Notes/Observations
- UK CPI hits a 4-year low ahead of Thursday’s BOE rate decision
- Focus on upcoming FOMC rate decision later today
Asia:
- Japan Lower House formally elected Yoshihide Suga (LDP party leader) as its new PM (as expected)
- Japan Aug Trade Balance registered a larger surplus (+¥248.3B v -¥37.5Be) Exports to China +5.1% y/y
- China PBOC sets Yuan reference rate at its strongest level since May 9th, 2019 (6.7825 v 6.8222 prior)
Europe:
- UK PM Johnson said to have signaled a potential compromise with Tory rebels on Brexit Internal Markets bill. Compromise possible after a minister suggested parts of Internal Markets bill could be rewritten
- UK govt said to have floated tentative compromise ideas on fisheries at EU trade talks last week, but they were rejected by France. EU diplomatic said that fisheries, animal checks, a level playing field and governance issues could all be resolved if there was a ‘political green light’
- Chancellor of the Exchequer Sunak (Fin Min) Sunnak stated that will ‘find ways of effectively helping people’ after job support scheme draws to a close at the end of October.
Americas:
- WTO ruled that US tariffs on China violated trade rules; recommended US to bring its measures into conformity. US Trade Rep Lighthizer noted that the WTO decision had no effect on US-China ‘Phase 1’ trade agreement
- USTR stated that US to resume duty free treatment of unwrought aluminum from Canada retrospective to Sept 1st, lifting 10% tariff. To drop the 10% tariff as long as Canadian aluminum imports decline through year end. Canada to drop threat to impose retaliatory sanctions against US aluminum after US removes tariffs
- Bridgewater Associates (Dalio) said to believe USD decades-long position as the global reserve currency is in jeopardy
Energy:
- Weekly API Crude Oil Inventories: -9.5M v +3.0M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.30% at 372.08, FTSE -0.04% at 6,102.85, DAX +0.12% at 13,233.90, CAC-40 +0.10% at 5,073.22, IBEX-35 +0.27% at 7,055.00, FTSE MIB +0.01% at 19,959.50, SMI +0.05% at 10,525.00, S&P 500 Futures +0.42%]
- Market Focal Points/Key Themes: European indices open mixed moving to trade modestly higher; better performing sectors include technology and consumer discretionary; utilities and financials sectors among underperformers; reportedly CNP likely to join bid for Suez; focus on upcoming results of FOMC meeting later today; earnings expected in the upcoming US session include Medtronic
Equities
- Consumer discretionary: Inditex [ITX.ES] +6% (earnings), Galliford Try [GFRD.UK] +9% (earnings), Lufthansa [LHA.DE] -2% (job cuts), Redrow [RDW.UK] -2% (earnings)
- Healthcare: Merck KGaA [MRK.DE] +1% (CMD)
- Industrials: Electrolux [ELUXB.SE] +2% (COO)
Speakers
- ECB’s Visco (Italy): Economic developments confirmed view that Italy 2020 GDP to be a contraction of less than 10% with recovery to be gradual afterwards
- Finland Fin Min Vanhanen: 2021 fiscal policy will be expansionary
- EU Parliament said to warn Turkey of possibility of more sanctions
- Bank of Spain (BOS) updated its economic outlook which revised its 2020 GDP from -11.6% to range between -12.6% to -10.5% range (depends on severity of pandemic) and cut its 2021 GDP growth forecast from 9.1% to 4.1-7.3% range
- Czech Central Bank Dep Gov Netzky: stated that saw Repo Rate holding steady for at least a year; views recent higher inflation as temporary
- OECD interim economic outlook report which raised 2020 global GDP from -6.0% to -4.5% and raised its 2021 global GDP from 4.8% to +5.0%
- RBI Gov Das noted that indicators were showing some stabilization of economy but recovery was not fully entrenched and likely to be gradual
- Japan PM Suga: announces Cabinet positions (**Note: no major changes from prior govt). maintained Aso as Fin Min and appointed Kato as Chief Cabinet Sec (position open as Suga elevated to PM)
- OPEC+ delegate noted that the OPEC+ preliminary Aug production cut compliance was seen at 101%
Currencies/Fixed Income
- USD remained on soft footing in quiet trading. Focus was FOMC decision and analysts noted that the rhetoric would likely keep the greenback on its downward path and support risk assets. looking for the Fed to indicates “looser policy for longer”
- EUR/USD at 1.1875 by mid-session
- USD/JPY drifting to the lower end of the 105 level where a slew of option barriers are in play.
