German CPI Highlights The ECB Concern On Euro Strength

Notes/Observations

• Optimism over the latest round of Brexit talks between the UK and EU
• China Q2 PBoC Survey showed Chinese households took a more positive view of their incomes
• Focus on first US presidential debate (Tuesday evening in the US)

Asia:

• BOJ Summary of Opinions from Sept 16-17th policy meeting: Monetary easing measures since March had positive effects; Desirable to continue with monetary easing via 3 measures
• World Bank raised its China 2020 GDP growth forecast from 1.0% to 2.0% (Reminder: on Jun 24th IMF updated its World Economic Forum and cut China GDP growth forecast from 1.2% to 1.0%)
• China Cabinet Adviser Yao noted that the CNY currency (Yuan) appreciation could weaken the country’s export competitiveness. FX reserves would not rise as fast as before, foreign trade would be more balanced
• China said to have had bought less than one-third of the US exports under the phase-1 trade agreement through August

Europe:

• EU said to be prepared to work on legal agreement text of a trade agreement with the UK in Brexit. EU was understood to have dropped its demand for the two sides to reach a broad agreement on all the outstanding areas of dispute before drafting a final agreement
• EU Parliament testimony ECB chief Lagarde noted that Euro Zone deflation would persist in coming months

Americas:

• House released another Covid-19 package that would restore $600 weekly jobless benefits as well as money for restaurants, airlines, childcare centers. The new bill also includes another round of direct checks of $1200 per taxpayer and $500 per dependent.

Energy:

• G20 Energy Ministers Statement recognized actions by producers and consumers to stabilize market; Reaffirmed commitment to ensure energy sector continued to make a full and effective contribution to overcoming virus

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.41% at 361.92, FTSE -0.86% at 5,877.07, DAX -0.66% at 12,785.55, CAC-40 -0.46% at 4,821.06, IBEX-35 -0.40% at 6,764.00, FTSE MIB +0.04% at 19,167.50, SMI -0.33% at 10,275.00, S&P 500 Futures -0.15%]
• Market Focal Points/Key Themes: European indices open modestly lower across the board, falling deeper in the red later in the session; better performing sectors include energy and utilities; financials and real estate sectors among worse performers; Altia announces merger with Arcus; reportely OHL reaches agreement with creditors to lower debt; Italina government looking at Autostrade spinoff; earnings expected in the upcoming US session include McCormick, Micron Technologies and Synnex

Equities

• Consumer discretionary: Altia [ALTIA.FI] +13% (merger), Greggs plc [GRG.UK] -2% (trading update), ScS Group [SCS.UK] -5% (earnings)
• Energy: Cairn Energy [CNE.UK] -3% (earnings)
• Industrials: Ferguson [FERG.UK] +5% (earnings; new CFO)
• Technology: Card Factory plc [CARD.UK] +1% (earnings), SLM Solutions [AM3D.DE] +18% (analyst upgrade

Speakers

• Germany Fin Min Scholz stated that Germany’s debt ratio would rise to ~75% of GDP. Ratio was lower compared to the financial crisis a decade ago (**Note: on Sept 23rd, German Fin Min Scholz stated that the govt sought to keep debt to GDP ratio under 80%)
• Sweden Central Bank (Riksbank) Gov Ingves stated that fiscal policy to be important in 2021 and beyond
• Turkey Finance Ministry updated its economic outlook which cut the 2020 GDP growth forecast from 5.0% to 0.3%. Saw end-2020 CPI at 10.5% and end-2021 CPI at 8.0%

Currencies/Fixed Income

• USD was slightly weaker in the session.
• Optimism over the latest round of trade deal talks between the U.K. and EU helped to keep the GBP on firmer footing. EU’s chief Brexit negotiators have indicated they are prepared to start writing a joint legal text of a trade agreement with the U.K. before resuming talks. GBP/USD higher by 0.3% to reapproach the 1.29 area
• German CPI highlights the ECB concern on Euro strength but the EUR/USD was slightly higher and just under the 1.17 level. The trading range currently seen between 1.15 to 1.20

