Notes/Observations
- Quiet month-end trading as UK off for bank holiday
- Plethora of EU Final GDP readings and Aug inflation data fails to spark price action
Asia:
- China Aug Manufacturing PMI (Govt official) registered its 6th straight expansion) (51.0 v 51.2e)
- Japan July Preliminary Industrial Production registerd its highest MoM reading since 1978 (MoM: 8.0% v 5.0%e; YoY: -16.1% v -17.5%e)
- Japan July Retail Sales missed expectations (M/M: -3.3% v -2.5%e; Y/Y: -2.8% v -1.7%e)
- Japan LDP Party reported to decide to hold leadership vote on Sept 14th
- South Korea July Industrial Production missed expectations (M/M: 1.6% v 2.5%e; Y/Y: -2.5% v -2.0%e)
- Berkshire Hathaway unit acquired 5% passive stakes in each of the 5 leading Japan trading companies (Itochu, Marubeni, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp)
Coronavirus:
- Total global cases 25,143,423 (+3.2% vs. Fri); total death: 845.4K (+1.8% vs. Fri)
Europe:
- UK Treasury officials said to be drawing up plans for a £30B increase of taxes on wealthy, businesses, pensions and foreign aid to plug a hole in the nation’s finances caused by the coronavirus crisis. Chancellor wants to use the autumn budget to start repairing public finance. Under proposals that are due to form the centrepiece of the budget in November, the government is planning to raise both capital gains tax and corporation tax.
- Senior Tories and business chiefs have told Chanllor Sunak that putting up taxes on businesses and pensions to pay huge coronavirus costs could damage the economy
- UK Brexit negotiator Frost said to have signaled to EU’s Barnier that he’ll recommend Britain leave without a trade deal unless the EU dropped its demands that the UK aligned with EU rules on state aid
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.52% at 370.72, FTSE closed, DAX +0.72% at 13,126.85, CAC-40 +1.04% at 5,054.87, IBEX-35 +0.43% at 7,164.00, FTSE MIB +0.94% at 20,027.50, SMI +0.57% at 10,222.23, S&P 500 Futures +0.26%]
- Market Focal Points/Key Themes: European indices open higher and continued in the green as the session progressed; better performing sectors include energy and utilities; financials and health care sectors among underperformers; UK closed for holiday; Aimune to be acquired by Nestle; Suez to study offer from Veolia for stake in company; earnings expected in the upcoming US session include Zoom Communications and Regis
Equities
- Consumer discretionary: Nestle [NESN.CH] +1% (acquisition)
- Energy: Suez [SEV.FR] +19%, Veolia [VIE.FR] +3.5% (deal)
Speakers
- Spain Econ Min Calvino reiterated view that domestic economy was already recovering from the pandemic and added that Q3 GDP growth was seen over 10%
- IMF Chief Georgieva stated that she saw a revival in trade
- Japan LDP Ruling Party official Ishiba: No need to radically change Abenomics stimulus policy – including monetary easing. Did not believe it iwas sustainable to reduce corporate tax, adopt zero interest rates, weaken the yen currency and curb wage hikes. Did not think that a weak JPY currency (yen) was better. Interest rates should return to appropriate levels eventually (**Note: the last rate hike by BOJ was back in 1989). Did not believe fiscal spending would cause hyper-inflation; still have room for further fiscal measures
- China Foreign Ministry spokesperson refuted claims by India and stressed that its Border troops never crossed the line. In close communication with India over the situation (**Note: Earlier: India Army statement noted that it had thwarted a transgression by China on the Pangong Pso Lake)
- Fed’s Kashkari (dove, FOMC voter): No urgency to raise rates
Currencies/Fixed Income
- The USD ended AUG on a steady note in thin-holiday trading but the month saw the greenback suffer heavy losses against numerous pairs as the markets shifted to the Fed’s new inflation policy framework.
- EUR/USD hovering around the 1.19 level in quiet trade with the 1.20 handle remaining the key psychological resistance.
