Notes/Observations
- Major European PMI data mixed in session (Beats: France; Misses: Germany, Euro Zone)
- New trade tariffs kick in as US implement additional $16B worth of imports from China
Asia:
- China Commerce Ministry (MOFCOM) reiterated stance that was oppose to US tariffs and was forced to retaliate, would file lawsuit against US with WTO on tariffs
- Australia PM Turnbull awaited a petition to call party meeting; would call meeting midday on Friday if the petition was received. Confirmed he would not stand as candidate in leadership ballot (unlikely to contest another leadership vote).Australia adjourns parliament until Sept 10th amid leadership crisis
Europe:
- Germany Chancellor Merkel is reportedly more focused on the selection of the next EU President over securing the ECB Presidency for Bundesbank’s Weidmann
- Brexit Sec Raab: EU was being irresponsible by refusing to help him limit the impact of a no deal Brexit. Remained confident that a good deal with EU was within our sights. In some cases UK to take unilateral action to maintain continuity in the event of a no-deal Brexit;
Americas:
- US Treasury official Malpass and Chinese Vice Min Wang resume trade talks in Washinton (Note: 1st face to face discussions since June)
- US tariffs on an additional $16B worth of imports from China are expected to take effect as of 12:01 am Thursday. China was expected to issue retaliatory measures
- FOMC Aug Minutes: Many participants said it would likely be appropriate to “soon” raise rates. Many participants noted that it would likely be appropriate in not too distance future to no longer refer to monetary policy stance as accommodative. Generally saw GDP growth slowing in H2 but remain above potential
Economic Data:
- (NO) Norway Q2 GDP Q/Q: 0.4% v 0.2% prior; GDP Mainland Q/Q: 0.5% v 0.5%e
- (FR) France Aug Business Confidence: 105 v 107e; Manufacturing Confidence:110 v 108e; Production Outlook Indicator: 11 v 11e; Own-Company Production Outlook:18# v 23 prior
- (FR) France Aug preliminary Manufacturing PMI: 53.7 v 53.5e (23rd month of expansion); Services PMI: 55.7 v 55.1e; Composite PMI: 55.1 v 54.6e
- (CH) Swiss Q2 Industrial Output Y/Y: 8.3% v 7.5%e; Industry & Construction Output Y/Y: 7.6% v 5.6% prior
- (DE) Germany Preliminary Manufacturing PMI: 56.1 v 56.5e (44th month of expansion); Services PMI: 55.2 v 54.3e; Composite PMI: 55.7 v 55.1e
- (SE) Sweden July Unemployment Rate: 6.0% v 5.8%e; Unemployment Rate (Seasonally adj): 6.4% v 6.2%e; Unemployment Rate Trend: 6.2% v 6.2% prior
- (SE) Sweden Q2 Total Number of Employees Y/Y: % v 2.4% prior
- (TW) Taiwan July Industrial Production Y/Y: 4.4% v 3.6%e
- (EU) Euro Aug Preliminary Manufacturing PMI: 54.6 v 55.2e (61st month of expansion); Services PMI: 54.4 v 54.4e; Composite PMI: 54.4 v 54.5e
- (ES) Spain Jun Trade Balance: -€2.5B v -€2.2B prior
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 0.2% at 385.1, FTSE 0.3% at 7591, DAX +0.1% at 12391, CAC-40 +0.3% at 5435, IBEX-35 +0.4% at 9617, FTSE MIB +0.1% at 20714, SMI +0.2% at 9066 S&P 500 Futures +0.1%]
- Market Focal Points/Key Themes: European Indices trades slightly higher in quiet trade with trade tensions and mixed European PMI figures capping gains. Ryanair outperforms following reports of an agreement with Irish pilots following lengthy negotiations. On the earnings front Kinopolis, Sunrise Com, CRH, Bam Groep are among the risers after earnings, while Ambu and Ion Beam are notable decliners after a fall in profits. Looking ahead notable earners include Alibaba, with Hormel, Childens Place, Leju, Sanderson Farms among other set to report.
