weekly API Oil Inventories: Crude: -5.2M v +3.7M prior
Economic Data:
- (HU) Hungary Jun Average Gross Wages Y/Y: 11.2% v 10.0%e
- (PL) Poland July Retail Sales M/M: -0.3% v -0.2%e; Y/Y: 9.3% v 9.5%e; Real Retail Sales Y/Y: 7.1% v 7.4%e
- (ZA) South Africa July CPI M/M: 0.8% v 0.8%e; Y/Y: 5.1% v 5.1%e (highest annual pace since Sept)
- (ZA) South Africa July CPI Core M/M: 0.6% v 0.5%e; Y/Y: 4.3% v 4.2%e
- (TW) Taiwan July Unemployment Rate: 3.7% v 3.7%e
- (IS) Iceland July Wage Index M/M: 0.4% v 0.7% prior; Y/Y: 6.3% v 5.9% prior
Fixed Income Issuance:
- (SE) Sweden sold SEK1.5B in 0.75% 2028 bond; Avg Yield: 0.4689% v 0.7488% prior; Bid-to-cover: 3.13x v 3.14x prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 0.0% at 384.1, FTSE 0.0% at 7563, DAX +0.3% at 12425, CAC-40 +0.2% at 5419, IBEX-35 -0.1% at 9536, FTSE MIB +0.1% at 20813, SMI -0.5% at 9040 S&P 500 Futures -0.2%]
- Market Focal Points/Key Themes: European Indices trade mixed with the DAx and CAC trending higher after an initial weaker open tracking lower US futures. In Germany shares of Continental trades sharply lower after cutting outlook on cost increases and warranty claims. Norwegian Fish farming names Greig Seafood, Marine Harest and Leroy Seafood were under pressure after results and lowered harvest volume outlook. Recent IPO Adyen trades higher after strong earnings growth, with Avast, GN Nord among other names trading higher after earnings. Hannover Re trades slightly higher after naming a new CEO; Capita also trades higher after naming former Go-ahead CFO as their new CFO. Looking ahead notable earners include Target, Royal Bank of Canada and Lowe’s.
Movers
- Consumer Discretionary Headlam group [HEAD.UK] -3.6% (Earnings)
- Consumer Staples Marine Harvest [MHG.NO] -2.8% (Earnings), Leroy Seafood [LSG.NO] -2.6% (Earnings), Greig Seafood [GSF.NO] -5.3% (Earnings)
- Technology Avast [AVST.UK] +3.8% (Earnings), Adyen [ADYEN.NL] +3.8% (Earnings)
- Industrials Continental [CON.DE] -4.2% (cuts outlook) Tessenderlo [TESB.BE] -4.2% (Earnings), Costain [COST.UK] +1.9% (Earnings)
- Financials Hanover Re [HNVR.DE] +0.4% (names new CEO)
- Healthcare Capio [CAPIO.SE] +2.1% (Reports of potential higher offer)
Speakers
- Austria Central Bank to name a successor for Gov Nowotny by end-2018 (**Note: Nowotny term ends in Aug 2019)
- Former President Lula leads Datafolha Poll with 39% (if allowed to run). Bolsonaro (PSL party) has 22% lead without Lula
- Australia Liberal party members (ruling party) said to call a party room meeting for evening of Aug 22nd (**Note: Could be the precursor for another leadership challenge to PM Turnbull)
- BOJ reportedly may raise 10-year bond target (YCC) when inflation exceeds 1% on a sustained basis
- BOJ spokesperson: Gov Kuroda not to attend this year’s Jackson Hole symposium (**Note: No ECB members were slated to appear at the symposium as well)
- Kuwait Oil Min Almarzooq: oil markets expected to remain stable until year end. OPEC and non-OPEC oil production to be reviewed at Algeria meeting
Currencies
- USD was off its worst levels for most of the session after a multi-day sell-off from recent cycle highs but appeared to remain on the defensive in a quiet EU session with participants awaiting release of US Fed Aug minutes and upcoming US-China trade talks
- EUR/USD and GBP/USD pairs were not too far from recent 2-week highs at 1.1590 and 1.2890 respectively. Dealers took notice of recent Euro Area wage data that aided the ECB case for policy exit down the road.
Fixed Income
- Bund Futures trades at 163.32 up 3 ticks retracing some of the move as European Indices trade higher. Resistance moves to 163.82 then 164. A downside break of 163.00 sees 162.69 initially.
- Gilt futures trades at 123.46 up 11 ticks following the move in Treasuries. Continued support at 123.12, with a continued move higher targeting 123.93 then 124.00.
- Wednedsay ‘s liquidity report showed Tuesday’s excess liquidity fell from €1.878T to €1.877T. Use of the marginal lending facility rose from €45M to €46M.
- Corporate issuance saw 2 issuers raise $2.3B in the primary market
Looking Ahead
- (PT) Portugal Jun Current Account Balance: No est v -€1.2B prior
- (PE) Peru Q2 GDP Y/Y: 5.4%e v 3.2% prior
- 05:30 (DE) Germany to sell €3.0B in 0.25% Aug 2028 Bunds
- 06:00 (IE) Ireland July PPI M/M: No est v 0.2% prior; Y/Y: No est v -0.2% prior
- 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v -2.8% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Aug 17th: No est v -2.0% prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (CA) Canada Jun Retail Sales M/M: -0.2%e v +2.0% prior; Retail Sales (Ex-Auto) M/M: -0.1%e v 1.4% prior
- 09:00 (MX) Mexico Jun Retail Sales M/M: 0.4%e v 1.0% prior; Y/Y: 3.4%e v 2.5% prior
- 10:00 (US) July Existing Home Sales: 5.40Me v 5.38M prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:30 (BR) Brazil weekly currency flow data
- 12:00 (CA) Canada to sell 2023 notes
- 14:00 (US) FOMC Aug Minutes
- 15:00 (AR) Argentina July Trade Balance: -$0.1Be v -$0.4B prior
