Notes/Observations
- Temporary debt ceiling extension agreement aid risk appetite.
- Jobs data eyed for Fed policy clues.
Asia
- Japan Aug Household Spending Y/Y: -3.0% v -1.2%e.
- Japan Aug Current Account Balance: ¥1.665T v ¥1.474Te; Trade Balance (BoP Basis): -¥372,4B v -¥385.3Be v +¥622.3B prior.
- China Sept Caixin PMI Services: 53.4 v 49.2e.
- India Central Bank (RBI) left the Repurchase Rate unchanged at 4.00% (as expected) and announced complete QE tapering.
- China PBOC Open Market Operation (OMO) saw a net drain of CNY330B via the 7-day operation (**Note: 1st net liquidity drain in 11 sessions).
- China to increase coal supply amid power shortage; Large Chinese coal-producing provinces have pledged to increase long-term coal supply to power plants by a combined 145Mts during Q4.
- RBA Financial Stability Report noted the risk of excessive borrowing due to low interest rate environment; vulnerabilities in China financial system remained elevated.
- Japan Fin Min Suzuki confirmed that PM Kishida had Instructed cabinet to compile economic stimulus (as expected); would submit extra budget after election.
Europe
- ECB’s Lane (Ireland, chief economist) stated that there were solid reasons to believe that there was a significant transitory component to the rise in inflation. Reiterated Council stance that still have inflation in medium term well below inflation target.
- Ireland govt said to be planning to sign on to the OECD global corporate tax agreement of 15.0%.
Americas
- Senate Debt Limit Ceiling bill procedural vote received enough votes to pass (vote total 61 yea, 38 nay).
- Senate Majority Leader Schumer stated that Senate to pass the 2 month extension to the debt, long term solution was needed for the debt ceiling drama.
- Senate voted 50-48 to increase debt ceiling by $480B until early Dec 2021 (**Note: vote was along party lines). House to convene on Oct 12th (Tues) to pass the stopgap debt measure.
- Treasury Sec Yellen stated that the debt limit uncertainty was damaging to confidence; there was more work to do to get well past Dec 3rd on debt limit.
- Fed’s Mester (non-voter, hawk): Very important public understood the Fed’s goal. Inflation had already cleared hurdle for rate hike, but employment criteria not met yet.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 +0.08% at 7,083.90, FTSE % at #, DAX -0.26% at 15,210.95, CAC-40 -0.42% at 6,573.22, IBEX-35 -0.05% at 8,958.50, FTSE MIB -0.04% at 25,981.00 , SMI -0.46% at 11,709.32, S&P 500 Futures -0.15%].
- Market Focal Points/Key Themes: European indices open mixed but took on a negative bias as the session wore on; better performing sectors include insustrials and energy; while underperforming sectors include technology and consumer discretionary; Vonovia takes derivative position in Adler; Netcompany to acquire Intrasoft; Royal Mail to acquire Mid-Nite Sun; NN to sell €3.3B asset portfolio; zooplus receives competing offer from Hellman & Friedmanfocus on NFP figures later in the day; no major earnings scheduled for the US session.
Equities
- Consumer discretionary: International Consolidated Airlines [IAG.UK] +2.5% (UK cuts its travel red list), UNITE Group [UTG.UK] -3% (trading update).
- Industrials: Weir Group [WEIR.UK] -3% (trading update; cyber incident).
- Technology: Electrocomponents [ECM.UK] -1% (trading update).
- Real Estate: Adler Group [ADJ.DE] +9% (stake option).
Speakers
- Austria WIFO Think Tank updated its Quarterly Economic Forecasts which raised the 2021 GDP growth forecast from 3.4% to 4.4% while cutting the 2022 GDP growth outlook from 5.0% to 4.8%.
- Turkey President Erdogan said to be losing confidence in current Turkey Central Bank Gov Kavcioglu due to late rate cut.
- Poland Central Bank Gatnar stated that MPC made a good decision to hike rates; move seen as the beginning of normalizing policy.
- China Foreign Ministry spokesman Zhao Lijian: US should withdraw troops from Taiwan. US and China needed to cooperate not decouple on the trade front.
Currencies/Fixed income
- USD held onto its recent gains but traded within a narrow range ahead of the Sept payroll report. Price action was muted as participants adopted a wait-and-see stance ahead of the US labor market report.
- TRY currency (Lira) approaching the 9 handle (record lows) after reports circulated that President Erdogan said to be losing confidence in current Turkey Central Bank Gov Kavcioglu.
- Dealers noted that UK government bond yields climbed to levels last seen before the Brexit referendum in 2016 relative to German peer.
Economic data
- (SE) Sweden Aug Maklarstatistik Housing Prices Y/Y: 14% v 16% prior; Apartment Prices Y/Y:8% v 10% prior.
- (NL) Netherlands Aug Manufacturing Production M/M: -1.9% v +1.1% prior; Y/Y: 9.8% v 13.7% prior; Industrial Sales Y/Y: 16.0% v 16.4% prior.
