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Real GDP declined 1.1% (annualized) in the second quarter, well below consensus expectations for a 2.5% expansion. This left GDP around 2% below pre-pandemic (2019-Q4) levels. In nominal terms, GDP increased by 7.9% annualized in the second quarter.

The weakness in the quarter was driven by a substantial drop in residential investment (-12.4%), and exports (-15%). The former was held down by significantly lower home resale activity as home ownership transfer costs fell 54.2% (annualized) in the quarter, while exports were hobbled by supply chain disruptions, particularly the semiconductor shortage which lowered motor vehicles and parts production.

Meanwhile, business investment rebounded on the back of greater spending in the machinery and equipment category (+24.9%). Non-residential structures (+5.1%) and intellectual property products (+3.3%) also advanced in the second quarter. In terms of household consumption, spending was fairly flat (+0.2%). A rebound in outlays for services (+7.3%) was largely offset by a drop in goods expenditure (-7%). Notably, 32 out of 48 goods categories experienced declines in the second quarter.

On the income side, household disposable income rose 9.2% in annualized terms in the second quarter, outpacing the gain in consumption. As a result, the savings rate increased to 14.2%, the fifth consecutive quarters it's been in double-digit territory.

Statistics Canada also released monthly GDP data for June, which showed a 0.7% m/m expansion. The statistical agency also stated that preliminary data for July indicates a 0.4% decline in output for the month.

Key Implications

The Canadian economy lost momentum in its road to recovery in the second quarter of 2021. The cooling housing market and ongoing supply chain disruptions, particularly in motor vehicles, weakened economic activity during the quarter. The third wave and pandemic restrictions also kept a lid on household consumption. This was the first decline in quarterly GDP since the pandemic struck in the second quarter last year.

That said, today's data were not all gloomy. The GDP performance in June was encouraging as the vaccine rollout ramped up, and provinces gradually reopened their economies. The advance estimate for July was disappointing, but this was again probably due to cooling housing market activity, and supply chain disruptions. On the consumption side, consumers are reorienting their spending from goods to services, which is weighing on retail trade output. But as spending and saving patterns normalize, we expect consumption to drive GDP growth in the third quarter.

Looking further ahead, clouds are forming for the Canadian economy. Primarily, the Delta variant is spreading quickly in Canada, resulting in an uptick in cases and hospitalizations. International experience suggests this could be the beginning of a prolonged battle with this strain of the virus. Provinces and businesses are already responding to the threat with a number of policies such as vaccine passports, mandatory vaccinations and regular testing. While this will likely help mitigate the impact of the fourth wave, business and consumer confidence could be negatively affected. The pandemic is not yet over, and as long as its here, the road to recovery will be a bumpy one.

Daily Pivots: (S1) 109.77; (P) 109.86; (R1) 110.03; More...

Intraday bias in USD/JPY remains neutral as range trading continues. On the downside, break of 109.10 will target 108.71 support first. Firm break there will resume the decline from 111.65 and target 38.2% retracement of 102.58 to 111.65 at 108.18 next. On the upside, break of 110.79 will resume the rebound from 108.71 to retest 111.65 high.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. The pattern from 101.18 could still extend with another falling leg. Sustained trading below 55 day EMA will bring deeper fall to 107.47 support and below. Nevertheless, strong break of 111.71 resistance will confirm completion of the corrective decline from 118.65 (2016 high). Further rise should then be seen to 114.54 and then 118.65 resistance.

Daily Pivots: (S1) 0.9122; (P) 0.9154; (R1) 0.9205; More....

Range trading continues in USD/CHF and intraday bias remains neutral first. On the downside, break of 0.9098 will target 0.9017 support first. Further break there will likely resume the decline from 0.9471 through 0.8925 low. On the upside, break of 0.9241 resistance should resume the rise from 0.8925 through 0.927.

