Notes/Observations
- UK July CPI data beats expectations and some hope for the future health of the economy
- Focus turns to FOMC Minutes
Asia:
- Japan July Trade Balance: +¥11.6B v -¥85.0Be; Exports Y/Y: -19.2% v -20.7%e; Imports Y/Y: -22.3% v -23.0%e
Coronavirus:
- Total global cases 22,059,933 (+1.1% d/d); total deaths: 780.0K (+0.8% d/d)
Europe:
- PM Johnson reportedly to make ‘minor’ Cabinet changes and existing calls for an autumn reshuffle. PM only looking to make ‘minor’ adjustments after the summer recess before a full reset in the New Year
- Brexit trade talks set to stall again over British truckers’ EU access’ –
Americas:
- White House Chief of Staff Meadows reiterated that no new trade talks between US and China were scheduled; USTR Lighthizer continued talks with China counterparts on Phase 1 commitments
- U.S. Postmaster General Loius DeJoy suspended all mail changes until after the November election.
- Senior US Official reported to say there is ‘real desire’ among some US Democrats and Republicans to reach a smaller stimulus deal of $500B. Agreement could include funding for the U.S. Postal Service, additional funding for loans to small- and medium-sized businesses to keep workers on their payrolls and potentially added money for schools. did not see aid to state and local governments and a fresh round of stimulus checks as possible at the moment.
- House Speaker Pelosi said to have hinted that Democrats might be willing to cut their stimulus proposal then wait until after November elections with additional agenda items.
- US State Department asking colleges and universities to divest from Chinese holdings in their endowments
Energy:
- Weekly API Crude Oil Inventories: -4.3M v -4.4M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.29% at 368.26, FTSE +0.11% at 6,083.55, DAX +0.29% at 12,919.50, CAC-40 +0.26% at 4,951.12, IBEX-35 +0.19% at 7,057.00, FTSE MIB +0.50% at 19,945.50, SMI +0.33% at 10,202.38, S&P 500 Futures +0.14%]
- Market Focal Points/Key Themes: European indices open modestly lower across the board and later moved to trade mixed; better performing sectors include utilities and materials; telecom and consumer discretionary sectors among those on the downside; Arnault and Lagardere families reach partnership agreement; reportedly UK working to shorten quarantine at Heathrow; British Chamber of Commerce warns about business outlook; reportedly a number of suitors interested in Capita unit; Dufry to acquire remaining interest in Hudson; Norsk Hydro halts aluminum plant in Brazil for maintenance; focus on renewed Brexit negotiations after EU rejects latest UK overture; earnings expected in the upcoming US session include Analog Devices, Samsonite and Nvidia
Equities
- Energy: RWE AG [RWE.DE] -4% (capital increase)
- Healthcare: Galapagos [GLPG.BE] -26% (FDA letter)
- Industrials: Maersk [MAERSKB.DK] +5% (earnings; reinstates forecast), NIBE Industrier [NIBEB.SE] +6% (earnings), GN Store Nord [GN.DK] +1.5% (earnings), Implenia [IMPN.CH] -5% (earnings)
Speakers
- Italy PM Conte said present recovery plan to EU by mid-October. PM said to agree with former ECB chief Draghi that need to strengthen instruments to give greater stability to Euro Area
- South Africa Treasury noted that current spending path implied budget deficit to GDP of over 12%
- WTO stated that it saw a partial uptick in world trade and output in Q3, L-shaped recovery in world trade could not be ruled out. Environment looking less pessimistic outlook but conceded that a V-shaped recovery might be overly optimistic
- Head of German vaccine regulator: If data from Phase III trials showed the vaccines were effective and safe, the first vaccines could be approved at the beginning of the year, possibly with conditions attached
- Indonesia Central Bank (BI) Policy Statement noted that to maintain loose monetary policy. Rate decision of keeping policy steady would help maintain external stability. To stay in quantitative path and continue FX stabilization measures. To monitor all indicators to take appropriate steps. Saw recovery beginning in Q3
- Indonesia Central Bank Gov Warjiyo pre-rate decision press conference noted it would continue to strengthen monetary expansion and financing the 2020 budget deficit. Saw domestic recovery beginning in July following the Q2 contraction as stimulus measures would aid recovery. IDR currency (Rupiah) remained stable but undervalued; still had room to appreciate
- Japan Econ Min Nishimura: Virus test positivity rate was declining nationwide
Currencies/Fixed Income
- USD continued to be on the defensive against the major pairs
- GBP/USD was higher by 0.2% after UK July CPI data beats expectations and provided some hope for the future health of the economy. Data did provide some hesitancy that BOE might move into negative rates. Dealers caution that the data still would not hinder the BOE from easing policy further due to continue demand shock from virus outbreak.
