Major Euro Area PMI Readings Showing Solid Expansion

Notes/Observations

• Jackson Hole symposium later in the week. Powell might offer further clarity on taper timing.
• High number of Delta variant cases in some countries raises concerns about the global growth outlook.
• Major European PMI data mixed but decelerating from recent cycle highs (Beats: France, UK; Misses: Germany, Euro Zone); expansion in region cooling only slightly despite widespread supply chain delays.

Asia

• New Zealand PM Ardern confirmed another extension of 3 days to the national lockdown extended until Aug 27th with Auckland lockdown extended until Aug 31st.
• Japan Aug Preliminary PMI Manufacturing registered its 7th month of expansion (52.4 v 53.0 prior.
• Australia Aug Preliminary PMI Manufacturing registered its 15th consecutive month of expansion but lowest since June 202 ( 51.7 v 56.9 prior.
• China Ministry of Commerce (MOFCOM) reiterated view that faced severe foreign trade situation in H2 2021 and early 2022. Added that foreign trade might face more complicated situation in 2022.
• Opposition-backed candidate Takeharu Yamanaka won the Yokohama mayoral elections.

Europe

• ECB’s Schnabel (Germany) reiterated stance that expected inflation to keep rising until the end of 2021 especially in Germany, but then seeing CPI falling “significantly” in 2022.
• German chancellor Merkel says Ukraine should remain a gas transit state after 2024 and construction of Nord Stream 2. Would impose new sanctions on Moscow if necessary, in reference to potential use of Nord Stream 2 as a “weapon”.
• UK PM Johnson to convene special G-7 meeting on Tuesday (Aug 24th) regarding Afghanistan was expected to ask US President Biden to delay withdrawal of US forces.
• Sweden PM Lofven to step down in November and to also step down as leader of the Social Democrats.

Americas

• Treasury Sec Yellen said to have told senior White House officials she was in favor of reappointing Fed Chair Powell for a 2nd term.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.30% at 470.20, FTSE +0.36% at 7,113.25, DAX +0.08% at 15,820.10, CAC-40 +0.70% at 6,672.37, IBEX-35 +0.16% at 8,930.00, FTSE MIB +0.26% at 25,985.50, SMI +0.31% at 12,453.82, S&P 500 Futures +0.24%].
• Market Focal Points/Key Themes: European indices open higher across the board but moderated their gains as the session wore on; improved risk sentiment supports cyclicals; better performing sectors include consumer discretionary and financials; industrials and materials sectors among the laggards; oil and gas subsector supported by higher crude; reportedly private equity firms looking to acquire Sainsbury’s; also private equity firms are reported interested in Babcock; Cembra Money Bank terminates agreement with Migros; Vonovia formally launches takeover of Deutsche Wohenen; reportedly Fincatieri interested in acquiring Leonardos’ OTO Melara unit; earnings expected during the upcoming US session include JD.com and Madison Square Garden Entertainment.

Equities

• Consumer discretionary: J Sainsbury [SBRY.UK] +9% (PE interest speculation), B&S Group [BSGR.NL] -3% (earnings), Zoo Digital [ZOO.UK] -4% (trading update).
• Financials: Cembra Money Bank [CMBN.CH] -27% (terminates credit card partnership).
• Healthcare: Valneva [VLA.FR] +3% (vaccine rolling submission).
• Industrials: Babcock International Group [BAB.UK] +5% (PE interest speculation), Renold [RNO.UK] +18% (trading update).
• Technology: Prosus [PRX.NL] +1.5% (buyback).

Speakers

• SNB President Jordan said to have preventive medical procedure. In good condition and to return to work after a recovery period.
• South Korea Fin Min Hong stated that financial market stabilization remained important as high uncertainties persist. Reiterated stance to closely monitor markets and take pre-emptive steps if needed.

Currencies/ Fixed income

• USD retraced from its recent strength. Dealers awaiting policy clues from central bankers at the Jackson Hole symposium on Thursday amid a recent surge in coronavirus cases that threatens to dent the global recovery. Some speculation Fed might delay the start of tapering.
• EUR/USD was trading at 1.1725 area by mid-session. Major European PMI data released during the session was mixed. Dealers noted that although readings were decelerating from recent cycle highs but added the expansion in region was cooling only slightly despite widespread supply chain delays. Yields in Europe reflected this sentiment and rose by approx. 3bps in both the core and peripheral areas.

