Notes/Observations
- Market participants continue to believe bet the global economic rebound would persist even as central banks prepared to scale back support.
- Major European PMI Manufacturing data continued to show recovery (Beats: UK, France, Italy, Spain; Misses: Euro Zone, Germany).
- Oil higher ahead of OPEC+ meeting in Vienna.
Asia
- South Korea Aug Trade Balance: $1.7B v $1.5Be.
- Australia Q2 GDP Q/Q: 0.7% v 0.4%e; Y/Y: 9.6% v 9.2%e.
- China Aug Caixin PMI Manufacturing registered its 1st contraction since Apr 2020) (49.2 v 50.1e).
- Japan Aug Final PMI Manufacturing confirmed its 7th straight month of expansion (52.7 v 52.4 prelim).
- BOJ Deputy Gov Wakatabe noted that inflation expectations were moving sideways with some signs up it picking up but more improvement needed to reach target. Stressed that even if Fed entered tightening cycle it did not mean BOJ would follow.
Europe
- SNB Vice Chairman Zurbruegg stated that he expected that global low interest rate environment would remain unchanged for some time to come.
Energy
- Weekly API Crude Oil Inventories: -4.0M v -1.6M prior.
- OPEC+ Joint Technical Committee to maintain 2021 oil demand growth steady at 6M bpd; JMMC saw 2022 oil market in 2.5M bpd surplus (Note: OPEC experts said to see oil supply deficit at 1M bpd by Sept and dropping to 0.4M by Dec. JMMC saw OECD oil inventories under 2015-2019 average until Jan 2022 and then saw stocks exceeding the average from Feb-Dec 2022.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +0.77% at 474.52, FTSE +0.91% at 7,184.55, DAX +0.60% at 15,930.05, CAC-40 +1.31% at 6,768.79 , IBEX-35 +2.17% at 9,039.00, FTSE MIB +1.24% at 26,332.50, SMI +0.33% at 12,452.48, S&P 500 Futures +0.37%].
- Market Focal Points/Key Themes: European indices open higher across the board and remained in the greeen as the session p; better performing sectors include financials and consumer discretionary; materials and industrials sectors among underperformers; travel subsector supported on commentary from airline/hotel outlook including SAS and WH Smith; oil and gas subsector supported by higher crude prices; Fluidra acquires SR Smith; focus on upcoming OPEC meeting later in the day; corporate events in the upcoming US session include Autodesk investor day and earnings from Capbell Soup and Brown-Forman.
Equities
- Consumer discretionary: Pernod-Ricard [RI.FR] +3% (earnings), 888 Holdings [888.UK] +2% (earnings), Carrefour [CA.FR] -4% (placement).
- Financials: Commerzbank [CBK.DE] +3% (analyst action).
- Healthcare: bioMerieux [BIM.FR] +5% (earnings).
- Industrials: Fluidra [FDR.ES] +4% (acquisition; raises outlook).
Speakers:
- ECB’s De Guindos (Spain) noted that future monetary policy decisions to be data dependent. Decision would essentially depend on how economy and inflation developed in the coming months. To have to decided volume of bond purchases for Q4 at Sept meeting. Reiterated Council stance that expects inflation to continue to pick up this year but decline in 2022.
- Spain PM Sanchez stated that govt sought an immediate increase to minimum wage and supported continued stimulus efforts.
- Sweden Fin Min Andersson announced SEK10B in tax cuts and stressed that was important to continue stimulus and not repeat mistakes from the financial crisis from over a decade ago.
- OPEC+ said to still focus on monthly oil production increases of 400K bpd despite upward 2022 demand revision.
- OPEC+ JMMC ministerial committee said to have raised its 2022 oil demand growth from 3.3M bpd to 4.2M bpd (**Reminder: On Aug 31st JMMC was said to have maintained the 2021 oil demand growth at 6.0M bpd).
Currencies/Fixed income
- USD consolidated near 3-week lows due to the recent Fed inspired losses which pushed back expectations on interest rate hikes. Dealers also were concerned that the Delta coronavirus variant could impact the economy.
- EUR/USD steady near 1-month highs around the 1.18 area. Euro received some momentum after Tuesday’s CPI reading of 3.0% coupled with more hawkish ECB speak.
- GBP/USD faced some headwinds as dealer chatter circulated Brexit tension could resurface in the weeks ahead.
Economic data
- (DE) Germany July Retail Sales M/M: -5.1% v -1.0%e; Y/Y: -0.3% v +3.6%e.
