Notes/Observations
- Risk aversion flows reverberated over possibility of further virus lockdowns
- Publication of FinCEN Files weighing upon banking sector as it accuses the world’s largest global banks of ignoring red flags and accepted illicit funds from questionable origins
Asia:
- China President Xi stated that the domestic economy remained resilient despite external risks
- China PBoC left its 1-year and 5-year loan prime rates unchanged for September (as expected) for its 5th straight month of steady fixings)
- South Korea Sept 1-20th Exports registered its 1st positive reading in 6-months (Y/Y +3.6% v -7.0% prior; Imports Y/Y -6.8% v -12.8% prior
- Japan PM Suga affirmed the importance of a bilateral alliance with the US in his first conversation with Trump over the weekend
Europe:
- Several ECB members said to call for review of Pandemic bond buying scheme (PEPP) in March. Believed that important questions for the review would be to consider how long PEPP should continue and whether some of its extra flexibility should be transferred to the ECB’s longer running asset-purchase schemes.
- Germany’s 2.3M public servants said to be looking to strike after talks broke down for pay increase
- BOE Haldane (Chief Economist): UK economic recovery has gone further and faster than anyone expected. Sought tax boost for firms that make economy ‘faster and smarter’ and called on the Government to spearhead a tech revolution for millions of firms (Note: Haldane was writing in his capacity as chairman of the Industrial Strategy Council)
- UK Chancellor of the Exchequer Sunak (Fin Min) said to call for extension of business loans to support the domestic economy in the UK. Could extend four business support loan schemes this week to avoid a wide collapse of firms and mass job losses as Cociv-19 worsened
- Italy govt said to see 2020 GDP contraction of 9.0% with growth of 5.0% in 2021
- S&P revised outlook of Spain sovereign rating to Negative from Stable; affirms Spain sovereign rating at A
- S&P affirmed Belgium sovereign rating at AA; outlook Stable
- Canada ratings agency DBRS affirmed Portugal rating at BBB (high); Trend Stable
Americas:
- President Trump’s WeChat curbs halted by Judge on free speech concerns. California judge ruled that app allowed free-speech and was needed by the millions of Chinese-speaking Americans who rely on it
- Ruth Bader Ginsburg passed away over the weekend (2nd woman ever on the US Supreme Court); several Republicans called on Trump to allow the appointment of her replacement to fall to next elected president
- President Trump stated that he would select a nominee to replace Ginsburg “without delay” with a woman nominee
Energy:
- Libya National Oil Company (NOC) said to have lifted force majeure on secure oil ports and facilities but would remain in place for facilities where fighters remain.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -2.41% at 359.90, FTSE -3.13% at 5,818.80, DAX -2.67% at 12,766.45, CAC-40 -2.58% at 4,849.86, IBEX-35 -3.01% at 6,721.00, FTSE MIB -2.76% at 18,986.50, SMI -1.19% at 10,413.59, S&P 500 Futures -1.76%]
- Market Focal Points/Key Themes: European indices open lower across the board and deepened into the red as the session wore on; surging covid cases across Europe have renewed speculation of renewed lockdowns and sapped investor sentiment; all sectors in the red, but the least negative include utilities and health care; financials and consumer discretionary sectors lead to the downside; major banks accused of transferring illicit money for years; Roche acquires Inflazome; focus on busy economic calendar including rate decisions this week; reportedly talks breakdown in German public sector pay negotiations, Deutsche Post negotiations ongoing; Iliad to acquire Play; Verona Pharma to delist from AIM; no major earnings expected during the upcoming US session
Equities
- Consumer discretionary: Superdry [SDRY.UK] -13% (earnings), United Internet [UTDI.DE] -25% (unit lowered forecast for Op) , Informa [INF.UK] -3% (earnings)
- Financials: Deutsche Bank [DBK.DE] -6% (report on suspicious transactions)
- Telecom: Iliad [ILD.FR] -2.5% (acquisition), 1&1 Drillisch [DRI.DE] -28% (outlook cut)
Speakers
- Germany Fin Min Scholz stated that the country’s Debt to GDP likely to rise to 80% as it would take on €100B in debt in 2021. He noted that no EU member State had issues financing their debt while the ECB was currently faced with a strengthening Euro
- UK Health Min Hancock reiterated view that country was at the tipping point on the coroniavirus (response to question regarding another lockdown). PM was concerned over rise in covid cases but no final decisions had been taken on response to covid surge;. No timing for announcement on new measures
- Poland Central Bank’s Lon reiterated stance of need to keep interest rates low
- Poland Central Bank member Kochalski stated that interest rates were at an adequate level. Believed that CPI, GDP data were arguments for stable rates
Currencies/Fixed Income
- Safe haven flows aiding the JPY currency and the USD to some extent. Risk aversion sentiment reverberated over possibility of further virus lockdowns in several EU countries coupled with a publication of FinCEN Files that hammered the banking sector accusing the global banks of ignoring red flags and accepted illicit funds from questionable origins
- EUR/USD trading back below the 1.18 level. Dealers to focus on Sept Preliminary PMI data later in the week to determine whether the slowing recovery back in August was a blip or a trend
- USD/JPY tested 6-month lows as it probed the 104.00 level. JPY the main beneficiary of safe-haven flows.
