Notes/Observations
- Germany July Trade Balance registered a larger surplus as exports continued its recovery; data viewed as part of the mechanical rebound and still suffering from structural challenges
- UK potential dilution of Withdrawal Agreement keeping the prospects of a hard Brexit on the table
- September begins with a steady flow of corporate and sovereign issuance – US-China trade tensions continue to fester
Asia:
- Japan Q2 Final GDP Q/Q: -7.9% v -8.0%e; GDP Annualized Q/Q: -28.1% v -28.5%e
- Japan July Household Spending Y/Y: -7.6% v -3.7%e (10th straight decline)
- China President Xi reiterated stance to deepen reforms and opening up. to expand domestic demand. China to safeguard food, energy, and job security. Sustained efforts needed to achieve complete victory over coronavirus; risk of sporadic virus outbreak still exists in China
- China Govt Statement noted that India’s behavior on border was serious military Provocation; Urged India to stop its dangerous behavior immediately (Note: India’s troops said to have crossed the line of actual control near the south bank of Pangong Tso lake)
Coronavirus:
- Total global cases 27,256,723; total deaths: 891.3K
Europe:
- PM Johnson poised to tell EU leaders that the Withdrawal Agreement was contradictory on Northern Ireland and must be rewritten to protect the union. PM believed it would leave Northern Ireland isolated from the rest of the UK
- Senior Tory MPs said to have warned PM Johnson against watering down obligations under the Withdrawal Agreement citing it could make a no deal Brexit more likely
- Germany Fin Min Scholz saw progress in economic recovery from coronavirus shock; to suspend debt rules into 2021 to allow more borrowing on a large scale
- BOE’s Haldane (chief economist) said to warn against extending the govt’s furlough scheme citing move would stop a necessary process of adjustment
Americas:
- President Trump press conference noted that China faced decoupling or massive tariffs from the US; US would prohibit federal contracts to companies that outsource to China
- US said to seek to ban cotton from China’s Xinjiang Region due to human rights concerns
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 % at #, FTSE % at #, DAX % at #, CAC-40 % at #, IBEX-35 % at #, FTSE MIB % at #, SMI % at #, S&P 500 Futures %]
- Market Focal Points/Key Themes: European indices open marginally in the green but turned around to trade down later in the session; focus on continuing Brexit negotiations and geopolitical issues; financials and telecom sectors among the better performers; underperforming sectors include energy and technology; MS raises outlook on European chemicals and consumer services sectors; German Transport Min says automotive sector needs more support; Pharma Mar creates new virology unit; McBride announces new strategic update; no major US earnings expected following holiday
Equities
- Consumer discretionary: JD Sports [JD.UK] +7% (earnings; reinstates outlook), EasyJet [EZJ.UK] -5% (capacity update)
- Consumer staples: Royal Mail [RMG.UK] +17% (trading update)
- Financials: Partners Group [PGHN.CH] +1.5% (earnings), Experian Group [EXPN.UK] +3% (trading update)
Speakers
- EU Commission President Von der Leyen appointed Dombrovskis as Trade Commissioner (as speculated)
- Germany Fin Min Scholz stated that the latest signals from UK on Brexit did not raise excessive hopes for an agreement but that could be part of their strategy
- German VCI (Chemical Industry Association) stated that expected to return to pre-crisis level in late 2021 at the earliest
- Japan Chief Cabinet Sec Suga (LDP leader candidate)stated that should prioritize prevention of coronavirus spread when thinking about the dissolution of Lower House . Developments of Covid-19 to have huge effect on decision by new PM whether to dissolve Parliament and call snap elections
Currencies/Fixed Income
- Overall FX prove action was muted but the GBP currency remains weak over hard Brexit concerns
- EUR/USD holding above the 1.18 level as market participants await the upcoming ECB meeting on Thursday. Dealers will be keen on any commentary on the currency and possible hints at further easing
- GBP/USD lower by another 0.5% after dropping 1% on Monday. UK potential dilution of Withdrawal Agreement keeping the prospects of a hard Brexit on the table
Economic Data
- (SE) Sweden Maklarstatistik Aug Housing Prices Y/Y: 8% v 7% prior; Apartment Prices Y/Y: 4% v 3% prior
