Thu, Sep 23, 2021 @ 06:49 GMT
HomeContributorsFundamental AnalysisEuropean Inflation Remains Above ECB Target

European Inflation Remains Above ECB Target


  • German July inflation picks up but analysts cite rise mainly due to base effects; Spain YoY steady at 2.7%.
  • Focus on US Q2 GDP data.
  • Heavy corporate earnings day. Companies due to report during the NY morning include Albertson’s, Alliance Data, AGCO, American Tower, Baxter International, Peabody Energy, Carrier, Carlyle Group, Comcast, Citrix Systems, Flex Ltd, Hilton Worldwide, Hershey, IntercontinentalExchange, International Paper, KBR, Keurig DR Pepper, Laboratory Corp, MasterCard, Altria Group, Merck, Northrop Grumman, NetScout, Oshkosh, Overstock, PG&E, Radware, Sally Beauty, S&P Global, MolsonCoors, Tempur Sealy, LendingTree, Textron, Valero Energy, YUM! Brands.


  • China Securities Regulatory Commission (CSRC) met recently with global financial companies, indicating they would consider impact on markets when making new policies.
  • China said to permit China companies to continue to have US IPOs.


  • New data show that efficacy of Pfizer/BioNTech Covid vaccine dropped from 96% to 84% after six months. Data could bolster Pfizer’s case that a third booster shot being necessary.


  • FOMC kept its policy steady but stated it made progress towards goals since setting out bar for tapering. Committee would continue to assess progress in coming meetings.
  • Senate voted 67-32 to advance the bipartisan $1.2T infrastructure bill with over a dozen Republicans voting yes to move forward with debate. Final passage remained uncertain as Republicans would demand amendment votes and input on the bill and it would once again face a 60-vote hurdle to close debate.



  • Indices [Stoxx600 +0.37% at 463.40, FTSE +0.71% at 7,066.55, DAX +0.19% at 15,600.25, CAC-40 +0.75% at 6,658.83, IBEX-35 +0.74% at 8,798.00, FTSE MIB +0.55% at 25,401.50, SMI +0.13% at 12,088.97, S&P 500 Futures +0.12%].
  • Market Focal Points/Key Themes: European indices open higher across the board (notable exception BEL20, dragged by Orange, AB InBev), and remained positive as the session progressed; sectors leading to the upside include energy and materials; while sectors trending to the downside include consumer discretionary and real estate; avalanche of results dominates market reaction; Charles Stanley to be acquired by Raymond James; focus on GDP figures from US later today as well as ECB minutes; earnings expected during the upcoming US session include KBR, Cenovus, Leonardo and Xcel.


  • Consumer discretionary: Danone [BN.FR] +6% (earnings), Nestle [NESN.CH] -1% (earnings).
  • Consumer staples: AB InBev [ABI.BE] -5% (earnings).
  • Energy: Royal Dutch Shell [RDSA.NL] +3% (earnings), TotalEnergies [FP.FR] +2% (earnings).
  • Financials: Lloyds Banking Group [LLOY.UK] +1% (earnings), Credit Suisse [CSGN.CH] -3.5% (earnings).
  • Healthcare: Astrazeneca [AZN.UK] +1% (earnings), Sanofi [SAN.FR] +1.5% (earnings).
  • Industrials: Airbus [AIR.FR] +4% (earnings), Volkswagen [VOW3.DE] +1% (earnings).
  • Technology: STMicroelectronics [STM.FR] +3% (earnings).
  • Telecom: Nokia [NOKIA.FI] +7% (earnings), Orange [ORA.FR] -3% (earnings).


  • ECB’s Panetta (Italy) reiterated Council stance that would not raise interest rates until convinced inflation could stabilize at the 2% target in the medium term. Reiterated stance that risks of high inflation and overheating were limited. Reiterated that both fiscal and monetary policy needed to support EU’s economy.
  • ECB’s Kazaks (Latvia) stated that if economy surprised to the upside then it could move faster than currently foreseen.
  • Turkey Central Bank (CBRT) Gov Kavcioglu stated that it was important to maintain tight monetary policy; not enough on its own to reduce inflation. Current tightening stance to be maintained decisively and reiterated stance that policy rate to be above inflation. Fluctuations in inflation to be temporary. Q2 GDP to be markedly high due to base effects.
  • Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raised the end-2021 inflation forecast from 9.4% to.12.4% and also raised the 2022 inflation from 7.0% to 7.5%.
  • China Finance Ministry (MOF): To remove steel products tax rebates for 23 items, confirmed to raise export tariffs for certain steel products from Aug 1st.

