China-US Tensions Remain In Focus

Notes/Observations

• Heighten US-China trade tensions; China names retaliatory measures on individuals in response to US sanctions on HK Security Law.
• President Trump issued series of executive orders aimed at extending some pandemic relief measures

Asia:

• Japan and UK reportedly largely agree to post-Brexit trade terms. Japan Foreign Min confirmed UK and Japan had substantial agreement in most areas for the trade deal and both sides agreed to accelerate talks. Aiming to agree on a trade deal by extending Japan’s current trade standards with the EU on financial and digital services. Both sides said to be keen to make a deal by year end and aiming for a formal agreement in principle by the end of August
• China July CPI Y/Y: 2.7% v 2.6%e
• Hong Kong Police confirmed arresting 7 people today under the Hong Kong Security Law. Added that more arrests were possible as Operations remained in progress (Note HK media tycoon Jimmy Lai, a Pro democracy Hong Konger and founder of Giordano had been arrested)
• Nikkei 225 closed for holiday

Coronavirus:

• Total global cases 19,792,519 (+4.0% vs. Fri); total deaths: 730.1K (+2.3% d/d)

Europe:

• Poll saw about 33% of UK businesses planning to cut jobs by October when furlough scheme ends

Americas:

• President Trump signed executive actions on coronavirus economic relief. Provided a payroll tax holiday to US earnings under $100,000, 2) defer student loan payments through the year end, 3) discourage evictions, and 4)extend enhanced unemployment benefits that expired last week. (Note: Actions likely to face legal challenges’
• House Speaker Pelosi and Treasury Sec Mnuchin agree to restart talks to a Covid19 relief bill. Both agreed to a narrower bill that would extend some aid until year end and revisit the need for more federal assistance in January
• Fed’s Evans (dove, non-voter) reiterated another coronavirus aid package was incredibly important; noted the most pessimistic economic projections assume there is no support for state and local governments

Energy:

• Saudi Aramco’ Q2 Net $6.6B v $24.7B y/y (profits fell 73% due to the C-19 outbreak). Reaffirmed their plans to pay $75B in dividends in 2020.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.2% at 364.4, FTSE +0.3% at 6048, DAX flat at 12675, CAC-40 +0.4% at 4908, IBEX-35 +0.7% at 7004, FTSE MIB +0.4% at 19584, SMI +0.5% at 10117, S&P 500 Futures +0.2%]
• Market Focal Points/Key Themes: European indices open modestly higher across the board, but turned around to trade mixed as the session progressed; better peforming sectors lead by financials and then energy; underperforming sectors include technology and health care; Alstom affirms commitment to Bombardier deal; Saudi Aramco reported over the weekend a significant drop in earnings; reportedly German companies see coronavirus restrictions continuing for at least another eight months; earnings expected in the upcoming US session include Marriott International, Duke Energy and Barrick Gold

Equities

• Consumer discretionary: Superdry [SDRY.UK] +20% (trading update; financing) , Bertrandt [BDT.DE] flat (earnings)
• Healthcare: Epigenomics [ECX.DE] +12% (article), Pharming [PHARM.NL] +12% (study), Roche [ROG.CH] -0.2% (study results; FDA approval)
• Industrials: Clarkson [CKN.UK} +11% (earnings)

Speakers

• EU Economic Commissioner Gentiloni (Italy): EU expected precise plans from Italy on EU funds
• Bank of Italy (BOI): Jun Non-performing loans at €68.1B v €71.2B prior – German SDP party leadership said to have proposed Fin Min Scholz as Chancellor candidate (Note: Next Federal election schedule in late 2021)
• IFO Survey noted that German Companies expected public restrictions from coronavirus to continue for another 8.5 Months. Leisure sector in particular fear a longer period of restrictions (13-months). Postal and courier services expect the shortest period of restrictions (6.6 months)
• Poland Central Bank’s Gatner stated that interest rates were too low, hike should be considered
• India trade Min Goyal: Moving towards more balanced trade with several countries and regions. July exports at 91% versus year-ago level
• China Foreign Ministry spokesperson: Prepared for obstacles and setbacks in relations with US. Reiterated firm opposition to US-Taiwan exchanges and hoped US could work with Beijing. US sanctioning HK officials was interference and would sanction US officials in response (names US Senators Cruz and Rubio)

Currencies/Fixed Income

• Risk appetite found some difficulty in finding some traction as the week began. Heighten US-China trade tensions continued to percolate after China named retaliatory measures on individuals in response to US sanctions on HK Security Law (included sanctions on Senators Cruz and Rubio). President Trump issued series of executive orders aimed at extending some pandemic relief measures but would likely face legal challenges.
• EUR/USD lower by 0.2% at mid-session around the mid-1.17 area. The 1.19 level continued to provide some significant resistance after several failed attempts in recent week to bust above it.
• USD/JPY hovering around the 106 level with little impetus with japan closed for holiday.