- (UK) Aug Nationwide House Price Index M/M: 2.1% v 0.1%e; Y/Y: 11.0% v 8.6%e.
- (RU) Russia Aug PMI Manufacturing: 46.5 v 49.2e (3rd straight contraction).
- (NO) Norway Jun AKU Unemployment Rate: 4.8%.
- (NO) Norway Q2 Current Account Balance (NOK): 93.2B v 92.1B prior.
- (AU) Australia Aug Commodity Index: 137.9 v 144.5 prior.
- (SE) Sweden Aug PMI Manufacturing: 60.1 v 64.5 prior (15th month of expansion).
- (NL) Netherlands Aug Manufacturing PMI: 65.8 v 67.4 prior (13th straight expansion).
- (HU) Hungary Aug Manufacturing PMI: 55.9 v 55.8 prior (5th straight expansion).
- (PL) Poland Aug PMI Manufacturing: 56.0 v 56.7e (13th straight expansion).
- (TR) Turkey Aug PMI Manufacturing: 54.1 v 54.0 prior (3rd straight expansion).
- (TR) Turkey Q2 GDP Q/Q: 0.9% v 1.0%e; Y/Y: 21.7% v 21.0%e.
- (HU) Hungary Q2 Final GDP Q/Q: 2.7% v 2.7% prelim; Y/Y:17.9 % v 17.9%e.
- (HU) Hungary Jun Final Trade Balance: €0.6B v €0.7B prelim.
- (ES) Spain Aug Manufacturing PMI: 59.5 v 59.0e (7th month of expansion).
- (CH) Swiss Aug PMI Manufacturing: 67.7 v 68.0e (13th straight expansion).
- (CZ) Czech Republic Aug PMI Manufacturing: 61.0 v 60.5e (12th straight expansion).
- (TH) Thailand Aug Business Sentiment Index: 40.0 v 41.4 prior.
- (IT) Italy Aug Manufacturing PMI: 60.9 v 60.1e (14th month of expansion).
- (FR) France Aug Final Manufacturing PMI: 57.5 v 57.3e (confirmed 9th month of expansion but lowest reading since Feb 2021).
- (DE) Germany Aug Final Manufacturing PMI: 62.6 v 62.7e (confirmed 14th month of expansion).
- (EU) Euro Zone Aug Final Manufacturing PMI: 61.4 v 61.5e (confirmed 14th month of expansion but lowest since Feb).
- (GR) Greece Aug Manufacturing PMI: 59.3 v 57.4 prior (6th month of expansion).
- (NO) Norway Aug PMI Manufacturing: 62.2 v 63.2 prior (12thmonth of expansion).
- (IT) Italy July Unemployment Rate: 9.3% v 9.6%e.
- (DE) Germany Aug CPI Brandenburg M/M: 0.2% v 1.0% prior; Y/Y: 5.0% v 4.3% prior.
- (UK) Aug Final Manufacturing PMI: 60.3 v 60.1e (confirmed 15th straight expansion).
- (NG) Nigeria Aug PMI: 52.2 v 55.4 prior.
- (EU) Euro Zone July Unemployment Rate: 7.6% v 7.6%e.
- (BE) Belgium July Unemployment Rate: 5.9% v 6.2% prior.
- (DK) Denmark Aug PMI Survey: 67.3 v 69.7 prior (6th straight expansion).
- (ZA) South Africa Aug Manufacturing PMI: 57.9 v 48.0e (moves back into expansion).
Fixed income issuance
- (IN) India sold total INR170B vs. INR170B indicated in 3-month, 6-month and 12-month bills.
- (DE) Germany opened its book to sell EUR-denominated 30-year bond via syndicate; guidance seen +4bps to Bunds.
- (GR) Greece Debt Agency (PDMA) opened its book to sell EUR-denominated 2026 and 2052 bond via syndicate.
- To sell 0% Feb 2026 bond; guidance seen +43bps to mid-swaps.
- To sell 1.875% Jan 2052 bond; guidance seen +145bps to mid-swaps.
- (DK) Denmark sold total DKK5.83B in 2024, 2031 and 2052 DGB bonds.
- (SE) Sweden sells SEK5.0B vs. SEK5.0B indicated in 12-month bills; Avg Yield: -0.1920% v -0.1970% prior; bid-to-cover: 2.51x v 2.45x prior.
- (UK) DMO sold £2.5B in new Jan 2029 Gilts; Avg Yield: 0.% v 0.531% prior; bid-to-cover: x v 2.20x prior; Tail: bps v 0.1bps prior.
Looking ahead
- OPEC+ meeting.
