Notes/Observations
- Focus on ECB rate decision, press conference and updated staff projections
- Concerns over a hard Brexit remains after recent UK internal market bill; UK’s Gove/EU’s Sefcovic to hold extra session of talks today
Asia:
- China said to have increase state stockpiles in Oil, Metal, and food
- Japan Defense Min Kono said to expect snap parliamentary election in Oct
Coronavirus:
- Total global cases 27,766,325 (+1.1% d/d); total deaths: 902.5K (+0.7% d/d)
- Tokyo lowered its Covid-19 alert level by one notch from highest of its 4 levels
- AstraZeneca [AZN.UK] noted that COVID-19 vaccine trials could resume during week of Sept 14th
Europe:
- UK Business secretary Sharma said the plans of the UK’s new subsidy regime for companies would not be ready till next year
- EU said to see a case for legal action versus the UK for infringement over internal markets bill
- US House Speaker Pelosi: if the UK violated an international treaty and Brexit undermines the Good Friday accord, there would be absolutely no chance of a US-UK trade agreement passing the Congress
Americas:
- US State Department said to revoke visas for more than 1,000 Chinese nationals under a May 29th presidential proclamation to suspend entry from China of students and researchers deemed security risks
- Senate Republicans confident that colleagues would vote to support a narrower coronavirus aid package, (move aimed to highlight party unity); Lawmakers increasingly pessimistic about any deal with Democrats before the election
Energy:
- Weekly API Crude Oil Inventories: +3.0M v -6.4M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.24% at 368.74, FTSE -0.75% at 5,967.55, DAX +0.04% at 13,242.30, CAC-40 -0.39% at 5,023.27, IBEX-35 -0.48% at 6,987.00, FTSE MIB -0.10% at 19,751.50, SMI -0.33% at 10,371.84, S&P 500 Futures -0.42%]
- Market Focal Points/Key Themes: European indices open mixed but later turned negative as the session wore on; better performing sectors include consumer discretionary; telecom and energy among underperforming sectors; Suez reiterated is still looking for alternatives to Veolia offer; Dufry gets investment from Advent International; AstraZeneca to transfer equity debt to Nasdaq, announces Fastnara met primary endpoins, restart of covid vaccine up to independent safety committee; Husqvarna proposes to reinstate dividend after sales increase; focus on upcoming ECB policy meeting; notable equity events in the upcoming US session include Corestate Capital CMD
Equities
- Consumer discretionary: Dixons Carphone [DC.UK] +5.5% (trading update), WM Morrison Supermarkets [MRW.UK] -4.5% (trading update)
- Industrials: Schaeffler [SHA.DE] +1% (analyst action)
- Healthcare: AstraZeneca [AZN.UK] +1% (CEO interview; US listing)
- Materials: Akzo Nobel [AKZA.NL] +3.5% (trading update)
Speakers
- ECB’s Knot (Netherlands): Recent data had solidified confidence in baseline staff projections
- Ireland PM Martin stated that had made clear out opposition to UK move on Withdrawal Agreement and its implications. Not optimistic about reaching a Brexit trade deal at this stage and need to prepare for a ahrd outcome. Noted that UK PM Johnson understood the difficulty his move had caused and stated that UK to meet its obligations
- Italy Economy Min Galtieri: July industrial production data encouraging, created basis for double digit GDP annual growth in Q3
- German DIW Institute raised its German 2020 GDP forecast from -9,4% to -6.0% and 2021 GDP growth from 3.0% to 4.1%
- Russia Central Bank Zabotkin (Monetary Policy Chief): 2020 economic contraction might not be as bad as forecasted
- Hungary Central Bank Dep Gov Virag reiterates stance of no need to lower Base Rate as current level appropriate
- Hungary Finance Ministry said to forecast 2020 GDP at -5.1%
- Israel Central Bank Gov Yaron stated that the Govt needed to approve 2021 budget; move would aid market confidence
- Malaysia Central Bank Policy Statement noted that its current stance of monetary policy was seen as appropriate and was committed to using policy levers to ensure recovery. Growth outlook remained subject to downside risks with the pace of recovery seen as uneven. Average headline inflation likely negative in 2020 but to average higher in 2021
- China Commerce Ministry (MOFCOM) spokesperson Gao Feng reiterated stance that continued to face complex and severe situation in foreign trade
Currencies/Fixed Income
- EUR/USD was higher by 0.3% at 1.1820 area ahead of the ECB rate decision. ECB is expected to reaffirm its stance towards an ultra-accommodative monetary policy and to prepare the ground for further easing measures in coming months in order to lift inflation. Reports recently circulated that ECB internal forecasts showed more confidence in the economic outlook and reduced market expectations for a dovish ECB meeting later today.
