European Inflation Continues To Move Higher

Notes/Observations

• Various Euro area inflation data remained above ECB target.
• EU Confidence indicators are starting to trend down.
• UK markets closed for a holiday.

Asia

• Japan PM candidate Kishida noted he would launch a large new economic stimulus package worth “several tens of trillion yen” if elected.
• Japan July Retail Sales beat consensus (M/M: 1.1% v 0.4%e; Y/Y: 2.4% v 2.1%e).
• China State Council announced plan targeting 55M urban jobs by 2025, capping unemployment rate at 5.5%; sought stronger rights for workers and increase training.
• US said to be aware of reports of North Korea restarting a nuclear reactor.

Coronavirus

• New variant first detected in South Africa said to be more mutated compared to original virus than any other known variant; Posed concerns it could be more infectious and evade vaccines.
• EU said to be considering recommending halting nonessential travel from the US as the average US infection rate was now above that of the EU. Current data showing that US daily new case average was over 150%over the last month, with hospitalizations surpassing 100,000 for the first time since January and Covid-related deaths on the rise.

Europe

• Germany Election Poll has Social Democrats with 24% compared to Merkel’s CDU’s 21%.

Energy

• Hurricane Ida hit Louisiana as a category 4 strength hurricane; More than 95% of Gulf crude and natural gas platforms are offline due to hurricane.
• Kuwait Oil Min al-Fares noted that OPEC+ could reconsider output increase.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.10% at 472.76, FTSE +0.23% at 7,148.01, DAX +0.23% at 15,887.65, CAC-40 +0.13% at 6,690.32, IBEX-35 -0.15% at 8,909.00, FTSE MIB +0.10% at 26,032.50, SMI +0.02% at 12,440.87, S&P 500 Futures +0.05%].
• Market Focal Points/Key Themes: European indices open modestly higher and failed to gain direction later in the session; UK markets closed for holiday; better performing sectors include materials and industrials; underperforming sectors include financials and health care; oil and gas subsector under pressure in the wake of Hurricane Ida; Rovi trading lower over investigation into two deaths after injection of Moderna’s covid vaccine in Japan; reportedly Sainsbury’s looking to sell financing unit; earnings expected during the upcoming US session includes Zoom.

Equities

• Consumer discretionary: Greenyard Foods [GREEN.BE] +2.5% (earnings).
• Healthcare: Sanofi [SAN.FR] -1% (trial results), Bayer [BAYN.DE] -1% (trial results), Bone Therapeutics [BOTHE.BE] -36% (trial results).

Speakers

• ECB’s Villeroy (France) reiterated Council stance that would be temporary spikes in inflation. ECB to discuss the impact of more favorable conditions. Not urgent to decide on Pandemic Bond Buying Fund (PEPP) by Sept meeting; reiterated that program remained in effect until at least Mar 2022. ECB had more time to decide on QE compared to the Fed as US to recover more quickly than Euro zone.
• Thailand Finance Ministry: Pandemic slowed growth in July period but overall, economic stability remains good.
• Japan PM Suga said to have ordered LDP Sec Gen Nikai to compile new economic stimulus measures.
• Japan LDP official Nikai: Ruling party facing difficulty in reviving economy due to dire fiscal situation.
• OPEC+ said to likely rollover output its planned 400K bpd production increase at the Sept 1st meeting.

Currencies/Fixed Income

• USD remained on soft footing after Fed Chair Powell’s Jackson Hole speech past week noted that the tapering timeline was on table, but not interest rate lift-off. Dealers noted that Tapering would not be as fast as anticipated. Fed chief was clear to detach tapering from rate liftoff. Greenback also weighed upon that the Covid-19 Delta variant would likely prompt some pullback on US consumer spending.
• EUR/USD hovering around the 1.18 area. Dealers noted that inflation and growth outlook appears to be rising but confidence indicators were starting to trend down.