- (ZA) South Africa Aug Naamsa Vehicle Sales Y/Y: No est v 1.7% prior.
- (RO) Romania Aug International Reserves: No est v $44.1B prior.
- (US) Aug Total Vehicle Sales data in session.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell €4.0B in 0% Oct 2026 BOBL.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell debt.
- 06:00 (IE) Ireland Aug Unemployment Rate: No est v 7.4% prior.
- 06:00 (RU) Russia to sell 2031 and 2041 OFZ Bonds.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (US) MBA Mortgage Applications w/e Aug 27th: No est v 1.6% prior.
- 08:00 (CZ) Czech Aug Budget Balance (CZK) No est v -279.4B prior.
- 08:00 (BR) Brazil Q2 GDP Q/Q: 0.2%e v 1.2% prior; Y/Y: 12.7%e v 1.0% prior; GDP 4-quarters Accumulated: +1.8%e v -3.8% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (DE) ECB’s Weidmann (Germany) at Bundesbank symposium.
- 08:15 (US) Aug ADP Employment Change: +638Ke v +330K prior.
- 08:30 (CA) Canada July MLI Leading Indicator M/M: No est v 1.6% prior.
- 08:30 (CL) Chile July Economic Activity Index (Monthly GDP) M/M: 1.4%e v 2.1% prior; Y/Y: 17.7%e v 20.1% prior.
- 09:00 (BR) Brazil Aug PMI Manufacturing: No est v 56.7 prior.
- 09:30 (CA) Canada Aug Manufacturing PMI: No est v 56.2 prior.
- 09:45 (US) Aug Final Markit Manufacturing PMI: 61.2e v 61.2 prelim.
- 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (7-20 years).
- 10:00 (US) Aug ISM Manufacturing: 58.5e v 59.5 prior; Prices Paid: 83.8e v 87.5 prior.
- 10:00 (US) July Construction Spending M/M: 0.2%e v 0.1% prior.
- 10:00 (MX) Mexico July Total Remittances: $4.4Be v $4.4B prior.
- 10:00 (MX) Mexico Central Bank Economist Survey.
- 10:30 (US) Weekly DOE Oil Inventories.
- 10:30 (MX) Mexico Aug PMI Manufacturing: No est v 49.6 prior.
- 11:00 (CO) Colombia Aug PMI Manufacturing: No est v 54.2 prior.
- 11:00 (PE) Peru Aug CPI M/M: No est v 1.0% prior; Y/Y: No est v 3.8% prior.
- (IT) Italy Aug Budget Balance: No est v €5.7B prior.
- 12:00 (IT) Italy Aug New Car Registrations Y/Y: No est v -19.4% prior.
- 12:00 (RU) Russia July Unemployment Rate: 4.8%e v 4.8% prior.
- 12:00 (RU) Russia Jun Real Wages Y/Y: 2.9%e v 3.3% prior.
- 12:00 (RU) Russia July Real Retail Sales Y/Y: 5.0%e v 10.9% prior.
- 12:00 (US) Fed’s Bostic.
- 12:00 (CA) Canada to sell 30-year inflation-linked bonds.
- 13:00 (MX) Mexico Aug IMEF Manufacturing Index: No est v 52.2 prior; Non-Manufacturing Index: No est v 52.9 prior.
- 14:00 (BR) Brazil Aug Trade Balance: $7.5Be v $7.4B prior; Total Exports: $27.1Be v $25.5B prior; Total Imports: $19.3Be v $18.1B prior.
- (AR) Argentina Aug Government Tax Revenue (ARS): No est v 933.2B prior.
- 18:45 (NZ) New Zealand Q2 Terms of Trade Index Q/Q: No est v 0.1% prior.
- 19:00 (KR) South Korea Q2 Final GDP Q/Q: 0.7%e v 0.7% prelim; Y/Y: 5.9%e v 5.9% prelim.
- 19:00 (KR) South Korea Aug CPI M/M: 0.4%e v 0.2% prior; Y/Y: 2.4%e v 2.6% prior; CPI Core Y/Y: 1.6%e v 1.7% prior.
- 19:50 (JP) Japan end-Aug Monetary Base: No est v ¥660.9T.
- 21:30 (AU) Australia July Trade Balance: A$10.0Be v A$10.5B prior; Exports M/M: 3%e v 4% prior; Imports Y/Y: 2%e v 1% prior.
- 21:30 (AU) Australia July Home Loans Value M/M: -0.2%e v -1.6% prior.
- 23:35 (JP) Japan to sell 10-Year JGB Bonds.
