Notes/Observations
- Hope for a quick global economic recovery faded; more coronavirus restriction, China data sap confidence
- Risk-appetite sentiment slowing down
Asia:
- China July Industrial Production Y/Y: 4.8% v 5.1%e
- China July Retail Sales Y/Y: -1.1% v +0.1%e (7th straight decline)
- China July Surveyed Jobless Rate: 5.7% v 5.7%e
- New Zealand July Manufacturing PMI: 58.8 v 56.2 prior (2nd straight expansion)
Coronavirus:
- Total global cases 20,840,381 (+1.4% d/d); total deaths: 754.6k (+0.8% d/d)
Europe:
- UK placed France and Netherlands on a 14-day travel quarantine list after recent rise in Covid cases
Americas:
- Mexico Central Bank (Banxico) cut Overnight Rate by 50bps to 4.50% (as expected)
Energy:
- US said to have seized Iran fuel cargo for the first time. The 4 ships were covered by US warrant for seizure. Vessels said to have been taken over without the use of military force. (Note: Iran said to have seized Liberian-flagged Greek-owned tanker “Wila” on Aug 12th. Iran claimed it was in retaliation for carrying cargoes to the US.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.91% 365.40, FTSE -2.48% at 6,035.05, DAX -1.48% at 12,801.70, CAC-40 -2.34% at 4,924.50, IBEX-35 -2.52% at 7,068.00, FTSE MIB -2.13% at 19,826.50, SMI -1.58% at 10,097.50, S&P 500 Futures -0.51%]
- Market Focal Points/Key Themes: European indices open lower across the board and continued to fall as the session progressed; resurgence in coronavirus cases saps risk appetite; better performing sectors include materials and health care; consumer discretionary and energy sectors among underperforming sectors; UK resumes lockdown easing, removes Spain but adds France and The Netherlands to travel restrictions; Italian government says still missing details on Autostrade deal; earnings expected in the upcoming US session include Terraform Power and ACS
Equities
- Consumer discretionary: Rovio Entertainment [ROVIO.FI] +5% (earnings), Flow Traders [FLOW.NL] +3% (earnings), EasyJet [EZJ.UK] -8%, Air France-KLM [AF.FR] -6% (UK adds France to quarantine list)
- Energy: PGS [PGS.NO] -5% (rejects offer)
- Industrials: Hapag-Lloyd [HLAG.DE] +13% (earnings), Varta [VAR1.DE] -5% (earnings)
Speakers
- Germany Economic Ministry: Would see a strong rebound in Q3 GDP
- Czech Central Bank (CNB) Aug Minutesnoted that the inflation spike wasseen as temporary and saw no risk of inflation expectations falling. Current trend in exchange rate was viewed as anti-inflationary factor
- Poland Central Bank Gatnar: Could raise Interest rate sin early 2021
- Indonesia President Jokowi: 2021 budget to speed up economic recovery. Forecasted 2021 budget deficit at IDR971.2T (budget deficit to GDP at 5.5% vs. 6.3% seen this year)). Set 2021 GDP growth target between 4.5-5.5% range and 2021 CPI target at 3.0%
- New Zealand PM Ardern: Auckland lockdown measures extended by an additional 12 days until Aug 26th; could see more cases as part of cluster. Strategy remained on elimination of Covid. To review measures on Friday, Aug 21st. No need to take Auckland into level 4 at this time; remainder of country remained at level 2
- Fitch affirmed Singapore sovereign rating at AAA; outlook stable
- China Foreign Ministry spokesperson Zhao Lijian noted that coronavirus pandemic and US export restrictions had impacted US imports. Reiterated stance that had been fulfilling US trade agreement and hoped US would stop its discrimination of Chinese companies Reminder: US-China officials plan to hold video conference in order to assess trade deal progression on Aug 15th)
Currencies/Fixed Income
- Risk appetite encountered some turbulence in the session as hope for a quick global economic recovery seemed to have faded. Dealers cited the addition of more coronavirus restrictions by some countries (NZ and UK) and disappointing Chinese data as factors.
- USD was trying to muster some safe-haven flows but was little changed against the European pairs.
- EUR/USD steady and holding above the 1.18 level with the 1.19 area still viewed as the key short-term resistance and the 1.20 handle as psychological resistance.
- GBP/USD managed to hold onto slight gains despite UK govt placing France and Netherlands on a travel quarantine list after recent rise in Covid cases. Pair at 1.3075 by mid-session
- USD/JPY saw the yen firmer on safe-haven flows.
- Weaker Chinese data put some of the commodity currencies on the defensive with AUD and NZD slightly softer.
Economic Data
- (FI) Finland Jun GDP Indicator Y/Y: -4.8 v -5.6% prior
- (FI) Finland July CPI M/M: 0.4% v 0.2% prior; Y/Y:0.6% v 0.0% prior
- (DK) Denmark Q2 GDP Indicator Q/Q: -7.4% v -1.9% prior
- (RO) Romania Q2 Advance GDP Q/Q: -12.3% v -11.5%e; Y/Y: -10.5% v -10.5%e
- (CH) Swiss July Producer & Import Prices M/M: 0.1% v 0.5% prior; Y/Y: -3.3% v -3.5% prior
- (IN) India July Wholesale Prices (WPI) Y/Y: -0.6% v -0.5%e
- (FR) France July Final CPI M/M: 0.4% v 0.4%e; Y/Y: 0.0% v 0.9%; CPI Ex-Tobacco Index: 104.44 v 104.45e
- (FR) France July Final CPI EU Harmonized M/M: 0.4% v 0.4%e; Y/Y: % v 0.8%e
- (HU) Hungary Q2 Preliminary GDP Q/Q: -14.5% v -10.7%e; Y/Y: -13.6% v -10.1%e
- (TR) Turkey Jun Current Account Balance: -$2.9B v -$3.0Be
- (TR) Turkey Jun Industrial Production M/M: 17.6% v 4.7%e; Y/Y: +0.1% v -5.5%e
- (CN) Weekly Shanghai copper inventories (SHFE): 172.1K v 172.5K tons prior
- (NL) Netherlands Q2 Preliminary GDP Q/Q: -8.5% v -9.2%e; Y/Y: -9.3% v -10.1%e
- (NL) Netherlands Jun Trade Balance: €4.1B v €3.2B prior
- (PL) Poland Q2 Preliminary GDP Q/Q: -8.9% v -9.5%e; Y/Y: -8.2% v -9.1%e
- (PL) Poland July Final CPI M/M: -0.2% v -0.1% prelim; Y/Y: 3.0% v 3.1% prelim
- (RU) Russia Narrow Money Supply w/e Aug 7th (RUB): 3.11T v 13.00T prior
- (TW) Taiwan Q2 Final GDP Y/Y: -0.6% v -0.7% prelim
- (PT) Portugal Q2 Preliminary GDP (2nd reading) Q/Q: -13.9% v -14.1%; Y/Y: -16.3% v -16.5% prelim
- (IT) Italy Jun General Government Debt: €2.531T v €2.510T prior (record high)
- (HK) Hong Kong Q2 Final GDP Q/Q: -0.1% v -0.1%e; Y/Y: -9.0% v -9.0%e
- (EU) Euro Zone Q2 Preliminary GDP (2nd reading): Q/Q: -12.1% v -12.1%e; Y/Y: -15.0% v -15.0%e
- (EU) Euro Zone Q2 Employment Q/Q: -2.8% v -0.2% prior; Y/Y: -2.9% v +0.4% prior
- (EU) Euro Zone Jun Trade Balance (seasonally Adj): €17.1B v €14.5Be; Trade Balance NSA (unadj): €21.2B v €9.4B prior
- (CY) Cyprus Q2 Preliminary GDP Q/Q: -11.6% v -1.3% prior; Y/Y: -11.9% v +0.9% prior
Fixed Income Issuance
- None seen
Looking Ahead
- (UR) Ukraine Q2 Preliminary GDP Q/Q: -9.5%e v -0.7% prior; Y/Y: -10.5%e v -1.3% prior
- (IN) India to sell combined INR300B in 2022, 2030, 2033 and 2060 bonds
- 05:30 (ZA) South Africa to sell combined ZAR2.0B in I/L 2025, 2038 and 2046 Bonds
- 06:00 (IE) Ireland Jun Trade Balance: No est v €6.7B prior
- 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively)
- 06:45 (US) Daily Libor Fixing
- 07:00 (IL) Israel July CPI M/M: +0.1%e v -0.1% prior; Y/Y: -0.7%e v -1.1% prior
- 07:00 (BR) Brazil Aug FGV Inflation IGP-10 M/M: 2.1%e v 1.9% prior
- 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations: Next 12 Month: No est v 9.3% prior
- 07:30 (IN) India Weekly Forex Reserve w/e Aug 7th: No est v $534.6B prior
- 08:00 (BR) Brazil Jun Economic Activity Index (Monthly GDP) M/M: 4.3%e v 1.3% prior; Y/Y: -7.5%e v -14.2% prior
- 08:00 (IS) Iceland July Unemployment Rate: No est v 7.5% prior (revised from 9.5%) – 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (ES) Spain Debt Agency (Tesoro) upcoming announcement on bond issuance
- 08:30 (US) July Advance Retail Sales M/M: 2.1%e v 7.5% prior; Retail Sales (ex-auto) M/M: 1.3%e v 7.3% prior; Retail Sales (ex-auto/gas): 1.0%e v 6.7% prior; Retail Sales (Control Group): 0.9%e v 5.6% prior
- 08:30 (US) Q2 Preliminary Nonfarm Productivity: +1.5%e v -0.9% prior; Unit Labor Costs: 7.2%e v 5.1% prior
- 08:30 (CA) Canada Jun Manufacturing Sales M/M: 16.4%e v 10.7% prior
- 09:00 (CA) Canada July Existing Home Sales M/M: 20.0%e v 63.0% prior
- 09:15 (US) July Industrial Production M/M: 3.0%e v 5.4% prior; Capacity Utilization: 70.3%e v 68.6% prior; Manufacturing Production: 3.0%e v 7.2% prior
- 10:00 (US) Aug Preliminary University of Michigan Confidence: 72.0e v 72.5 prior
- 10:00 (US) Jun Business Inventories: -1.1%e v -2.3% prior
- 11:00 (EU) Potential sovereign ratings after European close
- 12:00 (CO) Colombia Q2 GDP Q/Q: -15.2%e v -2.4% prior; Y/Y: -15.1%e v 1.1% prior
- 13:00 (US) Weekly Baker Hughes Rig Count
- 15:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: -11.9%e v -16.7% prior
Weekend:
- (IL) Israel Q2 Advance GDP Y/Y: -25.2%e v -6.9% prior