In the bigger picture, the failure to sustain above 55 week EMA (now at 0.9176) retains medium term bearishness in USD/CHF. Break of 0.8925 support should resume the whole decline form 1.0342 (2016 high) through 0.8756 low. However, break of 0.9273 resistance and sustained trading above 55 week EMA will be an early sign of bullish trend reversal. Focus will then turn to 0.9471 resistance for confirmation.

The latest data revealed that China’s economy continued to lose momentum. The PMI report from the National Bureau of Statistics (NBS) showed disappointment in both manufacturing and services activities. Stability of the renminbi (a.k.a. Yuan, CNY) is mainly due to government’s control and is not reflective of the headwind the economy is facing. We expect the People’s Bank of China (PBOC) would lower the reserve requirement ratio later this year, possibly followed by rate cut. Policy divergence from the Fed suggests further downside for the country’s currency.

The NBS manufacturing PMI slipped -0.3 point to 50.1 in August, slightly worse than consensus of consensus of 50.2. Concerning the sub-indexes, “production” was down -0.1 point to 50.9, while “new orders” was down -1.3 point to 49.6. “New exports” dropped to 46.7, lowest since June 2020, from 47.7 a month ago, while “imports” was down -1.1 pt to 48.3. The broad-based decline in these readings signals that demand was weak both at home and abroad.

The non-manufacturing PMI slumped to 47.5 in August from 53.3 in the prior month. The market had anticipated a milder decline to 52. A reading below 50 signals contraction in activities. While non-manufacturing activities are further divided into services and construction, the sharp decline this month was mainly driven by the former. The services PMI sank to 45.2 from July’s 52.2. The lockdown measures affected various industries, especially those require frequent contact with customers such as highway/air transportation, accommodation and catering. By contrast, the construction PMI improved to 60.5 in August to 60.5 from 57.5 previously.

The report also gives us a glimpse of China’s job market and inflation. The employment sub-index for the manufacturing sector stayed flat at 49.6 in August while that for non-manufacturing activities was above 50. The latter mainly reflects improved conditions in the construction sector. Inflation pressure appears to have moderated. The manufacturing “input cost” slipped -1.6 point to 61.3, while “output price” was down -0.4 point to 53.4 in August. Note that the output price of petroleum, coal and other fuels, smelting and pressing of ferrous metal each slumped more than 12 points and were all below 50 in August, resulting from regulatory measures to crack down commodity prices.

Overall, the PMI report suggests that China’s growth momentum continued to decelerate in August. As we mentioned in a previous report, it should take several months for the economic impacts of July’s flood and the resurgence of the pandemic to be reflected in the economic data, followed by government actions.

Implications on PBOC's Monetary Policy and USDCNY

The PBOC released a statement last week, pledging to use monetary policy tools to stimulate the economy, including the reserve ratio, and re-lending and re-discounting measures for rural developments. We expect that further reduction in RRR would come in a week or two. In April 2020, the central bank cut the RRR by -1 ppt for rural financial institutions and regional commercial banks, releasing RMB 400B of liquidity to the market. Meanwhile, Governor Yi Gang also pledged to boost credit support to the economy and improve efforts to bring down real lending rates for businesses.

The PBOC has been keeping its policy rate, the one-year loan prime rate (LPR), unchanged at 3.85% for 16 months in August. The five-year LPR also stays at 4.65%. Should RRR reduction and other liquidity injection tools prove insufficient to boost the economy, the central bank would be obliged to adopt an outright rate cut. This would exacerbate the monetary policy divergence with the Fed, sending renminbi further lower.

Daily Pivots: (S1) 1.3736; (P) 1.3755; (R1) 1.3777; More...

Intraday bias in GBP/USD remains mildly on the upside at this point. Rebound form 1.3601 short term bottom would target 1.3982 resistance first. Decisive break there will pave the way back to retest 1.4248 high. On the downside, break of 1.3678 will turn bias back to the downside for 1.3570 low, and possibly further to 1.3482 key resistance turned support.

