Notes/Observations
- Spot gold above the psychologically important level of $2,000/oz as bond yields and the dollar weaken further.
- Major European PMI Services data move into expansion territory (Beats: Italy; Misses: France, Germany, Euro Zone, UK, Spain)
Asia:
- New Zealand Q2 Unemployment Rate: 4.0% v 5.6%e (Note: People who were not actively seeking work were not counted as unemployed)
- Australia July Final PMI Services: 58.2 v 58.5 prelim (confirms 2nd straight expansion)
- Japan July Final PMI Services: 45.4 v 45.2 prelim (confirms 6th straight contraction)
- China July Caixin PMI Services: 54.1 v 58.0e (3rd straight expansion)
- RBA resumed its QE Bond buying operation (as expected) [Note: RBA had not purchased bonds since early May]
- US-China officials plan to meet in order to assess trade deal progression on Aug 15th
Coronavirus:
- Total global cases 18,480,000 (+1.6% d/d); total deaths: 699.6K (+1.0% d/d)
- Victoria state (Australia) reports additional coronavirus cases 725 (record high) v 439 prior
Americas:
- US Tsy Sec Mnuchin: The goal was to have a deal by the end of the week for stimulus. Would not be close to $3.4T cost for the next Covid-19 relief bill
- White House Chief of Staff Meadows: Made substantial progress on protections and unemployment in the Covid-19 relief bill talks
- President Trump hints of a big number for Friday’s July non-farm payroll report. Looking a various options regarding unemployment aid that did not involve congress; contemplating suspending payroll tax
- US Health and Human Services Secretary Azar to lead a delegation to Taiwan (highest-level visit by a US cabinet official since Washington cut ties with Taipei more than 40 years ago)
Energy:
- Weekly API Crude Oil Inventories: -8.6M v -6.8M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.65% at 365.78, FTSE +0.98% at 6,095.19, DAX +0.93% 12,718.30, CAC-40 +0.87% at 4,932.25, IBEX-35 +0.92% at 7,086.00, FTSE MIB +0.66% 19,742.50, SMI +0.19% at 10,181.10, S&P 500 Futures +0.52%]
- Market Focal Points/Key Themes: European indices open modestly higher across the board and continued into the green as the session progressed; risk sentiment attributed to announcement of US-China talks; better performing sectors include energy and basic resources; consumer discretionary and health care sectors underperforming reportedly UK considering raising business rates for high-value properties; Hastings being acquired by RMI, Sampo; Eurofins Scientific launches cheaper covid test; Intu Properties to delist from JSE; Atlantia intends to sell it’s Autostrade stake; earnings expected in the upcoming US session include BorgWarner, Tyson Foods, The New York Times, and Etsy
Equities
- Consumer discretionary: Ahold Delhaize [AD.NL] +5% (earnings; raised outlook), PageGroup [PAGE.UK] +4% (earnings), William Hill [WMH.UK] +3.5% (earnings), Accor [AC.FR] -1.5% (earnings; job cuts)
- Materials: Ferrexpo [FXPO.UK] +11% (earnings)
- Financials: Commerzbank [CBK.DE] +5% (earnings)
- Industrials: Continental [CON.DE] +2% (final earnings), BMW [BMW.DE] -2% (earnings)
- Technology: Dialog Semiconductor [DLG.DE] +4% (earnings)
- Telecom: Telecom Italia [TIT.IT] +4% (earnings)
Speakers
- Thailand Central Bank (BoT) Policy Statement Decision to keep policy steady was unanimous. Prepared to use additional tools if necessary. Reiterated concerns over THD currency (Bath) strength and its impact on economic recovery. To assess need for fresh appropriate steps in FX market
- China Foreign Ministry spokesperson Wang Wenbib: Lodged representation to US over Taiwan visit adding that Taiwan was most important issue in China -US relationship
Currencies/Fixed Income
- USD remained on soft footing as the coronavirus relief package continued to stall in Congress. Greenback hampered by lower Treasury yields. Analysts noted that the fall in US real yields was helping to lift the price of gold and weighing upon the USD sentiment.
