Risk Appetite Finds Some Headwinds

Notes/Observations

• Risk appetite hits some headwinds after AstraZeneca Phase 3 vaccine study was put on hold due to suspected adverse reaction in one UK participant

Asia:

• China Aug CPI YoY: 2.4% v 2.4%e
• South Korea Aug Unemployment Rate: 3.25 v 4.2%e South Korea Govt confirmed to finalize 4th extra budget on Thurs, Sept 10th

Coronavirus:

• Total global cases 27,479,047 (+0.8% d/d); total deaths: 896.2K (+0.6% d/d)
• Phase 3 vaccine study by AstraZeneca/Oxford University was put on hold due to suspected adverse reaction in one UK participant (Note: participant is expected to recover)
• NIH’s Fauci stated that it was unlikely there’ll be Covid-19 vaccine before the US election but optimistic one would occur by end-2020

Europe:

• ECB’s Knot (Netherlands) stressed that European crisis funds must be used for reform and investments that would help close the productivity gap between northern and southern member states
• France Trade Min reiterated EU’s warning to UK negotiators regarding the key issue of a level playing field. Brexit deals remained unattainable as long as Britain remained unwilling to follow rules that would ensure a level playing field in trade with the EU
• ECB SSM said to be pressuring large European banks on their Brexit plans
• UK Govt introduced bill to protect trade and jobs across the country by preventing new burdens on business when the Transition Period ended

Americas:

• Sen Maj Leader McConnell: GOP has tried to break the logjam over coronavirus aid talks; planned to vote on the GOP aid bill this week
• US Customs stated it had prepared orders to block imports of cotton and tomato products from Xinjian region due to allegations of being produced with forced labor

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.45% at 365.36, FTSE +0.58% at 5,964.85, DAX +0.70% at 13,059.45, CAC-40 +0.35% 4,990.77, IBEX-35 +0.10% at 6,962.00, FTSE MIB +0.27% at 19,432.50, SMI +0.56% at 10,308.20, S&P 500 Futures +0.49%]
• Market Focal Points/Key Themes: European indices open mixed but quickly surged to trade broadly higher as the session advanced; energy and telecom leading better performing sectors; consumer discretionary and financials sectors among under performers; AstraZeneca announces pause in covid-19 vaccine testing after potential adverse reaction in one patient; Computacenter acquires Canadian IT firm Pivot Technologies; French building federation sees production falling 15% this year; reportedly Sabadell looking for possible consolidation targets; earnings expected in the upcoming US session include Navistar, American Eagle Outfitters and Gamestop

Equities

• Consumer discretionary: Ryanair [RYA.UK] -2% (discounts; CEO interview)
• Energy: Tullow Oil [TLW.UK] -9% (earnings)
• Healthcare: AstraZeneca [AZN.UK] -1% (US and EU Regulators probing coronavirus vaccine, halts Co trials of vaccine), Qiagen [QIA.DE] +4% (Covid-19 antigen test), Novartis [NOVN.CH] +1% (fine)

Speakers

• Ireland PM Martin reiterated hope for a trade agreement with UK but added both sides needed mutual trust to secure a deal. Stressed that protocol to apply in all cases
• Ireland Dep PM Varadka stated that he believed that UK wanted a trade deal and that recent rhetoric was saber-rattling. Believed obstacles in negotiations cane be overcome
• Israel Finance Ministry: No intention to cut Value Added tax (VAT)
• Thailand Joint Standing Committee on Commerce, Industry and Banking noted that the domestic economy might continue to contract in H2

Currencies/Fixed Income

• FX price action was muted among the major pairs in the session.
• GBP/USD was slightly lower by 0.3% to test below 1.2925 in the session. Various Irish officials reacted the UK’s plans to amend the Withdrawal Agreement and noted that the Brexit process could be at risk.
• EUR/USD below 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

