Notes/Observations
- Major European Aug Preliminary PMI brings stark reality that a “V” shape recovery was unlikely; data showed region lost momentum particularly in services (Beats: Germany, UK; Misses: Euro Zone, France)
- UK govt debt passed the £2.0T mark for the 1st time; debate over how to finance the support for the economy
- Latest round of EU-UK negotiations likely made no progress on major outstanding points
- UK July Retail Sales data beats expectations aided as UK stores, bars and restaurants reopened after months of closure
Asia:
- Australia Aug Preliminary PMI Manufacturing: 53.9 v 54.0 prior (3rd straight expansion; PMI Services: 48.1 v 58.2 prior (1st contraction in 3 months)
- Australia July Preliminary Retail Sales M/M: 3.3% v 2.7% prior, Y/Y 12.2% v 8.2% prior
- Japan July National CPI Y/Y: 0.3% v 0.3%e; CPI Ex Fresh Food (Core) Y/Y: 0.0% v 0.1%e v 0.0% prior
- Japan Aug Preliminary PMI Manufacturing: 46.6 v 45.2 prior (16th straight contraction)
Coronavirus:
- Total global cases 22,678,483 (+1.6% d/d); total deaths: 792.7K (+0.8% d/d)
- South Korea CDC Chief Jung: Level 3 social distancing rules might be needed if coronavirus spread was not contained (Note: South Korea confirmed 324 additional coronavirus cases for a new daily high)
Europe:
- UK Aug Preliminary GfK Consumer Confidence: -27 v -27 prior
- Brexit talks said to have ended this week without a breakthrough. UK said to have tabled a draft free-trade agreement with the EU to try to unblock stalled Brexit negotiation. UK chief negotiator Frost said to have handed over “consolidated legal text” at a private dinner in Brussels this week
Americas:
- Democratic candidate for President Joe Biden formally accepts the nomination to run for President
- House Speaker Pelosi: not the right time for a smaller relief Bill
- President Trump: says if he’s re-elected, would impose tariffs on US firms that refuse to move jobs back to the US
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.32% at 366.80, FTSE -0.29% at 5,995.85, DAX +0.27% at 12,864.10, CAC-40 +0.09% at 4,915.88, IBEX-35 0.00% at 6,993.00, FTSE MIB -0.06% at 19,754.50, SMI +0.38% at 10,269.15, S&P 500 Futures -0.06%]
- Market Focal Points/Key Themes: European indices open modestly higher across the board but later turned around to trade mixed; lack of risk appetite being attributed to coronavirus headlines; consumer discretionary and materials among better performing sectors; sectors underperforming include telecom and financials; reportedly TUI to close more travel agencies and focus on online sales; UK adds Portucal to safe travel list, but removes Croatia and Austria; activist Amber calls for Lagardere shareholder meeting; focus on on-going US-China trade talks; earnings expected in the upcoming US session include Deere, Foot Locker and Buckle
Equities
- Consumer discretionary: Aryzta [ARYN.CH} +3% (acquisition interest), AF Gruppen [AFG.SE] -1% (earnings)
- Healthcare: Novartis [NOVN.CH] +1.5% (FDA approval)
- Technology: u-blox [UBXN.CH] -11% (earnings)
- Materials: Kingspan [KGP.UK] -1% (earnings)
Speakers
- Chancellor of the Exchequer Sunak (Fin Min): Pandemic has put the public finances under significant strain; debt load to require difficult decisions
- EU official noted that thelatest round of EU-UK negotiations made no progress on major outstanding points
- India Central Bank (RBI) Gov Das reiterated stance that have policy space available but future moves need to be implemented judiciously. RBI had various options including conventional and non-conventional tools
- Hong Kong court said to deny application to free the first man charged under the national security law. The person had been in custody since his arrest on July 1st
Currencies/Fixed Income
- USD was firmer against the European pairs as Aug PMI data highlighted that EU region lost momentum in its recovery path particularly in the services area.
- EUR/USD edged farther away from the 1.20 pivotal resistance area as hopes of a “V” shape recovery dissipated. Pair testing 1.1825 by mid-session. Key support pegged at 1.15.