Movers
- Consumer Discretionary Kinepolis [KIN.BE] +2.7% (Earnings), Ryanair [RYA.UK] +6.4% (Reportedly agreed deal with Irish pilots), Boohoo [BOO.UK] -5.5% (No reason seen)
- Technology Sunrise Communications [SRCG.CH] +7% (Earnings)
- Industrials CRH [CRH.UK] +0.7% (Earnings), Bam groep [BAMNB.NL] +7% (Earnings)
- Financials John Laing [JLG.UK] +8.2% (Earnings)
- Healthcare Ambu [AMBUB.DK] -1.5% (earnings)
Speakers
- ECB’s Weidmann (Germany): Time to begin the very expansionary policy (in-line with prior views). Reiterated view that policy normalization to be gradual over the coming years
- SNB’s Moser: Could be years before the balance sheet could be reduced
- UK Brexit Sec Raab stated that the Brexit withdrawal deal was about 80% complete with EU but obstacles remained including the Northern Ireland border. Was important not to exaggerate risks of a ‘no-deal’ Brexit. Reiterated that ‘no-deal’ Brexit remains an unlikely scenario
- EU’s Moscovici: France must present budget savings and stressed that French govt debt remained too high
- Italy Interior Min Salvini (also Dep PM): Govt to seek to increase investor appetite for the country. State must control private infrastructure company work
- Norway Central Bank (Norges) Household Inflation expectation survey raised its 12-month expectations outlook from 2.1% to 2.4% and its 2-3-year inflation outlook from 3.2% to 3.3%
Currencies
- The USD was marginally firmer in the session snapping a multi-day losing streak aided by the most recent Fed minutes that signaled a Sept rate rise coming. Concerns over the upcoming US/China trade negotiation moved back to the front burner as the US implemented the latest back of tariffs.
- EUR/USD lower by 0.3% at 1.1570 as the major European Manufacturing PMI data came in mixed.
- GBP/USD softer by 0.3% at 1.2880 area as Brexit negotiations continue
- The AUD/UASD was back below the 0.73 level after Australia adjourned its parliament until Sept 10th amid leadership crisis. PM Turnbull was seen as unlikely to contest another leadership vote
Fixed Income
- Bund Futures trades at 163.12 down 8 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 123.43 up 4 ticks following the move in Treasuries. Continued support at 123.12, with a continued move higher targeting 123.93 then 124.00.
- Thursday ‘s liquidity report showed Wednesday’s excess liquidity fell from €1.877T to €1.873T. Use of the marginal lending facility rose from €46M to €61M.
- Corporate issuance saw 4 issuers raise $3.7B in the primary market
Looking Ahead
- (IT) Italy Debt Agency (Tesoro) announcement on upcoming CTZ issuance (set for Aug 28th)
- (UK) First ‘no-deal’ technical notices to be published on Thursday, Aug 26th
- (IL) Israel July Leading ‘S’ Indicator M/M: No est v 0.4% prior
- (CO) Colombia July Retail Confidence: No est v 30.7 prior; Industrial Confidence: No est v 2.4 prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills
- 05:30 (PL) Poland to sell Bonds
- 06:00 (UK) Aug CBI Retailing Reports Sales: 13e v 20 prior; Total Distribution: No est v 25 prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 84.2 prior
- 07:30 (EU) ECB July Minutes
- 08:00 (PL) Poland July M3 Money Supply M/M: 0.4%e v 0.4% -prior; Y/Y: 7.3%e v 7.3% prior
- 08:00 (PL) Poland Central bank (NBP) July Minutes
- 08:00 (BR) Brazil Mid-Aug IBGE Inflation IPCA-15 M/M: 0.1%e v 0.6% prior; Y/Y: 4.3%e v 4.5% prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) Initial Jobless Claims: 215Ke v 212K prior; Continuing Claims: 1.73Me v 1.721M prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 17th: No est v $457.6B prior
- 09:00 (US) Jun FHFA House Price Index M/M: 0.3%e v 0.2% prior; Q/Q: No est v 1.7% prior
- 09:45 (US) Aug Preliminary Markit Manufacturing PMI: 55.0e v 55.3 prior; Services PMI: 55.8e v 56.0 prior; Composite PMI: No est v 55.7 prior
- 10:00 (US) July New Home Sales: 645Ke v 631K prior
- 10:00 (EU) Euro Zone Aug Advance Consumer Confidence: -0.7e v -0.6 prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Aug Kansas City Fed Manufacturing Activity: 23e v 23 prior
- 11:00 (US) Treasury announce on upcoming 2-year FRN issuance (set for Aug 29th)
- 13:00 (US) Treasury to sell 5-Year TIPS Reopening
- 15:00 (AR) Argentina Jun Economic Activity Index (Monthly GDP) M/M: No est v -1.4% prior; Y/Y: -5.0%e v -5.8% prior
