Various July UK Data Beats Expectations

Notes/Observations

• Plethora of UK data in session bests expectations (Monthly GDP, Production and trade data)
• Euro Zone Investor confidence rebounds from 6-yerar lows in Sept
• Markets expect major central banks to cut interest rates to bolster economic growth in the coming weeks; ECB poised to start the cycle this Thursday
• China sent the clearest signal to stimulate its economy last week

Asia:

• Japan Q2 Final GDP data revised lower (QoQ: 0.3% v 0.4% prelim; GDP Annualized QoQ: 1.3% v 1.8% prelim
• China Aug Trade Balance: $34.8B v $44.3Be;Exports registered its largest decline since June while imports fell for the 4th straight month
• China Aug Foreign Reserves: $3.1072T v $3.100Te; gold holdings rise for the 10th straight month (China has added almost 100 tons of gold to its reserves since it resumed buying in December)
• China is likely to cut MLF rates later in Sept partly due to expectations the Fed will cut its key rate

Europe/Mideast:

• Amber Rudd quits UK Cabinet and leaves Conservative Party over PM Johnson’s purge of the party and his handling of Brexit
• UK PM Johnson said to have signaled to cabinet ministers that the government would have to accept a further three-month delay to Brexit if it is forced on him by the courts.
• UK PM Johnson said to have drawn up plan to legally stop Brexit extension if MPs vote against general election (Note: late on Monday, Sept 9th UK Parliament is expected to vote on holding early general elections (needs 2/3 majority to pass)
• Times/YouGov poll on possible elections gives the Tories a 14 point over Labour – Italian govt to face several confidence votes in Lower House. PM Conte to address Parliament before 1st vote expected this afternoon

Energy:

• Saudi Arabia appointed Prince Abdulaziz as Energy Min, replacing Khalid al-Falih

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 0.00% at 387.14, FTSE -0.22% at 7,266.35, DAX +0.22% at 12,218.96, CAC-40 -0.07% at 5,599.98, IBEX-35 +0.20% at 9,008.45, FTSE MIB +0.18% at 21,986.50, SMI +0.22% at 10,095.50, S&P 500 Futures +0.20%]
• Market Focal Points/Key Themes: European Indices trade mixed following a mostly firmer session in Asia and higher US Index futures, as trade optimism over the weekend as well as stimulus in China has helped maintain the positive tone. On the corporate front shares of Intu Properties gains on reports that Orion Capital Managers are in early stage talks for seeking buyers for Intu; Lar Espana Real Estate also gains on talks of being acquired for over €700M, while Air France declines on talks its to bid for bankrupt airline Aigle Azur Airways. Elsewhere shares of LPKF gain over 4% after raising its outlook; Air Partner gains following a trading update, while Associated British Foods declines 3 % on a trading update; Singulus Tech falls after a profit warning and Abcam declines sharply after earnings and new longer term forecasts. Looking ahead notable earners include Lighinthebox Holdings and Wanda Sports Group.

Equities

• Consumer discretionary: Air France [AF.FR] -9% (M&A speculation; load factor), AB Foods [ABF.UK] -3.5% (trading update), Givaudan [GIVN.CH] +1% (analyst action)
• Financials: Intu Properties [INTU.UK] +15.5% (interest)
• Healthcare: Recordati [REC.IT] -4% (analyst downgrade)
• Industrials: Nordex AG [NDX1.DE] +3% (analyst action), Hapag-Lloyd [HLAG.DE] -6.5% (analyst action)
• Technology: Prosieben SAT.1 [PSM.DE] +4.5% (analyst upgrade), Singulus Technologies [SNG.DE] -4% (withdraws outlook)

Speakers

• BOE’s Vlieghe stated that BOE analysis ruled out taking rates negative. Not much room for Gilt yield to fall much further. More QE would unlikely provide more stimulus
• German Foreign Min Maas: we remain open to discussion in principl
• Italy PM Conte: Needed to define reform agenda asape on Brexit
• Ireland PM Varadkar: Brexit story will not end on Oct 31st as there is no such thing as a clean break. Open to realistic and legally binding alternatives on Irish backstop
• UK PM Johnson reiterated stance that Reiterates stance that must leave EU by Oct 31st; wants to leave with a deal
• OPEC Sec Gen Barkindo: OPEC-Non-OPEC Joint Ministerial Monitoring Committee (JMMC) could discuss new targets when it meets later this week
• Saudi Energy Min Abdulaziz: Country committed to work with oil producers both inside and outside of OPEC. No radical change in oil policy
• Iraq oil Min Ghadhban: Current oil production at 4.6M bpd. Too early to talks about deeper production cuts by OPEC+
• Iran said to have told International Atomic Energy Agency (IAEA) it plans to produced enriched uranium centrifuges

