Awaiting The FOMC Rate Decision

Notes/Observations

• Markets await FOMC decision.
• French and German confidence data miss consensus as new lockdowns fears that curbs might be needed to contain the spread of the Delta variant.

Asia

• Australia Q2 CPI moved above target and registered its highest level since 2008 (Q/Q: 0.8% v 0.7%e; Y/Y: 3.8% v 3.7%e) Analysts noted that far tamer reading for core inflation suggested the spike would be fleeting.
• BOJ July Summary of Opinions reiterated its overall assessment that the domestic economy had picked up as a trend, although it had remained in a severe situation due to the impact of COVID.
• China Sec Journal noted that investors should not be pessimistic due to stock price drops. There would not be a systemic risk in the China A-share market as a whole. Loose monetary environment would support equity assets.

Coronavirus

• US CDC noted that due to the rapid spread of the Delta variant that vaccinated people in areas with substantial levels of Covid-19 start wearing masks again.
• Lockdown in Sydney to be extended by 4-weeks through August 28th (as expected).
• Japan Prefectures Kanagawa, Saitama, and Chiba confirmed seeking coronavirus state of emergency from Federal Govt.

Europe

• ECB’s de Cos (Spain) stated that ECB’s new guidance was the first example of ECB resolve to act; Wanted to keep bond-buying flexible post-pandemic.
• EU Commission said to not move to the next step of its legal action against Britain for unilaterally changing trading arrangements for Northern Ireland (Note: Move-in in response to Britain’s request for a “standstill”).

Americas

• White House Press Sec Psaki noted that President Biden felt optimistic about the path forward on infrastructure.

Energy

• Weekly API Crude Oil Inventories: -4.7M v +0.8M prior.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.39% at 460.42, FTSE +0.16% at 7,007.55, DAX +0.24% at 15,556.40, CAC-40 +0.72% at 6,578.75, IBEX-35 +0.73% at 8,763.00, FTSE MIB +0.59% at 25,234.50, SMI +0.33% at 12,061.30, S&P 500 Futures +0.19%].
• Market Focal Points/Key Themes: European indices open generally higher and advanced into the green as the session progressed; better-performing sectors include consumer discretionary and technology; materials and industrials among the underperforming sectors; Adecco to acquire AKKA, Europcar confirms is in takeover discussions from a consortium led by Volkswagen; focus on the conclusion of FOMC meeting later in the day; earnings expected during the upcoming US session include Owens Corning, Thermo Fisher, Humana, and Avery Dennison.

Equities

• Consumer discretionary: Aston Martin Lagonda [AML.UK] +2% (earnings), Wizz Air [WIZZ.UK] +5% (earnings).
• Consumer staples: British American Tobacco [BATS.UK] -1% (earnings).
• Financials: Barclays [BARC.UK] +5% (earnings), Deutsche Bank [DBK.DE] +1% (earnings), Banco Santander [SAN.ES] -1% (earnings).
• Industrials: BASF [BAS.DE] -2% (final earnings), Equinor [EQNR.NO] -1.5% (earnings).
• Technology: AKKA Technologies [AKA.FR] +90% (to be acquired by Adecco), Capgemini [CAP.FR] +4% (earnings; raises outlook).
• Materials: Rio Tinto [RIO.UK] -1% (earnings; special dividend).

Speakers

• PM Johnson stated in a media interview that the UK would have a steady economic recovery after COVID-19 but could see some economic bumps on the road.
• Spain Econ Min Calvino stated that it would issue its first green bond in Sept.
• Czech Central Bank Dep Gov Nidetzky stated in a press interview that he favored relatively fast rate hikes and would back another rate hike at the Aug policy meeting.
• South Korea govt said to refute press reports that was in discussions for a summit with North Korea.

Currencies/Fixed Income

• Markets await the FOMC rate decision. Overall today’s outcome is likely to be a nonevent but Fed could acknowledge above-trend inflation and growth and keep speculation of a more hawkish turn at the Aug Jackson Hole Symposium.
• USD was slightly weaker by mid-session.
• EUR/USD holding above 1.18 level while USD/JPY drifted below 110.

