Update: Awaiting US Jobs Report

Notes/Observations

• Germany July Factory Orders miss expectations; keeping expectations that ECB to add to stimulus later this year
• Brexit headlines turning increasingly negative as UK PM Johnson said to harden his position on fisheries
• Focus turns to upcoming US jobs report

Asia:

• Australia PM Morrison stated that to develop new plan to reopen Domestic economy by Dec
• Global Times Op piece: China could gradually reduce its holdings of US Treasuries by 20% to around $800B over concerns of US federal deficit citing concerns about the potential risks behind surging debt level in the US
• China banking sector said to be planning near record bond sales in Sept to replenish capital levels

Coronavirus:

• Total global cases 26,220,930 (+1.1% d/d); total deaths: 867,.6K, (+0.7% d/d)

Europe:

• UK PM Johnson said to have demanded that British fishermen double the size of their catch from Britain’s coastal waters; added to impasse to negotiations

Americas:

• House Speaker Pelosi and Treasury Sec Mnuchin said to agree to a stopgap bill that would avoid govt shutdown at end of Sept; agreed to keep stimulus additions out of the upcoming govt funding bill

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.41% at 367.58, FTSE +0.45% at 5,877.25, DAX +0.07% at 13,067.00, CAC-40 +0.55% at 5,036.93, IBEX-35 +0.98% at 7,073.00, FTSE MIB +0.43% at 19,636.50, SMI +0.48% at 10,269.35, S&P 500 Futures +0.31%]
• Market Focal Points/Key Themes: European indices open lower across the board but later reversed to trade generally higher; better performing sectors include financials and materials; consumer discretionary and utilities sectors among underperfomers; UK CMA starts enforcement actions against 4 property developers; EssilorLuxottica decides to file appeal to judgment on GrandVision disclosures; reportedly Caixabank and Bankia planning merger; Engie CEO reiterates Veolia offer is too low; French FinMin reiterated does not want to raise taxes, focus on NFP coming up ahead of US open; no major earnings expected during upcoming US session

Equities

• Consumer discretionary: Ryanair [RYA.UK] +3% (placement)
• Financials: Bankia [BKIA.ES] +23%, CaixaBank [CABK.ES] +12% (prelim merger talks), Berkeley Group Holdings [BKG.UK] +1.5% (trading update), Vonovia [VNA.DE] -4% (capital increase)
• Healthcare: Astrazeneca [AZN.UK] -1% (trial in Japan)

Speakers

• France Fin Min Le Maire reiterated view that recession was not as bad as initially expected and hoped the 2020 GDP would be better than the -11.0% forecasted. Reiterated that there would be no tax increase
• Russia Fin Min Siluanov:: To raise 2021 Primary deficit to RUB1.46T
• Japan Chief Cabinet Sec Suga (leadership contender) issued a policy paper that vowed to defeat coronavirus and protect jobs if made he was made PM
• BOJ said to be considering raising its overall economic assessment but not be a sign of optimism (**Note: BOJ currently overall view was that domestic economy was in a severe situation due to coronavirus. On July 14th BOJ left its policy steady (as expected) and noted that the domestic economy would o improve second half of the year)

Currencies/Fixed Income

• Quiet FX session ahead of US jobs data. Focus turned to the upcoming ECB meeting next week with dealers noting that the ECB to likely to step up its crisis response later this year. Germany July Factory Orders miss expectations and kept expectations that ECB to add to stimulus at some point.
• GBP/USD was steady around the 1.33 level as Brexit headlines turned increasingly negative in recent days. Latest press speculation is that UK PM Johnson harden his position on fisheries and sought to double the size of their catch from Britain’s coastal waters