- EUR/USD holding above the 1.19 with the pivotal psychological level of 1.20 in the sights.
Economic Data
- (UK) July CPI M/M: +0.4% v -0.1%e; Y/Y: 1.0% v 0.6%e; CPI Core Y/Y: 1.8% v 1.2%e; CPIH Y/Y: 1.1% v 0.7%e
- (UK) July RPI M/M: 0.5% v 0.1%e; Y/Y: 1.6% v 1.2%e; RPI-X (ex-mortgage Interest Payments Y/Y: 1.9% v 1.3%e; Retail Price Index: 294.2 v 292.9e
- (UK) July PPI Input M/M: 1.8% v 1.1%e; Y/Y: -5.7% v -6.1%e
- (UK) July PPI Output M/M: 0.3% v 0.2%e; Y/Y: -0.9% v -0.9%e
- (UK) July PPI Output Core M/M: -0.1% v +0.1%e; Y/Y: 0.1% v 0.3%e
- (AT) Austria July CPI M/M: 0.2% v 0.6% prior; Y/Y: 1.7% v 1.1% prior
- (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo Rate unchanged at 4.00% (as expected)
- (EU) Euro Zone Jun Current Account Balance: €20.7B v €11.3B prior
- (PL) Poland July Employment M/M: 1.1% v 0.3%e; Y/Y: -2.3% v -3.0%e
- (PL) Poland July Average Gross Wages M/M: 1.8% v 0.9%e; Y/Y: 3.8% v 2.9%e
- (PL) Poland Aug Consumer Confidence: -15.2 v -6.5e
- (IT) Italy Jun Current Account Balance: €3.4B v €2.3B prior
- (GR) Greece Jun Current Account Balance: -€1.4B v -€0.9B prior
- (UK) Jun House Price Index Y/Y: 2.6% v 3.5% prior
- (HK) Hong Kong July Unemployment Rate: 6.1% v 6.4%e
- (EU) Euro Zone July Final CPI Y/Y: 0.4% v 0.4%e; CPI Core Y/Y: 1.2% v 1.2%e; CPI M/M: -0.4% v -0.3%e
- (CY) Cyprus July CPI Harmonized M/M: -0.2% v +0.4% prior; Y/Y: -2.0% v -2.2% prior
Fixed Income Issuance
- (IN) India sold total INR350B vs. INR350B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK5.27B in 2022 and 2029 Bonds
- (SE) Sweden sold total SEK12.5B vs. SEK12.5B indicated in 3-month Bills; Avg Yield: -0.1726% v -0.1580% prior; Bid-to-cover: 2.76x v 2.92x prior
- (UK) DMO sold £2.75B in 0.875% Oct 2029 Gilts; Avg Yield: 0.153% v 0.261% prior; bid-to-cover: 2.38x v 3.19x prior; Tail: 0.3bps vs. 0.1bps prior
Looking Ahead
- (IL) Israel Aug 12-month CPI Forecast: No est v 0.5% prior
- (UK) BOE buyback operation in APF Gilt purchase operation (7-20 years)
- 05:30 (DE) Germany to sell 0.0% Aug 2050 bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 3-month and 12-month Bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (PT) Portugal July PPI M/M: No est v 0.5% prior; Y/Y: No est v -5.7% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Aug 14th: No est v 6.8% prior
- 07:00 (RU) Russia to sell OFZ Bonds
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada July CPI M/M: 0.4%e v 0.8% prior; Y/Y: 0.6%e v 0.7% prior; Consumer Price Index: 137.7e v 137.2 prior; CPI Core- Median Y/Y: 2.0%e v 1.9% prior; CPI Core- Common Y/Y: 1.6%e v 1.5% prior; CPI Core- Trim Y/Y: 1.8%e v 1.8% prior
- 08:30 (CA) Canada Jun Wholesale Trade Sales M/M: 10.5%e v 5.7% prior
- 10:00 OPEC+ JMMC Technical meeting
- 10:30 (US) Weekly DOE Oil Inventories
- 13:00 (US) Treasury to sell 20-Year Bonds
- 14:00 (US) FOMC July Minutes
- 21:30 (CN) China Monthly Loan Operation: Expected to leave 1-Year Loan Prime Rate at 3.85%; Expected to leave 5-Year Loan Prime Rate at 4.65%
- 21:30 (AU) Australia July RBA FX Transactions data
- 22:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Expected to cut Key Rates by 50bps; Expected to cut Current Standing Deposit Rate by 50bps to 4.00%; Expected to cut Current Standing Lending Rate by 50bps to 5.00%
- 23:00 (KR) South Korea Q2 Short-Term External Debt: No est v $148.5B prior
- 23:00 (TH) Thailand Central Bank to sell THB35B in 2022 Bonds
- 23:35 (JP) Japan to sell 5-Year JGB Bonds