Economic Data

• (FI) Finland Aug House Price Index M/M: -1.1% v 0.9% prior; Y/Y: 0.1% v 0.9% prior
• (FR) France Sept Consumer Confidence Index: 95 v 93e
• (SE) Sweden Sept Consumer Confidence Index: 88.3 v 85.1 prior; Manufacturing Confidence: 105.8 v 98.9 prior; Economic Tendency Survey: 94.5 v 87.6 prior (5th month of improvement and back above pre-pandemic levels)
• (DE) Germany Sept CPI Saxony M/M: -0.1% v -0.3% prior; Y/Y: 0.1% v 0.1% prior
• (ES) Spain Sept Preliminary CPI M/M: 0.2% v 0.0%e; Y/Y: -0.4% v -0.5%e
• (ES) Spain Sept Preliminary CPI EU Harmonized M/M: 0.0% v 0.5%e; Y/Y: -0.6% v -0.5%
• (ES) Spain Aug Adjusted Retail Sales Y/Y: -2.4% v -3.9%e; Retail Sales (unadj): Y/Y: -4.6% v -3.1%e
• (TR) Turkey Sept Economic Confidence: 88.5 v 85.9 prior
• (HU) Hungary Aug Unemployment Rate: 4.6% v 4.9%e
• (DE) Germany Sept CPI Baden Wuerttemberg M/M: -0.2% v -0.2% prior; Y/Y: 0.0% v 0.3% prior
• (DE) Germany Sept CPI Hesse M/M: -0.2% v -0.3% prior; Y/Y: -0.5% v -0.3% prior
• (DE) Germany Sept CPI Bavaria M/M: -0.3% v 0.0% prior; Y/Y: -0.2% v +0.1% prior
• (IT) Italy Aug PPIM/M: 0.1% v 1.3% prior; Y/Y: -4.0% v -4.5% prior
• (CN) China PBoC Q3 Business Climate Index: 49.4% v 42.8% prior
• (UK) Aug Net Consumer Credit: £0.3B v £1.5Ber; Net Lending: £3.1B v £3.8Be
• (UK) Aug Mortgage Approvals: 84.7K v 71.3Ke
• (UK) Aug M4 Money Supply M/M: -0.4% v +0.8% prior; Y/Y: 12.1% v 13.4% prior; M4 Ex IOFCs 3M Annualized: 12.1% v 17.4% prior
• (DE) Germany Sept CPI North Rhine Westphalia M/M: -0.2% v 0.0% prior; Y/Y: -0.3% v -0.2% prior
• (PT) Portugal Sept Consumer Confidence Index: -26.3 v -26.0 prior; Economic Climate Indicator: -0.5 v -1.3prior
• (EU) Euro Zone Sept Economic Confidence: 91.1 v 89.0e; Industrial Confidence: -11.1 v -10.0e; Services Confidence: -11.1 v -16.8e; Consumer Confidence (final reading): -13.9 v -13.9 advance reading
• (IS) Iceland Sept CPI M/M: 0.4% v 0.5% prior; Y/Y: 3.5% v 3.2% prior

Fixed Income Issuance

• (DK) Denmark sold total DKK3.28B in 3-month, 6-month, 9-month and 12-month Bills
• (ID) Indonesia sold total IDR6.4T vs. IDR10.0T target in Islamic bonds (Sukuk)
• (IT) Italy Debt Agency (Tesoro) sold total €7.0B vs. €6.0-7.0B indicated range in 5-year and 10-year BTP Bonds
• Sold €2.5B vs. €2.0-2.5B indicated range in 0.50% Feb 2026 BTP bonds; Avg Yield: 0.35% v 0.58% prior; Bid-to-cover: 1.59x v 1.34x prior
• Sold €4.5B vs. €4.0-4.5B indicated range in 0.90% Apr 2-31 BTP; Avg Yield: 0.89% v 1.11% prior; bid-to-cover: 1.27x v 1.35x prior
• (IT) Italy Debt Agency (Tesoro) sold €1.25B vs. €0.75-1.25B indicated range in Feb 2024 CCTeu (floating rate Notes); Avg Yield: 0.11% v 0.45% prior; bid-to-cover: 2.37x v 1.68x prior
• (UK) DMO sold £2.75B in 0.125% Jan 2028 Gilts; Avg Yield: 0.086% v 0.125% prior; Bid-to-cover: 3.22x v 2.11x prior; Tail: 0.1bps v 0.4bps prior
• (CH) Switzerland sold CHF787.8M in 3-month Bills; Avg Yield: -0.755% v -0.746% prior
• (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2026, 2030 and 2037 bonds