In the bigger picture, current development argues that rise from 1.1409 (2020 low) has completed at 1.4248, after failing 1.4376 resistance. Fall from there could either be correcting the rise from 1.1409, or starting another falling leg inside long term sideway pattern. In either case, sustained break of 1.3482 resistance turned support will target 38.2% retracement of 1.1409 to 1.4248 at 1.3164 first. Break there will pave the way to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 1.1783; (P) 1.1797; (R1) 1.1810; More...

Intraday bias in EUR/USD stays on the upside at this point. Rebound from 1.1663 short term bottom is on track to 1.1907 resistance. Decisive break there will indicate that fall from 1.2265, as well as the consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for 1.2265/2348 resistance. On the downside, break of 1.1782 minor support will mix up the near term outlook and turn intraday bias neutral first.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.

Euro jumps notably today, as supported by highest inflation reading in a decade, and hawkish comments from an ECB official, as well as rise in German yields. Though, it's slightly outshone by Kiwi, Aussie and Swiss Franc for now. On the other hand, Dollar's selloff continues to pick up momentum and even dips against Yen. Canadian Dollar also stays weak, getting little support from GDP data that matched expectations.

Technically, EUR/GBP's break of 0.8592 minor resistance suggests resumption of the rebound from 0.8448. That's affirming Euro's underlying strength. But as EUR/CHF appears to be rejected by 1.0839 resistance, Euro's rally is somewhat capped elsewhere. We'll keep on monitoring European crosses to gauge the potential of more upside acceleration in EUR/USD and EUR/JPY.

In Europe, at the time of writing, FTSE is down -0.62%. DAX is down -0.37%. CAC is down -0.41%. Germany 10-year yield is up 0.0209 at -0.396, back above -0.4 handle. Earlier in Asia, Nikkei rose 1.08%. Hong Kong HSI rose 1.33%. China Shanghai SSE rose 0.45%. Singapore Strait Times dropped -1.52%. Japan 10-year JGB yield rose 0.0064 to 0.026.

Canada GDP grew 0.7% mom in Jun, to contract -0.4% mom in Jul

Canada GDP grew 0.7% mom in June, matched expectations. Total economic activity was -1.5% below February 2020's pre-pandemic level. Overall, 15 of 20 industrial sectors were up. Services-producing industries rose 0.7% mom while goods-producing industries rose 0.9% mom.

Statistics Canada said preliminary information indicates an approximate -0.4% decline in real GDP for July. The main decreases were in manufacturing, construction and retail trade.

ECB Holzmann will advise to slow down asset purchases in Q4, more so in Q1

ECB Governing Council member Robert Holzmann said in an interview, "we are now in a situation where we can think about how to reduce the pandemic special programs -- I think that's an assessment we share.""We have the opportunity to discuss how do we close the pandemic part and focus on the inflation part," he added.

"If enough people share my opinion, we will certainly advise the Executive Board to slow down purchases in the fourth quarter and more so in the first," Holzmann said. "We will spend as much as needed."

Eurozone CPI jumped to 3.0% yoy in Aug, core CPI rose to 1.6% yoy

Eurozone CPI accelerated to 3.0% in August, up sharply from 2.2% yoy, above expectation of 2.8% yoy. CPI core rose to 1.6% yoy, up from 0.7% yoy, above expectation of 0.5% yoy.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in August (15.4%, compared with 14.3% in July), followed by non-energy industrial goods (2.7%, compared with 0.7% in July), food, alcohol & tobacco (2.0%, compared with 1.6% in July) and services (1.1%, compared with 0.9% in July).

France consumer spending dropped -2.2% mom in Jul, GDP rose 1.1% qoq in Q2

France consumer spending dropped -2.2% mom in July, below expectation of 0.7% mom rise. This decrease came from the fallback in purchases of manufactured goods (–2.7%) and the sharp drop in food consumption (–2.9%). Energy expenditure, meanwhile, increased moderately (+1.0%).

