Awaiting US Job Reports

Notes/Observations

• Heighten US-China trade tensions
• German Jun Production suggesting country recovering a bit faster than initially expected but remained significantly below its pre-crisis level
• Focus on US jobs report ans impact on markets; S&P 500 only approx 1% away from record close

Asia:

• China July Trade Balance: $62.3B v $42.6Be; Exports Y/Y: +7.2% v -0.7%e; Imports Y/Y: -1.4% v +0.9%e
• Japan Jun Household Spending Y/Y: -1.2% -7.8%e (9th straight decline)
• Japan Jun Labor Cash Earnings Y/Y: -1.7% v -3.0%e
• RBA Statement on Monetary Policy (SOMP) reiterated stance that would not increase the OCR target until there progress towards full employment and inflation targets. Maintained Dec 2020 GDP growth forecast at -6.0% while cutting June 2021 GDP growth from 7.0 to 4.0%. Also cut its Dec 2021 GDP growth from 6.0% to 5.0%
• RBA Assist Gov Ellis: Baseline Scenario assumed infection rates subside in Australia, no more lockdowns; It would take many years for GDP to return to pre coronavirus levels; Inability of US to control virus was a worry, Virus to weigh on US growth for some time

Coronavirus:

• Total global cases 19,025,580 (+1.5% d/d); total deaths: 713.9K (+1.0% d/d)

Americas:

• President Trump signed executive orders addressing threat posed by WeChat and TikTok; effective Sept 20th; Any company that fails to comply being subject to sanctions
• Pres Trump confirmed re-imposing some tariffs on Canadian aluminum industry citing Canada producers had broken their commitments
• Treasury Sec Mnuchin: Lots of issues are close to a compromise on but remain very far apart on some significant issues. The president’s first choice is to do a deal but he alternatives in executive orders
• White House Chief of Staff Meadows: If we don’t reach a top line number in these talks, there’s very little incentive to have further talks
• House Speaker Pelosi: We remain very far apart

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.49% at 360.70. FTSE -0.43% at 6,000.75, DAX -0.47% 12,532.65, CAC-40 -0.73% at 4,849.70, IBEX-35 -0.93% at 6,889.00, FTSE MIB -1.04% at 19,273.50, SMI -0.18% at 10,049.00, S&P 500 Futures -0.57%]
• Market Focal Points/Key Themes: European indices open mixed but turned down into the red as the session progressed (SMI being notable exception trading higher); outperforming sectors include telecom and health care; underperforming sectors include materials and consumer discretionary; risk off sentiment after President Trump signs order blocking WeChat and Tik Tok; reportedly Moderna gets contract for 4.5M does of vaccine from Switzerland; reportedly BP considering significant asset sale; Avacta enters collaboration to develop covid test; reportedly Neptune Energy considering some of Eni’s assets; earnings expected in the upcoming US session include Magna, Clear Channel, Dish Network and Amren

Equities

• Energy: Petroleum Geo-Services [PGS.NO] +33% (offer)
• Healthcare: Hikma Pharmaceuticals [HIK.UK] +10% (earnings)
• Industrials: Scapa [SCPA.UK] +24% (trading update), Airbus [AIR..FR] -1.5% (deliveries), Outokumpu [OUT1F.FI] -10% (earnings)
• Technology: Wirecard [WDI.DE] -3% (Singapore charges)

Speakers

• BOE’s Ramsden stated that Gilts yields were extraordinarily low. Debt was a necessary response to pandemic. Reiterated BOE stance that negative rates were in the toolkit but not needed at this time. BOE had no plans to purchase equities and equity EFTs
• UK Chancellor of the Exchequer Sunak (Fin Min) stated that remained confident that a Brexit deal was possible. Reiterates govt stance that not fair to extend furlough indefinitely as the program was not sustainable in the long-run. There was hardship ahead for many people and should be helping them for new opportunities. UK to borrow a significant amount for cost of support
• Germany Econ Min Altmaier: Rise in domestic virus infection rate threatens economic recovery
• Russia Central Bank official Tremasov reiterated CBR stance that had room to lower rates
• Poland Central Bank’s Kropiwnicki (hawk): Mild rate hikes would not harm domestic economy
• Saudi Arabia and Iraq reaffirmed commitment to OPEC+ production cut agreement (**Reminder: Reports circulated that Iraq was planning additional cut of 400Kb/d production in August to compensate for overproduction in prior OPEC+ agreement)