Economic data

• (NL) Netherlands Aug Producer Confidence Index: 9.6 v 12.3 prior.
• (DE) Germany Aug CPI North Rhine Westphalia M/M:0.1 % v 0.8% prior; Y/Y: 4.2% v 4.1% prior.
• (ES) Spain Aug Preliminary CPI M/M: +0.4% v -0.8 % prior; Y/Y: 3.3% v 3.0%e (highest annual pace since Oct 2012).
• (ES) Spain Aug Preliminary CPI EU Harmonized M/M: 0.4% v 0.0%e; Y/Y: 3.3% v 2.9%e.
• (ES) Spain July Adjusted Retail Sales Y/Y: % v 0.6%e; Retail Sales (unadj) Y/Y: % v 1.8% prior.
• (CH) Swiss Aug KOF Leading Indicator: 113.5 v 125.9e.
• (AT) Austria July PPI M/M: 1.7% v 1.0% prior; Y/Y: 8.6% v 6.9% prior.
• (SE) Sweden Jun Non-Manual Workers’ Wages Y/Y: 3.4% v 3.3% prior.
• (DE) Germany Aug CPI Hesse M/M: 0.0% v 0.8% prior; Y/Y: 3,7% v 3.4% prior.
• (DE) Germany Aug CPI Bavaria M/M: 0.1% v 0.9% prior; Y/Y: 3.9% v 3.8% prior.
• (CH) Swiss weekly Total Sight Deposits (CHF): 715.2B v 715.0B prior; Domestic Sight Deposits: 640.1B v 639.8B prior.
• (PT) Portugal Aug Consumer Confidence: -13.8 v -14.1 prior; Economic Climate Indicator: 1.8 v 1.8 prior.
• (EU) Euro Zone Aug Economic Confidence: 117.5 v 118.0e; Industrial Confidence: 13.7 v 13.4e; Services Confidence: 16.8 v 19.0e; Consumer Confidence (final): -5.3 v -5.3 advance.
• (DE) Germany Aug CPI Saxony M/M: 0.1% v 1.0% prior; Y/Y: 4.0% v 3.7% prior.
• (BE) Belgium Q2 Final GDP Q/Q: 1.7% v 1.4% prelim; Y/Y: 14.9% v 14.5% prelim.
• (IS) Iceland Aug CPI M/M: 0.5% v 0.2% prior; Y/Y: 4.3% v 4.3% prior.

Fixed income Issuance

• (DK) Denmark sold total DKK3.38B in 3-month, 6-month, 9-month and 12-month Bills.

Looking Ahead

• (BE) Belgium Aug CPI M/M: No est v 0.9% prior; Y/Y: No est v 2.3% prior.
• (DE) Germany Aug CPI Brandenburg M/M: % v 1.0% prior; Y/Y: % v 4.3% prior.
• (DE) Germany Aug CPI Baden Wuerttemberg M/M: No est v 0.8% prior; Y/Y: No est v 3.4% prior.
• (MX) Mexico July YTD Budget Balance (MXN): No est v -231.2B prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
• 06:00 (PT) Portugal July Retail Sales M/M: No est v -1.5% prior; Y/Y: No est v 7.8% prior.
• 06:00 (IL) Israel to sell bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Aug FGV Inflation IGPM M/M: 0.8%e v 0.8% prior; Y/Y: 31.3%e v 33.8% prior.
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 07:30 (IS) Iceland to sell 3-month, 6-month Bills.
• 08:00 (DE) Germany Aug Preliminary CPI M/M: 0.1%e v 0.9% prior; Y/Y: 3.9%e v 3.8% prior.
• 08:00 (DE) Germany Aug Preliminary CPI EU Harmonized M/M: 0.1%e v 0.5% prior; Y/Y: 3.4%e v 3.1% prior.
• 08:00 (ZA) South Africa July Budget Balance (ZAR): -133.0Be v +63.1B 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) size announcement on upcoming issuance.
• 08:30 (CA) Canada Q2 Current Account Balance: No est v $1.2B prior.
• 09:00 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills.
• 09:45 (EU) ECB weekly QE bond buying update.
• 10:00 (US) July Pending Home Sales M/M: +0.4%e v -1.9% prior; Y/Y: -8.5%e v -3.3% prior.
• 10:30 (US) Aug Dallas Fed Manufacturing Activity Index: 22.8e v 27.3 prior.
• 11:00 (CO) Colombia July Exports: No est v $3.0B prior.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 16:00 (US) Weekly Crop Progress Report.
• 18:45 (NZ) New Zealand July Building Permits M/M: No est v 3.8% prior.
• 19:00 (KR) South Korea July Industrial Production M/M: 0.0%e v +2.2% prior; Y/Y: 7.3%e v 11.9% prior.
• 19:01 (UK) Aug Lloyds Business Barometer: No est v 30 prior.
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 101.6 prior.
• 19:30 (JP) Japan July Jobless Rate: 2.9%e v 2.9% prior; Job-To-Applicant Ratio: 1.12e v 1.13 prior.
• 19:50 (JP) Japan July Preliminary Industrial Production M/M: -2.5%e v +6.5% prior; Y/Y: 11.2%e v 23.0% prior.
• 21:00 (NZ) New Zealand Aug Business Confidence: No est v -3.8 prior; Activity Outlook: No est v 26.3 prior.
• 21:00 (CN) China Aug Manufacturing PMI (govt official): 50.1e v 50.4 prior; Non-manufacturing PMI: 52.0e v 53.3 prior; Composite PMI: No est v 52.4 prior.
• 21:30 (AU) Australia Q2 Current Account Balance: A$21.0Be v A$18.3B prior.
• 21:30 (AU) Australia July Building Approvals M/M: -5.0%e v -6.7% prior.
• 21:30 (AU) Australia July Private Sector Credit M/M: 0.5%e v 0.9% prior; Y/Y: 3.5%e v 3.1% prior.
• 22:00 (SG) Singapore July M2 Money Supply Y/Y: No est v 6.1% prior; M1 Money Supply Y/Y: No est v 17.2% prior.
• 23:00 (TH) Thailand Central Bank to sell THB 60B in Bills.
• 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.
• 22:35 (JP) Japan to sell 2-year JGB bonds.