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HomeContributorsFundamental AnalysisAugust Inflation Accelerates In Euro Area

August Inflation Accelerates In Euro Area

Trade The News
By Trade The News

Notes/Observations

  • Various EU inflation accelerated further in August aided by continuing pass-through of pipeline price pressures for non-energy goods (France nears ECB target; EU, Italy and Austria above it; Poland reading at 20-year high).
  • German Aug Unemployment Rate falls to a 17 month low.
  • Risk appetite continues to find some tail winds following last week’s Jackson Hole speech by Fed chief Powell.

Asia

  • South Korea July Industrial Production M/M: 0.4% v 0.0%e; Y/Y: 7.9% v 7.3%e.
  • July Jobless Rate: 2.8% v 2.9%e.
  • Japan July Preliminary Industrial Production M/M: -1.5% v -2.5%e; Y/Y: 11.6% v 11.2%e.
  • China Aug Manufacturing PMI (govt official) registered its 17th month of expansion but lowest since Feb 2020 (50.1 v 50.1e).
  • China PBOC Open Market Operation (OMO) injected CNY50B in 7-day reverse repos.

Coronavirus

  • Total global cases 217.9M (+0.3% d/d); total deaths: 4.52M (+0.2% d/d).

Europe

  • ECB’s Rehn (Finland) stated that would exercise great caution over withdrawing any stimulus measure. Could hold off on making a call on the future of its PEPP at its September meeting.
  • ECB’s Holzmann (Austria) said to see inflation falling later in 2021 and into 2022.

Americas

  • US formally announced completion of withdrawal from Afghanistan.

Energy

  • Analyst: Disruption to US economic activity from Hurricane Ida likely to result in a 0.2% drag on GDP.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

  • Indices [Stoxx600 +0.22% at 473.72, FTSE -0.08% at 7,142.57, DAX +0.60% at 15,983.25 , CAC-40 +0.28% at 6,706.11, IBEX-35 +0.42% at 8,905.00, FTSE MIB +0.58% at 26,175.50, SMI +0.16% at 12,456.12, S&P 500 Futures +0.22%].
  • Market Focal Points/Key Themes: European indices open mixed but generally traded higher as the session advanced; sectors trending higher include technology and industrials; sectors trending to the downside include consumer discretionary and real estate; insurance subsector under pressure ahead of assessment of damage from Hurricane Ida; oil and gas subsector supported by higher crude prices; Prosus acquires BillDesk; Neways receives takeover offer from Infestos; Valneva continues to rise following submission of covid vaccine approval; earnings expected during the upcoming US session include Designer Brands and Chico’s.

Equities

  • Consumer discretionary: Vivendi [VIV.FR] -1.5% (divests stake in UMG), Bunzl [BNZL.UK] -2% (earnings).
  • Healthcare: GlaxoSmithKline [GSK.UK] -1.5% (vaccine trial).
  • Industrials: Strabag [STB1.DE] -1.5% (earnings).
  • Technology: Prosus [PRX.NL] +5% (acquisitions), Neways Electronics International [NEWAY.NL] +1% (offer).

Speakers

  • Greek PM Mitsotakis said to be planning to reshuffle Cabinet but both Finance and Foreign ministers to keep positions.
  • Poland Central Bank’s Gatner stated that inflation was a concern and stressed that If rate were not raised at this time then they would be needed to be sharply increased in 2022.
  • Japan PM Suga stated that was to make small changes in cabinet.
  • China Vice Housing Min: To promote stable and healthy property development.
  • OPEC+ said to expect new oil surplus next year if it fully revived its output.

Currencies/Fixed Income

  • Risk appetite prompted continued unwinding of safe-haven flows. Greenback has been on the defensive since Fed chief Powell made it clear that the Fed intended to start tapering asset purchases this year but only gradually and that the timing of tapering would not be a signal for the timing of interest rate rises. Additionally an analyst noted that the disruption to US economic activity from Hurricane Ida likely to result in a 0.2% drag on GDP.
  • EUR/USD was steady in the session at 1.1825 despite the better economic data and acceleration in AUG CPI readings throughout the region. Focus turning to next week’s ECB meeting and whether PEPP would be tapered.