Economic Data
- (UK) Aug CPI M/M: -0.4% v -0.6%e; Y/Y: 0.2% v 0.0%e; CPI Core Y/Y: 0.9% v 0.5%e; CPIH Y/Y: 0.5% v 0.3%e
- (UK) Aug RPI M/M: -0.3% v -0.3%e; Y/Y: 0.5% v 0.6%e; RPI-X (ex-mortgages interest payments Y/Y: 0.8% v 0.9%e; Retail Price Index: 293.3 v 293.5e
- (UK) Aug PPI Input M/M: -0.4% v +0.2%e; Y/Y: -5.8% v -5.3%e
- (UK) Aug PPI Output M/M: 0.0% v 0.2%e; Y/Y: -0.9% v -0.7%e
- (UK) Aug PPI Output Core M/M: 0.1% v 0.1%e; Y/Y: 0.0% v 0.0%e
- (CZ) Czech Aug PPI Industrial M/M: -0.4% v +0.1%e; Y/Y: -0.5% v -0.1%e
- (UK) July ONS House Price Index Y/Y: 3.4% v 1.1% prior
- (EU) Euro Zone July Trade Balance (seasonally adj): €B v €19.3Be; Trade Balance NSA (unadj): €B v €21.2B prior
Fixed Income Issuance
- (IN) India sold total INR350B vs. INR350B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK5.79B in 2029 and 2052 DBG bonds
- (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 6-month and 9-month Bills
- (UK) DMO sold £2.5B in 0.375% Oct 2030 Gilts; Avg Yield: 0.263% v 0.323% prior; bid-to-cover: 2.96x v 2.68x prior; Tail: 0.2bps v 0.2bps prior
Looking Ahead
- 05:30 (DE) Germany to sell €1.5B in 1.25% Aug 2048 Bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.5-1.75B in 6-month and 12-month bills
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:00 (IE) Ireland July Property Prices M/M: No est v 0.3% prior; Y/Y: No est v 0.1% prior
- 06:00 (IL) Israel Q2 Preliminary GDP Annualized (2nd reading): No est v -28.7% advance
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia to sell OFZ Bonds
- 07:00 (US) MBA Mortgage Applications w/e Sept 11th: No est v 2.9% prior
- 07:00 (ZA) South Africa July Retail Sales M/M: 3.3%e v 6.4% prior; Y/Y: -5.0%e v -7.5% prior
- 07:00 (BR) Brazil Sept FGV Inflation IGP-10 M/M: 4.2%e v 2.5% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:30 (CL) Chile Central Bank (BCCh): Sept Minutes
- 08:00 (PL) Poland Aug CPI Core M/M: 0.0%e v 0.2% prior; Y/Y: 4.1%e v 4.3% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Aug Advance Retail Sales M/M: 1.0%e v 1.2% prior; Retail Sales (ex-auto) M/M: 1.0%e v 1.9% prior; Retail Sales (ex-auto/gas): 0.9%e v 1.5% prior; Retail Sales (Control Group): 0.3%e v 1.4% prior
- 08:30 (CA) Canada Aug CPI M/M: 0.1%e v 0.0% prior; Y/Y: 0.4%e v 0.1% prior; Consumer Price Index: 137.3e v 137.2 prior
- 08:30 (CA) Canada July Int’l Securities Transactions (CAD): No est v -13.5B prior
- 10:00 (US) July Business Inventories: +0.1%e v-1.1% prior
- 10:00 (US) Sept NAHB Housing Market Index: 78e v 78 prior
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (AT) ECB’s Holzmann (Austria)
- 12:00 (RU) Russia Aug PPI M/M: 1.4%e v 4.3% prior; Y/Y: +0.3%e v -2.2% prior
- 14:00 (US) FOMC Interest Rate Decision: Expected to leave Target Range unchanged between 0.00-0.25%; Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at 0.10%
- 14:30 (US) Fed Chair Powell post rate decision press conference
- 15:00 (AR) Argentina Aug National CPI M/M: 2.8%e v 1.9% prior; Y/Y: 40.8%e v 42.4% prior
- 16:00 (US) July Net Long-term TIC Flows: No est v $113.0B prior; Total Net TIC Flows: No est v -$67.9B prior
- 17:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Rate Target unchanged at 2.00%
- 18:45 (NZ) New Zealand Q2 GDP Q/Q: -12.5%e v -1.6% prior; Y/Y: -12.8%e v -0.2% prior
- 20:30 (SG) Singapore Aug Non-oil Domestic Exports M/M: 2.2%e v 1.2% prior; Y/Y: 3.3%e v 6.0% prior; Electronic Exports Y/Y: No est v 2.8% prior
- 21:00 (CN) China Aug Swift Global Payments (CNY): No est v 1.9% prior
- 21:30 (AU) RBA Quarterly Bulletin
- 21:30 (AU) Australia Aug Employment Change: -35.0Ke v +114.7K prior; Unemployment Rate: 7.7%e v 7.5% prior
- 22:05 (NZ) New Zealand to sell 2023, 2029 and 2033 bonds
- 23:00 (NZ) New Zealand Aug Non Resident Bond Holdings: no est v 51.6% prior
- (JP) BOJ Interest Rate and Policy Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintain 10-Year Yield Target at 0.00%