- USD/JPY bounced off Friday’s low in the aftermath of PM Abe’s announced resignation. Dealers believing that Japan’s next leader would maintain the course on the ‘Abenomics’ economic program
Economic Data
- (NL) Netherlands July Retail Sales Y/Y: 12.0 v 10.5% prior
- (NO) Norway July Credit Indicator Growth Y/Y: 4.6% v 4.5% prior
- (FI) Finland Jun Final Trade Balance: -€0.2B v -€0.2B prelim
- (ZA) South Africa July M3 Money Supply Y/Y: 10.5% v 11.1% prior; Private Sector Credit Y/Y: 5.1% v 5.6%e
- (DK) Denmark Q2 Preliminary GDP Q/Q: -6.9% v -2.0% prior; Y/Y: -8.2% v -0.2% prior
- (DK) Denmark July Unemployment Rate (Seasonally Adj): 4.8% v 5.1% prior; Gross Unemployment Rate : 5.2% v 5.4% prior
- (CH) Swiss July Real Retail Sales Y/Y: 4.1 v 3.3% prior
- (DE) Germany Aug CPI Saxony M/M: -0.3% v -0.5% prior; Y/Y: 0.1% v 0.2% prior
- (ES) Spain Aug Preliminary CPI M/M: 0.0% v 0.1% v -0.9% prior; Y/Y: -0.6% v -0.6%
- (ES) Spain Aug Preliminary CPI EU Harmonized M/M: +0.1%e v -1.6% prior; Y/Y: -0.6% v -0.6%e
- (HU) Hungary Jun Average Gross Wages Y/Y: 15.6% v 9.0%e
- (TR) Turkey Q2 GDP Q/Q: -11.0% v -13.6%e; Y/Y: -9.9% v -10.5%e
- (TR) Turkey July Trade Balance: -$2.7B v -$2.7Be
- (SE) Sweden Jun Non-Manual Workers Wages Y/Y: 1.7% v 1.5% prior
- (TH) Thailand July Current Account Balance: +$1.0Be v -$0.3B prior; Overall Balance of Payments (BOP): $2.7B v $3.5B prior; Trade Account Balance: $4.1B v $2.3B prior; Exports Y/Y: -11.9% v -24.6% prior; Imports Y/Y: -25.4% v -18.2% prior
- (DE) Germany Aug CPI Hesse M/M: -0.3% v -0.8% prior; Y/Y: -0.3% v -0.1% prior
- (DE) Germany Aug CPI Bavaria M/M: 0.0% v -0.5% prior; Y/Y: 0.1% v 0.0% prior
- (IT) Italy Q2 Final GDP Q/Q: % v -12.4%e; Y/Y: % v -17.3%e
- (CH) Swiss weekly Total Sight Deposits (CHF): 701.6B v 700.0B prior; Domestic Sight Deposits: 636.5B v 634.2B prior
- (NO) Norway Central Bank (Norges) Sept Daily FX Purchases (NOK): -2.0B v -2.0B prior
- (PL) Poland Q2 Final GDP Q/Q: -8.9% v -8.9% prelim; Y/Y: -8.2% v -8.2% prelim
- (CZ) Czech July M2 Money Supply Y/Y: 10.0% v 9.5% prior
- (ES) Spain Jun Current Account Balance: €2.0B v €0.8B prior
- (DE) Germany Aug CPI North Rhine Westphalia M/M: 0.0% v -0.7% prior; Y.Y: -0.2% v -0.2% prior
- (PT) Portugal Aug CPI M/M: -0.2% v -1.3% prior; Y.Y: 0.0% v 0.1% prior
- (PT) Portugal Aug CPI EU Harmonized M/M: -0.2% v -2.0% prior; Y.Y: -0.2% v -0.1% prior
- (IT) Italy Aug Preliminary CPI M/M: 0.3% v 0.3%e; Y.Y: -0.5% v -0.5%e
- (IT) Italy Aug Preliminary CPI EU Harmonized M/M: -1.3% v -1.1%e ; Y.Y: -0.5% v -0.3%e
- (BE) Belgium Q2 Final GDP Q/Q: -12.1% v -12.2% prelim; Y/Y: -14.4% v -14.5% prelim
- (GR) Greece Jun Retail Sales Value Y/Y: -7.3% v -5.1% prior; Retail Sales Volume Y/Y: -6.9% v -5.3% prior
- (IS) Iceland July Final Trade Balance (ISK): -11.6B v -12.4B prelim
- (IS) Iceland Q2 GDP Q/Q: -9.1% v -5.7% prior; Y/Y: -9.3% v -1.7% prior
- (CY) Cyprus Q2 Final GDP Q/Q: -11.6% v -11.6% prelim; Y/Y: -11.9% v -11.9% prelim
- (IN) India July Eight Infrastructure (key) Industries: -9.6%t v -12.9% prior
Fixed Income Issuance
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 0.01% v 1.40% prior; Bid-to-cover: 2.84x v 1.96x prior
Looking Ahead
- (DE) Germany Aug CPI Baden Wuerttemberg M/M: No est v -0.1% prior; Y/Y: No est v 0.3% prior
- (DE) Germany Aug CPI Brandenburg M/M: % v -0.8% prior; Y/Y: % v -0.1% prior
- 05:30 (SL) Sri Lanka Aug CPI Y/Y: 4.3%e v 4.2% prior
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (PT) Portugal Q2 Final GDP (3rd reading) Q/Q: No est v -13.9% prelim; Y/Y: No est v -16.3% prelim
- 06:45 (US) Daily Libor Fixing