Economic data

• (NL) Netherlands Aug Consumer Confidence Index: -6 v -4 prior.
• (DK) Denmark Aug Consumer Confidence Indicator: 4.4 v 2.6 prior.
• (CH) Swiss July M3 Money Supply Y/Y: 3.4% v 3.7% prior.
• (TR) Turkey Aug Consumer Confidence: 78.2 v 79.5 prior.
• (FR) France Aug Preliminary Manufacturing PMI: 57.3 v 57.2e (9th month of expansion); Services PMI: 56.4 v 56.3e; Composite PMI: 55.9 v 56.1e.
• Germany Aug Preliminary Manufacturing PMI: 62.7 v 65.0e (14th month of expansion); Services PMI: 61.5 v 61.0e; Composite PMI: 60.6 v 62.5e.
• (EU) Euro Zone Aug Preliminary Manufacturing PMI: 61.5 v 62.0e (14th month of expansion); Services PMI: 59.7 v 59.5e; Composite PMI: 59.5 v 59.6e.
• (CH) Swiss weekly Total Sight Deposits (CHF): 715.0B v 714.6B prior; Domestic Sight Deposits: 639.8B v 639.3B prior.
• (TR) Turkey July Foreign Tourist Arrivals Y/Y: 367.0% v 853.4% prior.
• (TW) Taiwan July Industrial Production Y/Y: 13.9% v 17.6%e.
• (TW) Taiwan July Unemployment Rate:4.4 % v 4.7%e.
• (UK) Aug Preliminary Manufacturing PMI: 60.1 v 59.5e (15th straight expansion); Services PMI: 55.5 v 59.1e; Composite PMI: 55.3 v 58.7e.
• (IS) Iceland July Wage Index M/M: -0.1% v +0.4% prior; Y/Y: 7.8% v 7.7% prior.

Fixed income issuance

• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month bills; Avg Yield: 0.21 v 0.12% prior; Bid-to-cover: 3.01x v 2.13x prior.

Looking ahead

• (PE) Peru Q2 GDP Y/Y: 41.5%e v 3.8% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 ((DE) Germany to sell €4.0B in 12-month BuBills.
• 06:00 (UK) Aug CBI Industrial Trends Total Orders: 16e v 17 prior; Selling Prices: 40e v 42 prior.
• 06:00 (IL) Israel July Unemployment Rate: No est v 5.2% prior; Unemployment Rate (including Covid): No est v 9.0% prior.
• 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v -1.7% prior.
• 06:00 (RO) Romania to sell RON200M in 4.25% 2036 Bonds.
• 06:00 (IL) Israel to sell bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (MX) Mexico Jun Retail Sales M/M: 0.1%e v 0.6% prior; Y/Y: 20.4%e v 29.7% prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 08:00 (PL) Poland July M3 Money Supply M/M: 0.5%e v 0.2% prior; Y/Y: 8.2%e v 7.4% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 08:30 (US) July Chicago Fed National Activity Index: 0.11e v 0.09 prior.
• 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%.
• 09:00 (FR) France Debt Agency (AFT) to sell €4.3-5.5B in 3-month, 6-month and 12-month bills.
• 09:45 (US) Aug Preliminary Markit Manufacturing PMI: 62.3e v 63.4 prior; Services PMI: 59.2e v 59.9 prior; Composite PMI: No est v 59.9 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).
• 10:00 (US) July Existing Home Sales: 5.83Me v 5.86M prior.
• 10:00 (EU) Euro Zone Aug Advance Consumer Confidence Index: -4.9e v -4.4 prior.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 16:00 (US) Weekly Crop Progress Report.
• 17:00 (KR) South Korea Aug Consumer Confidence: No est v 103.2 prior.
• 18:45 (NZ) New Zealand Q2 Retail Sales (ex-inflation) Q/Q: 2.0%e v 2.5% prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 101.1 prior.
• 20:00 (AU) RBA’s Richards.
• 21:30 (KR) South Korea to sell KRW250B in 20-Year Bonds.
• 22:30 (KR) South Korea to sell KRW300B in 20-Year Bonds.
• 23:00 (KR) South Korea Q2 Household Credit (KRW): No est v 1.765T prior.
• 23:00 (TH) Thailand Central Bank to sell combined THB 60B in bills.
• 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills.
• 22:30 (JP) Japan to sell 6-Month Bills.
• 23:35 (JP) Japan to sell 5-Year JGB Bonds.