Awaiting Key US Data To Gauge Recovery Strength And Potential For Fed Tapering

Notes/Observations

• Lackluster US and Chinese economic data fuel concerns about the global economic recovery stalling (recent miss in Aug ADP employment data opened the door for the risk of a weak US nonfarm payrolls report on Friday).

Asia

• South Korea Q2 Final GDP data confirmed its fastest annual pace in 10-years (Y/Y: 5.9%e v 5.9% prelim).
• South Korea Aug CPI data registered its 5th consecutive month above target and highest since 2012 (Y/Y: 2.6% v 2.4%e).
• Australia July Trade Balance registered a record high (A$12.1B v A$10.0Be).
• BOJ Board Member Kataoka [dovish, dissenter] stated that needed to watch downside risks to global economy; BOJ must strengthen forward guidance on interest rate targets, stronger easing needed.
• Japan LDP Leadership Candidate Kishida stated that must compile and economic stimulus package. Needed to swiftly carry out econ measures worth ‘tens of trillion’ of yen.

Coronavirus

• World Health Organization (WHO) tracking new COVID variant called MU, warned it could be more resistant to vaccines.
• Japan considering extending COVID emergency by 2 weeks past the Sept 12th planned lifting.

Americas

• Fed’s Bostic (FOMC voter, hawk) concerned about a wave of evictions with the moratorium ending; A surge would have a negative impact on recovery.

Energy

• OPEC+ producers confirmed its had agreed to keep production road map of 400K bpd capacity increase in Oct.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.33% at 474.68, FTSE 0.00% at 7,149.69, DAX +0.22% at 15,859.50 , CAC-40 +0.25% at 6,775.30, IBEX-35 +0.11% at 9,003.00, FTSE MIB +0.17% at 26,225.50 , SMI +0.25% at 12,464.42, S&P 500 Futures +0.19%].
• Market Focal Points/Key Themes: European indices open mixed but later advanced to trade modestly positive across the board; better performing sectors include industrials and technology; While materials and consumer discretionary among underperformers; Energy under pressure following OPEC resolution; Stellantis acquires First Financial Services; Lagardere divests stakes in restructuring program; SOBI receives takeover offer from private equity; Earnings expected during the upcoming US session include Hormel and Ciena.

Equities

• Consumer discretionary: JD Sports Fashion [JD.UK] +1% (UK CMA probe).
• Financials: CMC Markets [CMCX.UK] -28% (trading update).
• Healthcare: SOBI Swedish Orphan Biovitrum [SOBI.SE] +25% (offer).
• Industrials: Melrose [MRO.UK] +5% (earnings), Barratt Developments [BDEV.UK] -1% (earnings).

Speakers

• German VDMA Engineering association: July Machinery Orders +37% y/y.
• Philippines Central Bank (BSP) Gov Diokno noted that manageable inflation provided latitude for policy support and that conventional instruments were far from fully utilized. Sustaining recovery and preventing permanent economic scarring required heavy lifting from fiscal policy.
• EMA and European Center for Disease Prevention and Control (ECDC) technical report assessed data on booster shots and saw no urgent need for the administration of booster doses of vaccines to fully vaccinated individuals.
• Russia Energy Ministry: No further need for gasoline export ban at this time. Nord Stream 2 gas pipeline to probably start this year.

Currencies/Fixed Income

• USD remained on the defensive since last week’s Jackson Hole symposium. The recent miss in Aug ADP employment data opened the door for the risk of a weak US nonfarm payrolls report on Friday.
• EUR/USD at multi-week highs around 1.1850 area aided by recent ECB speak that hinted at a possible reduction in monetary stimulus. Higher yields in Europe following the sharp rise in Euro Zone CPI data also contributed to Euro’s upside price action. Key resistance in the pair remains the psychological 1.20 level.

Economic data

• (CH) Swiss Aug CPI M/M: 0.2% v 0.1%e; Y/Y: 0.9% v 0.7%e; CPI Core Y/Y: 0.4% v 0.3%e.
• (CH) Swiss Aug CPI EU Harmonized M/M: 0.2% v 0.1% prior; Y/Y: 0.8% v 0.5% prior.
• (CH) Swiss July Real Retail Sales Y/Y: -2.6% v +0.1% prior.
• (ES)) Spain Aug Net Unemployment Change: -82.6K v -197.8K prior.
• (CH) Swiss Q2 GDP Q/Q:1.8 % v 1.9%e; Y/Y: 7.7% v 8.9%e.
• (HU) Hungary July PPI M/M: % v 1.0% prior; Y/Y: 14.8% v 11.6% prior.
• (BR) Brazil Aug FIPE CPI (Sao Paulo) M/M: 1.4% v 1.4%e.
• (EU) Euro Zone July PPI M/M: 2.3% v 1.8%e; Y/Y: 12.1% v 11.1%e.
• (IS) Iceland Q2 Current Account Balance (ISK): -31.1B v -22.8B prior.

Fixed income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €3.729B vs. €3.0-4.0B in 2027, 2028 and 2031 bonds.
• Sold €809M in 1.5% Apr 2027 SPGB; Avg yield: -0.288% v -0.132% prior; Bid-to-cover: 2.51x v 2.34x prior.
• Sold €1.324B in 0.00% Jan 2028 SPGB bonds; Avg yield: -0.133% v -0.082% prior; Bid-to-cover: 2.10x v 1.63x prior.
• Sold €1.602B in 0.50% Oct 2031 SPGB bonds; Avg Yield: 0.309% v 0.199% prior; bid-to-cover: 1.69x v 1.30x prior.
• (ES) Spain Debt Agency (Tesoro) sold €415M vs. €250-750M indicated range in 0.70% Nov 2033 inflation-linked bonds (SPGBi); Real Yield: -1.025% v -0.739% prior; Bid-to-cover: 1.88x v 1.77x prior.
• (FR) France Debt Agency (AFT) sold total €10.358B vs. €10.0-11,0B indicated range in 2031, 2044 and 2050 bonds.
• Sold €6.315B in 0.0% Nov 2031 Oat; Avg Yield: -0.05% v +0.13% prior; Bid-to-cover: 1.81x v 2.14x prior (July 1st 2021).
• Sold €2.122B in 0.50% Jun 2044 Oat; Avg Yield: 0.55% v 0.74% prior; bid-to-cover: 2.14x v 1.79x prior (Jun 3rd 2021).
• Sold €1.921B in 1.50% May 2050 Oat; Avg Yield: 0.70% v 0.27% prior; Bid-to-cover: 2.02x v 1.61x prior (Nov 5th 2020).
• (SE) Sweden sold total SEK1.25B vs. SEK1.25B indicated in I/L 2027 and 2039 Bonds.

Looking Ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.
• 06:00 (RO) Romania to sell 3.25% 2026 bonds.
• 06:00 (RO) Romania to sell RON600M in 6-month bills.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (ZA) South Africa July Electricity Production Y/Y: No est v 3.2% prior; Electricity Consumption Y/Y: No est v 2.1% prior.
• 07:00 (MX) Mexico Aug Consumer Confidence: No est v 44.3 prior.
• 07:00 (MX) Mexico July Leading Indicators M/M: No est v 0.20 prior.
• 07:00 (MX) Mexico Aug Vehicle Domestic Sales: No est v 82.2K prior.
• 07:30 (US) Aug Challenger Job Cuts: No est v -18.9K prior; Y/Y: No est v -92.8% prior.
• 08:00 (BR) Brazil July Industrial Production M/M: -0.7%e v 0.0% prior; Y/Y: 1.9%e v 12.0% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Q2 Final Nonfarm Productivity: 2.4%e v 2.3% prelim; Unit Labor Costs: 1.0%e v 1.0% prelim.
• 08:30 (US) Initial Jobless Claims: 345Ke v 353K prior; Continuing Claims: 2.80Me v 2.862M prior.
• 08:30 (US) July Trade Balance: -$71.0Be v -$75.7B prior.
• 08:30 (CA) Canada July Int’l Merchandise Trade (CAD): 1.7Be v 3.2B prior.
• 08:30 (CA) Canada July Building Permits M/M: 2.0%e v 6.9% prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 08:30 (SE) Sweden Central bank (Riksbank) Gov Ingves.
• 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 27th: No est v $595.6B prior.
• 09:00 (SG) Singapore Aug Purchasing Managers Index: 50.9e v 51.0 prior; Electronics Sector Index: No est v 50.8 prior.
• 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (3-7 years);.
• 10:00 (US) July Factory Orders: 0.3%e v 1.5% prior; Factory Orders (ex-transportation): No est v 1.4% prior.
• 10:00 (US) July Final Durable Goods Orders: -0.1%e v -0.1% prelim; Durables (ex-transportation) No est v 0.7% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.0% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 1.0% prelim.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 11:00 (DK) Denmark Aug Foreign Reserves (DKK): No est v 458.6B prior.
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.
• 17:00 (KR) South Korea Aug Foreign Reserves: No est v $458.7B prior.
• 19:00 (AU) Australia Aug Final PMI Services: No est v 43.3 prelim; PMI Composite: No est v 43.5 prelim.
• 20:01 (IE) Ireland Aug PMI Services: No est v 66.6 prior; PMI Composite: No est v 65.0 prior.
• 20:30 (JP) Japan Aug Final PMI Services: No est v 43.5 prelim; PMI Composite: No est v 45.9 prelim.
• 20:30 (SG) Singapore Aug PMI (whole economy): No est v 56.7 prior.
• 20:30 (HK) Hong Kong Aug PMI (whole economy): No est v 51.3 prior.
• 21:30 (AU) Australia July Final Retail Sales M/M: -2.0%e v -2.7% prelim.
• 21:45 (CN) China Aug Caixin PMI Services: 52.0e v 54.9 prior; PMI Composite: No est v 53.1 prior.
• 23:30 (JP) Japan to sell 3-Month Bills.