Notes/Observations
Jackson Hole surprises not expected but markets still await policy statements from Yellen, Draghi
German Ifo business falls less than expected in August
Overnight
Asia:
Japan July National CPI saw the core rate register its 7th straight positive reading and its largest rise since Mar 2015. ( CPI Y/Y: 0.4% v 0.4%e; CPI Ex Fresh Food (core) Y/Y: 0.5% v 0.5%e; CPI Ex Fresh Food/Energy (core-core) Y/Y: 0.1% v 0.1%)
Europe:
France July Net Change in Jobseekers: +34.9K v -17.5Ke
Germany Fin Min Schaeuble reiterated view that believes that ECB did not overstep its mandate but also reiterated stance that ECB should tighten policy sooner rather than later
Americas:
White House spokesperson: President Trump relationship with Republican congressional leaders is fine; there are policy differences but shared goals
Fed’s Kaplan (moderate, voter): Has not lost faith inflation will get back to 2%; Does not favor raising 2% inflation target
Economic data
(DE) Germany Q2 Final GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.1% v 2.1%e; GDP NSA Y/Y: 0.8% v 0.8%e
(DE) Germany Q2 Private Consumption Q/Q: 0.8% v 0.7%e, Government Spending Q/Q: 0.6% v 0.6%e, Capital Investment Q/Q: 1.0% v 1.1%e, Construction Investment Q/Q: 0.9% v 1.6%e, Domestic Demand Q/Q: 1.0% v 1.0%e, Exports Q/Q: 0.7% v 1.2%e, Imports Q/Q: 1.7% v 2.0%e
(DE) Germany July Import Price Index M/M: -0.4% v 0.0%e, Y/Y: 1.9% v 2.3%e
(FR) France Aug Consumer Confidence: 103 v 103e
(DE) Germany Aug IFO Business Climate: 115.9 v 115.5e; Current Assessment: 124.6 v 125.0e, Expectation Survey: 107.9 v 106.8e
Fixed Income Issuance:
(ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in I/L 2025, 2029 and 2046 bond
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.2% at 375.1, FTSE +0.2% at 7425, DAX +0.2% at 12201, CAC-40 flat at 5114, IBEX-35 +0.1% at 10368, FTSE MIB flat at 21730, SMI -0.2% at 8925, S&P 500 Futures flat]
Market Focal Points/Key Themes:
European Indices trade higher in narrow trade with the markets awaiting policy statements from Yellen and Draghi. Supermarket stocks are under pressure on the back of reports that Amazon are looking to lower prices at Wholefoods to gain market share. Ahold Delhaize trades lower by over 4% with Carrefour down over 2% as the sector weighs. Else where Computacenter rises sharply after raising forecasts once again, and Provident Financial trades over 20% higher after providing an update on its consumer credit division.
Equities
Consumer discretionary [ Ahold Delhaize [AD.NL] -4.0%, Tesco [TSCO.UK] -1.8%, Sainsbury’s [SBRY.UK] -1.1%, Carrefour [CA.FR] -2.3%, Casino [CO.FR] -1.5% (Amazon to lower prices at Whole foods to gain market share)]
Industrials: [WYG [WYG.UK] -40% (Trading update)]
Financials: [Provident Financial [PFG.UK] +22% (Consumer credit division update), Augean [AUG.UK] -50% (Notice of Assessment for Landfill Tax from Her Majesty’s Revenue and Customs)]
Technology: [Computacenter [CCC.UK] +15% (Earnings)]
Speakers
UK Foreign Sec Johnson stated that would meet obligations on Brexit bil; to pay not a penny more or less than legally obligated
France Fin Min le Maire: Domestic economy remains too fragile; latest jobless data shows that more work needs to be down
German IFO Economists noted that there was no overheating of domestic economy; German businesses were getting used to Trump politics. Business climate index remained at a very high level. It added that auto industry, antitrust allegation, and the diesel affair had, no noticeable effects in the survey
US National Economic Council Dir Cohn: Trump to push for tax reform passage by end 2017; President to launch major push next week with speech in Missouri
NATO Sec Gen Stoltenberg: Urges Russia to be transparent in its exercises and abide by international agreements
S&P Affirms Hong Kong Sovereign rating at AAA; Outlook remains negative
Currencies
FX markets quiet ahead of the key speeches at Jackson Hole later today. Analysts are not expecting any surprises by either Fed’s Yellen or ECB’s Draghi. Dealers noted that Draghi was more likely to say something about Europe’s single currency than the ECB’s €60B/month bond purchase program
The recent uptick in US bond yields were supporting the greenback. EUR/USD just under the 1.18 level, GBP/USD at 1.2810 and USD/JPY at 109.65
Fixed Income
Bund futures trades at 164.44 down 24 ticks as euro zone fixed income markets remain in narrow ranges ahead of Jackson Hole Meeting. Downside targets 163.50 followed by 162.56. To the upside the 164.50 to 165.20 remains key resistance.
Gilt futures trades at 127.85 down 27 ticks after easing off the 128.14 high from Thursday. A resumption to the upside could eye 128.25 then 128.75. A move back below 126.51 targets 125.97
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.703T from €1.721T and use of the marginal lending facility fell to €131M from €1.085B prior.
Corporate issuance no deals price in high grade primary. For the week ending August 23rd IG Funds reported inflows of $3.3B, while High Yields funds reported inflows of $1.01B
Looking Ahead
(BR) Brazil Aug CNI Consumer Confidence: No est v 99.5 prior
06:00 (UK) DMO to sell combined £5.5B in 1-month, 3-month and 6-month bills
06:45 (US) Daily Libor Fixing
07:00 (BR) Brazil Aug FGV Consumer Confidence: No est v 82 prior
07:30 (TR) Turkey Aug Capacity Utilization: 78.7%e v 78.7% prior
07:30 (TR) Turkey Aug Real Sector Confidence (Seasonally Adj): No est v 107.7 prior; Real Sector Confidence (unadj): No est v 109.5 prior
07:30 (IN) India Weekly Forex Reserves
08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
08:05 (UK) Baltic Dry Bulk Index
08:30 (US) July Preliminary Durable Goods Orders: -6.0%e v +6.4% prior; Durables Ex Transportation: 0.4%e v 0.1% prior, Capital Goods Orders (Non-defense/ex-aircraft): 0.4%e v 0.0% prior, Capital Goods Shipment (Non-defense/ex-aircraft): 0.2%e v 0.1% prior; Durables Ex-Defense: No est v 5.6% prior
08:30 (SE) Sweden PM Lofven with Finland PM Siplia
09:00 (MX) Mexico July Unemployment Rate (Seasonally Adj): 3.3%e v 3.3% prior; Unemployment Rate (Unadj): 3.5%e v 3.3% prior
10:00 (MX) Mexico Q2 Current Account: -$4.5Be v -$6.9B prior
10:00 (US) Fed Chair Yellen speaks at Jackson Hole on financial stability
11:00 (EU) Potential sovereign ratings after European close(Finland Sovereign Debt to be rated by Canadian rating agency DBRS; Hungary Sovereign Debt to be rated by S&P ; Lituania and Slovenia by Fitch
11:30 (SE) Sweden PM Lofven and Finland PM Siplia post meeting press conference
13:00 (US) Weekly Baker Hughes Rig Count data
14:30 (BR) Brazil July Tax Collections (BRL): 110.0Be v 104.1B prior
