German ZEW Misses Consensus With Expectation Survey Falling For The 3rd Straight Month

Notes/Observations

• German ZEW Survey misses consensus over concerns of the 4th wave or slowdown in global growth.
• Fed taper talk; focus on Wed’s release of US CPI data.

Asia

• Japan July Current Account Balance: ¥905.1B v ¥855.0B; Trade Balance (BOP basis): ¥640.6B v ¥639.0Be.
• Japan Fin Min Aso stated that no new stimulus package or extra budget being put together (again refutes press reports); lots of funds for COVID still unspent.
• China might need to fine-tune macro policy to lend more support to economic growth due to downside risks from the Delta variant and mild inflation prospects offer room for further easing.

Coronavirus

• EU said not to reintroduce restrictions on non-essential travel from the US despite US virus cases being over the EU’s threshold of 75 cases per 100K , the situation to be closely watched over next few weeks.

Europe

• UK July BRC LFL Sales register its weakest growth in 5 months as post-lockdown rebound fades (Y/Y: 4.7% v 5.0%e).

Americas

• Fed’s Rosengren: Fed should announce in Sept that it will begin tapering purchases of Treasuries and mortgage bonds.
• Fed’s Barkin (FOMC voter, hawk) noted inflation expectations were near target and supported the idea that recent inflation rates were temporary. Fed had made substantial further progress towards taper benchmark, comfortable basing forward guidance on outcomes.
• US Senator Majority Leader Schumer (D-NY) stated that had an agreement for final passage of infrastructure bill with Senate to vote on bill at 11:00 ET (15:00 GMT) on Tuesday (Aug 10th). Follow Up: Agenda to focus of Senate Democrats now shifts to the social change package.
• US senate rejected bipartisan compromise on crypto tax bill within the infrastructure bill following objection filed by Sen Shelby (R-AL).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.23% at 471.76, FTSE -0.12% at 7,123.65, DAX +0.08% at 15,758.40 , CAC-40 +0.05% at 6,816.47, IBEX-35 -0.04% at 8,862.00, FTSE MIB +0.13% at 26,172.50, SMI +0.18% at 12,333.03, S&P 500 Futures -0.01%].
• Market Focal Points/Key Themes: European indices open modestly higher and stayed in the green through the session (FTSE 100 and PSI20 notable exceptions); sectors among those trending higher are consumer discretionary and technology; while underperformers include financials and telecom; travel subsector boosted by IAG, Dufry results and outlook; reportedly Reliance looking to buy Deutche Telekom’s Netherlands unit; Vectura receives improved offer from Philip Morris; Marlowe desists from Restore offer; Derwent announces three acquisitions; focus on US CPI data later in the day; earnings expected during the upcoming US session include Sysco, CF Industries and Chesapeake Energy.

Equities

• Consumer discretionary: IWG [IWG.UK] +1% (earnings), Home24 [H24.DE] +15% (earnings), Dufry [DUFN.CH] -2% (earnings), InterContinental Hotels Group [IHG.UK] -3% (earnings).
• Financials: Munich Re [MUV2.DE] +1% (earnings; raises outlook).
• Technology: Auto1 [AG1.DE] -4% (placement).

Speakers

• German ZEW Economists commented that the decline in expectation survey pointed to increasing risks for economy from a possible 4th wave of pandemic or slowdown in Chinese growth.
• India Finance Ministry Monthly Economic Report (DEA) saw signs of economic rejuvenation; inflation likely to smooth out over coming months.

Currencies/Fixed Income

• USD holding on to its recent strength after more Fed officials (Barkin, Bostic and Rosengren) noted of discussions about how and when to taper their asset purchases.Dealers noted that tapering could begin as early as September if jobs data continued to signal that the economy was heating up.
• EUR/USD tested 4-month lows below 1.1730 in the session and faced headwinds following the miss in German ZEW data.

