Notes/Observations
- Trade tensions continue to remain in focus
- Emerging market currencies with large current account deficits remain under pressure; India resorts to verbal intervention to curb Rupee weakness
- Norway Aug CPI data confirms looming Sept rate hike by Norges (would be 1st since 2011)
- Sweden parliamentary elections produce a deadlock (as anticipated)
Asia:
- China Aug Trade Balance: $27.9B v $31.0Be; Trade Surplus with the US $31.1B (record high) v $28.1B m/m (v $26.2B y/y)
- China Aug CPI hits highest level since Feb (YoY: 2.3%vV 2.1%e
- China: State Council Committee on Financial Stability met on Sept 7th: To fend off ‘Black Swan’ events; to fine-tune monetary policy in ‘pre-emptive’ way
- Japan Q2 Final GDP registers its fastest growth since 2016 (Annualized QoQ: 3.0% v 2.6%e)
- Bank of Korea (BoK) said to consider cutting its 2018 GDP growth forecast (currently 2.9%)
- Philippines Central Bank (BSP) said to be considering a possible extraordinary policy meeting later in Sept to address inflation and declining peso (PHP) currency
Europe:
- EU said to be prepared to tell EU Chief Brexit Negotiator Barnier to ‘zero in’ on Brexit deal, preparing new instructions to help close the Brexit deal. New instructions to help close a deal with Britain in a conciliatory move that will bolster PM May. An informal summit in Salzburg this month between the EU 27 is emerging as one of the most significant Brexit discussions since the bloc first set its strategy for talks
- Sweden Early Election Results shows the country faced political deadlock with ruling center-left Social Democrats and Greens and their Left Party parliamentary allies winning 40.6 percent of the vote; Opposition center-right Alliance were seen at 40.1 percent and Anti-Immigration Democrats seen winning 16.3% of vote
- Sweden PM Lofven: Election result is still uncertain: to continue as PM until parliament vote, to await the final election outcome before making decisions
- Sweden Centre-right Moderates Leader Kristersson stated that PM Lofven now needed to step down, the Centre-left government should resign . Would now discuss with alliance partners how to form a new government
- Greece PM Tsipras said the country will not need to cut pensions or raise taxes as planned, cites the government beating its budget targets; rules out snap election
- South Africa’ ANC party said to reject reports of party officials’ plot to oust President Ramaphosa
Americas:
- President Trump said there were another $267B in China tariffs that could be launched on short notice, in addition to the latest $200B of potential tariffs.
- Federal Reserve said to considers a new tool to avert crises. Fed has two tools for dealing with financial bubbles with one tool that includes regulation.
Energy:
- Weekly Baker Hughes US Rig Count: 1,048 v 1,048 w/w (flat w/w)
- Iraq oil Min Al-Luaibi: Situation in south was improving (refers to protests), no worries about oil production in the country; Iraq was producing 4.36M bpd, capacity could reach 4.75M bpd
- National Hurricane Center (NHC): Tropical Storm Florence is expected expected to strengthen to a hurricane tonight and make landfall in the Carolinas by Thursday as a Major Hurricane
Economic Data:
- (NO) Norway Aug CPI M/M: -0.4% v -0.5%e; Y/Y: 3.4% v 3.2%e
- (NO) Norway Aug CPI Underlying M/M: -0.5% v -0.7%e; Y/Y: 1.9% v 1.7%e
- (NO) Norway Aug PPI including Oil M/M: 0.6 v 1.1% prior; Y/Y: 22.8% v 22.6% prior
- (DK) Denmark July Current Account (DKK): 14.4 v 11.0B prior; Trade Balance: 7.4B v 7.4B prior
- (DK) Denmark Aug CPI M/M: -0.4% v -0.3%e; Y/Y: 1.0% v 1.1%e
- (DK) Denmark Aug CPI EU Harmonized M/M: -0.5% v -0.4%e; Y/Y: 0.8% v 0.9%e
- (FI) Finland July Industrial Production M/M: -1.1% v +1.6% prior; Y/Y: 3.3% v 5.8% prior
- (FR) Bank of France (Industrial) Sentiment: 103 v 102e
- (SE) Sweden Sept Housing Price Indicator: 33 v 26 prior
- (CZ) Czech Aug CPI M/M: 0.1% v 0.0%e; Y/Y: 2.5% v 2.4%e
- (CZ) Czech Aug Unemployment Rate: 3.1% v 3.0%e
- (TR) Turkey Q2 GDP Q/Q: 0.9% v 0.5%e; Y/Y: 5.2% v 5.3%e
- (SE) Sweden July Household Consumption M/M: -2.1% v -0.3% prior; Y/Y: -0.1% v +2.9% prior
- (CH) SNB Total Sight Deposits for Week Ended Sept 7th (CHF): 576.5B v 576.2B prior
- (EU) Euro Zone Sept Sentix Investor Confidence:12.0 v 14.3e
- (UK) July GDP M/M: 0.3% v 0.1%e; 3M/3M: 0.6% v 0.4% prior
- (UK) July Industrial Production M/M: 0.1% v 0.2%e; Y/Y: 0.9% v 1.1%e
- (UK) July Manufacturing Production M/M: -0.2% v +0.2%e; Y/Y: 1.1% v 1.4%e