- GBP/USD back above the 1.30 level as EU weighed various measures to enforce the UK to abide by the Withdrawal Agreement.
Economic Data
- (FI) Finland July Industrial Production M/M: +0.9% v -0.9% prior; Y/Y: -6.1% v -7.2% prior
- (NO) Norway Aug CPI M/M: -0.4% v -0.5%e; Y/Y: 1.7% v 1.6%e
- (NO) Norway Aug CPI Underlying M/M: -0.4% v -0.7%e; Y/Y: 3.7% v 3.4%e
- (NO) Norway Aug PPI (including Oil) M/M: 1.2% v 0.0% prior; Y/Y: -12.1% v -13.3% prior
- (RO) Romania Aug CPI M/M: -0.1% v 0.0%e; Y/Y: 2.7% v 2.8%e
- (DK) Denmark Aug CPI M/M: -0.4% v +0.8% prior; Y/Y: 0.5% v 0.6%e
- (DK) Denmark Aug CPI EU Harmonized M/M: -0.4% v +0.9% prior; Y/Y: 0.4% v 0.4% prior
- (FR) France July Industrial Production M/M: 3.8% v 5.0%e; Y/Y: -8.3% v -8.0%e
- (FR) France July Manufacturing Production M/M: 4.5% v 3.5%e; Y/Y: -8.5% v -9.7%e
- (MY) Malaysia Central Bank (BNM) left Overnight Policy Rate unchanged at 1.75% (as expected)
- (CZ) Czech Aug CPI M/M: 0.0% v 0.0%e; Y/Y: 3.3% v 3.3%e
- (CZ) Czech July Export Price Index Y/Y: 1.2% v 2.0% prior; Import Price Index Y/Y: -1.4% v -1.5% prior
- (TR) Turkey Jun Unemployment Rate: 13.4% v 12.9% prior
- (SE) Sweden Aug CPI M/M: -0.1% v -0.1%e; Y/Y: 0.8% v 0.8%e; CPI Level: 337.07 v 337.23e
- (SE) Sweden Aug CPIF M/M: -0.1% v 0.0%e; Y/Y: 0.7% v 0.7%e
- (SE) Sweden Aug CPIF (ex-energy) M/M: -0.5% v -0.4%e; Y/Y: 1.4% v 1.5%e
- (SE) Sweden July Household Consumption M/M: 3.0% v 3.8% prior; Y/Y: -3.7% v -6.6% prior
- (IT) Italy July Industrial Production M/M: 7.4% v 3.5%e; Y/Y: -8.0% v -9.8%e; Industrial Production NSA (unadj) Y/Y: -8.0% v -11.2% prior
- (GR) Greece Aug CPI Y/Y: -1.9% v -1.8% prior; CPI EU Harmonized Y/Y: -2.3% v -2.1% -prior
- (ZA) South Africa Q2 Current Account Balance (ZAR): -104B v +3Be; Current Account to GDP Ratio: -2.4% v -0.4%e
Fixed Income Issuance
- (IT) Italy Debt Agency (Tesoro) sold total €6.5B vs. €5.25-6.25B indicated range in 3-year and 7-year BTP bonds
- Sold €3.25B vs. €2.75-3.25B indicated range in 0.30% Aug 2023 BTP bonds; Avg Yield: 0.07% v 0.08% prior; Bid-to-cover: 1.54x v 1.63x prior
- Sold €3.0B vs. €2.5-3.0B indicated range in 0.95% Sept 2027 BTP; Avg Yield: 0.75% v 0.72% prior; Bid-to-cover: 1.47x v 1.43x prior
- (UK) DMO sold £3.25B in in 0.125% Jan 2023 Gilts; Avg Yield: -0.061% v -0.025% prior; Bid-to-cover: 2.49x v 2.59x prior; Tail: 0.4bps v 0.2bps prior
- (IE) Ireland Debt Agency (NTMA) sold toal €1.25B vs. €1.0-1.5B indicated range in 2031 and 2050 IGB bonds
Looking Ahead
- 05:30 (ZA) South Africa July Total Mining Production M/M: 1.1%e v 1.4% prior; Y/Y: -19.8%e v -28.2% prior; Platinum Production Y/Y: No est v -42.5% prior; Gold Production Y/Y: No est v -17.0% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
- 06:00 (IE) Ireland Aug CPI M/M: No est v -0.2% prior; Y/Y: No est v -0.4% prior
- 06:00 (IE) Ireland Aug CPI EU Harmonized M/M: No est v -0.2% prior; Y/Y: No est v -0.6% prior
- 06:00 (PT) Portugal Aug Final CPI M/M: No est v -0.2% prelim; Y/Y: No est v 0.0% prelim
