Notes/Observations
- France, Sweden and Italian Aug confidence data rises from month ago levels
- Markets await Fed Chair Powell’s speech for clarity on monetary policy outlook; speculation he would will tweak its policy framework to help push up inflation.
- Hurricane Laura makes landfall in SW Louisiana as a Cat 4 storm
Asia:
- Bank of Korea (BOK) left the 7-Day Repo Rate unchanged at 0.50% (as expected); cut 2020 GDP outlook to a larger contraction and remains opens to additional stimulative measures
- China July Industrial Profits Y/Y: 19.6% v 11.5% prior (fastest rise since mid-2018, 3rd straight increase)
- BOJ Official Suzuki stated that the BoJ’s monetary policy framework was functioning,. He reiterated view that needed to watch for impacts of side effects; but benefits of monetary easing were exceeding costs for now. Reiterated would ease monetary policy further without hesitation with eye on pandemic impact on economy
Coronavirus:
- Total global cases: 24,099,954 (+1.2% d/d); total deaths: 824.7K (+0.8% d/d)
- South Korea confirms 441 additional coronavirus cases v 320 prior (Highest daily case count since early March)
- US VP Pence: we’re on track for a C-19 vaccine by the end of 2020
Europe:
- EU Brexit Negotiator Barnier stressed that an agreement with UK on Brexit was needed by Oct 31st. Would meet UK chief negotiator Frost next week if conditions are right
- Germany canceled plan to hold Brexit talks at EU ambassadors summit on Sept 2nd, citing lack of any tangible progress (Note: Germany currently holds the rotating presidency of the EU council)
- EU trade chief Hogan resigned after uproar over Covid rules breach
Americas:
- US Govt announced sanctions on certain China State-owned companies due to militarization in the South China Sea (Reminder: Comments made after Chinese military launched two ‘Aircraft Carrier Killer’ missiles in the South China Sea ‘as a warning to the US’ after spy plane was detected observing)
- Republicans said to be refining a new skinny stimulus Covid-19 relief bill
Energy:
- NHC: Hurricane Laura made landfall on the Texas-Louisiana border as a Cat 4 storm with maximum winds at 150 mph
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.33% at 371.90, FTSE -0.35% at 6,024.45, DAX -0.29% at 13,151.55, CAC-40 -0.58% at 5,019.32, IBEX-35 -0.87% at 7,061.00, FTSE MIB -0.81% at 19,973.50, SMI -0.31% at 10,277.84, S&P 500 Futures -0.24%]
- Market Focal Points/Key Themes: European indices open mixed but later turned to trade in the red across the board; better performing sectors include technology and consumer discretionary; energy and financials sectors among underperformers; SDL and RWS agree to merge; del Vecchio allowed to increase holding in Mediobanca; Rolls Royce to sell assets to raise cash after announcing earnings, CFO to step down; Mota Engil in talks to sell stake; WPP resumes dividend; focus on Jackson Hole symposium later today; earnings expected in the upcoming US session include HP, Tiffany and The Gap
Equities
- Consumer discretionary: Delivery Hero [DHER.DE] -1.5% (acquisition)
- Industrials: Rolls Royce [RR.UK] -8% (earnings; CFO steps down)
- Technology: SDL [SDL.UK] +41% (merger), WPP [WPP.UK] +5% (earnings), Sopheon [SPE.UK] -8% (earnings)
- Telecom: Bouygues [EN.FR] +3% (earnings)
Speakers
- Spain Econ Min Calvino noted that the domestic economy was already recovering from the pandemic. Hard-hit industries such as tourism and restaurants would take longer to rebound. Govt was nNegotiating with businesses and unions over a possible extension to the country’s ERTE furlough scheme for some sectors
- Japan Cabinet Office (Govt) Aug Monthly Economic Report maintained its overall economic assessment. Maintained assessment that domestic economy was showing signs of picking up but remained in a severe situation. Raised assessment on Exports and Production sectors
- Japan Chief Cabinet Sec Suga: PM Abe to serve out his term as LDP leader (**Note: Abe’s current three-year term as the LDP president ends in September 2021)
- India’s RBI Gov Das stated that it would begin providing forecasts for growth and inflation once some clarity appeared on the coronavirus situation. Not going to unwind any special measures in the near future
- China Foreign Ministry spokesperson Zhao Lijoan: US sanctions on State-own companies were unjustified and a gross interference in its internal affairs
Currencies/Fixed Income
- USD steady ahead of the Fed’s Jackson Hole symposium. The greenback has been softer in recent weeks on speculation the Fed would will tweak its policy framework to help push up inflation. The implications suggesting that future monetary policy would be based on realized rather than projected inflation data while explicitly accepting an overshoot in inflation. Dealers surmise that such a move would suggest that the Fed would leave interest rates at their current lows for longer than in past crises. Disappointment on such expectations could cause the USD to snap back. The 1.20 level remains a key resistance point in the current trend.
