Notes/Observations
- PM Johnson Brexit plan goes to Supreme Court (decision seen on Thursday)
- US-China set date for mid-level trade talks in preparation of Oct key meeting
- German ZEW Survey mixed in Sept with the expectation outlook rebounding a bit
Asia:
- China working-level trade team to visit the US on Sept 18th (Wed); the Chinese group will include Deputy Finance Minister Liao Min
- President Trump: To enter trade agreement with Japan in the coming weeks (as speculated); reached agreement regarding tariff barriers with Japan. Confirms the US to also enter into agreement with Japan related to digital trade.
- Japan Fin Min Aso: US/Japan trade agreement would not include currency clause
- Japan’s Foreign Min Motegi: US-Japan trade deal did not agreed on autos. Japan wanted written confirmation the US would refrain from added tariffs on Japanese auto exports
- RBA Sept Minutes reiterated stance that Board would consider further policy easing if needed to support growth and inflation targets. Reasonable to expect an extended period of low interest rates to achieve employment & inflation goals
- Hong Kong Chief Exec Lam: Escalating violence would only deepen division in Hong Kong; Police treat everyone equally; Stopping the violence remains the priority. To hold meeting with community next week and engage in open dialogue
Europe/Mideast:
- Former Italy PM Renzi planning to leave Democrat party (PD) to form his own new party, but has said he will continue to support PM Conte
Brexit:
- UK Supreme Court to hear two appeals that will determine whether PM Johnson acted lawfully in suspending Parliament for five weeks
Americas:
- President Trump: it’s looking like Iran was responsible for attacks on Saudi oil facilities; doesn’t want war with Iran but the US is prepared
Energy:
- Iran President Rouhani: Saudi Aramco attacks was a reciprocal response to aggression against Yemen; the Yemeni people are defending themselves
- Saudi Arabia Foreign Min confirmed that Saudi Aramco attack cut 50% of country’s oil production. Preliminary investigations showed Iranian weapons were used in the attacks
- Saudi said to have restored one-third of its oil production after Saturday’s attacks (as rumored according to Refinitiv tracking data)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.05% at 389.32, FTSE +0.24% at 7,339.15, DAX -0.14% at 12,363.32, CAC-40 +0.12% at 5,608.68, IBEX-35 -0.41% at 9,015.15, FTSE MIB -0.17% at 21,932.50, SMI +0.39% at 10,008.50, S&P 500 Futures -0.05%]
- Market Focal Points/Key Themes: European Indices trade mixed, after a mixed session in Asia and slightly lower US Index futures. Crude futures consolidate following sharp gains yesterday on talks Saudi Aramco has restored a third of its oil production following the attacks. On the corporate front, shares of Tom Tailor trades sharply higher as the company notes its in final negotiations on new financing structure with Fosun and banks; Zalando declines over 10% as Kinnevik places 13.1M shares, while CellaVision gains on the acquisition of Ral Diagnostics. On the earnings front, Virback gains over 10% on strong results and guidance; while Sirius Minerals declines over 50% on earnings, and an update over a proposed $500M note offering; Staffline declines over 20% on earnings and a profit warning, while Smart Metering Systems falls on earnings and a profit warning. Looking ahead notable earners include Cracker Barrel, Apogee Enterprises and Destination Maternity.
Equities
- Consumer discretionary: Ocado [OCDO.UK] +1% (trading update), Zalando [ZAL.DE] -10% (stake), Staffline Group [STAF.UK] -20% (earnings; no dividend), Tom Tailor [TTI.DE] +13% (final negotiations on new financing structure), Watchstone Group [WTG.UK] +6% (divestment), Actia Group [TI.FR] +2.5% (earnings)
- Telecom: Sistema [AFKS.UK] +7% (share buyback)
- Technology: Bango [BGO.UK] -5% (earnings), Soitec [SOI.FR] -3% (placement)
- Materials: Sirius Minerals [SXX.UK] -52% (earnings; financing update)
Speakers
- Swiss SECO Sept Economic Forecasts cut its 2019 GDP from 1.2% to 0.8% while maintaining 2020 GDP at 1.7%. The govt also cut its 2019 CPI from 0.6% to 0.5% and d 2020 CPI from 0.6% to 0.4%. SECO added that in the coming year, Swiss economy was set to brighten only gradually.
