Notes/Observations
- Sterling rises on strong inflation reading out of the UK reinforcing expectations of gentle rate rise cycle over the next couple of years -Japan leaves rates on hold -European Indices mostly higher tracking another strong session in Asia
Asia:
- BOJ leaves interest rates unchanged as expected and reiterates forward guidance
- China Premier Li Keqiang: China will further open itself at a faster pace: Has been sluggish global growth and sluggish trade recently; will not resort to forceful stimulus; reiterates won’t devalue yuan to stimulate exports -Thailand Keeps Benchmark rates unchanged as expected
Europe:
- UK August inflation data recorded a 6 month high, coming ahead of forecasts as Sterling hits 8 week highs, driven by higher prices for airfares, theater tickets and clothes
- Prime Min May in interview with UK press notes exit deal is ‘virtually agreed’; rules out holding a second Brexit vote
- EU Brexit negotiator Barmier says EU is “ready to improve” its proposal on Northern Ireland in a bid to reach an agreement
Economic Data:
- (UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
- (UK) AUG PPI INPUT M/M: 0.5% V 0.5%E; Y/Y: 8.7% V 9.1%E
- (UK) July ONS House Price Index Y/Y: 3.1% v 2.7%e
- (EU) EU27 New Car Registrations: 31.2% v 5.2% prior
- (TH) THAILAND CENTRAL BANK
- (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.50%, AS EXPECTED
- (ZA) SOUTH AFRICA AUG CPI M/M: -0.1% V 0.2%E; Y/Y: 4.9% V 5.2%E
- (EU) Euro Zone July Current Account (seasonally Adj): €21.3B v €23.8B prior
- (PL) Poland Aug Sold Industrial Output M/M: 0.8% v 1.2%e; Y/Y: 5.0% v 5.0%e
- (PL) Poland Aug PPI M/M: 0.0% v -0.1%e; Y/Y: 3.0% v 2.9%e
- (IT) Italy July Current Account: €8.6B v €5.3B prior
- (EU) Euro Zone July Construction Output M/M: 0.3% v 0.2% prior; Y/Y: 2.6% v 2.6% prior
Fixed Income Issuance:
- (DK) Denmark sells total DKK2.42B in 2020 and 2027 bonds
- (IN) India sells total INR180B vs. INR180B indicated in 3-month, 6-month and 12-month bills
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx50 +0.1% at 3,361, FTSE +0.2% at 7,317, DAX +0.2% at 12,176, CAC-40 +0.2% at 5,375; IBEX-35 +0.2% at 9,465, FTSE MIB -0.1% at 21,218, SMI +0.3% at 8,939, S&P 500 Futures -0.1%]
- Market Focal Points/Key Themes: European indices open higher across the board and maintain in the green as the session wore on; risk sentiment improved by positive outlook on Brexit negotiations; Israel closed for holiday; materials sector leads better performers at the open; healthcare sector underperforming; Danske Bank CEO steps down following results of investigation in Estonia money laundering probe; Chile closed for holiday; upcoming earnings expected in the US session include Union Pacific and Copart
Equities
- Consumer discretionary: Adecco ADEN.CH -4.7% (results), Ceconomy CEC.DE -5.4% (cuts outlook), Kingfisher KGF.UK -6.0% (results), Tarkett TKTT.FR -8.5% (new interim CEO), Tomtom TOM2.NL -5.6% (no longer target of Google)
- Energy: Orsted ORSTED.DK +2.2% (asset sale)
- Financials: Danske Bank DANSKE.DK -5.9% (CEO steps down, cuts outlook)
- Healthcare: Argenx ARGX.BE -4.4% (prices ADS), Bavarian Nordic BAVA.DK +2.4% (study submission, order), Pharming Group PHARM.NL -27.4% (receives response from FDA)
- Industrials: Babcock BAB.UK +5.3% (trading update), Gaztransport Et Technigaz GTT.FR -4.1% (analyst action)
- Technology: Aveva Group AVV.UK +3.7% (capital markets update)
- Telecom: Iliad ILD.FR -1.8% (analyst action)
Speakers
- (UK) UK PM May: EU needs to advance its position on Brexit – German press
- (JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target – post rate decision press conference
- (CN) China Foreign Ministry: China does not interfere in other countries internal affairs
- (SE) Sweden PM Lofven: preparations been made in case of no Brexit deal; orderly Brexit most likely scenario -(IQ) Iraq Gov official: 2019 draft budget assumes $55-60bbl
- (CN) China PBOC: Banks should increase financing support to private companies
Currencies
- GBPUSD rose to over 1.32 rising to 8 week high following the stronger than expected inflation data out of the UK, and taking out key resistance at 1.3213, before fading some of the move.
Fixed Income
- Bund Futures trades at 158.46 down 22 ticks as German 10-year Bund yield touches 0.50% for the first time since mid-Jun. Resistance moves to 161.82 then 163. A downside break of 158.25 sees 157.69 initially.
- Gilt futures trades at 120.71 down 39 ticks following the move in Treasuries. Continued support at 120.50, with a continued move higher targeting 123.93 then 124.00.
- Wednesday ‘s liquidity report showed Tuesday’s excess liquidity fell from €1.881T to €1.867T. Use of the marginal lending facility rose from €93M to €119M.
- Corporate issuance saw 8 high grade issuers raise $12.3B in the primary market
Looking Ahead
- 06:00 (PT) Portugal Aug PPI M/M: No est v 0.2% prior; Y/Y: No est v 4.4% prior
- 07:00 (US) MBA Mortgage Applications w/e Sept 14th: No est v % prior
- 08:05 (UK) Baltic Dry Bulk Index
- 08:30 (US) Q2 Current Account: No est v -$124.1B prior
- 08:30 (US) Aug Housing Starts: No est v 1.17M prior; Building Permits: No est v 1.31M prior
- 09:00 (RU) Russia Aug Real Retail Sales Y/Y: No est v 2.5% prior
- 09:00 (RU) Russia Aug Unemployment Rate: No est v 4.7% prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 15:00 (AR) Argentina Q2 GDP Q/Q: No est v 1.1% prior; Y/Y: No est v 3.6% prior