- GBP/USD could not sustain any fresh momentum even after UK July Retail Sales data beat expectations as the data aided that UK stores, bars and restaurants reopened after months of closure. GBP facing some headwinds as reports noted that the latest round of EU-UK negotiations made no progress on major outstanding points. Focus on UK debt levels as govt debt passed the £2.0T mark for the 1st time and sparked debate over how to finance the support needed for the economy
Economic Data
- (UK) July Public Finances (PSNCR): £16.5B v £44.1B prior; Public Sector Net Borrowing: £25.9B v £28.3Be; Central Government NCR: £25.5B v £47.0B prior; PSNB (ex-Banking Groups): £26.7B v £28.6Be
- (UK) July Retail Sales (ex-auto/fuel) M/M: 2.0% v 0.2%e; Y/Y: 3.1% v 1.5%e
- (UK) July Retail Sales (including auto/fuel) M/M: 3.6% v 2.0%e; Y/Y: 1.4% v 0.1%e
- (NL) Netherlands July House Price Index M/M: 0.9% v 0.3% prior; Y/Y: 7.4% v 7.6% prior
- (DK) Denmark Aug Consumer Confidence Indicator: -5.5 v -2.9 prior
- (CH) Swiss July M3 Money Supply Y/Y: 3.8% v 3.1% prior
- (MY) Malaysia Mid-Aug Foreign Reserves: $104.3B v $104.2B prior-
- (TR) Turkey Aug Consumer Confidence: 59.6 v 60.9 prior
- (FR) France Aug Preliminary Manufacturing PMI: 49.0 v 53.0e (1st contraction in 3 months); Services PMI: 51.9 v 56.3e; Composite PMI: 51.7 v 57.0e
- (DE) Germany Aug Preliminary Manufacturing PMI: 53.0 v 52.3e (2nd straight expansion and highest reading since Sept 2018); Services PMI: 50.8 v 55.2e; Composite PMI: 53.7 v 55.0e
- (CN) Weekly Shanghai copper inventories (SHFE): 172.3K v 172.1K tons prior
- (SE) Sweden Q2 Industry Capacity: 82.8% v 89.1% prior
- (EU) Euro Zone Aug Preliminary Manufacturing PMI: 51.7 v 52.7e; Services PMI: 50.1 v 54.5e; Composite PMI: 51.6 v 55.0e
- (ES) Spain Jun Trade Balance: €1.5B v €0.1B prior
- (PL) Poland July Construction Output Y/Y: -10.9% v -4.5%e
- (PL) Poland July Retail Sales M/M: 6.4% v 3.3%e; Y/Y: +2.7% v -0.4%e; Real Retail Sales Y/Y: +3.0% v -0.5%e
- (RU) Russia Narrow Money Supply w/e Aug 14th (RUB): 3.22T v 3.11T prior
- (UK) Aug Preliminary Manufacturing PMI: 55.3 v 54.0e (3rd straight expansion); Services PMI: 60.1 v 57.0e; Composite PMI: 60.3 v 56.9e
- (BE) Belgium Aug Consumer Confidence Index: -26 v -20 prior
- (IS) Iceland July Wage Index M/M: -0.1% v +0.2% prior; Y/Y: 6.3%v 6.7% prior
Fixed Income Issuance
- (IN) India sold total INR320B vs. INR300B indicated in 2022, 2030, 2033 and 2060 bonds
Looking Ahead
- 05:30 (SL) Sri Lanka July National CPI (NCPI) Y/Y: No est v 6.3% prior
- 05:30 (ZA) South Africa to sell combined ZAR2.0B in I/L 2025, 2033 and 2046 Bonds
- 06:00 (UK) Aug CBI Industrial Trends Total Orders: -34e v -46 prior; Selling Prices: No est v 4 prior
- 06:00 (IE) Ireland July PPI M/M: No est v -1.2% prior; Y/Y: No est v -8.2% prior
- 06:00 (UK) DMO to sell £2.25B in 1-month, 3-month and 6-month bills (£0.5B, £750M and £1.0B respectively)
- 06:45 (US) Daily Libor Fixing
- 07:00 (MX) Mexico Jun Retail Sales M/M: 8.5%e v 0.8% prior; Y/Y: -16.6%e v -23.7% prior
- 07:30 (IN) India Weekly Forex Reserve w/e Aug 14th: No est v $538.2B prior
- 07:30 (IS) Iceland to sell new Jan 2031 RIKB Bonds
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada Jun Retail Sales M/M: 24.5%e v 18.7% prior; Retail Sales (ex-auto) M/M: 14.2%e v 10.6% prior
- 09:00 (CL) Chile July PPI M/M: No est v 2.2% prior
- 09:45 (US) Aug Preliminary Markit Manufacturing PMI: 52.0e v 50.9 prior; Services PMI: 51.0e v 50.0 prior; Composite PMI: No est v 50.3 prior
- 10:00 (EU) Euro Zone Aug Advance Consumer Confidence Index: -15.0e v -15.0 prior
- 10:00 (US) July Existing Home Sales: 5.40Me v 4.72M prior
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on France sovereign rating)
- 13:00 (US) Weekly Baker Hughes Rig Count