- (NL) Netherlands Aug CPI M/M: -0.5% v +1.1% prior; Y/Y: 0.7% v 1.7% prior
- (NL) Netherlands Aug CPI EU Harmonized M/M: -0.7% v +0.9% prior; Y/Y: 0.3% v 1.6% prior
- (FR) France Q2 Final Private Sector Payrolls Q/Q: -0.8% v -0.6%e; Total Payrolls: -0.9% v -2.0% prior
- (DE) Germany July Current Account Balance: €20.0B v €17.3Be; Trade Balance: €19.2B v €15.9Be; Exports M/M: 4.7% v 5.0%e; Imports M/M: 1.1% v 3.5%e
- (DE) Germany Q2 Labor Costs Q/Q: 1.9% v 2.3% prior; Y/Y: 5.1% v 4.7% prior
- (NO) Norway July GDP Mainland M/M: 1.1% v 2.0%e; Overall GDP M/M: 1.1% v 3.1% prior
- (DK) Denmark July Current Account Balance (DKK): 12.5B v 13.7B prior; Trade Balance: 7.1B v 7.5B prior
- (RO) Romania Q2 Preliminary GDP (2nd reading) Q/Q: =12.3% v -12.3%e; Y/Y: -10.5% v -10.5%e
- (FR) France July Trade Balance: -€7.0B v -€6.2Be; Current Account Balance: -€6.2B v -€8.6B prior
- (ES) Spain Q2 INE House Price Index Q/Q: 0.1% v 1.1% prior; Y/Y: 2.1% v 3.2% prior
- (HU) Hungary July Preliminary Trade Balance: €0.3B v €0.7B prior
- (SE) Sweden July Private Sector Production M/M: 3.2% v 1.6% prior; Y/Y: -4.1% v -7.8% prior
- (SE) Sweden July Industrial Orders M/M: 5.5% v 6.0% prior; Y/Y: -6.4% v -13.1% prior
- (SE) Sweden July Industry Production Value Y/Y: -6.5% v -9.1% prior; Service Production Value Y/Y: -3.5% v -8.3% prior
- (IT) Italy July Retail Sales M/M: -2.2% v -1.0%e; Y/Y: -7.2% v -1.9%e
- (TW) Taiwan Aug CPI Y/Y: -0.3% v -0.4%e; CPI Core Y/Y: 0.3% v 0.3%e; WPI Y/Y: -9.1% v -8.1%e
- (EU) Euro Zone Q2 Final GDP Q/Q: -11.8% v -12.1%e; Y/Y: -14.7% v -15.0%e
- (EU) Euro Zone Q2 Household Consumption Q/Q: -12.4% v -12.2%e; Govt Expenditures Q/Q: -2.6% v -2.5%e; Gross Fixed Capital Q/Q: -17.0% v -12.5%e
- (EU) Euro Zone Q2 Final Employment Q/Q: -2.9% v -2.8% prelim; Y/Y: -3.1% v -2.9% prelim
Fixed Income Issuance
- (ID) Indonesia sold total IDR22.0T in bills and bonds
- (IT) Italy Debt Agency (Tesoro) opened its book to sell new Mar 2041 BTP via syndicate; guidance seen +12bps to mid-swaps
- (UK) DMO opened book to sell new July 2035 Gilt; guidance seen bps to 13.0bps to UK Treasuries; order book over £57B
- (NL) Netherlands Debt Agency (DSTA) sold €2.25B vs. €1.5-2.5B indicated in 0.75% DSL 2028 Bonds; Avg Yield: -0.479% v +0.555% prior
- (ES) Spain Debt Agency (Tesoro) sold total €B vs. €6.0-7.0B indicated range in 6-month and 12-month Bills
- (AT) Austria Debt Agency (AFFA) sold €1.15B vs. €1.15B indicated in 2030 and 2034 RAGB bonds
Looking Ahead
- (PT) Bank of Portugal Releases Data on Banks
- 05:30 (ZA) South Africa Q2 GDP Annualized Q/Q: -47.2%e v -2.0% prior; Y/Y: -16.3%e v -0.1% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills
- 05:30 (ZA) South Africa to sell combined ZAR6.6B in 2026, 2030 and 2035 bonds
- 06:00 (US) Aug NFIB Small Business Optimism Index: 99.0e v 98.8 prior
- 06:00 (FI) Finland to sell 9-month and 12-month Bills
- 06:30 (EU) ESM to sell to €2.0B in 3-month Bills; Avg Yield: % v -0.5550% prior; Bid-to-cover: x v 5.2x prior (Aug 4th 2020)
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 07:00 (CL) Chile Aug CPI M/M: 0.1%e v 0.1% prior; Y/Y: 2.4%e v 2.5% prior
- 07:00 (BR) Brazil Aug FGV Inflation IGP-DI M/M: 3.0%e v 2.3% prior; Y/Y: 14.2%e v 10.4% prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada July MLI Leading Indicator M/M: No est v -1.4% prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month bills
- 11:30 (US) Treasury to sell 13-week and 26-week bills
- 11:30 (US) Treasury to sell 52 week bills
- 13:00 (US) Treasury to sell 3-Year Notes
- 15:00 (US) July Consumer Credit: $12.9Be v $9.0B prior
- 18:00 (NZ) New Zealand Aug ANZ Heavy Truckometer M/M: No est v 2.7% prior
- 18:45 (NZ) New Zealand Q2 Manufacturing Activity Q/Q: No est v 0.0% prior; Activity Volume Q/Q: No est v -1.7% prior
- 19:00 (KR) South Korea Aug Unemployment Rate: 4.2%e v 4.2% prior
- 19:50 (JP) Japan Aug M2 Money Stock Y/Y: 8.1%e v 7.9% prior; M3 Money Stock Y/Y: 6.7%e v 6.5% prior
- 20:30 (AU) Australia Sept Consumer Confidence Index: No est v 79.5 prior; Business Confidence: No est v -41.8 prior
- 21:00 (NZ) New Zealand Sept Preliminary Activity Outlook: No est v -17.5 prior
- 21:30 (CN) China Aug CPI Y/Y: 2.4%e v 2.7% prior; PPI Y/Y: -1.9%e v -2.4% prior
- 21:30 (AU) Australia July Home Loans Value M/M: 1.8%e v 6.2% prior
- 22:35 (CN) China to sell 2-year and 5-year Upsized Bonds)
- 23:30 (JP) Japan to sell 6-Month Bills