France GDP grew 1.1% qoq in Q2 in volume term better than expectation of 0.9% qoq. GDP closed one quarter of the gap to is pre-crisis level at the end of 2020. It stood -3.2% below its level in Q4 2019.

Also released, Germany unemployment rate dropped from 5.6% to 5.5% in August, below expectation of 5.6%.

From UK, mortgage approvals dropped to 75k in July, below expectation of 79k. M4 money supply rose 0.1% mom, below expectation of 0.6% mom.

Japan industrial production dropped -1.5% mom in Jul, but expected to bounce back ahead

Japan industrial production dropped -1.5% mom in July, better than expectation of -2.5% mom. The overall output was back below pre-pandemic levels already. The Ministry of Economy, Trade and Industry expects, however, a bounce back of 3.4% in production in August, and 1.0% in September.

Unemployment rate ticked down to 2.8%, better than expectation of 2.9%. Housing starts rose 9.9% yoy in July versus expectation of 4.8% yoy. Consumer confidence dropped slightly to 36.7 in August, below expectation of 37.4.

China PMI manufacturing dropped to 50.1, services tumbled to 47.5

China's official PMI Manufacturing dropped slightly from 50.4 to 50.1 in August, below missed expectation of 50.2. PMI Non-Manufacturing dropped sharply from 53.3 to 47.5, well below expectation of 52.8, back in contraction for the first time since Q1 last year.

"This epidemic in multiple provinces and locations was a fairly big shock to the services industry, which is still in recovery," said Zhao Qinghe, of China's National Bureau of Statistics.

New Zealand ANZ business confidence dropped to -14.2 on Delta lockdown

New Zealand ANZ Business Confidence dropped sharply from -3.8 to -14.2 in August. Own Activity Outlook dropped from 26.3 to 19.2. Looking at some more details, export intentions ticked down from 7.6 to 7.4. Investment intentions dropped from 17.4 to 14.4. Employment intentions dropped from 21.4 to 17.0. Profit expectations dropped from 0.0 to -5.5. Inflation expectations, however, rose further from 2.70 to 3.05, above RBNZ's target band. ANZ said that the "initial responses after level 4 lockdown look encouragingly robust".

Also released, New Zealand building permits rose 2.1% mom in July.

From Australia, current account surplus widened to AUD 20.5B in Q2, versus expectation of AUD 21.0B. Private sector credit rose 0.7% mom in July versus expectation of 0.5% mom. Building permits dropped -8.6% mom, versus expectation of -5.0% mom.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1783; (P) 1.1797; (R1) 1.1810; More...

Intraday bias in EUR/USD stays on the upside at this point. Rebound from 1.1663 short term bottom is on track to 1.1907 resistance. Decisive break there will indicate that fall from 1.2265, as well as the consolidation pattern from 1.2348, have completed. Near term outlook will be turned bullish for 1.2265/2348 resistance. On the downside, break of 1.1782 minor support will mix up the near term outlook and turn intraday bias neutral first.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.

Economic Indicators Update

Canada GDP grew 0.7% mom in June, matched expectations. Total economic activity was -1.5% below February 2020's pre-pandemic level. Overall, 15 of 20 industrial sectors were up. Services-producing industries rose 0.7% mom while goods-producing industries rose 0.9% mom.

Statistics Canada said preliminary information indicates an approximate -0.4% decline in real GDP for July. The main decreases were in manufacturing, construction and retail trade.

Full release here.

ECB Governing Council member Robert Holzmann said in an interview, "we are now in a situation where we can think about how to reduce the pandemic special programs -- I think that's an assessment we share.""We have the opportunity to discuss how do we close the pandemic part and focus on the inflation part," he added.

"If enough people share my opinion, we will certainly advise the Executive Board to slow down purchases in the fourth quarter and more so in the first," Holzmann said. "We will spend as much as needed."

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.