• Week begins with risk appetite finding some fresh legs
  • This week’s focal point would be Jackson Hole, as the market would like to get more clues to the next steps of central bankers
  • Policy easing chorus has been getting louder in recent weeks; Germany govt might also consider fiscal stimulus if recession looked likely


  • China PBoC announced new interest rate reform plan, Loan Prime Rate (LPR) as the new Benchmark Reference Rate to be used by banks for lending (aimed at supporting funding for small businesses); to be set monthly; move seen as to further lower real interest rates
  • China’s State Council announced long-awaited interest rate reform aimed at lowering real interest costs and resolving “financing difficulty”. Measures include enhancing loan rate formation mechanism, improving transparency in loan rates and fees, and utilizing multiple monetary policy instruments to lower SME borrowing costs by 1%pt this year
  • China PBoC set its yuan reference rate: 7.0365 v 7.0312 prior (weakest since March 2008)
  • Hong Kong protesters turned out in force through heavy rain to march for an 11th straight weekend; tactics shift with peaceful march


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  • UK Govt said to be planning to end freedom of movement for EU citizens on day 1 of Brexit
  • Brexit Secretary Barclay signed order to repeal the 1972 Brussels Act ending all EU law in the UK; the repeal would take effect on Oct 31st
  • Germany officials said to have called on allies to hold firm in face of a ‘no deal’ Brexit
  • Germany govt said to be prepared for deficit spending if recession hits


  • President Trump got briefing from Wall Street CEOs Dimon, Corbat and Moynihan during stock market sell off this week. bank CEOs told Trump that the American consumer is strong, but the trade issue is hurting the outlook
  • President Trump reiterated stance that China tariffs had cost nothing or very little, China wanted to make a deal, we’ll see what happens; humanitarian outcome in Hong Kong would be good for trade deal; China President Xi had something in mind to do with trade, reiterated believe that China was not ready to make a deal
  • Trump Administration said to grant Huawei an additional 90 day extension on a license that allowed the company to conduct some business with US customers. However, President Trump stated over the weekend that US was open to not to doing business with Huawei; Huawei was a national security threat
  • White House advisor Kudlow: US and Chinese negotiators to speak in the next week or 10 days; if lower level talks panned out we would still have face to face meeting in Sept; China response to Hong Kong protests could impact trade talks. Saw no recession on the horizon for the US
  • Fitch cut Argentina sovereign rating two notches to CCC from B



  • Indices [Stoxx600 +0.61% at 371.88, FTSE +0.70% at 7,166.85, DAX +0.71% at 11,645.04, CAC-40 +0.60% at 5,332.43, IBEX-35 +0.55% at 8,717.85, FTSE MIB +1.02% at 20,530.50, SMI +0.51% at 9,778.00, S&P 500 Futures +0.72%]

Market Focal Points/Key Themes:


  • European Indices trade higher across the board following a higher session in Asia, and higher US Index futures particularly on news over the weekend that US could grant another temporary 90-days business operating license to Huawei. Bonds yields have risen slightly.
  • On the corporate front shares of Vapiano in Germany trade sharply lower following announced CEO resignation, while UK-listed retail giant Sainsbury gains after refuting press speculation regarding CEO planning to step down. Safestore rises 2% on announcement of forming JV with Carlyle. Metall Zug in Switzerland trades 1.5% lower following its earnings and CEO retirement.
  • On M&A front, shares of Countrywide on LSE trade almost 22% higher on press speculation that company attracted some takeover interest.
  • Looking ahead notable earners include Estee Lauder, Weibo Corp and QIWI.
  • Consumer discretionary: Vapiano [VAO.DE] -11.5% (CEO steps down), Norwegian Air [NAS.NO] +6% (divestment), Sainsbury [SBRY.UK] +2% (no CEO succession plans)
  • Materials: Metall Zug [METN.CH] -1.5% (earnings; CEO to retire)
  • Energy: Savannah Petroleum [SAVP.UK] +50% (receives consent)
  • Financials: Safestore [SAFE.UK] +2% (JV), Countrywide [CWD.UK] +21% (takeover interest), CYBG [CYBG.UK] +6% (analyst action)


  • Italy League party chief economist reiterated party stance that must cut taxes and raise budget deficit to GDP ratio
  • UK Labour party leader Corbyn said to meet with opposition parties during week of Aug 26th to discuss strategy to avoid a no-deal Brexit outcome
  • China Foreign Ministry spokesperson Geng Shuang urged cancellation of US arms sale to Taiwan; US to bear all consequences of this sale

Currencies/ Fixed Income

  • This week’s focal point would be Jackson Hole symposium that begins on Friday (Aug 23rd) where the market would likely to get more clues to the next steps from central bankers. Dealers noted that policy easing chorus has been getting louder in recent weeks. Fed Chair Powell said to likely to use Jackson Hole to suggest that the central bank was ready to Cut
  • EUR/USD steady just above the 1.11 level on reports that the German govt might also consider fiscal stimulus if recession looked likely. This would be on top the expected ECB stimulus likely to be announced next month (Sept). Levels to the upside are in the range of 1.125 and to the downside1.103.
  • GBP/USD was slightly softer in the session ahead of UK PM Johnson trip to the heart of Europe. Johnson to take is message that Britain was leaving the European Union on Oct. 31st with or without a deal. Levels to the upside are in the range of 1.221 and to the downside 1.201.

Economic Data

  • (AT) Austria July CPI M/M: -0.4% v +0.1% prior; Y/Y: 1.4% v 1.6% prior
  • (CH) Swiss Weekly Total Sight Deposits (CHF): 589.3B v 585.5B prior; Domestic Sight Deposits: 475.3B v 469.0B prior
  • (IT) Italy Jun Current Account Balance: €5.1B v €2.7B prior
  • (EU) Euro Zone Jun ECB Current Account Balance (Seasonally adj): €18.4B v 30.3B prior
  • (HK) Hong Kong July Unemployment Rate: 2.9% v 2.8%e (1st rise since Mar 2018)
  • (EU) Euro Zone July Final CPI Y/Y: 1.0% v 1.1%e; CPI Core Y/Y: 0.9% v 0.9%e; CPI M/M: -0.5% v -0.4%e

Fixed Income Issuance

  • None seen

Looking Ahead

  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v -0.3% prior
  • 06:00 (RO) Romania to sell Bonds
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (BR) Brazil Aug IGP-M Inflation (2nd Preview): No est v 0.5% prior
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 07:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming bill sale
  • 08:30 (CL) Chile Q2 GDP Q/Q: 0.8%e v 0.0% prior; Y/Y: 1.9%e v 1.6% prior
  • 08:30 (CL) Chile Q2 Current Account Balance: -$1.9Be v -$1.0B prior
  • 09:00 (FR) France Debt Agency (AFT) to sell combined €4.0-5.2B in 3-month, 6-month and 12-month Bills
  • 09:00 (RU) Russia July Unemployment Rate: 4.5%e v 4.4% prior; Real Wages Y/Y: 2.6%e v 2.3% prior
  • 09:00 (RU) Russia July Real Retail Sales Y/Y: 1.5%e v 1.4% prior
  • 10:15 (US) Fed performs permanent open market operations (POMO)
  • 11:30 (US) Treasury to sell 3-month and 6-month bills
  • 13:30 (US) Fed’s Rosengren (hawk, dissenter)


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