Economic Data

• (DE) Germany July Factory Orders M/M: 2.8% v 5.0%e; Y/Y: -7.3% v -6.0%e
• (FR) France July YTD Budget Balance: -€151.0B v -€124.9B prior
• (CZ) Czech July Retail Sales Y/Y: -1.1% v -2.6%e; Retail Sales (ex-auto) Y/Y: 3.0% v 0.0%e
• (HU) Hungary July Industrial Production M/M: 7.2% v 7.8%e; Y/Y: -7.7% v -7.7%e
• (MA) Malaysia End-Aug Foreign Reserves: $104.4B v $104.3B prior
• (DE) Germany Aug Construction PMI: 48.0 v 49.7 prior
• (CN) Weekly Shanghai copper inventories (SHFE): 176.9K v 170.1K tons prior
• (RU) Russia Narrow Money Supply w/e Aug 28th (RUB): 13.16T v 13.22T prior
• (UK) Aug New Car Registrations Y/Y: -5.8% v 11.3% prior
• (TW) Taiwan Aug Foreign Reserves: $498.2B v $496.2B prior
• (UK) Aug Construction PMI: 54.6 v 58.3e (3rd month of expansion)
• (IS) Iceland Aug Preliminary Trade Balance (ISK): -11.2B v -11.6B prior

Fixed Income Issuance

• (IN) India sold total INR300B vs. INR300B indicated in 2025, 2034 and 2050 bonds

Looking Ahead

• (RU) Russia Aug Light Vehicle Car Sales Y/Y: No est v 6.8% prior
• 05:25 (FR) ECB’s Villeroy (France)
• 05:30 (UK) BOE Sanders
• 06:00 (IE) Ireland Q2 GDP Q/Q: No est v 1.2% prior; Y/Y: No est v 5.1% prior
• 06:00 (IE) Ireland Q2 Current Account Balance: No est v -€14.6B prior
• 06:00 (UK) DMO to sell £2.25B 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 (MX) Mexico Aug Consumer Confidence: no est v 34.4 prior
• 07:00 (MX) Mexico Aug Vehicle Production: No est v 295.0K prior; Vehicle Exports: No est v 256.1K prior
• 07:30 (TR) Turkey Aug Real Effective Exchange Rate (REER): No est v 68.52 prior
• 07:30 (IN) India Weekly Forex Reserve w/e Aug 28th: No est v $537.5B prior
• 07:30 (IS) Iceland to sell Mar 2033 Bonds
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) Aug Change in Nonfarm Payrolls: 1.350Me v +1.763M prior; Change in Private Payrolls: 1.284Me v +1.462M prior; Change in Manufacturing Payrolls: +60Ke v +26K prior
• 08:30 (US) Unemployment Rate: 9.8%e v 10.2% prior; Underemployment Rate: No est v 16.5% prior; Labor Force Participation Rate: 61.8%e v 61.4% prior
• 08:30 (US) Aug Average Hourly Earnings M/M: 0.0%e v 0.2% prior; Y/Y: 4.4%e v 4.8% prior; Average Weekly Hours: 34.5e v 34.5 prior
• 08:30 (CA) Canada Aug Net Change in Employment: +250Ke v +418.5K prior; Unemployment Rate: 10.1%e v 10.9% prior; Full Time Employment Change: No est v +73.2 prior; Part Time Employment Change: No est v +345.3 prior; Participation Rate: No est v 64.3% prior; Hourly Wage Rate Y/Y: No est v 5.7% prior
• 08:30 (CA) Canada July MLI Leading Indicator M/M: No est v -1.4% prior
• 09:00 (CL) Chile July Nominal Wage M/M: No est v 0.0% prior; Y/Y: No est v 2.7% prior
• 09:30 (BR) Brazil Aug Vehicle Production: No est v 98.7K prior; Vehicle Sales: No est v 132.8K prior; Vehicle Exports: No est v 62.2K prior
• 10:00 (CA) Canada Aug Ivey Purchasing Managers Index: No est v 68.5 prior
• 11:00 (EU) Potential sovereign ratings after European close
• 11:00 (IE) ECB’s Lane (Ireland, chief economist)
• 12:00 (RU) Russia Aug CPI M/M: -0.1%e v +0.4% prior; Y/Y: 3.5%e v 3.4% prior
• 12:00 (RU) Russia Aug CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 3.0%e v 3.0% prior
• 13:00 (US) Weekly Baker Hughes Rig Count
• 18:30 (AU) Australia Aug AiG Performance of Services Index: No est v 44.0 prior

Sat

• 13:00 (CO) Colombia Aug CPI M/M: 0.1%e v 0.0% prior; Y/Y: 2.0%e v 2.0% prior
• 13:00 (CO) Colombia Aug CPI Core M/M: No est v % prior; Y/Y: No est v % prior