COVID-19 Angst Continues, NZ Enters Into National Lockdown After Once Case Found In Country

Notes/Observations

• UK wage growth reaches record levels in July as reopening economy triggered an unprecedented scramble for staff.
• Continued concerns over rising COVID-19 cases in parts of the world.
• New Zealand finds one case of Coronavirus and locks down the country; analyst scale back calls for potential RBNZ rate hike at its scheduled meeting on Wed, Aug 18th (tomorrow).

Asia

• RBA July Minutes noted that the Delta variant of the virus had interrupted the recovery, prepared to act in response to further bad news, reiterated forward guidance that did not expect rate hike conditions to be met until 2024.
• China Sec Journal noted that analysts believed that China PBOC is likely to cut RRR during Q4.
• China Military announced start of air and sea exercise near Taiwan, in response to external interference and provocations.

Coronavirus

• Total global cases 208.7M (+0.3% d/d); total deaths: 4.38M (+0.2% d/d).
• Pfizer [PFE] noted that US would advise coronavirus vaccine boosters to be taken 8 months after vaccination, could offer boosters to non-immune compromised individuals in mid Sept.
• Biden administration said to be close to announcing a Covid-19 booster shot for all Americans 8 months after their 2nd dose. Would commence in mid-to-late Sept pending FDA approval.
• Five US states (Florida, Louisiana, Hawaii, Oregon and Mississippi) reached new peaks in their seven-day average of new cases per day as of Sunday.

Americas

• Fed’s Rosengren (non-voter) stated on CNBC that he believed a substantial further progress standard on inflation had been met. Would prefer to start tapering this fall, potentially in Oct or Nov, and no later than Dec; Reiterated prefer to end tapering program by mid-2022.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.06% at 473.16, FTSE +0.12% at 7,162.43, DAX -0.23% at 15,889.75, CAC-40 -0.38% at 6,812.79, IBEX-35 -0.68% at 8,866.00, FTSE MIB -0.69% at 26,267.50, SMI +0.19% at 12,440.21, S&P 500 Futures -0.43%].
• Market Focal Points/Key Themes: European indices open down across the board and remained under pressure as the session wore on; general risk off move attributed to rise in covid cases through Asia; less negative sectors include heath care and telecom; sectors leading to the downside include financials and consumer discretionary; energy sector under pressure after crude prices erase earlier gains; Woodside to acquire BHP’s petroleum assets; TP Group rejects offer from Science Group; earnings expected in the upcoming US session include Home Depot, Walmart and Agilent Technologies.

Equities

• Consumer discretionary: Just Eat Takeaway.com [TKWY.NL] +3% (earnings), Pandora [PNDORA.DK] -1% (earnings).
• Financials: Plus500 [PLUS.UK] +6% (earnings).
• Industrials: DFDS [DFDS.DK] +7% (earnings).
• Telecom: BT Group [BT.A.UK] -2% (new Chairman).
• Materials: BHP Group [BHP.UK] +7% (earnings; acquisition).

Speakers

• UK Chancellor of the Exchequer (Fin Min) Sunak noted that the latest data had been promising but could still face some bumps in the road.
• New Zealand PM Ardern stated the country to enter into a three day lockdown and raised alert level 4 (highest level). The lockdown in Auckland and Coromandel area to last for 7 days. She did not know if coronavirus case was of the Delta variant but assumed it was. Stressed that going hard and early on lockdown had worked before.

Currencies/Fixed income

• Coronavirus concerns prompted some safe-haven flows in the session. Bond yields were lower at the start of the EU session but since climbed off lowest levels. Dealers eyeing the upcoming Powell’s speech on Tuesday for further clues on tapering.
• EUR/USD having difficulties moving above the 1.18 area.
• GBP/USD tested a 3-week low after moving below the 1.38 level despite healthy UK jobs data. Dealers noted that a decline in risk appetite was weighing upon GBP. Also concern the UK labor market could start cooling as government support was withdrawn.
• Safe-haven flows helped the JPY currency hit a 2-week high.
• NZD currency (Kiwi) tumbled during the Asian and EU session after the country discovered its first community case of COVID-19 in six months and announced a 3-day national lockdown. Various analysts scaled back calls for potential RBNZ rate hike at its scheduled meeting on Wed, Aug 18th (tomorrow).