Looking Ahead

• (BE) Belgium Sept CPI M/M: No est v 0.1% prior; Y/Y: No est v 0.8% prior
• (BR) Brazil Aug Central Govt Budget Balance (BRL): No est v -87.8B prior
• (BR) Brazil Aug Total Formal Job Creation: No est v +131.0K prior
• 05:30 (ZA) South Africa Q2 Unemployment Rate: 34.8%e v 30.1% 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)
• 06:00 (FI) Finland to sell €1.0B in 0.125% April 2036 RFGB bonds
• 06:00 (IL) Israel to sell 2023, 2025, 2029, 2030 and 2037 bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
• 07:00 (BR) Brazil Sept FGV Inflation IGPM M/M: 4.5%e v 2.7% prior; Y/Y: 18.1%e v 13.0% prior
• 07:45 (US) Goldman Economist Chain Store Sales
• 08:00 (BR) Brazil Aug PPI Manufacturing M/M: No est v 2.7% prior; Y/Y: No est v 10.8% prior
• 08:00 (DE) Germany Sept Preliminary CPI M/M: 0.0%e v -0.1% prior; Y/Y: 0.0%e v 0.0% prior
• 08:00 (DE) Germany Sept Preliminary CPI EU Harmonized M/M: -0.1%e v -0.2% prior; Y/Y: -0.1%e v -0.1% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:25 (US) Fed’s Williams on Libor
• 08:30 (US) Aug Advance Goods Trade Balance: -$81.8Be v -$79.3B prior
• 08:30 (US) Aug Preliminary Wholesale Inventories M/M: -0.1%e v -0.3% prior; Retail Inventories M/M: No est v 1.2% prior
• 08:30 (CA) Canada Aug Industrial Product Price M/M: No est v 0.7% prior; Raw Materials Price Index M/M: no est v 3.0% prior
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (US) July S&P/Case-shiller House Price Index (20-City) M/M: 0.10%e v 0.00% prior; Y/Y: 3.60%e v 3.46% prior; House Price Index (HPI): No est v 225.13 prior
• 09:00 (US) July S&P/Case-shiller House Price Index (overall) Y/Y: No est v 4.29% prior; HPI: No est v 219.82prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:15 (US) Fed’s Williams at conference
• 09:30 (US) Fed’s Harker
• 10:00 (US) Sept Consumer Confidence Index: 90.0e v 84.8 prior
• 10:00 (MX) Mexico Weekly International Reserves data
• 11:40 (US) Fed’s Clarida on panel
• 13:00 (US) Fed’s Williams participates in foreside chat
• 13:00 (US) Fed’s Quarles on panel
• 15:00 (AR) Argentina Q2 Current Account Balance: No est v -$0.4B prior
• 15:00 (US) Fed’s Quarles webinar
• 16:30 (US) Weekly API Oil Inventories
• 17:45 (NZ) New Zealand Aug Building Permits M/M: No est v -4.5% prior
• 19:01 (US) Sept GfK Consumer Confidence: No est v -27 prior
• 19:01 (UK) Sept Lloyds Business Barometer: No est v -14 prior
• 19:01 (UK) Sept BRC Shop Price Index Y/Y: -1.4%e v -1.6% prior
• 19:50 (JP) Japan Aug Preliminary Industrial Production M/M: 1.4%e v 8.7% prior; Y/Y: -13.4%e v 15.5% prior
• 19:50 (JP) Japan Aug Retail Sales M/M: +2.0%e v -3.4% prior (revised from -3.3%); Y/Y: -3.1%e v -2.% prior (revised from -2.8)
• 19:50 (JP) Japan Aug Dept. Store, Supermarket Sales Y/Y: -4.5%e v -4.2% prior
• 20:00 (NZ) New Zealand Sept Final Business Confidence: No est v -26.0 prelim; Activity Outlook: No est v -9.9 prelim
• 21:00 (CN) China Sept Manufacturing PMI: 51.3e v 51.0 prior; Non-manufacturing PMI: 54.7e v 55.2 prior; Composite PMI: No est v 54.5 prior
• 21:10 (JP) BOJ Outright Bond Purchase Operation in 3~5 Years maturities
• 21:30 (AU) Australia Aug Building Approvals M/M: 0.0%e v 12.0% prior
• 21:30 (AU) Australia Aug Private Sector Credit M/M: -0.1%e v -0.1% prior; Y/Y: 2.1%e v 2.4% prior
• 21:45 (CN) China Sept Caixin PMI Manufacturing: 53.1e v 53.1 prior
• 22:00 (SG) Singapore Aug M2 Money Supply Y/Y: No est v 12.2% prior; M1 Money Supply Y/Y: No est v 28.1% prior
• 23:30 (TH) Thailand Aug ISIC Manufacturing Production Index Y/Y: -10.9%e v -14.7% prior; Capacity Utilization: No est v 56.01 prior
• (US) First Presidential debate (South Bend, IN)