Notes/Observations
- Markets trade most higher helped by positive sentiment resulting from trade talks between US and China
- Turkish Lira trades sharply lower on inflation comments from president Erdogan
- Traders await rate decision from BoE, Turkey and the ECB
Asia:
- US reportedly planning new round of trade talks with China led by Treasury Sec Mnuchin to get economic negotiations back on track
- NZD declines as milk company Fonterra reports first ever annual loss; Next week’s GDP data in focus
- Australian Jobs data handily beats estimates, Underutilization fell to 13.4% lowest in over 5 years.
Europe:
- Italy’s Economy Minister has reportedly denied earlier reports that Italian FinMin Tria threatens to quit over the budget, calling the reports baseless
- 5 Star Minister of South Lezzi says Government would be in trouble if it does not include universal income.
- Turkish Lira trades sharply lower on Erdogan comments stating that interest rates should be cut, noting that high interest rate is the reason for inflation, and was the result of wrong policy
Americas:
- Canada Foreign Min: Will not be at the Thursday talks related to NAFTA, officials to work on NAFTA in Washington on Thursday; talks are not at a ‘stalemate’
Energy:
- IEA report: Global oil supply hit a record high in August despite Iran, Venezuela fallout
Economic Data:
- (DE) GERMANY AUG FINAL CPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
- (FI) Finland July Final Retail Sales Volume Y/Y: 1.5% v 0.9% prelim
- (FR) FRANCE AUG FINAL CPI M/M: 0.5% V 0.5%E; Y/Y: 2.3% V 2.3%E
- (ES) Spain July House transactions Y/Y: 16.2% v 1.8% prior
- (CN) China Aug Foreign Direct Investment
- (FDI) Y/Y: 1.9% v 14.9% prior (yuan terms)
- (CH) Swiss Aug Producer & Import Prices M/M: 0.0% v 0.0%e; Y/Y: 3.4% v 3.4%e
- (SE) Sweden Q2 Final GDP Q/Q: 0.8% v 0.9%e; Y/Y: 2.5% v 3.3%e
Fixed Income Issuance:
- (IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €7.75B V €6.25-7.75B INDICATED RANGE IN 2021, 2025 AND 2048 BTP BONDS
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.4% at 3,341, FTSE -0.2% at 7,299, DAX +0.5% at 12,090, CAC-40 +0.4% at 5,351; IBEX-35 +0.3% at 9,322, FTSE MIB -0.2% at 20,930, SMI +0.2% at 8,974, S&P 500 Futures +0.1%]
- Market Focal Points/Key Themes: European indices open mixed, with most slightly lower, but reversed course to trade marginally higher as the session wore on; Focus on upcoming macro events with rate decisions by ECB and BOE on tap; materials and financial sectors among better performers; utilities underperform n the downside; upcoming events expected in the US session include Kroger and Fred’s
Equities
- Consumer discretionary: Debenhams DEB.UK -6.4% (Sports Direct won’t make offer), Delivery Hero DHER.DE -5.1% (results), GVC Holdings GVC.UK -0.9% (results), Korian KORI.NL +2.9% (results), Takeaway.com TKWY.NL -4.7% (accelerated bookbuild), WM Morrison MRK.UK -1.1% (results)
- Consumer stable: Greeenyard Foods GREEN.BE +16.2% (resumes production in Hungary)
- Energy: Rubis RUI.FR -7.0% (results)
- Financials: Natixis KN.FR +4.7% (disposal)
- Industrials: Grupo Ezentis RDT.DE +3.6% (results), Michelin ML.FR +3.2% (affirms outlook)
- Technology: Adyen ADYEN.NL -9.7% (holder placement)
Speakers
- (CN) China Commerce Ministry: Reiterates China and US do not want to see trade war escalate further; have been constantly communicating on trade
- (IT) Italy 5 Star Min for South Lezzi: Government would be in trouble if budget does not include universal income
- (IT) Italy Dep PM Di Maio says it has no rift with Tria, they are working together
- No ultimatum or threat to Tria, Government wants to give full support
- (TR) Turkey President Erdogan: My sensitivity on interest rates remains, Central Bank independent and takes its out decisions
- (TR) Turkey President Erdogan: we should cut high interest rate, Inflation is a result of wrong policy-maker steps, Central Banks has never accurately guessed inflation
Currencies
- Markets are little changed ahead of three rate decisions later today. GBPUSD trades little changed maintaining above $1.30 following strength yesterday ahead of the BoE rate decision and minutes. Turkish Lira loses further ground ahead of the Turkish rate decision with the USD/TRY up over 1.5% as President Erdogan said that high rates should be cut as the pair approaches 6.50.
Fixed Income
- Bund Futures trades at 159.68 up 5 ticks with the focus on the ECB projections, the 10-year bund yield trades steady above 0.40%. Resistance moves to 161.82 then 163. A downside break of 159.85 sees 158.69 initially.
- Gilt futures trades at 121.81 up 1 ticks following the move in Treasuries. Continued support at 122.50, with a continued move higher targeting 123.93 then 124.00.
- Thursday ‘s liquidity report showed Wednesday’s excess liquidity rose from €1.901T to €1.909T. Use of the marginal lending facility rose from €41M to €47M.
- Corporate issuance saw 7 issuers raise $6.6B in the primary market
Looking Ahead
- 05:30 (ZA) South Africa July Total Mining Production M/M: 0.4%e v 5.0% prior; Y/Y: 3.0%e v 2.8% prior; Gold Production Y/Y: No est v -19.2% prior; Platinum Production Y/Y: No est v 28.2% prior
- 06:00 (IE) Ireland Q2 GDP Q/Q: +1.0%e v -0.6% prior; Y/Y: No est v 9.1% prior
- 06:00 (IE) Ireland Q2 Current Account: No est v €9.6B prior
- 06:00 (IE) Ireland Aug CPI M/M: No est v 0.4% prior; Y/Y: No est v 0.8% prior
- 06:00 (IE) Ireland Aug CPI EU Harmonized M/M: No est v 0.4% prior; Y/Y: No est v 1.0% prior
- 06:00 (IL) Israel Aug Consumer Confidence: No est v 130 prior
- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.75% and maintain asset purchases at £435B
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to raise One-week Repo Rate by 325bps to 21.00%
- 07:45 (EU) European Central Bank (ECB) Interest Rate Decision: Expected to leave Main Refinancing Rate unchanged at 0.00%
- 08:00 (PL) Poland July Current Account: -€0.7Be v -€0.2B prior; Trade Balance: -€0.4Be v -€0.4B prior
- 08:00 (BR) Brazil July Retail Sales M/M: +0.2%e v -0.3% prior; Y/Y: 1.0%e v 1.5% prior
- 08:00 (BR) Brazil July Broad Retail Sales M/M: 0.2% v 2.5% prior; Y/Y: 4.0%e v 3.7% prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) Aug CPI M/M: 0.3%e v 0.2% prior; Y/Y: 2.8%e v 2.9% prior
- 08:30 (US) Aug CPI Ex Food and Energy M/M: 0.2%e v 0.2% prior; Y/Y: 2.4%e v 2.4% prior
- 08:30 (US) Aug CPI Index NSA: 252.343e v 252.006 prior, CPI Core Index SA: 258.414e v 257.930 prior
- 08:30 (US) Initial Jobless Claims: 210Ke v 203K prior; Continuing Claims: 1.71Me v1.707M prior
- 08:30 (US) Aug Real Avg Weekly Earnings Y/Y: No est v 0.1% prior; Real Avg Hourly Earning Y/Y: No est v -0.1% prior (revised from -0.2%)
- 08:30 (CA) Canada July New Housing Price Index M/M: 0.1%e v 0.1% prior; Y/Y: 0.5%e v 0.8% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (RU) Russia Gold and Forex Reserve w/e Sept 7th : No est v $460.0B prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 14:00 (US) Aug Monthly Budget Statement: -$183.0Be v -$76.9B prior
- 15:00 (AR) Argentina Aug National CPI M/M: 3.8%e v 3.1% prior; Y/Y: No est v 31.2% prior
