Notes/Observations
- Risk-on appetite aids Far East and EU stock
- German Aug IFO survey beats expectations as domestic economy hums along
- European budget matters drifting onto the front-burner
- UK markets closed for banking holiday
Asia:
- China July Industrial Profits slowed for the 3rd consecutive month in July. (Y/Y: 16.2% v 20% prior
- President Trump asked Sec of State Pompeo to cancel North Korea trip at this time due to lack of denuclearization progress; says China was not helping with denuclearization process ‘as they once were’
Europe:
- Reportedly deadline to reach agreement on Brexit has been pushed back by 4 weeks to a “hard” deadline in mid-November
- Germany Fin Min Scholz said public sector debt could decline below the EU debt ceiling (60% of GDP) before the end of 2018 (previously said 2019)
- Italy PM Conte said to threatened to pull the plug on European budget plans
- Italy disembarks stranded migrants
- Italy Interior Min Salvini (also Dep PM) said he had been placed under investigation by a prosecutor in Sicily for abuse of office, kidnapping and illegal arrest
- Bank of International Settlements (BIS) General Manager Carstens said to warn that reversing globalization could lead to higher prices and unemployment, along with slower growth
Americas:
- Senator John McCain (R-AZ) ex-POW and ‘maverick Republican’, dies at 81. Vacancy created by McCain’s death narrows the number of Republican-held seats in the 100-member U.S. Senate to 50, with Democrats controlling 49
- Mexico Economy Min Guajardo: Mexico negotiators will be back to the USTR on Monday; Says still working on the NAFTA deal, we are advancing and will come back on Monday.
Energy:
- Iran Finance Minister Masoud Karbasian has been impeached by parliament amid public concerns over the economy
Economic Data:
- France Fin Min Le Maire: Uncertainty surrounds the global economic outlook but had avoided a trade war. French GDP growth of 1.7% in both 2018 and 2019 was still a sustained pace. France was committed to keeping budget deficit to GDP ratio within 3% for 2019
- France Budger Min Darmanin: 2018 budget deficit to GDP to be above 2.3% but below 3.0%
- Italy Interior Min Salvini (also Dep PM) reportedly sought discussion on Italy’s EU costs. EU had been absent and uncaring in discussion over standoff on taking action on migrants. Supportive of PM Conte comments on using possible veto on the EU’s ten-year funding draft following a standoff between the two powers
- German IFO Institute stated that the domestic economy was performing robustly and saw Q3 GDP growth of 0.5% (in-line with Q2 pace) and saw Q3 GDP growth of 0.5% (in-line with Q2 pace)
- Russia Dep PM Kozak stated that govt to raise excise tax for diesel and gasoline fuel to help stabilize domestic prices; effective Jan 1st. Move to compensate for tax cuts made in Jun/July period
- China Govt: Trade with BRIC nations exceeded $5T over the past 5 years
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.2% at 384.4, FTSE Closed, DAX +0.4% at 12440, CAC-40 +0.4% at 5453, IBEX-35 +0.2% at 9607, FTSE MIB +0.4% at 20690, SMI +0.1% at 9059 S&P 500 Futures +0.3%]
- Market Focal Points/Key Themes: European Indices trade higher across the board in quiet trade as the UK markets are closed for Bank Holiday. In a light morning for corporate news shares of Metro outperform after Ceconomy said it was in talks to sell the majority of of its 10% stake in the retailer; DIDA in Spain also trades higher after reports of bid interest. On the earnings front Alpiq trades lower after a decline in Profit; Greenyard a sharp decliner after cutting its outlook.
Movers
- Consumer Discretionary Metro Ag [B4B.DE] +12.5%, Cecnonomy {CEC.DE] +5.5% (Ceconomy looking to sell stake in Metro), DIDA [DIA.ES] +5.0% (Bid speculation)
- Consumer Staples Greenyard [GREEN.BE] -6.7% (Earnings, cuts outlook)
- Industrials Volkswagen [VOW3.DE] +1.4% (Said to be one of the investors bankers lined up if Tesla going private proposal went ahead)
- Healthcare Ambu [AMBUB.DK] -4.5% (Reportedly Chairman sold DKK61M shares)
- Energy Alpiq [ALPH.CH] -1.4% (Earnings)
Speakers
- France Fin Min Le Maire: Uncertainty surrounds the global economic outlook but had avoided a trade war. French GDP growth of 1.7% in both 2018 and 2019 was still a sustained pace. France was committed to keeping budget deficit to GDP ratio within 3% for 2019
- France Budger Min Darmanin: 2018 budget deficit to GDP to be above 2.3% but below 3.0%
- Italy Interior Min Salvini (also Dep PM) reportedly sought discussion on Italy’s EU costs. EU had been absent and uncaring in discussion over standoff on taking action on migrants. Supportive of PM Conte comments on using possible veto on the EU’s ten-year funding draft following a standoff between the two powers
- German IFO Institute stated that the domestic economy was performing robustly and saw Q3 GDP growth of 0.5% (in-line with Q2 pace) and saw Q3 GDP growth of 0.5% (in-line with Q2 pace)
- Russia Dep PM Kozak stated that govt to raise excise tax for diesel and gasoline fuel to help stabilize domestic prices; effective Jan 1st. Move to compensate for tax cuts made in Jun/July period
- China Govt: Trade with BRIC nations exceeded $5T over the past 5 years
Currencies
- EU budget matters appear to be moving onto the front burner as France conceded it would miss its initial 2018 target of 2.3% due to slower growth. Italy threatening its payments to the EU budget as the govt was not satisfied with EU’s promised to address the migrant issue
- EUR/USD holding above the 1.16 level in quiet trade as UK participants was off for a banking holiday.
- Turkey returned following a prolong holiday to find the TRY currency back under modest pressure with USD/TRY higher by 2% to test above 6.13 level.
Fixed Income
- Bund Futures trades at 162.83 down 29 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.
- Monday ‘s liquidity report showed Friday’s excess liquidity fell from €1.856T to €1.851T. Use of the marginal lending facility fell from €68M to €55M.
- Corporate issuance saw high grade issuers raise $8.3B in the primary market last week
Looking Ahead
- (IT) Italy Fin Min Tria in China to help build economic dialogue (thru Sept 1st)
- 06:30 (IS) Iceland to sell 3-month Bills
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.3%e v 0.7% prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (TR) Turkey Aug Capacity Utilization: No est v 77.1% prior
- 07:30 (TR) Turkey Aug Real Sector Confidence (Seasonally Adj): No est v 101.5 prior; Real Sector Confidence (NSA): No est v 102.7 prior
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) July Chicago Fed National Activity Index: 0.45e v 0.43 prior
- 08:55 (FR) France Debt Agency (AFT) to sell combined €3.5-4.7B in 3-month, 6-month and 12-month BTF Bills
- 09:00 (MX) Mexico July Trade Balance: -$1.7Be v -$0.9B prior
- 09:00 (BR) Brazil July Total Federal Debt (BRL): No est v 3.754T prior
- 09:30 (BR) Brazil July Current Account Balance: -$3.8Be v +$0.4B prior; Foreign Direct Investment (FDI): $4.0Be v $6.5B prior
- 09:30 (EU) ECB announces Covered-Bond Purchases
- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 10:30 (US) Aug Dallas Fed Manufacturing Activity: 30.0e v 32.3 prior
- 11:30 (US) Treasury to sell 3-month and 6-month Bills
- 13:00 (US) Treasury to sell 2-year notes
- 16:00 (US) Weekly Crop Progress Report