Currencies/Fixed Income

• EUR/USD was little changed as markets awaited the ECB decision on Thursday. Weakening economic prospects and subdued inflation warrant further ECB policy stimulus, but there appears to be no unanimity for a big package of measures
• GBP currency was initially lower in the session as dealers noted that UK PM Johnson was pushing on with his hardline Brexit strategy, even as he faced losing another vote in Parliament Monday. Better UK data in the session helped Sterling recover some composure

Economic Data

• (NL) Netherlands July Manufacturing Production M/M: +0.5% v -1.2% prior; Y/Y: -0.2% v -2.7% prior; Industrial Sales Y/Y: -6.6% v -9.8% prior
• (CH) Swiss Aug Unemployment Rate: 2.1%e v 2.1%e; Unemployment Rate (Seasonally adj) : 2.3%e v 2.3%e
• (DE) Germany July Current Account Balance: €22.1B v €16.4Be ; Trade Balance: €21.4B v €17.4Be; Exports M/M: +0.7% v -0.5%e; Imports M/M: -1.5% v -0.3%e
• (NO) Norway July GDP M/M: +1.0% v -0.2% prior; GDP Mainland M/M: 1.0% v 0.3%e
• (DK) Denmark July Current Account Balance (DKK): No est v 15.2B prior; Trade Balance: No est v 7.4B prior
• (FR) Bank of France Aug Industrial (Business) Sentiment: 99 v 96e
• (SE) Sweden Aug SEB Swedish Housing-Price Indicator: 38 v 38 prior
• (CZ) Czech Aug Unemployment Rate: 2.7% v 2.7%e
• (CH) Swiss Weekly Total Sight Deposits (CHF): 591.6B v 591.6B prior; Domestic Sight Deposits: 477.0B v 475.5B prior
• (CZ) Czech Aug International Reserves: $144.9B v $145.0B prior
• (TW) Taiwan Aug Trade Balance: $6.0B v $4.4Be; Exports Y/Y: 2.6% v 0.9%e; Imports Y/Y:-2.7 % v +1.2%e
• (EU) Euro Zone Sept Sentix Investor Confidence: -11.1 v -13.4e
• (UK) July Monthly GDP M/M: 0.3% v 0.1%e; 3M/3M: 0.0% v -0.1%e
• (UK) July Industrial Production M/M: +0.1% v -0.3%e; Y/Y: -0.9% v -1.1%e
• (UK) July Manufacturing Production M/M: +0.3% v -0.3%e; Y/Y: -0.6% v -1.2%e
• (UK) July Construction Output M/M: 0.5% v 0.2%e; Y/Y: 0.3% v 0.1%e
• (UK) July Index of Services M/M: 0.3% v 0.1%e; 3M/3M: 0.2% v 0.1%e
• (UK) July Visible Trade Balance: -£9.1B v -£9.6Be; Overall Trade Balance: -£0.2B v -£1.5Be; Trade Balance Non EU: -£1.9B v -£3.0Be
• (GR) Greece July Industrial Production Y/Y: -2.1% v +0.3% prior
• (HU) Hungary Aug YTD Budget Balance (HUF): -510.8B v -352.7B prior

Fixed Income Issuance

• None seen

Looking Ahead

• (UR) Ukraine Aug CPI M/M: -0.3%e v -0.6% prior; Y/Y: 8.7%e v 9.1% prior
• (UK) Parliament votes on holding early general elections (needs 2/3 majority)
• (IE) Ireland Debt Agency (NTMA) announcement for upcoming IGB bond auction for Thursday, Sept 12th
• (IT) Italy Debt Agency (Tesoro) announcement for upcoming BTP bond auction for Thursday, Sept 12th
• 05:30 (DE) Germany to Sell €2.0B in 6-month BuBubill
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 06:00 (PT) Portugal Monthly Employment Report
• 06:00 (PT) Portugal Trade Balance: No est v -€1.8B prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Aug CPI M/M: 0.0%e v 0.4% prior; Y/Y: 3.2%e v 3.8% prior; CPI Core M/M: 0.2%e v 0.3% prior
• 07:00 (MX) Mexico Aug Vehicle Production: No est v 292.6K prior; Vehicle Exports: No est v 270.9K prior
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations:: Expected Inflation Next 12 Mont: No est v 12.8% prior
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size on upcoming 6-month and 12-month Bill auction (held on Tuesday)
• 08:00 (BR) Brazil July Retail Sales M/M: No est v 0.1% prior; Y/Y: No est v -0.3% prior
• 08:00 (BR) Brazil July Broad Retail Sales M/M: No est v 0.0% prior; Y/Y: No est v 1.7% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 09:00 (RU) Russia Q2 Preliminary GDP (2nd reading) Y/Y: 0.9%e v 0.9% advance
• 09:00 (FR) France Debt Agency (AFT) to sell combined €3.6-4.8B in 3-month, 6-month and 12-month Bills
• 09:45 (UK) BOE buys £1.15B in APF Gilt purchase operation (4-7-years)
• 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
• 15:00 (US) July Consumer Credit: $16.0Be v $14.6B prior