Economic data

  • (NL) Netherlands July Retail Sales Y/Y: 3.9 v 6.6% prior.
  • (FI) Finland Q2 GDP Q/Q: +2.1 v 0.1% prior; Y/Y: +7.5 v -1.5% prior.
  • (FI) Finland July House Price Index M/M: -0.4% v -0.4% prior; Y/Y: 3.1% v 4.9% prior.
  • (DK) Denmark Q2 Preliminary GDP Q/Q: +2.3% v -0.9% prior; Y/Y: +8.5% v -0.7% prior.
  • (DK) Denmark July Gross Unemployment Rate: 3.8% v 3.8% prior; Unemployment Rate (seasonally adj): 3.3% v 3.3% prior.
  • (FI) Finland Jun Final Trade Balance: -€0.2B v -€0.2B prelim.
  • (NO) Norway July Credit Indicator Growth Y/Y: 5.3% v 5.3% prior.
  • (ZA) South Africa July M3 Money Supply Y/Y: 1.9% v 0.1%e; Private Sector Credit Y/Y: +0.6% v -0.5%e.
  • (FR) France Q2 Final GDP Q/Q: 1.1% v 0.9%e; Y/Y: 18.7% v 18.7%e.
  • (FR) France Aug Preliminary CPI M/M: 0.6% v 0.4%e; Y/Y: 1.9% v 1.7%e.
  • (FR) France Aug Preliminary CPI EU Harmonized M/M: 0.7% v 0.5%e; Y/Y: 2.4% v 2.1%e.
  • (FR) France July PPI M/M: 1.3% v 1.1% prior; Y/Y: 8.6% v 7.6% prior.
  • (FR) France July Consumer Spending M/M: -2.2% v +0.2%e; Y/Y: -4.6% v -1.4%e.
  • (AT) Austria Aug Preliminary CPI M/M: 0.1% v 0.3% prior; Y/Y: 3.1% v 2.9% prior.
  • (CZ) Czech Q2 Preliminary GDP (2nd reading) Q/Q: 1.0% v 0.6%e; Y/Y: 8.2% v 7.8%e.
  • (HU) Hungary Jun Average Gross Wages Y/Y: 3.5% v 8.2% prior.
  • (TR) Turkey July Trade Balance: -$4.3B v -$4.3Be.
  • (TH) Thailand July Current Account Balance: -$0.7B v -$1.3Be; Overall Balance of Payments (BOP): -$0.3B v -$1.5B prior; Trade Account Balance: $3.4B v $3.9B prior; Exports Y/Y: 21.7% v 46.1% prior; Imports Y/Y: 36.6% v 45.8% prior.
  • (DE) Germany Aug Net Unemployment Change: -53.0K v -40.0Ke; Unemployment Claims Rate: 5.5% v 5.6%e.
  • (IT) Italy Q2 Final GDP Q/Q: 2.7% v 2.7%e; Y/Y: 17.3% v 17.3%e.
  • (NO) Norway Central Bank (Norges) Sept Bank Daily FX Purchases (NOK): -1.7B v -1.7B prior.
  • (CZ) Czech July M2 Money Supply Y/Y: 10.2% v 10.7% prior.
  • (PL) Poland Q2 Final GDP Q/Q: 2.1% v 1.9% prelim; Y/Y: 11.1% v 10.9% prelim.
  • (PL) Poland Aug Preliminary CPI M/M: 0.2% v 0.1%e; Y/Y: 5.4% v 5.1%e.
  • (ES) Spain Jun Current Account Balance: €0.3B v €0.9B prior.
  • (UK) July Net Consumer Credit: £0.0B v £0.4Be; Net Lending: -£1.5B v +£3.1Be.
  • (UK) July Mortgage Approvals: 75.2K v 78.0Ke.
  • (UK) July M4 Money Supply M/M: % v 0.6% prior; Y/Y: % v 6.9% prior; M4 3-month Annualized (ex-IOFCs): % v 6.0% prior.
  • (PT) Portugal Aug Preliminary CPI M/M: -0.2% v -0.3% prior; Y/Y: 1.5% v 1.5% prior.
  • (PT) Portugal Aug Preliminary CPI EU Harmonized M/M: -0.1% v -0.4% prior; Y/Y: 1.3% v 1.1% prior.
  • (HK) Hong Kong July Retail Sales Value Y/Y: 2.9% v 10.0%e; Retail Sales Volume Y/Y: 0.9% v 6.9%e.
  • (EU) Euro Zone Aug CPI Estimate Y/Y: 3.0% v 2.7%e; CPI Core Y/Y: 1.6% v 1.5%e.
  • (IT) Italy Aug Preliminary CPI M/M: 0.5% v 0.4%e; Y/Y: 2.1% v 1.9%e.
  • (IT) Italy Aug Preliminary CPI EU Harmonized M/M: +0.3% v -0.2%e; Y/Y: 2.6% v 2.1%e.
  • (GR) Greece Jun Retail Sales Value Y/Y: 10.8% v 15.0% prior; Retail Sales Volume Y/Y: 11.7% v 14.8% prior.
  • (IS) Iceland Q2 GDP Q/Q: +4.2% v -3.3% prior; Y/Y: +7.3% v -0.2% prior.
  • (IS) Iceland July Final Trade Balance (ISK): -16.9B v -16.1B prelim.