Economic data

• (SE) Sweden Jun Maklarstatistik Housing Prices Y/Y: 18% v 20% prior; Apartment Prices Y/Y: 12 % v 13% prior.
• (NL) Netherlands Jun Manufacturing Production M/M: 4.4% v 1.2% prior; Y/Y: 17.9% v 16.4% prior; Industrial Sales Y/Y: 21.3% v 19.1% prior.
• (FI) Finland Jun Industrial Production M/M: -2.0% v +2.0% prior; Y/Y: 4.1% v 7.9% prior.
• (NO) Norway July CPI M/M: 0.9% v 0.8%e; Y/Y: 3.0% v 2.9%e(7th straight month above target).
• (NO) Norway July CPI Underlying M/M:0.6 % v 0.4% prior; Y/Y: 1.1% v 1.1%e.
• (NO) Norway July PPI (including oil) M/M: % v 4.6% prior; Y/Y: 43.4% v 37.1% prior.
• (DK) Denmark July CPI M/M: 0.7% v 0.1% prior; Y/Y: 1.6% v 1.7% prior.
• (DK) Denmark July CPI EU Harmonized M/M: 0.8% v 0.1% prior; Y/Y: 1.7% v 1.9% prior.
• (AT) Austria Jun Industrial Production M/M: -1.8% v 0.0% prior; Y/Y: 11.3% v 23.4% prior.
• (HU) Hungary July CPI M/M: 0.5% v 0.6%e; Y/Y: 4.6% v 4.7%e.
• (TR) Turkey Jun Unemployment Rate: 10.6% v 13.1% prior.
• (CZ) Czech July CPI M/M: 1.0% v 0.5%e; Y/Y: 3.4% v 2.9%e.
• (CZ) Czech Jun Export Price Index Y/Y: 3.4% v 1.0% prior; Import Price Index Y/Y: 5.1% v 1.5% prior.
• (SE) Sweden Jun Private Sector Production M/M: 0.8% v 0.1% prior; Y/Y: 10.5% v 10.6% prior.
• (SE) Sweden Jun Industrial Orders M/M: 1.1% v 6.3% prior; Y/Y: 24.4% v 33.1% prior.
• (SE) Sweden Jun Industry Production Value Y/Y: 16.7% v 23.3% prior; Service Production Value Y/Y: 10.1% v 9.7% prior.
• (SE) Sweden Jun Household Consumption M/M: 0.5% v 2.6% prior; Y/Y: 7.3% v 8.8% prior.
• (IT) Bank of Italy (BOI) Banks and Money Monthly Statistics: Jun Gross Non-performing Loans (NPLs): €48.5B vs. €50.5B prior.
• (DE) Germany Aug ZEW Current Situation Survey: 29,3 v 31.0e; Expectations Survey: 40.4 v 55.0e.
• (EU) Euro Zone Aug ZEW Expectations Survey: 42.7 v 61.2 prior.

Fixed income Issuance

• (ID) Indonesia sold total IDR11.0T vs. IDR12.0T target in Islamic bills and bonds (sukuk).
• (ES) Spain Debt Agency (Tesoro) sold total €5.13B vs. €4.5-5,5B indicated range in 6-month and 12-month bills.
• (UK) DMO sold £2.75B in 0.25% July 2031 Gilts; Avg Yield: 0.664% v 0.819% prior; bid-to-cover: 2.72x v 2.68x prior; Tails: 0.1bps v 0.1bps prior.

Looking Ahead

• (MX) Mexico July ANTAD Same-Store Sales Y/Y: No est v 21.1% prior.
• (MX) Mexico July Nominal Wages: No est v 5.0% prior.
• 05:15 (CH) Switzerland to sell 3-month Bills.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.8-2.2B in 3-month and 12-month bills.
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
• 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2031, 2032 and 2037 bonds.
• 06:00 (IL) Israel July Consumer Confidence: No est v 137 prior.
• 06:00 (US) July NFIB Small Business Optimism Index: 102.0e v 102.5 prior.
• 06:30 (EU) ESM to sell €1.1B in 12-month Bills; Avg Yield: % v -.063% prior; Bid-to-cover: x v 8.4x prior (July 13th).
• 06:45 (US) Daily Libor Fixing.
• 07:00 (ZA) South Africa Jun Manufacturing Production M/M: +0.5%e v -2.6% prior; Y/Y: 14.7%e v 35.3% prior.
• 07:00 (CZ) Czech Central Bank on July CPI data.
• 08:00 (IS) Iceland Jun Unemployment Rate: No est v 10.0% prior.
• 08:00 (BR) Brazil July IBGE Inflation IPCA M/M: 0.9%e v 0.5% prior; Y/Y: 9.0%e v 8.4% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 08:30 (US) Q2 Preliminary Nonfarm Productivity: 3.2%e v 5.4% prior; Unit Labor Costs: 1.0%e v 1.7% prior.
• 08:30 (CL) Chile Central Bank Economist Survey.
• 08:55 (US) Weekly Redbook LFL Sales data.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (20+ years).
• 10:00 (MX) Mexico Weekly International Reserve data.
• 10:00 (US) Fed’s Mester discusses inflation risks.
• 11:00 (US) Senate vote on an infrastructure bill.
• 11:30 (US) Treasury to sell 52-week bills.
• 13:00 (US) Treasury to sell 3-Year Notes.
• 16:30 (US) Weekly API Oil Inventories.
• 19:00 (KR) South Korea July Unemployment Rate: 3.8%e v 3.7% prior.
• 19:50 (JP) Japan July M2 Money Supply Y/Y: 5.4%e v 5.9% prior; M3 Money Supply Y/Y: 4.7%e v 5.2% prior.
• 20:00 (SG) Singapore Q2 Final GDP Q/Q: -2.0%e v -2.0% prelim; Y/Y: 14.3%e v 14.3% prelim.
• 20:30 (AU) Australia Aug Consumer Confidence Index: No est v 108.8 prior.
• 23:00 (KR) South Korea July Total Bank Lending To Household (KRW): No est v 1030.4t prior.
• 23:00 (CN) China to sell 2-year and 5-year Upsize Bonds.
• 23:35 (JP) Japan to sell 30-Year JGB Bonds.