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (DE) Germany Aug Preliminary CPI M/M: 0.0%e v -0.5% prior; Y/Y: +0.1%e v -0.1% prior
- 08:00 (DE) Germany Aug Preliminary CPI EU Harmonized M/M: 0.0%e v -0.5% prior; Y/Y: 0.1%e v 0.0% prior
- 08:00 (ZA) South Africa July Trade Balance (ZAR): No est v 46.6B prior
- 08:00 (IN) India Q2 GDP Y/Y: -19.2%e v 3.1% prior; GVA Y/Y: -19.8%e v 3.0% prior
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement of size on upcoming issuance
- 08:30 (CA) Canada July Industrial Product Price M/M: No est v 0.4% prior; Raw Materials Price Index M/M: No est v 7.5% prior
- 08:30 (BR) Brazil July Primary Budget Balance (BRL): -99.4Be v -188.7B prior; Nominal Budget Balance: No est v -210.2B prior; Net Debt to GDP Ratio: No est v 58.1% prior
- 09:00 (FR) France Debt Agency (AFT) to sell €4.3-5.5B in 3-month, 6-month and 12-month bills
- 09:00 (CL) Chile July Industrial Production Y/Y: No est v -2.6% prior; Manufacturing Production Y/Y: -10.5%e v -8.3% prior; Total Copper Production: No est v 472.2K tons prior
- 09:00 (CL) Chile July Retail Sales Y/Y: -20.0%e v -24.0% prior; Commercial Activity Y/Y: No est v -15.9% prior
- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (MX) Mexico July Net Outstanding Loans (MXN): No est v 4.932T prior
- 10:30 (US) Aug Dallas Fed Manufacturing Activity: 0.0e v -3.0 prior
- 11:00 (CO) Colombia July National Unemployment Rate: No est v 19.8% prior; Urban Unemployment Rate: No est v 24.9% prior
- 11:00 (CO) Colombia July Exports: No est v $2.3B prior
- 14:00 (CO) Colombia Central Bank Interest Rate Decision: expected to cut Overnight Rate by 25bps to 2.00%
- 15:00 (AR) Argentina Jun Wages M/M: No est v -0.1% prior
- 16:00 (US) Weekly Crop Progress Report
- 18:30 (AU) Australia Aug Performance of Manufacturing Index: No est v 53.5 prior
- 18:45 (NZ) New Zealand Q2 Terms of Trade Index Q/Q: No est v -0.7% prior
- 18:45 (NZ) New Zealand July Building Permits M/M: No est v 0.5% prior
- 19:00 (KR) South Korea Q2 Final GDP Q/Q: -3.%e v -3.3% prelim; Y/Y: -2.9%e v -2.9% prelim
- 19:00 (AU) Australia Aug Final PMI Manufacturing: No est v 53.9 prelim
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 92.7 prior
- 19:30 (JP) Japan July Jobless Rate: 3.0%e v 2.8% prior; Job-To-Applicant Ratio: 1.08e v 1.11 prior
- 19:50 (JP) Japan Q2 Company Profits Y/Y: No est v -28.4% prior; Company Sales Y/Y: No est v -7.5% prior
- 20:00 (AU) Australia Aug CoreLogic House Price Index: No est v -0.8% prior
- 20:00 (KR) South Korea Aug Trade Balance: $3.7Be v $4.3B prior; Exports Y/Y: -10.0%e v -7.1% prior (revised from -7.0%); Imports Y/Y: -15.0%e v -11.6% prior (revised from -11.9%)
- 20:01 (IE) Ireland Aug PMI Manufacturing: No est v 57.3 prior
- 20:30 (JP) Japan Aug Final PMI Manufacturing: No est v 46.6 prelim
- 20:30 (KR) South Korea Aug PMI Manufacturing: No est v 46.9 prior
- 20:30 (TW) Taiwan Aug PMI Manufacturing: No est v 50.6 prior
- 20:30 (ID) Indonesia Aug PMI Manufacturing: No est v 46.9 prior
- 20:30 (PH) Philippines Aug PMI Manufacturing: No est v 48.4 prior
- 20:30 (TH) Thailand Aug PMI Manufacturing: No est v 45.9 prior
- 20:30 (MY) Malaysia Aug PMI Manufacturing: No est v 50.0 prior
- 20:30 (VN) Vietnam Aug PMI Manufacturing: No est v 47.6 prior
- 21:30 (AU) Australia Sept Building Approvals M/M: -1.0%e v -4.9% prior
- 21:30 (AU) Australia July Private Sector Houses M/M: No est v -5.7% prior
- 21:30 (AU) Australia Q2 Current Account Balance: A$13.0Be v A$8.4B prior
- 21:45 (CN) China Aug Caixin China PMI Manufacturing: 52.5e v 52.8 prior
- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
- 23:35 (JP) Japan to sell 10-Year JGB Bonds
