EU inflation data ticks higher while confidence in region falls

Notes/Observations

- Data driven morning session saw European inflation tilt higher as Spain and German States Aug CPI came in above estimates, with national Germany figure at 08:00 ET (12:00 GMT). Mixed bag of economic and consumer confidence readings for Euro Zone (which released early), Italy, Portugal, Netherlands and Sweden.

- Data barrage continues later with US ADP employment, GDP, advance goods trade balance and pending home sales.

- Hurricane Idalia (category 4, upgraded rapidly to 3 then 4 in last few hours) approaches US east coast over Florida panhandle, expected to make landfall at 08:00 ET.

- Collection of major Chinese banks reported first half results. Remaining on China front, no notable stimulus announced overnight as US Sec Raimondo wraps up visit and UK Foreign Sec begins visit in China.

- Asia closed higher with ASX200 out-performing at +1.2%. EU indices are mixed -0.5% to +1.3%. US futures are -0.1% to -0.2%. Gold -0.1%, DXY +0.1%; Commodity: Brent +0.4%, WTI +0.6%, TTF -1.4%; Crypto: BTC +5.7%, ETH +4.3%.

Asia

- Australia July CPI Y/Y: 4.9% v 5.2%e v 5.4% prior; provide cause for the RBA to extend pause in its current tightening cycle.

- Australia July Building Approvals M/M: -8.1% v -0.5%e.

- Japan Aug Consumer Confidence: 36.2 v 37.4e.

- BOJ's Tamura stated that was appropriate to keep easy monetary policy at present; Inflation likely to slow for time being, then accelerate moderately again.

Energy

- Weekly API Crude Oil Inventories: -11.5M v -2.4M prior.

- NHC on Hurricane Idalia noted that storm continued to strengthen, likely to become a major hurricane soon.

- Chevron evacuated staff from three Gulf of Mexico oil production platforms; Kinder Morgan planned to shut a petroleum pipeline ahead of Hurricane Idalia.

- EU poised to import records amounts of Russian LNG in 2023 despite trying to wean itself off Russian fossil fuels by 2027.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.15% at 459.14, FTSE +0.12% at 7,474.25, DAX -0.27% at 15,887.35, CAC-40 -0.18% at 7,359.81, IBEX-35 -0.26% at 9,556.37, FTSE MIB +0.24% at 28,959.00, SMI -0.29% at 11,073.50, S&P 500 Futures -0.12%].

Market focal points/Key themes: European indices open mixed with a bias to the downside and remained under pressure through the early part of the trading session; better performing sectors include materials and financials; while sectors trending lower include utilities and technology; Encavis acquires battery project; Smiths acquires HCP; earnings expected in the upcoming US session include Salesforce, Brown-Forman and Hovnanian.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] -6.5% (final results), Academedia [ACAD.SE] +2.5% (Q4 results).

- Consumer staples: Heineken [HEIA.NL] +0.5% (analyst action - cut to underperform at RBC).

- Financials: Prudential [PRU.UK] +3.5% (H1 results).

- Healthcare: Zealand Pharma [ZEAL.DK] -0.5% (priority review by the US FDA for dasiglucagon in congenital hyperinsulinism).

- Industrials: Implenia [IMPN.CH] -5.5% (Norbert Ketterer placed a total of 1.30M Implenia Ltd. shares), Stadler Rail [SRAIL.CH] +4.5% (H1 results), Andritz [ANDR.AT] +2.5% (analyst action - raised to buy at Kepler Cheuvreux).

- Materials: Eramet [ERA.FR] -17.0%, Rougier [ALRGR.FR] -6.0% (coup in Gabon, one of the world's largest producers of manganese).

Speakers

- South Africa Central Bank (SARB) Gov Kganyago testified in parliament that rate moves have averted a larger inflation issue.

- Poland Central Bank (NBP) Wnorowski stated that expected single-digit inflation in Aug reading.

- Poland Central Bank (NBP) Kotecki noted that did not see room for interest rate cuts amid looser fiscal policy.

- Japan PM Kishida unveiled new gasoline subsidy measures effective from Sept 7th (as expected). No need for extra budget.

- China PBOC said to hold meeting with private companies on supporting the private sector economy.

- US Commerce Sec Raimondo stated that she had productive, candid and constructive meetings in China; Raised the tough issues with Chinese govt; US policy not decoupling.

Currencies/fixed income

- USD consolidated its recent soft tone as market participants focus on clues on the Fed rate path. Following the JOLTS data on Tuesday the Fed Funds futures were approx. 50% of a hike by November. The 1st rate cut now shifted to May from June/July period.

- EUR/USD at 1.0865 area after some EU Aug CPI data registered an uptick with core levels remaining sticky. Markets now saw approx. 60% chance that ECB will hike by 25bps at the Sept meeting.

Economic data

- (NL) Netherlands Aug Producer Confidence: -2.2 v +0.1 prior.