- Sweden Central Bank (Riksbank) Sept Minutes noted that the domestic economy had entered calmer phase but risk of a slowdown had increased. Domestic situation provided greater freedom to deviate from overseas easing policies. One member did have doubts on rate path
- Czech Central Bank Holub (chief economist): Interest rate stability was appropriate in current environment; debate on policy would whether to hike or hold. Rate cut may not be necessary throughout the economic slowdown
- Ireland Agricultural Min Creed reiterated EU stance that backstop was critical for the country and yet to see credible alternatives from UK on backstop
- BOJ said to see no backlash if a rate cut becomes necessary
- Bank of Korea (BOK) Aug Minutes: Majority of Board said to be unclear if more rate cuts were needed. One member saw 2019 GDP growth could be below 2.0%. A member saws 2019 GDP growth below the 2.2% forecast. A member saw the risk of a prolong economic slump as rising. A member noted that was hard to be optimistic on 2020 growth. A member noted that couldnot say whether if Repo Rate of 1.25% was a low level
- Energy Sec Perry: Confident oil market remained well-supplied, large price spike was unlikely
- Russia Energy Min Novak: Oil price spike following the attack on Saudi Aramco facilities was expected; higher prices reflecting uncertainties and risks
- Iran supreme leader Khamenei: If U.S. repented & returned to JCPOA it withdrew from, then it could join & talk with Iran among other members of the deal
Currencies/Fixed Income
- GBP/USD was softer for a 2nd straight session as participants awaited the UK Supreme Court decision PM Johnson’s suspension of Parliament. The court began the hearings today with a decision expected on Thursday. The recent meeting between Johnson and EU’s Juncker failed to produce any meaningful results with EU officials noting that they yet to see credible alternatives from UK on backstop
- EUR/USD probed below the 1.10 level early in the session but failed to move below the post ECB stimulus level of 1.0925. German ZEW survey was mixed with expectations improving somewhat. Pair at 1.1005 just ahead of the US morning. Dealers noted that the pair could hit new lows for 2019 if the Federal Reserve dialed back on further rate cuts at its meeting on wed
Economic Data
- (ES) Spain Q2 labour Costs Y/Y: % v 2.1% prior
- (SE) Sweden Aug Unemployment Rate: 7.1% v 6.3%e; Unemployment Rate (Seasonally Adj): 7.4% v 6.8%e; Trend Unemployment Rate: 7.1% v 7.0% prior
- (HK) Hong Kong Aug Unemployment Rate: 2.9% v 2.9%e
- (DE) Germany Sept ZEW Current Situation Survey: -19.9 v -15.0e (lowest since 2010); Expectations Survey: -22.5 v -38.0e
- (EU) Euro Zone Sept ZEW Expectations Survey: -22.4 v -43.6 prior
Fixed Income Issuance
- (ID) Indonesia sold total IDR7.05T vs. IDR7.0T target in 6-month Bills & 2-year,4-year,7-year and 15-year Islamic bonds (Sukuk)
- (ES) Spain Debt Agency (Tesoro) sold total €1.82B vs. €1.5-2.5B indicated range in 3-month and 9-month Bills
- (ZA) South Africa sold total ZAR4.53B vs. ZAR4.53B indicated in 2032, 2035 and 2048 bonds
Looking Ahead
- (FI) Finland Govt holds 2020 budget talks – 05:30 (UK) Weekly John Lewis LFL Sales data
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 05:40 (FR) ECB’s Villeroy (France) in London
- 06:30 (EU) ESM to sell €3.0B in 6-month bills; Avg Yield: % v -0.5875% prior; Bid-to-cover: x v 2.4x prior (Aug 20th 2019)
- 06:45 (US) Daily Libor Fixing
- 07:45 (US) Goldman Economist Chain Store Sales
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (RU) Russia announces upcoming OFZ Bond issuance
- 08:30 (CA) Canada July Manufacturing Sales M/M: -0.1%e v -1.2% prior
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (RU) Russia Aug PPI M/M: -0.1%e v -2.7% prior; Y/Y: -0.2%e v +1.1% prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:15 (US) Aug Industrial Production M/M: +0.2%e v -0.2% prior; Capacity Utilization: 77.6%e v 77.5% prior; Manufacturing Production: +0.2%e v -0.4% prior
- 10:00 (US) Sept NAHB Housing Market Index: 66e v 66 prior
- 10:30 (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: No est v -0.4% prior
- 10:30 (CA) Canada to sell 3-month, 6-month in and 12-month Bills
- 12:35 (IR) ECB’s Lane (Ireland, chief economist) in Luxembourg
- 13:10 (FR) ECB’s Coeure (France) in Luxembourg
- 15:00 (CO) Colombia July Industrial Production Y/Y: No est v -0.2% prior
- 16:00 (US) July Net Long-term TIC Flows: No est v $99.1B prior; Total Net TIC Flows: No est v $1.7B prior
- 16:30 (US) Weekly API Oil Inventories