- (FI) Finland Aug Industrial Production M/M: 1.4% v 0.3% prior; Y/Y: 4.4% v 3.5% prior.
- (DE) Germany Aug Current Account Balance: €11.8B v €17.6Be; Trade Balance: €10.7B v €15.0Be; Exports M/M: -1.2% v +0.5%e; Imports M/M: 3.5% v 1.8%e.
- (FI) Finland Aug Preliminary Trade Balance: -€0.6B v -€0.4B prior.
- (NO) Norway Aug Overall GDP M/M: 2.0% v 0.8% prior; GDP Mainland M/M: 1.1% v 0.9%e.
- (ES) Spain Aug House transactions Y/Y: 57.9% v 53.5% prior.
- (AT) Austria Aug Industrial Production M/M: -0.6% v -1.2% prior; Y/Y: 8.6% v 8.8% prior.
- (CZ) Czech Aug Retail Sales Y/Y: 3.7% v 5.3%e; Retail Sales (ex-auto) Y/Y: 5.1% v 7.5%e.
- (HU) Hungary Aug Preliminary Trade Balance: -€0.5B v -€0.2B prior.
- (HU) Hungary Sept CPI M/M: 0.2% v 0.2%e; Y/Y: 5.5% v 5.5%e (6th month above target range).
- (TH) Thailand end-Sept Foreign Reserves: $245.3B v $250.8B prior.
- (CN) Weekly Shanghai copper inventories (SHFE): 50.1K v 43.5K tons prior.
- (RU) Russia Narrow Money Supply w/e Oct 1st(RUB): 14.34T v 14.41T prior.
- (TW) Taiwan Sept Trade Balance: $6.5B v $4.9Be; Exports Y/Y: 29.2% v 25.0%e; Imports Y/Y: 40.4% v 42.6%e.
- (GR) Greece Sept CPI Y/Y: 2.2% v 1.9% prior; CPI EU Harmonized Y/Y: 1.9% v 1.2% prior.
- (GR) Greece Aug Industrial Production Y/Y: 10.1% v 7.8% prior.
- (HU) Hungary Sept YTD Budget Balance (HUF): T v 1.9001T prior.
Fixed income Issuance
- None seen.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (IN) India to sell combined INR240B in 2023, 2026, 2035 and 2050 in bonds.
- 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2029, 2038 and 2050 Bonds.
- 06:00 (IE) Ireland Sept Live Register Monthly Change: No est v -1.6K prior; Live Register Level: No est v 168.4K prior.
- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).
- 06:00 (BE) Belgium Debt Agency (BDA) to sell 2026 and 2034 OLO Bonds via ORI Auction.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (IN) India announces upcoming bill issuance (held on Wed).
- 07:00 (CL) Chile Sept CPI M/M: 0.8%e v 0.4% prior; Y/Y: 5.0%e v 4.8% prior.
- 07:00 (IT) ECB’s Panetta (Italy).
- 07:30 (IN) India Weekly Forex Reserve w/e Oct 1st: No est v $638.6B prior.
- 07:30 (IS) Iceland to sell 1.5% Feb 2026 RIKB inflation-linked Bonds.
- 07:45 (US) Sept CBIZ Small Business Employment Index.
- 08:00 (UR) Ukraine Sept CPI M/M: +0.8%e v -0.2% prior; Y/Y: 10.7%e v 10.2% prior.
- 08:00 (IS) Iceland Sept Unemployment Rate: No est v 5.5% prior.
- 08:00 (BR) Brazil Sept IBGE Inflation IPCA M/M: 1.3%e v 0.9% prior; Y/Y: 10.3%e v 9.7% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Sept Change in Nonfarm Payrolls: +500Ke v +235K prior; Change in Private Payrolls: +450Ke v +243K prior; Change in Manufacturing Payrolls: +25Ke v +37K prior.
- 08:30 (US) Sept Unemployment Rate: 5.1%e v 5.2% prior; Underemployment Rate: No est v 8.8% prior; Labor Force Participation Rate: 61.7%e v 61.7% prior.
- 08:30 (US) Sept Average Hourly Earnings M/M: 0.4%e v 0.6% prior; Y/Y: 4.6%e v 4.3% prior; Average Weekly Hours: 34.7e v 34.7 prior.
- 08:30 (CA) Canada Sept Net Change in Employment: +60.0Ke v +90.2K prior; Unemployment Rate: 6.9%e v 7.1% prior; Full Time Employment Change : No est v +68.5K prior; Part Time Employment Change: No est v +21.7K prior; Participation Rate: 65.2%e v 65.1% prior; Hourly Wage Rate Y/Y: 1.8%e v 1.2% prior.
- 10:00 (US) Aug Final Wholesale Inventories M/M: 1.2%e v 1.2% prelim; Wholesale Trade Sales M/M: 0.8%e v 2.0% prior.
- 11:00 (EU) Potential sovereign ratings after European close.
- 13:00 (US) Weekly Baker Hughes Rig Count.