Currencies/ Fixed income

  • USD was softer after the Fed did acknowledge progress on taper conditions but added it still had some way to go. Markets now looking to the Aug Jackson Hole symposium meeting for clarity. USD weakness attributed to the Fed cautious stance.
  • Greenback also weighed down after some easing of China market fears which damped the demand for safe-haven plays.
  • EUR/USD approaching the 1.19 neighborhood as various German State inflation data. Analysts note that Euro Zone headline inflation to rise further than most expect in the second half (in-line with ECB view).
  • GBP/USD at 1-month high as the pair approached the 1.3970 level in the session. Optimism over the recent decline in UK coronavirus cases helping sentiment.

Economic data

  • (DE) Germany July CPI North Rhine Westphalia M/M: 0.8% v 0.5% prior; Y/Y: 4.1% v 2.5% prior.
  • (ZA) South Africa Jun M3 Money Supply Y/Y:0.1 % v 2.0%e; Private Sector Credit Y/Y: -0.5% v +0.4%e.
  • (FR) France Jun PPI M/M: 1.1% v 0.4% prior; Y/Y: 7.5% v 7.2% prior.
  • (ES) Spain July Preliminary CPI M/M: -0.7% v -0.6%e; Y/Y: 2.9% v 2.7%e.
  • (ES) Spain July Preliminary CPI EU Harmonized M/M: -1.2% v -1.2%e; Y/Y: 2.9% v 2.9%e.
  • (ES) Spain Q2 Unemployment Rate: 15.3% v 15.1%e.
  • (SE) Sweden July Consumer Confidence: 106.5 v 109.3 prior; Manufacturing Confidence: 129.2 v 125.1 prior; Economic Tendency Survey: 122.4 v 119.8 prior.
  • (TR) Turkey July Economic Confidence: 100.1 v 97.8 prior.
  • (SE) Sweden Q2 GDP Indicator Q/Q: 0.9% v 0.7%e; Y/Y: 10.0% v 0.0% prior.
  • (SE) Sweden Jun GDP Indicator M/M: 2.5% v 0.4% prior; Y/Y: 10.5% v 10.2% prior.
  • (SE) Sweden Jun Unemployment Rate: 10.3% v 9.8% prior; Unemployment Rate (seasonally adj): 9.5% v 9.1% prior; Trend Unemployment Rate: 9.2% v 9.1% prior.
  • (DE) Germany July Net Unemployment Change: -91.0K v -29.0Ke; Unemployment Claims Rate: 5.7% v 5.8%e.
  • (DE) Germany July CPI Brandenburg M/M: 1.0% v 0.5% prior; Y/Y: 4.3% v2.4 % prior.
  • (DE) Germany July CPI Hesse M/M: 0.8% v 0.3% prior; Y/Y: 3.4% v 2.2% prior.
  • (DE) Germany July CPI Bavaria M/M: 0.9% v 0.4% prior; Y/Y: 3.8% v 2.4% prior.
  • (DE) Germany July CPI Baden Wuerttemberg M/M: 0.8% v 0.4% prior; Y/Y: 3.4% v 2.4% prior.
  • (IT) Italy Jun Hourly Wages M/M: 0.2% v 0.0% prior; Y/Y: 0.6% v 0.6% prior.
  • (UK) Jun Net Consumer Credit: £0.3B v £0.5Be; Net Lending: £17.9B v £7.0Be.
  • (UK) Jun Mortgage Approvals: 81.3K v 84.5Ke.
  • (UK) Jun M4 Money Supply M/M: 0.5% v 0.5% prior; Y/Y: 6.9% v 7.4% prior; M4 (ex-IOFCs Annualized: 5.9% v 4.7% prior.
  • (PT) Portugal July Consumer Confidence Index: -14.1 v -14.2 prior; Economic Climate Indicator: 1.8 v 1.6 prior.
  • (EU) Euro Zone July Economic Confidence: 119.0 v 118.2e; Industrial Confidence: 14.6v 13.0e; Services Confidence: 19.3 v 19.3e; Consumer Confidence (final): -4.4 v -4.4 advance.
  • (DE) Germany July CPI Saxony M/M: 1.0% v 0.3% prior; Y/Y: 3.7% v 2.1% prior.
  • (IT) Italy Jun PPI M/M: 1.7% v 1.3% prior; Y/Y: 11.0% v 10.0% prior.
  • (BE) Belgium Q2 Preliminary GDP Q/Q: 1.4% v 1.1% prior; Y/Y: 14.5.% v -0.5% prior.