Economic Data

• (SE) Sweden Aug SEB Swedish Housing-Price Indicator: 40 v 24 prior
• (FI) Finland Jun Industrial Production M/M: -0.8% v -1.8% prior; Y/Y: -6.9% v -4.6% prior
• (CH) Swiss July Unemployment Rate: 3.2% v 3.2%e; Unemployment Rate (seasonally adj): 3.3% v 3.4%e
• (NO) Norway July CPI M/M: 0.7% v 0.5%e; Y/Y: 1.3% v 1.2%e
• (NO) Norway July CPI Underlying M/M: 0.9% v 0.5%e; Y/Y: 3.5% v 3.1%e
• (NO) Norway July PPI M/M: 0.0% v -1.3% prior; Y/Y: -13.3% v -14.4% prior
• (DK) Denmark July CPI M/M: 0.8% v 0.1% prior; Y/Y: 0.5% v 0.3% prior
• (DK) Denmark July CPI EU Harmonized M/M: 0.9% v 0.1% prior; Y/Y: 0.4% v 0.2% prior
• (DK) Denm ark Jun Current Account Balance (DKK): 14.7B v 12.2B prior; Trade Balance: 8.6B v 8.8B prior
• (FR) Bank of France July Industrial (Business) Sentiment: 99 v 92e
• (AU) Australia July Foreign Reserves: A$59.9B v A$61.5B prior
• (TR) Turkey May Unemployment Rate: 12.9% v 12.8% prior
• (SE) Sweden Jun Household Consumption M/M: 2.9% v 2.0% prior; Y/Y: -5.8% v -9.2% prior
• (CH) Swiss weekly Total Sight Deposits (CHF): 695.8B v 693.7B prior; Domestic Sight Deposits: 628.5B v 625.5B prior
• (EU) Euro Zone Aug Sentix Investor Confidence: -13.4 v -16.0e

Fixed Income Issuance

• None seen

Looking Ahead

• (UR) Ukraine July CPI M/M: -0.2%e v 0.2% prior; Y/Y: 2.8%e v 2.4% prior
• (MX) Mexico July Nominal Wages: No est v 4.6% prior
• 05:30 (DE) Germany to sell combined €8.0B in 3-month and 9-month Bubills
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 6-month and 12-month bills
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 06:00 (IL) Israel July Consumer Confidence: No est v 63 prior
• 06:00 (NO) Norway Parliament Hearing on Wealth Fund CEO Hiring Process
• 06:00 (IL) Israel to sell Bonds
• 06:00 (RO) Romania to sell RON300M in 4.15% 2030 Bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Aug IGP-M Inflation (1st Preview): 1.2%e v 1.2% prior
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:15 (CA) Canada July Annualized Housing Starts: 205.0Ke v 211.7K prior
• 08:50 (FR) France Debt Agency (AFT) to sell €5.6-6.8B in 3-month, 6-month and 12-month bills
• 09:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 09:45 (EU) ECB weekly QE bond buying update
• 10:00 (US) Jun JOLTS Job Openings: 5.300Me v 5.397M prior
• 10:30 (TR) Turkey July Cash Budget Balance (TRY): No est v -26.8B prior
• 11:30 (US) Treasury to sell 13-week and 26-week bills
• 16:00 (US) Weekly Crop Progress Report
• 18:00 (NZ) New Zealand July Heavy Truckometer M/M: No est v 14.5% prior
• 18:45 (NZ) New Zealand July Total Card Spending M/M: No est v 19.1% prior; Retail Card Spending M/M: No est v 16.3% prior
• 19:01 (UK) July BRC Sales Like-For-Like Y/Y: No est v 10.9% prior
• 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 88.6 prior
• 19:50 (JP) Japan Jun Current Account Balance (BOP basis): ¥132.6Be v ¥1.177T prior; Adjust Current Account: ¥1.001Te v ¥821.1B prior; Trade Balance: -¥110.0Be v -¥556.8B prior
• 19:50 (JP) Japan July Bank Lending Y/Y: No est v 6.2% prior; Bank Lending (ex-trusts) Y/Y: No est v 6.5% prior
• 20:00 (SG) Singapore Q2 Final GDP Q/Q: -43.0%e v -41.2% prelim; Y/Y: -12.6%e v -12.6% prelim
• 21:30 (AU) Australia July Business Confidence: No est v 1 prior; Business Conditions: No est v -7 prior -23:00 (TH) Thailand to sell THB5.0B in 2049 bonds – 23:30 (HK) Hong Kong to sell 3-month and 6-month bills