- (FI) Finland July Preliminary Retail Sales Volume Y/Y: -1.9% v -3.5% prior.

- (DE) Germany Aug CPI North Rhine Westphalia M/M: 0.5% v 0.2% prior; Y/Y: 5.9% v 5.8% prior.

- (DE) Germany July Import Price Index M/M: -0.6% v -0.2%e; Y/Y: -13.2% v -12.9%e.

- (EU) EU27 July New Car Registrations: 15.2% v 17.8% prior.

- (ZA) South Africa July M3 Money Supply Y/Y: 9.3% v 10.8%e; Private Sector Credit Y/Y: % v 6.2%e.

- (SE) Sweden Jun Non-Manual Workers Wages Y/Y: 3.5% v 3.1% prior.

- (ES) Spain Aug Preliminary CPI M/M: 0.5% v 0.5%e; Y/Y: 2.6% v 2.5%e; CPI Core Y/Y:6.1 % v 6.0%e.

- (ES) Spain Aug Preliminary CPI EU-Harmonized M/M: 0.5% v 0.5%e; Y/Y: 2.4% v 2.3%e.

- (CH) Swiss Aug KOF Leading Indicator: 91.1 v 91.0e.

- (AT) Austria July PPI M/M: -0.7% v -0.8% prior; Y/Y: -1.3% v +0.8% prior.

- (SE) Sweden Aug Consumer Confidence: 70.4 v 72.5 prior; Manufacturing Confidence: 96.6 v 97.5 prior; Economic Tendency Survey: 85.2v 87.7 prior.

- (DE) Germany Aug CPI Hesse M/M: 0.2% v 0.3% prior; Y/Y: 6.0% v 6.1% prior.

- (DE) Germany Aug CPI Bavaria M/M: 0.3% v 0.4% prior; Y/Y: 5.9% v 6.1% prior.

- (DE) Germany Aug CPI Brandenburg M/M: 0.7% v 0.3% prior; Y/Y: 7.1% v 6.7% prior.

- (DE) Germany Aug CPI Baden Wuerttemberg M/M: 0.3% v 0.2% prior; Y/Y: 7.0% v 6.8% prior.

- (CH) Swiss Aug Expectations Survey: -38.6 v -32.6 prior.

- (IT) Italy Aug Consumer Confidence: 106.5 v 106.6e; Manufacturing Confidence: 97.8 v 98.0e; Economic Sentiment: 106.8 v 108.9 prior.

- (EU) Euro Zone Aug Economic Confidence: 93.3 v 93.5e; Industrial Confidence: -10.3 v -9.9e; Services Confidence: 3.9 v 4.8e; Consumer Confidence (final): -16.0 v -16.0 prelim.

- (UK) July Net Consumer Credit: £1.2B v £1.4Be; Net Lending: -£0.2B v £0.3Be.

- (UK) July Mortgage Approvals: 49.4K v 51.0Ke.

- (UK) July M4 Money Supply M/M: -0.5% v -0.1% prior; Y/Y:-0.9 % v +0.1% prior; M4 (ex-IOFCs) 3-month Annualized: -1.1% v -0.1% prior.

- (PT) Portugal Aug Consumer Confidence: -21.9 v -23.7 prior; Economic Climate Indicator: 1.5 v 1.5 prior.

- (DE) Germany Aug CPI Saxony M/M: 0.3% v 0.3% prior; Y/Y: 6.8% v 6.7% prior.

- (IT) Italy Jun Industrial Sales M/M: 0.4% v 1.6% prior; Y/Y: +1.3% v -0.5% prior.

- (IS) Iceland Aug CPI M/M: 0.3% v 0.0% prior; Y/Y: 7.7% v 7.6% prior.

Fixed income issuance

- (IN) India sold total INR240B vs. INR240B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK7.22B in 3-month and 6-month Bills.

- (SE) Sweden sold SEK2.5B vs. SEK2.5B indicated in 1.75% Nov 2033 bonds; Avg Yield: 2.7915% v 2.7968% prior, bid-to-cover: 3.4x v 2.07x prior.

- (IT) Italy Debt Agency (Tesoro) sold total €8.5B vs. €7.0-8.5B indicated range in 5-year and 10-year BTP Bonds.

- Sold €3.25B vs. €2.75-3.25B indicated range in 3.80% Aug 2028 BTP bonds; Avg Yield: 3.79% v 3.73% prior; Bid-to-cover: 1.43x v 1.44x prior (July 27th 2023).

- Sold €1.5B vs. €1.0-1.5B indicated range in 4.35% Nov 2033 BTP; Avg Yield: 4.20% v 4.10% prior, bid-to-cover: 1.59x v 1.37x prior (July 27th 2023).

- Sold €3.75B vs. €3.25-3.75B indicated in new 5.0% Mar 2034 BTP bond; Avg Yield: 4.24%; Bid-to-cover: 1.33x.