- 06:00 (PT) Portugal Aug Final CPI EU Harmonized M/M: No est v -0.2% prelim; Y/Y: No est v -0.2% prelim
- 06:00 (IL) Israel Aug Consumer Confidence: No est v 35 prior
- 06:00 (RO) Romania to sell RON500M in 3.4% 2022 Bonds; Avg Yield: %; Bid-to-cover: x
- 06:30 (UK) DMO to sell £2.0B in 0.625% 2050 Oct Gilts
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Sept IGP-M Inflation (1st Preview): 2.1%e v 1.5% prior
- 07:00 (ZA) South Africa July Manufacturing Production M/M: 3.8%e v 16.8% prior; Y/Y: -13.8%e v -16.3% prior
- 07:00 (CZ) Czech Central Bank to comment on CPI data
- 07:30 (CL) Chile Central Bank Economists Survey
- 07:45 (EU) ECB Interest Rate Decision; Expected to leave Main Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate unchanged at -0.50%
- 08:00 (BR) Brazil July Retail Sales M/M: 1.2%e v 8.0% prior; Y/Y: 2.3%e v 0.5% prior
- 08:00 (BR) Brazil July Broad Retail Sales M/M: 5.7%e v 12.6% prior; Y/Y: +1.8%e v -0.9% prior
- 08:00 (BR) Brazil CONAB Crop Report
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Aug PPI Final Demand M/M: 0.2%e v 0.6% prior; Y/Y: -0.3%e v -0.4% prior
- 08:30 (US) Aug PPI (ex-food/energy) M/M: 0.2%e v 0.5% prior; Y/Y: 0.3%e v 0.3% prior
- 08:30 (US) Aug PPI (ex-food/energy/trade) M/M: 0.2%e v 0.3% prior; Y/Y: 0.2%e v 0.1% prior
- 08:30 (US) Initial Jobless Claims: 850Ke v 881K prior; Continuing Claims: 12.90Me v 13.254M prior
- 08:30 (EU) ECB chief Lagarde post rate decision press conference
- 09:00 (RU) Russia Gold and Forex Reserve w/e Sept 4th: No est v $591.8B prior
- 10:00 (US) July Final Wholesale Inventories M/M: -0.1%e v -0.1% prelim; Wholesale Trade Sales M/M: No est v 8.8% prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Weekly DOE Crude Oil Inventories
- 12:00 (CA) Canada to sell 0.25% 2022 Bonds
- 12:30 (CA) Bank of Canada (BOC) Macklem Economic Progress Report
- 13:00 (EU) ECB chief Lagarde at Bundesbank Event
- 13:00 (US) Treasury to sell $23B in 30-Year Bonds Reopening
- 15:00 (AR) Argentina July Capacity Utilization: No est v 53.3% prior
- 18:30 (NZ) New Zealand Aug Business Manufacturing PMI: No est v 58.8 prior
- 18:45 (NZ) New Zealand Aug Food Prices M/M: No est v 1.2% prior
- 19:00 (PE) Peru Central Bank (BCRP) Interest Rsate Decision: Expected to leave Reference Rate unchanged at 0.25%
- 19:50 (JP) Japan Aug PPI M/M: 0.2%e v 0.6% prior; Y/Y: -0.5%e v -0.9% prior
- 19:50 (JP) Japan Q3 BSI Large All Industry Q/Q: -40.0e v -47.6 prior; Large Manufacturing Q/Q: No est v -52.3 prior
- 21:10 (JP) BOJ Outright Bond Purchase Operation in 1~3 Years; 3~5 Years and 5~10 Years maturities
- 22:35 (CN) China to sell CNY55B in 30-Yr Bonds
- 23:00 (KR) South Korea July M2 Money Supply M/M: No est v 0.8% prior; “L” Money Supply M/M: No est v 0.6% prior
- 23:00 (KR) South Korea Aug Total Bank Lending To Households (KRW): No est v 936.5T prior
- 23:00 (CN) China to sell 3-month Bills
- 23:30 (JP) Japan to sell 3-Month Bills