Fixed income Issuance

  • (NL) Netherlands Debt Agency (DSTA) sold €2.0B vs. €1.5-2.5B indicated range in 0.25% July 2025 DSL Bonds; Avg Yield: -0.716% v -0.721% prior.
  • (ID) Indonesia sold total IDR21.0T vs. IDR21.0T target in bills and bonds.
  • (EU) ESM opened its book to sell USD-denominated 2-year notes via syndicate; guidance seen +1bp to mid-swaps.
  • (IT) Italy Debt Agency (Tesoro) sold total €5.75B vs. €4.75-5.75B indicated range in 5-year and 10-year BTP Bonds.
  • Sold €2.5B vs. €2.0-2.5B indicated range in 0.00% Apr 2026 BTP bonds; Avg Yield: -0.01% v +0.02% prior; Bid-to-cover: 1.46x v 1.29x prior (July 29th 2021).
  • Sold €3.25B vs. €2.75-3.25B indicated range in 0.95% Dec 2031 BTP; Avg Yield: 0.67% v 0.66% prior; bid-to-cover: 1.36x v 1.33x prior.
  • (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in 0.65% Apr 2029 Floating Rate Note (CCTeu); 0.03% v 0.05% prior; bid-to-cover: 1.46x v 1.86x prior.
  • (CH) Switzerland sold CHF773.9M in 3-month Bills; Avg Yield: -0.770% v -0.750% prior.