Currencies/ Fixed Income

• USD saw some retracement in its recent losing trend aided by some renewed trade tensions between US-China
• EUR/USD recent rally suggesting some signs of fatigue with 1.20 area proving to be formable resistance for the time being. Dealers cited that potential derailing of the budding economic recovery in Europe as a factor with Spain, Germany and France all recording jumps in the number of people infected with the virus during the course of the week.

Economic Data

• (NL) Netherlands Jun Manufacturing Production; Industrial Sales Y/Y: -8.5% v -21.8% prior
• (DE) Germany Jun Current Account Balance: €22.4B v €15.0Be; Trade Balance: €15.6B v €11.3Be; Exports M/M: 14.9% v 14.4%e; Imports M/M: 7.0% v 10.6%e
• (DE) Germany Jun Industrial Production M/M: 8.9% v 8.2%e; Y/Y: -11.7% v -11.4%e
• (FI) Finland Jun Preliminary Trade Balance: -€0.2B v -€0.3B prior
• (DK) Denmark Jun Industrial Production M/M: +4.0% v -3.0% prior
• (ZA) South Africa July Net Reserves: $48.1B v $46.3Be Gross Official Reserves: $57.9B v $53.0Be
• (NO) Norway Jun Industrial Production M/M: -2.2% v -0.9% prior; Y/Y: 3.1% v 3.1% prior
• (NO) Norway Jun Manufacturing Production M/M: +0.4% v -3.0% prior; Y/Y: -7.2% v -8.2% prior
• (NO) Norway Jun Credit Indicator Growth Y/Y: % v 4.6% prior
• (FR) France Jun Industrial Production M/M: 12.7% v 8.4%e; Y/Y: -11.7% v -12.9%e
• (FR) France Jun Manufacturing Production M/M: 14.4% v 13.0%e; Y/Y: -12.5% v -13.3%e
• (FR) France Jun Trade Balance: -€8.0B v -€7.5B prior; Current Account Balance: -€8.4B v -€8.5B prior
• (FR) France Q2 Preliminary Private Sector Payrolls Q/Q: -0.6% v -2.5% prior
• (ES) Spain Jun Industrial Production M/M: 14.0% v 10.0%e; Y/Y: -14.0% v -15.2%e; Industrial Production NSA (unadj) Y/Y: -9.6% v -27.8% prior
• (ES) Spain Jun House Transactions Y/Y: -34.3% v -53.7% prior
• (CH) Swiss July Foreign Currency Reserves (CHF): 845.0B v 851.1B prior
• (AT) Austria July Wholesale Price Index M/M: 0.9% v 1.4% prior; Y/Y: -4.6% v -5.1% prior
• (HU) Hungary Jun Preliminary Trade Balance: €0.7B v €0.4Be
• (MY) Malaysia end-July Foreign Reserves: $104.2B v $104.0B mid-month reading
• (SE) Sweden July Budget Balance (SEK): -34.4B v -56.5B prior
• (UK) July Halifax House Price index M/M: +1.6% v -0.1% prior; 3M/Y: 3.8% v 2.5% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 172.5K v 159.5K tons prior
• (CN) China July Foreign Reserves: $3.154T v $3.140Te (4th straight increase)
• (RU) Russia Narrow Money Supply w/e July 31st (RUB): 13.00T v 13.03T prior
• (IT) Italy Jun Total Trade Balance: €6.2B v €5.6B prior; Trade Balance EU: €1.6B v €1.5B prior
• (TW) Taiwan July Trade Balance: $5.4B v $4.2Be; Exports Y/Y: +0.4% v -1.4%e; Imports Y/Y: -6.8% v -3.1%e
• (CZ) Czech July International Reserves: $157.8B v $151.4B prior
• (CN) China Q2 Preliminary Current Account: +$119.6B v -$33.7B prior
• (GR) Greece July CPI Y/Y: -1.8% v -1.6% prior; CPI EU Harmonized Y/Y: -2.1% v -1.9% prior
• (GR) Greece Jun Industrial Production Y/Y: -4.9% v -7.5% prior
• (IS) Iceland July Preliminary Trade Balance (ISK): -12.4B v –12.9B prior
• (SG) Singapore July Foreign Reserves: $B v $312.5B prior