- GBP/USD weaker as the rise in Covid-19 cases prompted concerns over a new national lockdown. Pair testing 1.2860 just ahead of mid-session
Economic Data
- (NL) Netherlands Aug House Price Index M/M: 0.9% v 0.9% prior; Y/Y: 8.2% v 7.4% prior
- (HU) Hungary Q2 Current Account Balance: -€0.9B v -€1.2Be
- (CH) Swiss Aug M3 Money Supply Y/Y: 4.0% v 3.8% prior
- (CH) Swiss weekly Total Sight Deposits (CHF): 703.9B v 704.1B prior; Domestic Sight Deposits: 634.7B v 635.3B prior
- (PL) Poland Aug Retail Sales M/M: -2.6% v +0.4%e; Y/Y: 0.4% v 2.4%e; Real Retail Sales Y/Y: 0.5% v 2.3%e
- (PL) Poland Aug Construction Output Y/Y: -12.1% v -7.9%e
- (TW) Taiwan Aug Export Orders Y/Y: 13.6% v 9.2%e
- (ES) Spain July Trade Balance: -€0.3B v €1.5B prior
- (HK) Hong Kong Aug CPI Composite Y/Y: -0.4% v -1.9%e
- (BE) Belgium Sept Consumer Confidence Index: -16 v -26 prior
Fixed Income Issuance
- None seen
Looking Ahead
- (BR) Brazil Sept CNI Industrial Confidence: No est v 57.0 prior
- (SK) Slovakia Debt Agency (ardal) to sell 2024, 2030 and 2047 bonds
- 05:30 (SL) Sri Lanka Aug National CPI (NCPI) Y/Y: No est v 6.1% prior
- 05:30 (DE) Germany to sell combined €8.0B in 6-month and 12-month
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.5-2.0B in 2025, 2031 and 2033 OLO bonds
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 9-month bills
- 06:00 (IL) Israel to sell 2023, 2025, 2030 and 2051 bonds (5 tranches)
- 06:00 (RO) Romania to sell RON500M in 4% Oct 2023 Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:00 (MX) Mexico Q2 Aggregate Supply and Demand: -19.0%e v -1.9% prior
- 07:00 (SE) Sweden Parliament debates on budget proposal
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:30 (CL) Chile Central Bank Traders Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Aug Chicago Fed National Activity Index: 1.18e v 1.18 prior
- 08:50 (FR) France Debt Agency (AFT) to sell €4.7-5.9B in 3-month, 6-month and 12-month bills (3 tranches)
- 09:45 (EU) ECB weekly QE bond buying update
- 12:00 (US) Fed Q2 Financial Accounts Household Change in Net Worth: No est v -$6.548T prior
- 16:00 (US) Weekly Crop Progress Report
- 17:00 (KR) South Korea Aug PPI Y/Y: No est v -0.8% prior
- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 92.4 prior
- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills
