Risk appetite finds some room as threats of North Korea escalation and the most severe US hurricane scenarios have been temporarily avoided

Inflation in Norway slipped unexpectedly in August.

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Focus was on UK Parliament vote on Brexit repeal bill later today. Brexit Min Davis warned of chaotic Brexit if Parliament blocked the bill



No North Korea missile test/launch detected on the 69th anniversary of NK National Founding Day

North Korea reiterated view that closely following US’ moves with ‘vigilance’; ready and willing to use ‘any form of ultimate means’. Warned of retaliation if UN Security Council approved US request for further sanctions – KCNA

US called for a vote on Monday, Sept 11th concerning Draft UN Security Council resolution on additional sanctions on North Korea

China Aug CPI Y/Y: 1.8% v 1.6%e; PPI Y/Y: 6.3% v 5.7%e

China PBOC said to have removed reserve request for offshore bank yuan accounts (reflect major changes of market environment currently)


UK Brexit Min Davis said to warn of chaotic Brexit if Parliament block bill. Without repeal bill we would be approaching a cliff edge of uncertainty

UK Aug Visa Consumer Spending y/y: +0.3% v -0.8% prior (1st increase since Apr)

Greece PM Tsipras: Determined to speed up conclusion of 3rd bailout review. Wants IMF to decide if it will join 3rd bailout by end-2017


Hurricane Irma made landfall in Florida as a category 4 storm


Saudi Arabia Energy Ministry stated that Al-Falih discussed with his Venezuelan and Kazakh counterparts the possible extension of the global oil supply cut pact beyond March 2018

Economic data

(NO) Norway Aug CPI M/M: -0.8% v -0.4%e; Y/Y: 1.3% v 1.7%e

(NO) Norway Aug CPI Underlying M/M: -0.9% v -0.4%e; Y/Y: 0.9% v 1.4%e

(SE) Sweden Aug PES Unemployment Rate: 4.1% v 4.0% prior

(FR) Bank of France Aug Business Sentiment: 104 v 106e

(CZ) Czech Aug CPI M/M: -0.1% v -0.1%e; Y/Y: 2.5% v 2.6%e

(TR) Turkey Q2 GDP Q/Q: 2.1% v 1.8%e; Y/Y: 5.1% v 5.3%e; GDP (unadj): 6.5% v 5.2%e

(DK) Denmark Aug CPI M/M: -0.3% v -0.5%e; Y/Y: 1.5% v 1.3%e

(DK) Denmark Aug CPI EU Harmonized M/M: -0.4% v +1.0% prior; Y/Y: 1.5% 1.5% prior

(IT) Italy July Industrial Production M/M: +0.1% v -0.4%e; Y/Y: 4.4% v 5.3% prior; Industrial Production WDA Y/Y: 4.4% v 3.7%e

Fixed Income Issuance:

None seen



Indices [Stoxx600 +0.9% at 378, FTSE +0.6% at 7424, DAX +1.1% at 12432, CAC-40 +1.1% at 5170, IBEX-35 +1.4% at 10276, FTSE MIB +1.2% at 22026, SMI +0.6% at 8968, S&P 500 Futures +0.5%]

Market Focal Points/Key Themes:

European Indices trade sharply higher across the board being led by Re-Insurers as the impact from Hurricane Irma was less than feared. Hannover Re, Swiss Re and Munich Re are all outperforming in Europe.In the UK Associated British Foods trades lower after there Full year Trading update, reporting strong sales especially from Primark, which reported sales up 13% (cc). Meanwhile Roche trades lower weighing on the Swiss SMI after its BRIM8 phase 3 study failed to meet primary endpoint.


Consumer discretionary [Air Berlin [AB1.DE] +13% (Hans Rudolf Wohrl offers up to €500M), Associated British Foods [ABF.UK] -2.2% (Trading update)]

Financials: [Beazly [BEZ.UK] +6%, Munich Re [MUV2.DE] +4.2%, Hannover Re [HNR1.DE] +4.4%, Swiss Re [SREN.CH] +4.5% (Hurricane Irma initial loss estimates less then originally forecast)]

Healthcare: [Roche [ROG.CH] -1.1% (Zelboraf (vemurafenib) failed to reduce the risk of melanoma recurring, compared with the placebo), Pharming Group [PHARM.NL] +5.6% (Concludes interactions with FDA)]


ECB’s Coeure (France): Exogenous shocks to exchange rate if persistent can lead to unwarranted tightening of financial conditions. Policy to remain more accommodative for longer, thereby muting further the pass-through of any growth-driven exchange rate appreciation. Transmission of monetary policy that the policy-relevant horizon likely to be longer given the persistence of subdued inflationary pressures

German govt said to seek Weidmann as next ECB chief when Draghi terms ends in 2019

Poland Central Bank’s Lon: Saw need for 50bps cut in Base Rate

South Africa Fin Min Gigaba: Cautious on recovery in consumer spending

Thailand Central Bank reiterated view that current monetary stance is appropriate

Thailand Finance Ministry said to propose that central bank cut interest rates to boost investment


The week began with a decrease in decline in risk aversion sentiment as North Korea held off any additional missile tests while Hurricane Irma’s wrath did not cause the extensive damage in Florida

North Korea marked the 69th anniversary of its founding on Saturday without resorting to any further missile or nuclear tests, fuelling some unwinding of safe-haven bets such as gold and government debt

EUR/USD hovering around the 1.20 level. The soft tone for Euro aided by dovish commentary from ECB’s Coeure who reiterated Council view that monetary policy would likely to remain more accommodative for longer.

USD/JPY was higher as the North Korean missile test failed to materialize for the time being. Reports also circulated that UN draft on North Korea dropped its call for an oil embargo of the country

GBP/USD was fractionally lower in the session. Focus was on UK Parliament vote on Brexit repeal bill later today. Brexit Min Davis warned of chaotic Brexit if Parliament blocked the repeal bill.

The NOK was softer after Norway Aug CPI data came in lower-than-expected. EUR/NOK higher by 0.3% to test above 9,35 level. The NOK was off its worst levels of the session as dealers believed the data Inflation unlikely to alter the Norges Bank’s outlook

Fixed Income

Bund futures trade at 162.84 down 12 ticks trading lower on rising equities as the absence of activity from North Korea as well as Hurricane Irma damages being less than feared helped prop markets. Continued downside targets 162.53 while upside resistance stands initially at 163.22.

Gilt futures trade at 127.49 down 22 ticks with continued downside eyeing 127.25, then 126.88. A reversal targets 127.90 then 128.24.

Monday’s liquidity report showed Friday’s excess liquidity rose to €1.778T from €1.775T and use of the marginal lending facility fell to €142M from €1.01B.

Corporate issuance saw $46.2B last week via 63 tranches, bringing YTD issuance to above $980B. For the week ahead analysts forecast around $25B to come to market.

In Euro denominated issuance ~€35B came to market via 41 issuers and 46 tranches marking the busiest day in Q3. Thursday saw the bulk of the issuance with just shy of €20B coming to market.

Looking Ahead

(UK) Parliament vote on Brexit repeal bill

05:30 (DE) Germany to sell €2.0B in 6-month BuBills

06:00 (IL) Israel Aug Consumer Confidence: No est v 116 prior

06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:00 (BR) Brazil Sept IGP-M Inflation (1st Preview): 0.3%e v 0.0% prior

07:00 (CZ) Czech Central Bank to comment on CPI data

07:25 (BR) Brazil Central Bank Weekly Economists Survey

07:30 (TR) Turkey TCMB Survey of Expectations

08:00 (PL) Poland Aug Final CPI M/M: No est v -0.2% prelim; Y/Y: No est v 1.8% prelim

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:05 (UK) Baltic Dry Bulk Index

08:15 (CA) Canada Aug Annualized Housing Starts: 216.0Ke v 222.3K prior

09:00 (MX) Mexico July Industrial Production M/M: -0.1%e v +0.1% prior; Y/Y: -0.2%e v -0.3% prior; Manufacturing Production Y/Y: 2.4%e v 2.3% prior

09:00 (RU) Russia July Trade Balance: $6.5Be v $8.7B prior; Exports: $27.4Be v $29.5B prior; Imports: $21.0Be v $20.8B prior

09:00 (FR) France Debt Agency (AFT) to sell combined €4.0-5.2B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

09:50 (UK) BOE to buy £1.125B in in APF Gilt purchase operation (3-7 years)

11:30 (US) Treasury to sell 3-Month and 6-Month Bills

13:00 (US) Treasury to sell 3-Year Notes

14:15 (DE) German Chancellor Merkel takes questions at Televised Town-Hall Event in Luebeck

16:00 (US) Weekly Crop Progress Report

(MX) Mexico Aug ANTAD Same-Store Sales Y/Y: No est v 4.0% prior

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