Market movers today
There are no significant economic releases today.
In Denmark, retail sales figures for July are due on Wednesday. Our own spending monitor indicated solid consumption over the summer on the back of most Danes holidaying in Denmark, with grocery sales looking particularly strong. We estimate retail sales fell slightly after a strong June but remain more than 6% up on July last year.
The string of new syndicated deals is set to continue today. Finland is expected to launch a new 10Y benchmark today. More announcements are expected today. This will put upward pressure on bond yields and swap rates.
The 60 second overview
Macro. Oil price is trending on the back of oil and production being closed down in the Mexican Gulf as tropical storm Laura is approaching Texas.
The German government has agreed to extend its wage compensation scheme to the end of 2021. The compensation scheme was intended to last 12 months, but given the negative effects from the coronavirus, the government agreed to extend it in order to prevent mass layoffs.
Equities. US equities continue to rise as the market expects that the Federal Reserve will remain supportive for the economy, as the US economy recovers from the coronavirus.
FI. The European fixed income market sold off sharply yesterday as the bond market prepares for a string of new issuance in the autumn. Swap spreads also tightened as issuers are using the swap market to hedge a large part of the issuance and the 10Y German ASW-spread dropped below 30bp.
FX. Majors have generally been quiet over the week in EUR/USD, SEK and NOK. We see clear financial contagion from the situation in Belarus to the rouble. Other Eastern European currencies like PLN, HUF and CZK should also be considered at risk from a further souring of sentiment.
Credit. Credit markets started out on a positive note, but sentiment turned during the day and iTraxx Xover ended the day 3bp wider while Main closed 1bp wider.
Nordic macro and markets
In Nordic Research: Update 5: Moving out of the COVID-19 crisis and the support measures from yesterday we look at the current economic situation in the Nordic countries, how the different COVID19 support measures have been used and if or when they will be phased out. We also look at the implications for budgets and funding in the four Nordic countries.
In Norway, we saw a move higher in rates yesterday, fuelled by the international FI sell-off. It is also noteworthy that the GDP number came out at ‘just’ -6.3% q/q in Q2 underlining that Norway is one of the OECD countries with the smallest drop in GDP in Q2. Especially June looked strong with GDP growing 3.7% m/m. Today, we will have the AKU unemployment rate. However, it is hard to assess and we favour the registered unemployment rate that will be out on Friday. Note the NGB auction today at 11.00 CEST. See more in yesterday’s research note.
Finland announced yesterday that it plans to launch a new 10Y benchmark through syndication. Danske Bank is part of the lead group. It plans to sell EUR3bn at the upcoming transaction.