Economic Data

• (NL) Netherlands July Manufacturing Production M/M: 3.0 v 2.6% prior; Y/Y: -5.8 v -9.7% prior; Industrial Sales Y/Y: -8.0 v -8.3% prior
• (CH) Swiss Aug Unemployment Rate: 3.3% v 3.3%e; Unemployment Rate (Seasonally Adj): 3.4% v 3.4%e
• (HU) Hungary Aug CPI M/M: 0.0% v 0.0%e; Y/Y: 3.9% v 3.9%e
• (CZ) Czech Aug International Reserves: $159.1 v $157.9B prior
• (GR) Greece July Industrial Production Y/Y: -0.2% v -4.9% prior
• (HU) Hungary Aug YTD Budget Balance (HUF): -2.261T v -2.165T prior

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) sold €7.0B vs. €7.0B indicated in 12-month Bills; Avg Yield: % v -0.192% prior; Bid-to-cover: x v 1.74x prior
• (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2022 and 2029 bonds
• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.375% Aug 2030 bonds; Avg Yield: 0.650% v 0.740% prior; bid-to-cover: 2.57x v 4.21x prior

Looking Ahead

• (UR) Ukraine Aug CPI M/M: -0.1%e v -0.6% prior; Y/Y: 2.7%e v 2.4% prior
• 05:30 (DE) Germany to sell €4.0B in 0% Aug 2030 Bunds
• 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2030 and 2045 OT bonds
• 05:30 (GR) Greece Debt Agency (PDMA) to sell 12-month Bills
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:00 (IE) Ireland Aug Unemployment Rate: No est v 5.0% prior
• 06:00 (PT) Portugal July Trade Balance: No est v -€0.8B prior
• 06:00 (ZA) South Africa Q3 BER Business Confidence: 8e v 5 prior
• 06:00 (CZ) Czech Republic to sell combined CZK5.0B in 2027 and 2030 bonds
• Sells CZK vs. CZK2.0B indicated in Floating 2027 Bonds; Avg Yield: %; bid-to-cover: x
• Sells CZK vs. CZK3.0B indicated in 0.95% 2030 Bonds; Avg Yield: % v 0,866% prior; bid-to-cover: x v 4.55x prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (RU) Russia to sell OFZ Bonds
• 07:00 (US) MBA Mortgage Applications w/e Sept 4th: No est v -2.0% prior
• 07:00 (MX) Mexico Aug CPI M/M: 0.4%e v 0.7% prior; Y/Y: 4.0%e v 3.6% prior; CPI Core M/M: 0.3%e v 0.4% prior
• 07:00 (UK) Weekly PM Question time in House
• 07:45 (US) Goldman Economist Chain Store Sales
• 08:00 (HU) Hungary Central Bank Aug Minutes
• 08:00 (BR) Brazil Aug IBGE Inflation M/M: 0.2%e v 0.4% prior; Y/Y: 2.4%e v 2.3% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:15 (CA) Canada Aug Annualized Housing Starts: 222.0Ke v 245.6K prior
• 08:55 (US) Weekly Redbook LFL Sales data
• 10:00 (US) July Jolts Job Openings: 6.00Me v 5.889M prior
• 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.25%
• 10:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Floden
• 12:00 (RU) Russia Q2 Preliminary GDP (2nd reading) Y/Y: -8.5%e v -8.5% advance
• 13:00 (US) Treasury to sell $35B in 10-Year Notes Reopening
• 16:30 (US) Weekly API Oil Inventories
• 18:45 (NZ) New Zealand Aug Retail Card Spending M/M: No est v 1.2% prior; Total Card Spending M/M: No est v 1.2% prior
• 19:01 (UK) Aug RICS House Price Balance: 25%e v 12% prior
• 19:50 (JP) Japan July Core Machine Orders M/M: +2.0%e v -7.6% prior; Y/Y: -18.1%e v -22.5% prior
• 20:30 (AU) Australia to sell 3-month and 9-month bills
• 21:00 (AU) Australia Sept Consumer Inflation Expectation Survey: No est v 3.3% prior
• 21:00 (PH) Philippines July Trade Balance: -$1.5Be v -$1.3B prior; Exports Y/Y: -10.0%e v -13.3% prior; Imports Y/Y: -20.0%e v -24.5% prior
• 22:05 (NZ) New Zealand to sell 2024, 2031 and 2037 Bonds