Poor Chinese Data And COVID-19 Concerns Weigh On Risk Appetite

Notes/Observations

• China registered disappointing economic figures in July have raised the chance of more fiscal and monetary policy support to help cushion the recovery (Note: both production and retail sales data missed consensus).

Asia

• China July Retail Sales missed expectations (YoY: 8.5% v 10.9%e.
• China July Industrial Production missed expectations and registered its slowest growth since Aug 2020 (6.4% v 7.9%e).
• China PBOC offered more medium-term loans (MLFs) than expected to cushion economic slowdown.
• China’s Ningbo-Zhoushan remained partially closed.
• Japan Q2 Preliminary GDP beat expectations and avoids a technical recession (Q0Q: 0.3% v 0.1%e; GDP Annualized QoQ: 1.3% v 0.5%e).
• Japan govt said to consider expanding and extending State of Emergency for Tokyo and surrounding regions, as well as Osaka and Okinawafor about another two weeks (Note: Emergency was set to set to expire at the end of August).

Europe

• UK PM Johnson said to be looking to delay his Cabinet reshuffle until the COP26 climate change summit in November.
• UK Aug Rightmove House Prices registered its first decline of 2021 (M/M: -0.3% v +0.7% prior).
• Moody’s affirmed Ireland sovereign rating at A2; Outlook revised to Positive from Stable.

Mid-East

• UN Security Council to meet on Monday, Aug 16th on Afghanistan; Kabul falls to Taliban as president flees country.

Americas

• Fed’s Kashkari (dove, non-voter): Want a few more strong jobs reports before taper starts; gal is to let labor market back to at least pre-COVID levels.
• 9 Democrats in the House of Representatives have said no to Speaker Pelosi’s procedural compromise.
• Canada Governor General dissolves parliament, triggering an election for Sept 20th (as speculated).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.50% at 473.42, FTSE -0.90% at 7,153.85, DAX -0.49% at 15,900.25, CAC-40 -0.75% at 6,844.57, IBEX-35 -0.54% at 8,951.00, FTSE MIB -0.40% at 26,545.50, SMI -0.52% at 12,399.37, S&P 500 Futures -0.19%].
• Market Focal Points/Key Themes: European indices open lower across the board but moderated some of the losses as the session progressed; geopolitical concerns blamed for loss of risk appetite; better performing sectors include real estate; while sectors leading to the downside include consumer discretionary and energy; Bechtle share split became effective; Ultra Electronics confirms takeover offer from Cobham; Faurecia launches bid for Hella; reportedly German government to sell up to 5% stake in Lufthansa; no major US earnings scheduled for later in the session.

Equities

• Consumer discretionary: Lufthansa [LHA.DE] -4% (govt stake sale).
• Energy: TGS [TGS.NO] -2% (CFO resigns).
• Industrials: Faurecia [EO.FR] +6%, Hella [HLE.DE] -3% (Faurecia to acquire Hella).
• Technology: Ultra Electronics [ULE.UK] +5% (agrees conditions of offer), Future plc [FUTR.UK] +5% (acquisition).

Speakers

• Thailand Central Bank Gov Sethaput stated that the country’s economic recovery to take a long time and be slower compared to peers. Household income affected from virus; outbreak situation is more serious than thought.
• China Foreign Ministry Spokesperson Hua Chunying stated that China to play a constructive role in rebuilding Afghanistan.

Currencies/Fixed Income

• USD was steady near.
• 1-week lows after Friday’s selloff. After key Chinese data came in weaker than expected. Continued concerns over the COVID-19 outbreak also weighed upon risk sentiment further aid USD and JPY-denominated pairs on safe-haven flows. Focus will be on the Feb Aug minutes when released mid-week. Markets will continue to look toward the Fed’s central banking conference in Jackson Hole, Wyoming later in Aug for clues to the Fed’s next move.
• EUR/USD steady at 1.1790 area during a quiet session.
• GBP/USD at 1.3865 with focus on key data during the week (claimant and wage data Tuesday and inflation data on Wed).

Economic data

• (DK) Denmark Q2 GDP Indicator Q/Q: +2.2 v -1.5% prior.
• (DK) Denmark July PPI M/M: 1.6% v 3.6% prior; Y/Y: 11.8% v 10.1% prior.
• (NO) Norway July Trade Balance (NOK): 42.2B v 24.3B prior.
• (IN) India July Wholesale Prices (WPI) Y/Y: 11.2% v 11.3%e.
• (CZ) Czech July PPI Industrial M/M: 1.6% v 0.7%e; Y/Y: 7.8% v 6.7%e.
• (CH) Swiss weekly Total Sight Deposits (CHF): 714.6B v 713.2B prior; Domestic Sight Deposits: 639.3B v 635.9B prior.
• (TR) Turkey July Central Gov’t Budget Balance (HUF): -45.8B v -25.0B prior.
• (IT) Italy Jun General Government Debt: €2.696T v €2.687T prior.
• (IS) Iceland July International Reserves (ISK): 859B v 856B prior.

Fixed income issuance

• None seen.

Looking ahead

• (NG) Nigeria July CPI Y/Y: 17.5%e v 17.8% prior.
• (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: No est v 47.8% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 ((DE) Germany to sell combined €6.0B in 6-month and 12-month BuBills.
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €3.0-5.0B in 3-month and 6-month bills.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (IE) Ireland Jun Trade Balance: No est v €5.0B prior.
• 06:00 (IL) Israel Q2 Advance GDP Annualized: +12.6%e v -5.8% prior.
• 06:00 (RO) Romania to sell RON300M in 5% 2029 Bonds.
• 06:00 (TR) Turkey to sell 2023 and 2026 bonds.
• 06:00 (IL) Israel to sell bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 08:00 (PL) Poland July CPI Core M/M: 0.3%e v 0.0% prior; Y/Y: 3.6%e v 3.5% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 08:00 (ES) Spain Debt Agency (Tesoro) announcement on size of upcoming issuance.
• 08:30 (US) Aug Empire Manufacturing: 28.5e v 43.0 prior.
• 08:30 (CA) Canada Jun Manufacturing Sales M/M: No est v -0.6% prior; Wholesale Trade Sales MM: No est v 0.5% prior.
• 08:30 (UR) Ukraine Q2 Preliminary GDP Q/Q: No est v -1.2% prior; Y/Y: +7.3%e v -2.2% prior.
• 09:00 (FR) France Debt Agency (AFT) to sell €3.8-5.0B in 3-month, 6-month and 12-month bills.
• 09:00 (CA) Canada July Existing Home Sales M/M: No est v -8.4% prior.
• 09:45 (EU) ECB weekly QE bond buying update.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (3-7 years).
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 11:00 (PE) Peru July Unemployment Rate: No est v 10.3% prior.
• 16:00 (US) Jun Total Net TIC Flows: No est v $105.3B prior; Net Long-term TIC Flows: No est v -$30.2B prior.
• 16:00 (US) Weekly Crop Progress Report.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 98.6 prior.
• 20:30 (SG) Singapore July Non-oil Domestic Exports M/M: -1.1%e v +6.0% prior; Y/Y: 11.9%e v 15.9% prior; Electronic Exports Y/Y: No est v 25.5% prior.
• 21:30 (AU) RBA Aug Minutes.
• 21:30 (KR) Bank of Korea (BOK) to sell KRW300B in 6-month bills.
• 22:30 (KR) South Korea to sell KRW2.6T in 10-Year Bonds.
• 23:00 (NZ) New Zealand July Non Resident Bond Holdings: No est v 51.1% prior.
• 23:00 (TH) Thailand Central Bank to sell THB60B in bills.
• 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.