- (IT) Italy Debt Agency (Tesoro) sold €1.5B vs. €1.0-1.5B indicated range in Oct 2031 CCTeu (floating rate Notes); Real Yield: 4.62%; bid-to-cover: 1.93x.

Looking ahead

- (CO) Colombia July Retail Confidence: No est v 17.8 prior; Industrial Confidence: No est v -2.2 prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Aug CPI M/M: No est v 0.8% prior; Y/Y: No est v 4.1% prior.

- 05:30 (DE) Germany to sell €1.5B in 1.3% Oct 2027 BOBL.

- 05:30 (EU) ECB allotment in 3-month LTRO tender.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (IE) Ireland Aug Preliminary CPI EU Harmonized Y/Y: No est v 4.6% prior.

- 06:45 (SE) Sweden Central Bank (Riksbank) Breman.

- 07:00 (US) MBA Mortgage Applications w/e Aug 25th: No est v -4.2% prior.

- 07:00 (BR) Brazil Aug FGV Inflation IGPM M/M: 0.1 v -0.4% prior (revised from -0.7%); Y/Y: -7.0%e v -7.5% prior (revised from -7.8%).

- 07:00 (RU) Russia to sell OFZ Bonds (2 tranches).

- 08:00 (DE) Germany Aug Preliminary CPI M/M: 0.3%e v 0.3% prior; Y/Y: 6.0%e v 6.2% prior.

- 08:00 (DE) Germany Aug Preliminary CPI EU-Harmonized M/M: 0.2%e v 0.5% prior; Y/Y: 6.2%e v 6.5% prior.

- 08:00 (ZA) South Africa July Monthly Budget Balance (ZAR): -115.5Be v +36.7B prior.

- 08:00 (PL) Poland Central Bank (NBP) July Minutes.

- 08:00 (BR) Brazil July Total Formal Job Creation: +144.0Ke v +157.2K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) Aug ADP Employment Change: +195Ke v +324K prior.

- 08:30 (US) Q2 Preliminary GDP Annualized (2nd of 3 readings) Q/Q: 2.4%e v 2.4% advance; Personal Consumption: 1.8%e v 1.6% advance.

- 08:30 (US) Q2 Preliminary GDP Price Index (2nd of 3 readings): 2.2%e v 2.2% advance; Core PCE Q/Q: 3.8%e v 3.8% advance.

- 08:30 (US) July Advance Goods Trade Balance: -$90.0Be v -$87.8B prior.

- 08:30 (US) July Preliminary Wholesale Inventories M/M: -0.3%e v -0.5% prior; Retail Inventories M/M: 0.5%e v 0.7% prior.

- 09:00 (CL) Chile July Unemployment Rate: No est v 8.5% prior.

- 10:00 (US) July Pending Home Sales M/M: -1.0%e v 0.3% prior; Y/Y: No est v -14.8% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 12:00 (RU) Russia July Real Retail Sales Y/Y: 9.5%e v 10.0% prior.

- 12:00 (RU) Russia July Unemployment Rate: 3.1%e v 3.1% prior; Jun Real Wages Y/Y: 9.2%e v 13.3% prior.

- 13:30 (BR) Brazil July Central Govt Budget Balance (BRL): No est v -45.2B prior.

- 14:30 (MX) Mexico Central Bank Releases Inflation Report.

- 19:00 (KR) South Korea July Industrial Production M/M: -1.0%e v -1.0% prior; Y/Y: -6.0%e v -5.6% prior.

- 19:01 (UK) Aug Lloyds Business Barometer: No est v 31 prior.

- 19:50 (JP) Japan July Retail Sales M/M: +0.8%e v -0.6% prior (revised from -0.4%); Y/Y: 5.5%e v 5.6% prior (revised from 5.9%); Dept. Store, Supermarket Sales Y/Y: No est v 4.1% prior.

- 19:50 (JP) Japan July Preliminary Industrial Production M/M: -1.4%e v +2.4% prior; Y/Y: -1.4%e v 0.0% prior.

- 21:00 (NZ) New Zealand Aug ANZ Business Confidence: No est v -13.1 prior; Activity Outlook: No est v 0.8 prior.

- 21:30 (AU) Australia July Private Sector Credit M/M: 0.3%e v 0.2% prior; Y/Y: No est v 5.5% prior.

- 21:30 (AU) Australia Q2 Private Capital Expenditure Q/Q: 1.0%e v 2.4% prior.

- 21:30 (CN) China Aug Manufacturing PMI (Govt Official): 49.2e v 49.3 prior; Non-manufacturing PMI: 51.1e v 51.5 prior; Composite PMI: No est v 51.1 prior.

- 21:30 (JP) BOJ’s Nakamura.

- 22:00 (SG) Singapore July M2 Money Supply Y/Y: No est v 3.2% prior; M1 Money Supply Y/Y: No est v -8.5% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$500M in 2028, 2031 and 2041 bonds.