- (UK) July Construction Output M/M: +0.5% v -0.5%e; Y/Y: 3.5% v 2.6%e
- (UK) July Visible Trade Balance: -£10.0B v -£11.7Be; Overall Trade Balance: -£0.1B v -£2.1Be; Trade Balance Non EU: -£2.8B v -£3.3Be
- (UK) July Index of Services M/M: 0.3% v 0.5%e; 3M/3M: 0.6% v 0.2%e
- (GR) Greece July Industrial Production Y/Y: 1.9% v 1.2% prior
- (GR) Greece Aug CPI Y/Y: 1.0% v 0.9% prior; CPI EU Harmonized Y/Y: 0.9% v 0.8% prior
Fixed Income Issuance:
- None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.3% at 374.90, FTSE +0.1% 7285, DAX 0% at 11961, CAC-40 +0.2% at 5260, IBEX-35 +0.6% at 9223, FTSE MIB +1.8% at 20816, SMI +0.8% at 8909, S&P 500 Futures +0.4%]
- Market Focal Points/Key Themes: European Indices trade higher this morning coming off earlier lows tracking US futures higher after a weaker session in Asia. Italy outperforms after Italian Finance Minister said that Italy will improve its budget balance. On the corporate front ABF trades lower following a trading update, while Richement trades higher after 10% rise in sales. RPC rises sharply after confirmation of prelim talks with Bain Capital; Debenhams declines after a possible restructuring plan. Looking ahead notable earners include Destination Maternity and Hovonian Enterprises.
Movers
- Consumer Discretionary Debenhams [DEB.UK] -15% (Hired KPMG to put together contingency measures or possible restructuring plan), ABF [ABF.UK] -2% (Earnings), Richement -1.4% (Earnings)
- Industrials RPC [RPC.UK] +21% (Confirms prelim talks with Apollo
- Financials Allied Minds [ALM.UK] +8% (Federated wireless update)
- Healthcare Abcam [ABC.UK] -16.5% (Earnings)
Speakers
- France Fin Min Le Maire: 2018 Budget deficit to GDP at 2.6%. Domestic growth was solid but could be better. Saw the rise in French inflation seen as temporary
- Turkey Fin Min Albayrak: Main targets remain fighting inflation and reducing the current account deficit
- India Finance Ministry official: Govt is concerned about INR currency (Rupee) decline; markets should not panic as RBI will intervene when necessary
- Indonesia Finance Ministry official Marbun: Drafting policy to attract more local bond investors
- China Foreign Ministry reiterated stance that would respond if US take any new steps on trade
Currencies
- Trade tensions keeping the USD on firm footing as President Trump noted that the US has more potential tariffs against China in the works if needed.
- EUR/USD off its worst level as Italian official continued conciliatory comments on the 2019 budget. Dealers noted that the 1.1750 area remains key resistance now.
- Emerging market FX remained on the defensive. USD/INR hit a fresh record high at 72.68 that prompted India to perform some verbal intervention. The rupee weakness attributed to the release of the Q2 current account balance for India that registered its widest deficit in 5 years.
Fixed Income
- Bund Futures trades at 159.65 down 30 ticks with the focus on Thursday’s ECB meeting. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
- Gilt futures trades at 121.85 down 30 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
- Friday ‘s liquidity report showed Thursday’s excess liquidity rose from €1.916T to €1.921T. Use of the marginal lending facility fell from €40M to €35M.
- Corporate issuance saw high grade issuers raise $57B in the primary market last week.
Looking Ahead
- (IE) Ireland Debt Agency (NTMA) announcement for Sept 13th auction
- (BE) Belgium Debt Agency (BDA) announcement for OLO bond auction for Sept 17th
- (IT) Italy Debt Agency (Tesoro) announcement for BTP auction for Sept 13th
- 05:30 (DE) Germany to sell €2.0B in 6-Month BuBills
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 6-month Bills
- 06:00 (PT) Portugal July Trade Balance: No est v -€1.7B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (CZ) Czech Central Bank to comment on CPI data
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (TR) Turkey Sept Central Bank TCMB Survey of Expectations
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
- 08:05 (UK) Baltic Dry Bulk Index
- 08:55 (FR) France Debt Agency (AFT) to sell combined €4.4-5.6B in 3-month, 6-month, 9-month and 12-month BTF Bills
- 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
- 12:00 (US) Fed’s Bostic (dove, voter) discusses Economic Outlook
- 15:00 (US) July Consumer Credit: $14.4Be v $10.2Bprior
- 16:00 (US) Weekly Crop Progress Report
- (MX) Mexico Aug Nominal Wages: No est v 5.7% prior