Economic data

• (FI) Finland Jun GDP Indicator Y/Y: 9.7% v 8.9% prior.
• (UK) July Jobless Claims Change: -7.8K v -136.1K prior; Claimant Count Rate: 5.7% v 5.7% prior.
• (UK) Jun Average Weekly Earnings 3M/Y: 8.8% v 8.6%e; Weekly Earnings (ex-bonus) 3M/Y: 7.4% v 7.4%e.
• (UK) Jun ILO Unemployment Rate: 4.7% v 4.8%e (matched lowest since summer 2020); Employment Change 3M/3M: +95K v +100Ke.
• (RO) Romania Q2 Advance GDP Q/Q: 1.8% v 2.0%e; Y/Y: 13.0% v 14.5%e.
• (HU) Hungary Q2 Preliminary GDP Q/Q: 2.7% v 1.2%e; Y/Y: 17.9% v 15.9%e.
• (NL) Netherlands Q2 Preliminary GDP Q/Q: 3.1% v 1.5%e; Y/Y: +9.7% v -2.6% prior.
• (NL) Netherlands Jun Trade Balance: €6.5B v €4.7B prior.
• (NL) Netherlands Jun Consumer Spending Y/Y: 6.4% v 11.0% prior.
• (CY) Cyprus Q2 Preliminary GDP Q/Q: 0.2% v 2.0% prior; Y/Y: +12.8% v -1.6% prior.
• (EU) Euro Zone Q2 Preliminary GDP (2nd reading) Q/Q: 2.0% v 2.0%e; Y/Y: 13.6% v 13.7%e.
• (EU) Euro Zone Q2 Preliminary Employment Q/Q: +0.5% v -0.2% prior; Y/Y: +1.8%v -1.8% prior.

Fixed income issuance

• (ES) Spain Debt Agency (Tesoro) sold total €1.71B vs. €1.0-2.0B indicated range in 3-month and 9-month Bills.
• (UK) DMO sold £2.0B in 0.875% Jan 2046 Gilts; Avg Yield: 0.940% v 1.359% prior; bid-to-cover: 2.38x v 2.40x prior; Tail: 0.2bps v 0.2bps prior.

Looking ahead

• (NG) Nigeria July CPI Y/Y: 17.5%e v 17.8% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:15 (CH) Switzerland to sell 3-month Bills; Avg Yield: % v -0.780% prior.
• 05:30 (DE) Germany to sell €6.0B in new 0.00% Sept 2023 Schatz.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-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, 2037 and 2044 bonds.
• 06:00 (FI) Finland to sell €1.0-2.0B in 6-month and 9-month bills.
• 06:00 (TR) Turkey to sell 2026 and 2030 bonds.
• 06:30 (EU) ESM to sell €B in 6-month Bills.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Aug FGV Inflation IGP-10 M/M: 1.3%e v 0.2% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 08:15 (CA) Canada July Annualized Housing Starts: 280.0Ke v 282.1K prior.
• 08:30 (US) July Advance Retail Sales M/M: -0.2%e v +0.6% prior; Retail Sales (ex-auto) M/M: 0.2%e v 1.3% prior; Retail Sales (ex-auto/gas): 0.0%e v 1.1% prior; Retail Sales (Control Group): -0.2%e v +1.1% prior.
• 08:30 (CA) Canada Jun Int’l Securities Transactions (CAD): No est v 20.8B prior.
• 08:55 (US) Weekly Redbook LFL Sales data.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:15 (US) July Industrial Production M/M: 0.5%e v 0.4% prior; Capacity Utilization: 75.7%e v 75.4% prior; Manufacturing Production: +0.6%e v -0.1% prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (20+ years).
• 10:00 (US) Jun Business Inventories: 0.8%e v 0.5% prior.
• 10:00 (US) Aug NAHB Housing Market Index: 80e v 80 prior.
• 10:00 (MX) Mexico Weekly International Reserve data.
• 12:00 (CO) Colombia Q2 GDP Q/Q: -1.0%e v +2.9% prior; Y/Y: 18.5%e v 1.1% prior.
• 12:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: 13.9%e v 13.6% prior.
• 13:30 (US) Fed Chief Powell hosts Town Hall discussion with educators.
• 15:45 (US) Fed’s Kashkari.
• 16:30 (US) Weekly API Oil Inventories.
• 18:45 (NZ) New Zealand Q2 PPI Input Q/Q: No est v 2.1% prior; PPI Output Q/Q: No est v 1.2% prior.
• 19:50 (JP) Japan July Trade Balance: ¥196.4Be v ¥384.0B prior (revised from ¥383.2B); Adjusted Trade Balance: ¥125.1Be v -¥90.2B prior; Exports Y/Y: 39.4%e v 48.6% prior; Imports Y/Y: 35.3%e v 32.7% prior.
• 19:50 (JP) Japan Jun Core Machine Orders M/M: -2.8%e v +7.8% prior; Y/Y: 15.6%e v 12.2% prior.
• 20:30 (AU) Australia July Leading Index M/M: No est v -0.07% prior.
• 21:10 (JP) BOJ Outright Bond Purchase Operation for maturities in 1~3 Years.
• 21:30 (AU) Australia Q2 Wage Price Index Q/Q: 0.6%e v 0.6% prior; Y/Y: 1.9%e v 1.5% prior.
• 21:30 (KR) Bank of Korea (BOK) to sell KRW2.0T in 2-Year Bonds.
• 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to raise Official Cash Rate (OCR) by 25bps to 0.50%.
• 23:00 (CN) China to sell 1-year and 10-year Upsize Bonds.
• 23:00 (TH) Thailand to sell THB4.0B in 2071 Bonds.