- EUR/USD higher by 0.4% at 1.1840 at mid-session while USD/JPY was lower by 0.1% at 105.65
- GBP/USD higher by 0.3% to test 1.3100 aided by the UK July PMI reading registering its 1st expansion in 5 months and since July 2015
Economic Data
- (RU Russia July PMI Services: 58.5 v 51.0e (1st expansion in 5 months and highest since July 2008); PMI Composite: 56.8 v 48.9 prior
- (SE) Sweden July PMI Services: 54.8 v 50.9prior (2nd straight expansion); PMI Composite: 53.7 v 50.0 prior
- (CZ) Czech Jun Retail Sales Y/Y: -3.7% v 0.0%e; Retail Sales (ex-auto) Y/Y: 0.0% v 3.1%e
- (CZ) Czech July Unemployment Rate: 3.8% v 3.7% prior
- (HU) Hungary Jun Retail Sales Y/Y: -0.1% v +0.6%e
- (TH) Thailand Central Bank (BoT) left Benchmark Interest unchanged at 0.50%; as expected
- (ES) Spain July PMI Services: 51.9 v 52.3e (2nd straight expansion); PMI Composite: 52.8 v 52.0e
- (ZA) South Africa July PMI (whole economy): 44.9 v 42.5 prior (15th month of contraction)
- (SE) Sweden Q2 GDP Indicator Q/Q: -8.6% v -8.0%e; Y/Y: -8.2% v -7.4%e
- (SE) Sweden Jun Private Sector Production M/M: +0.7% v -0.3% prior; Y/Y: -8.5% v -9.7% prior
- (SE) Sweden Jun Industrial Orders M/M: 6.7% v 4.5% prior; Y/Y: -11.9% v -18.4% prior
- (SE) Sweden Jun Industry Production Value Y/Y: -9.1% v -15.7% prior; Service Production Value Y/Y: -8.4% v -8.9% prior
- (IT) Italy July PMI Services: 51.6 v 51.4e(1st expansion in 5 months); PMI Composite: 52.5 v 51.8e
- (FR) France July Final PMI Services: 57.3 v 57.8e(confirmed 2nd straight expansion and highest reading since Apr 2018); PMI Composite: 53.3 v 57.6e
- (DE Germany July Final PMI Services: 55.6 v 56.7e (confirmed 1st expansion in 5 months and highest reading since Jun 2019); PMI Composite: 55.3 v 55.5e
- (EU) Euro Zone July Final PMI Services: 54.7 v 55.1e (confirmed 1st expansion in 5 months; PMI Composite: 54.9 v 54.8e
- (UK) July New Car Registrations Y/Y: +11.3% v -34.9% prior
- (TW) Taiwan July Foreign Reserves: $496.2B v $488.7B prior
- (UK) July Final PMI Services: 56.5 v 56.6e(confirmed 1st expansion in 5 months and highest since July 2015)); PMI Composite: 57.0 v 57.1e
- (NG) Nigeria July PMI (whole economy): 50.4 v 46.6 prior
- (EU) Euro Zone Jun Retail Sales M/M: 5.7% v 6.1%e; Y/Y: +1.3% v -0.2%e
Fixed Income Issuance
- (IN) India sold total INR350B vs. INR350B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK4.72B in 2022 and 2029 Bonds
- (UK) DMO sold £2.75B in 0.375% 2030 Gilts; Avg Yield: 0.197% v 0.197% prior; Bid-to-cover: 2.41x v 2.50x prior; Tail: 0.3bps vs. 0.2bps prior
- (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 3-month and 6-month bills
Looking Ahead
- (MX) Citibanamex Survey of Economists
- 05:30 (DE) Germany to sell €5.0B in 0% Oct 2025 BOBL
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 13-week Bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (PT)) Portugal Q2 Unemployment Rate: No est v 6.7% prior
- 06:00 (IE) Ireland July Unemployment Rate: No est v 5.3% prior
- 06:30 (UK) DMO to sell £500M in 0.125% 2048 index-linked Gilt
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell OFZ Bonds (2 tranches)
- 07:00 (US) MBA Mortgage Applications w/e July 31st: No est v -0.8% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:30 (TR) Turkey July Real Effective Exchange Rate (REER): No est v 69.32 prior
- 08:00 (HU) Hungary Central Bank July Minutes
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:15 (US) July ADP Employment Change: +1.20Me v +2.369M prior
- 08:30 (US) Jun Trade Balance: -$50.2Be v -$54.6B prior
- 08:30 (CA) Canada Jun Int’l Merchandise Trade (CAD): -0.6Be v -0.7B prior
- 09:00 (BR) Brazil July PMI Services: No est v 35.9 prior; PMI Composite: No est v 40.5 prior
- 09:45 (US) July Final Markit PMI Services: 49.6e v 49.6 prelim; PMI Composite: No est v 50.0 prelim
- 10:00 (US) July ISM Non-Manufacturing Index: 55.0e v 57.1 prior
- 10:30 (US) Weekly DOE Oil Inventories
- 10:30 (US) treasury quarterly refunding announcement
- 12:00 (CA) Canada to sell 5 Year Bonds
- 12:00 (RU) Russia July CPI M/M: 0.4%e v 0.2% prior; Y/Y: 3.4%e v 3.2% prior
- 12:00 (RU) Russia July CPI Core M/M: 0.3%e v 0.3% prior; Y/Y: 3.0%e v 2.9% prior
- 15:00 (AR) Argentina Jun Industrial Production Y/Y: No est v -26.4% prior; Construction Activity Y/Y: No est v -48.6% prior
- 17:00 (BR)) Brazil Central Bank (BCB) Interest Rate Decision: Expected to cut Selic RateTarget by 25bps to 2.00%
- 17:00 (US) Fed’s Mester
- 19:00 (KR) South Korea Jun Current Account Balance: No est v $2.3B prior; Balance of Goods (BOP): No est v $2.5B prior
- 20:00 (CO) Colombia July CPI M/M: -0.2%e v -0.4% prior; Y/Y: 1.8%e v 2.2% prior
- 20:01 (IE) Ireland July PMI Services: No est v 39.7 prior; PMI Composite: No est v 44.3 prior
- 22:00 (PH) Philippines Q2 GDP Q/Q: No est v -5.1% prior; Y/Y: -9.4%e v -0.7% prior (revised from -0.2%)
- 23:00 (NZ) New Zealand Q3 Inflation Expectation Survey (2-year outlook): No est v 1.24% prior
- 23:30 (JP) Japan to sell 6-Month Bills
- 23:35 (JP) Japan to sell 10-Year CPI Linked 10-Year Bonds