Economic data

• (DE) Germany Aug GfK Consumer Confidence: -0.3 v +1.0e (17th straight decline).
• (DE) Germany Jun Import Price Index M/M: 1.6% v 1.5%e; Y/Y: 12.9% v 12.6%e (highest annual pace since Oct 1981).
• (UK) July Nationwide House Price Index M/M: -0.5% v +0.3%e; Y/Y: 10.5% v 11.9%e.
• (NO) Norway Jun Retail Sales (includes auto/fuel) M/M: -0.1% v +5.8% prior.
• (FR) France July Consumer Confidence: 101 v 102e.
• (HU) Hungary Jun Unemployment Rate: 4.0% v 3.7%e.
• (SE) Sweden Jun Retail Sales M/M: -0.3% v +2.3% prior; Y/Y: 8.5% v 10.3% prior.
• (IT) Italy July Consumer Confidence Index: 116.6 v 115.5e; Manufacturing Confidence: 115.7 v 115.3e; Economic Sentiment: 116.3 v 112.8 prior.
• (CH) Swiss July Expectations Survey: 42.8 v 51.3 prior.
• (AT) Austria July Manufacturing PMI: 63.9 v 67.0 prior (13th month of expansion).

Fixed income Issuance

• (IN) India sold a total of INR170B vs. INR170B indicated in 3-month, 6-month, and 12-month bills.
• (IT) Italy Debt Agency (Tesoro) sold €7.0B vs. €7.0B indicated in 6-month Bills; Avg Yield: -0.524% v -0.521% prior; Bid-to-cover: 1.29x v 1.35x prior.

Looking Ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell €2.5B in 0% May 2036 Bunds.
• 05:30 (GR) Greece Debt Agency (PDMA) to sell 26-week Bills;.
• 05:30 (EU) ECB allotment in 3-month LTRO tender.
• 05:30 (ZA) South Africa announces details of the next bond auction (held on Tuesdays).
• 06:00 (IE) Ireland Jun Retail Sales M/M: No est v 1.8% prior; Y/Y: No est v 44.0% prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (RU) Russia to sell 2029 and 2036 OFZ Bonds.
• To sell Mar 2029 OFZ bonds.
• To sell July 2036 OFZ bonds.
• 07:00 (US) MBA Mortgage Applications w/e July 23rd: No est v -4.0% prior.
• 07:00 (UK) Weekly PM Question time in House.
• 08:00 (BR) Brazil Jun PPI Manufacturing M/M: No est v 1.1% prior; Y/Y: No est v 32.5% prior.
• 08:30 (US) Jun Advance Goods Trade Balance: -$88.0Be v -$88.2B prior (revised from -$88.1B).
• 08:30 (US) Jun Preliminary Wholesale Inventories M/M: 1.1%e v 1.3% prior; Retail Inventories M/M: -0.3%e v -0.8% prior.
• 08:30 (CA) Canada Jun CPI M/M: 0.4%e v 0.5% prior; Y/Y: 3.2%e v 3.6% prior; Consumer Price Index: 141.6e v 141.0 prior.
• 08:30 (BR) Brazil Jun Total Outstanding Loans (BRL): 4.212Te v 4.178T prior; M/M: 1.1%e v 1.2% prior; Personal Loan Default Rate: No est v 4.1% prior.
• 09:45 (UK) BOE buys £1.147B in APF Gilt purchase operation.
• 10:30 (US) Weekly DOE Oil Inventories.
• 12:00 (RU) Russia Jun Unemployment Rate: 4.8%e v 4.9% prior.
• 12:00 (RU) Russia Jun Real Retail Sales Y/Y: 11.9%e v 27.2% prior.
• 13:00 (US) Treasury to sell 2-Year FRN.
• 13:30 (BR) Brazil Jun Total Federal Debt (BRL): No est v 5.171T prior.
• 14:00 (US) FOMC Interest Rate Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged between 0.00-0.25% range.
• 14:30 (US) Fed Chair Powell post rate decision press conference.
• 21:00 (NZ) New Zealand July Business Confidence: No est v -0.6 prior; Activity Outlook: No est v 31.6 prior.
• 21:30 (AU) Australia Q2 Import Price Index Q/Q: 1.0%e v 0.2% prior; Export Price Index Q/Q: 9.9%e v 11.2% prior.
• 23:35 (JP) Japan to sell 2-Year JGB Bonds.