Economic Data
- (FI) Finland Aug Consumer Confidence: -5.1 v -1.6 prior; Business Confidence: -19 v -18 prior
- (FI) Finland July House Price Index M/M: M/M: +1.4% v -0.1% prior; Y/Y: % v -1.4% prior
- (CH) Swiss Q2 GDP Q/Q: -8.2% v -9.0%e; Y/Y: -9.3% v -10.4%e
- (NO) Norway July Retail Sales M/M: 0.6% v 0.6%e
- (JP) Japan Final Machine Tool Orders Y/Y: -31.1% v -31.1% prelim
- (FR) France Aug Business Confidence: 91 v 88e; Manufacturing Confidence: 93 v 86e; Production Outlook Indicator: -3 v -2e; Own-Company Production Outlook: 22 v 13e
- (SE) Sweden Aug Consumer Confidence: 84.4 v 83.8 prior; Manufacturing Confidence: 97.7 v 96.5 prior; Economic Tendency Survey: 87.0 v 83.8 prior
- (SE) Sweden July Retail Sales M/M: 1.9% v 1.0%e; Y/Y: 4.8% v 3.9% prior
- (SE) Sweden July Trade Balance (SEK): 2.9B v 5.6B prior
- (SE) Sweden July Household Lending Y/Y:5.2 % v 5.1% prior
- (EU) Euro Zone July M3 Money Supply Y/Y: 10.2% v 9.2%e
- (AT) Austria Aug Manufacturing PMI: 51.0 v 52.8prior (2nd month of expansion)
- (IT) Italy Jun Industrial Sales M/M: 13.4% v 42.3% prior; Y/Y: -16.4% v -25.9% prior
- (IT) Italy Jun Industrial Orders M/M: 23.4% v 43.8% prior; Y/Y: -11.8% v -34.1% prior
Fixed Income Issuance
- (IT) Italy Debt Agency (Tesoro) sold €B vs. €7.0B indicated in 6-month bills; Avg Yield: -0.330% v -0.276% prior; Bid-to-cover: 1.71x v 1.78x prior
Looking Ahead
- 05:30 (ZA) South Africa July PPI M/M: 0.8%e v 0.5% prior; Y/Y: 1.3%e v 0.5% prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
- 06:00 (CA) Canada Aug CFIB Business Barometer: No est v 61.3 prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (MX) Mexico July Trade Balance: $0.4Be v 5.6B prior
- 08:00 (PL) Poland Central Bank July Minutes
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Q2 Preliminary GDP Annualized (2nd reading) Q/Q: -32.5%e v -32.9% advance; Personal Consumption: -34.6%e v -34.6% advance
- 08:30 (US) Q2 Preliminary GDP Price Index: -1.8%e v -1.8% advance; Core PCE Q/Q: -1.1%e v -1.1% prior
- 08:30 (US) Initial Jobless Claims: 1.00Me v 1.106M prior; Continuing Claims: 14.40Me v 14.844M prior
- 08:30 (CA) Canada Q2 Current Account Balance: -$12.2Be v -$11.1b prior
- 08:30 (CL) Chile Central Bank Traders Survey
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 21st: No est v $590.2B prior
- 09:00 (RO) Romania to sell RON400M in 4% 2023 Bonds; Avg Yield: % v 3.94% prior; Bid-to-cover: x v 2.22x prior
- 09:10 (US) Fed Chief Powell on policy framework at Jackson Hole
- 10:00 (US) July Pending Home Sales M/M: 2.0%e v 16.6% prior; Y/Y: No est v 12.7% prior
- 10:00 (MX) Mexico Central Bank (Banxico) Aug Minutes
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 12:00 (CA) Canada to sell 2 Year Bonds
- 11:00 (US) Aug Kansas City Fed Manufacturing Activity Index: 5e v 3 prior
- 11:15 (CA) Bank of Canada (BOK) Macklem at Jackson Hole
- 11:50 (IE) ECB’s Lane (Ireland, chief economist)
- 12:30 (US) Fed’s Barker
- (AR) Argentina Aug Consumer Confidence Index: No est v 38.2 prior
- (BR) Brazil July Total Formal Job Creation: No est v -11.0K prior
- 18:00 (NZ) New Zealand Aug Consumer Confidence Index: No est v 104.3 prior
- 19:01 (UK) Aug Lloyds Business Barometer: No est v -22 prior
- 19:30 (JP) Japan Aug Tokyo CPI Y/Y: 0.6%e v 0.6% prior; CPI Ex-Fresh Food Y/Y: 0.3%e v 0.4% prior; CPI Ex-Fresh Food/Energy Y/Y: 0.4%e v 0.6% prior
- 21:10 (JP) BOJ Outright Bond Purchase Operation for 10~25 Years and 25 Years~ maturities
- 23:00 (CN) China to sell 3-Month Bills
- 23:30 (JP) Japan to sell 3-Month Bills