Fixed income issuance

  • (DK) Denmark sold total DKK4.0B in 1-month,3-month, 6-month and 9-month bills.
  • (IT) Italy Debt Agency (Tesoro) sold total €7.5B vs. €6.5-7.5B indicated range in 5-year and 10-year BTP Bonds.
  • Sold €4.5B vs. €4.0-4.5B indicated range in 0.00% Apr 2026 BTP bonds; Avg Yield: 0.02% v 0.12% prior; Bid-to-cover: 1.29x v 1.37x prior (Jun 30th 2021).
  • Sold €3.0B vs. €2.5-3.0B indicated range in 0.95% Dec 2031 BTP; Avg Yield: 0.66% v 0.81% prior; bid-to-cover: 1.33x v 1.57x prior.
  • (IT) Italy Debt Agency (Tesoro) sold €1.25B vs. €0.75-1.25B indicated range in 0.65% Apr 2029 Floating Rate Note (CCTeu); Avg Yield: 0.05%; bid-to-cover: 1.86x.

Looking ahead

  • (BE) Belgium July CPI M/M: No est v 0.2% prior; Y/Y: No est v 1.6% prior.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (ZA) South Africa Jun PPI M/M: 0.4%e v 0.4% prior; Y/Y: 7.3%e v 7.4% prior.
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
  • 06:00 (CA) Canada July CFIB Business Barometer: No est v 70.1 prior.
  • 06:00 (PT) Portugal Jun Retail Sales M/M: No est v 3.9% prior; Y/Y: No est v 16.1% prior.
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (BR) Brazil July FGV Inflation IGPM M/M: 0.9%e v 0.6% prior; Y/Y: 34.0%e v 35.8% prior.
  • 07:30 (IS) Iceland to sell 3-month, 6-month and 9-month Bills.
  • 08:00 (DE) Germany July Preliminary CPI M/M: 0.6%e v 0.4% prior; Y/Y: 3.2%e v 2.3% prior.
  • 08:00 (DE) Germany July Preliminary CPI EU Harmonized M/M: 0.4%e v 0.4% prior; Y/Y: 2.9%e v 2.1% prior.
  • 08:30 (US) Q2 Advance GDP Annualized (1st reading) Q/Q: 8.5%e v 6.4% prior; Personal Consumption: 10.5%e v 11.4% prior.
  • 08:30 (US) Q2 Advance GDP Price Index: 5.4%e v 4.3% prior; Core PCE Q/Q: 6.1%e v 2.5% prior.
  • 08:30 (US) Initial Jobless Claims: 385Ke v 419K prior; Continuing Claims: 3.199Me v 3.236M prior.
  • 08:30 (US) Weekly USDA Net Export Sales.
  • 09:00 (RU) Russia Gold and Forex Reserve w/e July 23rd: No est v $597.4B prior.
  • 10:00 (US) Jun Pending Home Sales M/M: 0.5%e v 8.0% prior; Y/Y: -3.3%e v +13.9% prior.
  • 10:30 (US) Weekly EIA Natural Gas Inventories.
  • 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.
  • 13:00 (US) Treasury to sell 7-Year Notes.
  • (AR) Argentina July Consumer Confidence Index: No est v 34.6 prior.
  • 17:00 (KR) South Korea Aug Business Manufacturing Survey: No est v 99 prior; Business Non-Manufacturing Survey: No est v 82 prior.
  • 18:00 (NZ) New Zealand July Consumer Confidence Index: No est v 114.1 prior.
  • 18:45 (NZ) New Zealand Jun Building Permits M/M: No est v -2.8% prior.
  • 19:00 (KR) South Korea Jun Industrial Production M/M: +1.5%e v -0.7% prior; Y/Y: 9.6%e v 15.6% prior.
  • 19:01 (UK) July Lloyds Business Barometer: No est v 33% prior.
  • 19:30 (JP) Japan Jun Jobless Rate: 3.0%e v 3.0% prior; Job-To-Applicant Ratio: 1.10e v 1.09 prior.
  • 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: +5.0%e v -6.5% prior; Y/Y: 20.7%e v 21.1% prior.
  • 19:50 (JP) Japan Jun Retail Sales M/M: +2.7%e v -0.3% prior (revised from -0.4%; Y/Y: 0.2%e v 8.3% prior (revised from 8.2%).
  • 19:50 (JP) Japan Jun Dept. Store, Supermarket Sales Y/Y: 0.5%e v 5.7% prior.
  • 21:30 (AU) Australia Jun Private Sector Credit M/M: 0.4%e v 0.4% prior; Y/Y: 2.4%e v 1.9% prior.
  • 21:30 (AU) Australia Q2 PPI M/M: No est v 0.4% prior; Y/Y: No est v 0.2% prior.
  • 22:00 (SG) Singapore Jun M2 Money Supply Y/Y: No est v 7.0% prior; M1 Money Supply Y/Y: No est v 16.5% prior.
  • 22:00 (SG) Singapore Jun Foreign-Currency Deposits (SGD): No est v 770.4B prior.
  • 23:30 (JP) Japan to sell 3-Month Bills.


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