Fixed Income Issuance

• (IN) India sold total INR340B vs. INR300B indicated in 2025, 2034 and 2050 bonds

Looking Ahead

• (IT) Bank of Italy Balance-Sheet Aggregates
• 05:30 (ZA) South Africa to sell combined ZAR2.0B in I/L 2029, 2046 and 2050 Bonds
• 06:00 (PT) Portugal Jun Trade Balance: No est v -€0.9B prior
• 06:00 (IE) Ireland July Live Register Monthly Level: No est v -14.2K prior; Live Register Level: No est v +213.7K prior
• 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively)
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico July CPI M/M: 0.7%e v 0.6% prior; Y/Y: 3.6%e v 3.3% prior; CPI Core M/M: 0.4%e v 0.4% prior
• 07:30 (IN) India Weekly Forex Reserve w/e July 31st: No est v $522.6B prior
• 08:00 (PL) Poland July Official Reserves: No est v $129.1B prior
• 08:00 (BR) Brazil July IBGE Inflation IPCA M/M: 0.4%e v 0.3% prior; Y/Y: 2.3%e v 2.1% prior
• 08:00 (CL) Chile July CPI M/M: +0.1%e v -0.1% prior; Y/Y: 2.5%e v 2.6% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) July Change in Nonfarm Payrolls: +1.48Me v +4.800M prior; Change in Private Payrolls: +1.18Me v +4.767M prior; Change in Manufacturing Payrolls: +261Ke v +356K prior
• 08:30 (US) July Unemployment Rate: 10.6%e v 11.1% prior; Underemployment Rate: No est v 18.0% prior; Participation Rate: 61.8%e v 61.5% prior
• 08:30 (US) July Average Hourly Earnings M/M: -0.5%e v -1.2% prior; Y/Y: 4.2%e v 5.0% prior; Average Weekly Hours: 34.4e v 34.5 prior
• 08:30 (CA) Canada July Net Change in Employment: +390.0Ke v +952.9K prior; Unemployment Rate: 11.1%e v 12.3% prior; Full Time Employment Change: No est v +488.1K prior; Part Time Employment Change: No est v +464.8K prior; Participation Rate: 64.5%e v 63.8% prior; Hourly Wage Rate Y/Y: 5.2%e v 6.8% prior
• 08:30 (CL) Chile July Trade Balance: $0.7Be v $1.4B prior; Total Exports: No est v $5.4B prior; Total Imports: No est v 4.0B prior; Copper Exports: No est v 2.7B prior
• 08:30 (CL) Chile July International Reserves: No est v $36.4B prior
• 09:00 (RU) Russia July Official Reserve Assets: $575.0Be v $568.9B prior
• 10:00 (US) Jun Final Wholesale Inventories M/M: -2.0%e v -2.0% prelim; Wholesale Trade Sales M/M: No est v 5.4% prior
• 10:00 (CA) Canada July Ivey Purchasing Managers Index (Seasonally Adj): No est v 58.2 prior; PMI (unadj): No est v 62.9 prior
• 11:00 (EU) Potential sovereign ratings after European close (Czech Republic Sovereign Debt to be rated by Moody’s; Russia Sovereign Debt to be rated by Fitch)
• 13:00 (US) Weekly Baker Hughes Rig Count
• 15:00 (US) Jun Consumer Credit: +$10.0Be v -$18.3B prior