Looking Ahead

  • OPEC+ JMMC technical panel.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 05:30 (SL) Sri Lanka Aug CPI Y/Y: 5.4%e v 5.7% prior.
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
  • 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.4-1.8B in 3-month and 6-month bills.
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
  • 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2030, 2037 and 2044 bonds.
  • 06:00 (IT) Italy July PPI M/M: No est v 1.7% prior; Y/Y: No est v 11.0% prior.
  • 06:00 (PT) Portugal Q2 Final GDP Q/Q: No est v 4.9% prelim; Y/Y: 15.5%e v 15.5% prelim.
  • 06:00 (IL) Israel July Chain Store Sales M/M: No est v 3.5% prior.
  • 06:30 (IN) India July Fiscal Deficit (INR): No est v 1.511T.
  • 06:45 (US) Daily Libor Fixing.
  • 08:00 (IN) India Q2 GDP Y/Y: 21.0%e v 1.6% prior; GVA Y/Y: 19.6%e v 3.7% prior.
  • 08:00 (IN) India July Eight Infrastructure (key) Industries: No est v 8.9% prior.
  • 08:00 (ZA) South Africa July Trade Balance (ZAR): 48.1Be v 57.7B prior.
  • 08:00 (BR) Brazil Jun National Unemployment Rate: 14.4%e v 14.6% prior.
  • 08:00 (UK) Daily Baltic Dry Bulk Index.
  • 08:00 (SE) Sweden Central Bank (Riksbank) Dep Gov Floden.
  • 08:30 (CA) Canada Jun GDP M/M: +0.7%e v -0.3% prior; Y/Y: 8.8%e v 14.6% prior; Q2 Quarterly GDP Annualized: 2.5%e v 5.6% prior.
  • 08:30 (BR) Brazil July Primary Budget Balance (BRL): -16.0Be v -65.5B prior; Nominal Budget Balance: -57.2Be v -75.6B prior; Net Debt to GDP Ratio: 60.4%e v 60.9% prior.
  • 08:55 (US) Weekly Redbook LFL Sales data.
  • 09:00 (US) Jun FHFA House Price Index M/M: 1.9%e v 1.7% prior; Q/Q: No est v 3.5% prior.
  • 09:00 (US) Jun S&P Case-shiller (20-City) M/M: 1.80%e v 1.81% prior; Y/Y: 18.60%e v 16.99% prior; S&P Case-shiller (overall) Y/Y: No est v 16.61% prior.
  • 09:00 (CL) Chile July Unemployment Rate: 9,2%e v 9.5% prior.
  • 09:00 (CL) Chile July Retail Sales Y/Y: 59.8%e v 65.6% prior; Commercial Activity Y/Y: No est v 40.3 prior.
  • 09:00 (CL) Chile July Manufacturing Production Y/Y: 10.0%e v 14.6% prior; Industrial Production Y/Y: 7.3%e v 6.0% prior; Total Copper Production: No est v 484.7K tons prior.
  • 09:00 (EU) Weekly ECB Forex Reserves.
  • 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
  • 09:45 (US) Aug Chicago Purchase Managers Index (PMI): 68.0e v 73.4 prior.
  • 09:45 (UK) BOE to buy £3.77B in APF Gilt purchase operation (20+ years).
  • 10:00 (US) Aug Consumer Confidence: 123.0e v 129.1 prior.
  • 10:00 (MX) Mexico July Net Outstanding Loans (MXN): No est v 4.607T prior.
  • 10:00 (MX) Mexico Weekly International Reserve data.
  • 11:00 (CO) Colombia July National Unemployment Rate: No est v 14.4% prior; Urban Unemployment Rate: 16.5%e v 17.1% prior.
  • 13:00 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report (QIR).
  • 16:30 (US) Weekly API Oil Inventories.
  • 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to raise the Overnight Rate Target by 50bps to 1.25%.
  • 19:00 (AU) Australia Aug Final PMI Manufacturing: No est v 51.7 prelim.
  • 19:01 (UK) Aug BRC Shop Price Index Y/Y: No est v -1.2% prior.
  • 19:50 (JP) Japan Q2 Capital Spending Y/Y: +3.5%e v -7.8% prior; Capital Spending (ex-software) Y/Y: +3.0%e v -9.9% prior.
  • 19:50 (JP) Japan Q2 Company Profits Y/Y: No est v 26.0% prior; Company Sales Y/Y: No est v -3.0% prior.
  • 20:00 (KR) South Korea Aug Trade Balance: $1.5Be v $4.4B prior; Exports Y/Y: 34.0%e v 39.7% prior; Imports Y/Y: 44.6%e v 40.7% prior.
  • 20:00 (AU) Australia Aug CoreLogic House Price Index M/M: No est v 1.6% prior.
  • 20:01 (IE) Ireland Aug PMI Manufacturing: No est v 63.3 prior.
  • 20:30 (JP) Japan Aug Final PMI Manufacturing: No est v 52.4 prelim.
  • 20:30 (KR) South Korea Aug PMI Manufacturing: No est v 53.0 prior.
  • 20:30 (TW) Taiwan Aug PMI Manufacturing: No est v 59.7 prior.
  • 20:30 (ID) Indonesia Aug PMI Manufacturing: No est v 40.1 prior.
  • 20:30 (TH) Thailand Aug PMI Manufacturing: No est v 48.7prior.
  • 20:30 (PH) Philippines Aug PMI Manufacturing: No est v 50.4 prior.
  • 20:30 (MY) Malaysia Aug PMI Manufacturing: No est v 40.1 prior.
  • 20:30 (VN) Vietnam Aug PMI Manufacturing: No est v 45.1 prior.
  • 21:30 (AU) Australia Q2 GDP Q/Q: 0.4%e v 1.8% prior; Y/Y: 9.2%e v 1.1% prior.
  • 21:45 (CN) China Aug Caixin PMI Manufacturing: 50.1e v 50.3 prior.
  • 23:00 (CN) China to sell 3-year and 7-year bonds.
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