Focus on upcoming US CPI release
|Notes/observations
- USD index pulls back against modestly rising global equities/futures ahead of US July CPI at 08:30 ET.
- European economic data saw inflation fall as Norway July CPI was cooler than expected and Italy Final July CPI was revised lower.
- EU Earnings Recap: Allianz sees momentum picking up in asset management; Evonik expects continued weak demand in 2023; Siemens sees normalization in demand, particularly in China; ThyssenKrupp raised FY23 guidance, plans a program to improve performance; Henkel raised FY23 guidance, but sees challenging China environment; Antofagasta cut FY23 copper production; Orsted Q2 missed, cites industry challenge against inflation; Persimmons raised FY23 home completions.
- Notable US Premarket Earnings: BABA, RL, TAST, UTZ.
- Asia closed mixed with Nikkei225 outperforming at +0.9%. EU indices are +0.1-1.0%. US futures are +0.5-0.6%. Gold +0.2%, DXY -0.3%; Commodity: Brent +0.1%, WTI +0.1%, TTF -6.5%; Crypto: BTC -1.1%, ETH -0.5%.
Asia
- Japan July PPI (CPGI) registered its slowest annual pace since Mar 2021 (M/M: 0.1% v 0.2%e; Y/Y: 3.6% v 3.5%e).
- India Central Bank (RBI) left the Repurchase Rate unchanged at 6.50% (as expected) for its 3rd straight pause in the current tightening cycle; Maintaining focus on withdrawal of accomoodation.
- China Foreign Ministry said to have filed diplomatic complaint with US on investment curbs. Says order “seriously disrupted the security of the global industrial and supply chains.”
- China said to have at least a 70% dependence on about 412 items imported from the US and allied countries, at a value of roughly $47B annually. Beijing lacked ready-made homegrown alternatives for many of the items.
Europe
- UK July RICS House Price Balance: -53% v -51%e (lowest since Apr 2009).
- UK PM Sunak was said to be contemplating following Pres Biden’s curb on Chinese tech investment.
Americas
- President Biden issued order limiting investment in some Chinese technology citing threats to US national security. Order limited investment in some chips, AI, and quantum computing.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 +0.56% at 463.14, FTSE +0.02% at 7,588.46, DAX +0.56% at 15,941.85, CAC-40 +1.00% at 7,395.03, IBEX-35 +0.96% at 9,444.20, FTSE MIB +0.88% at 28,557.00, SMI +0.50% at 11,137.30, S&P 500 Futures +0.54%].
Market focal points/Key themes: European indices open generally higher and drifted higher as the session progressed; sectors trending into the green include consumer discretionary and financials; lagging sectors include industrials and materials; oil & gas subsector supported after Brent hit multi-month high; Shares of Siemens trade lower in Germany after earnings results and China market outlook; European chip names trade higher after bounce in TSMC monthly sales; Obesity drug maker Novo Nordisk shares fell up to 2% after comments on production capacity; Capita sells its Agiito and Evolvi units to Clarity Travel; focus on release of US CPI later in the day; earnings expected in the upcoming Americas session include Alibaba, Metro, News Corp and Hanesbrands.
Equities
- Consumer discretionary: Persimmon [PSN.UK] +3.0% (H1 results), Deliveroo [ROO.UK] +3.5% (earnings).
- Energy: Orsted [ORSTED.DK] +2.0% (Q2 results, misses estimates).
- Financials: Allianz [ALV.DE] +2.0% (Q2 results).
- Healthcare: Novo Nordisk [NOVOB.DK] -1.5% (earnings; obesity drug comments).
- Industrials: Thyssenkrupp [TKA.DE] +3.0% (Q3 results, raises FY23 guidance), Siemens [SIE.DE] -3.5% (Q3 results), Antofagasta [ANTO.UK] +1.5% (H1 results), Knorr-Bremse [KBX.DE] +2.0% (Q2 results, raises FY23 guidance).
- Technology: Infineon Technologies [IFX.DE] +1.5% (TSMC monthly sales).
- Utilites: RWE [RWE.DE] +1.5% (Q2 results).
Speakers
- ECB Economic Bulletin reiterated Council stance that Inflation continues to decline but is still expected to remain too high for too long. Future decisions would ensure that rates would be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target.
- Norway Central Bank (Norges) Bank Lending Survey noted that it saw broadly unchanged credit demand and standards in Q2.
- India Fin Min Sitharaman stated that govt to continue measures to contain high prices.
Currencies/fixed income
- USD was slight softer against the major pairs ahead of the US July CPI data. Dealers noted that reading could be a large factor in shaping the Fed's policy direction. Inflation is poised to accelerate for the 1st time in 14 months (mainly due to base effects). Currently Markets saw approx 90 % chance of a pause at the Sept policy meeting and a 70% chance of a pause continuing in Nov.
- USD/JPY was edging back towards the 144 neighborhood. Dealers noted that BOJ's decision to relax its control of long-term yields was only a technical tweak aimed at extending the shelf life of stimulus. Previously Japanese.
- Softer Norway CPI reading was seen unlikely to deter the expected plan for a 25 basis-point interest-rate rise at next week's meeting.
Economic data
- (SE) Sweden July Maklarstatistik Housing Prices Y/Y: -10% v -12% prior; Apartment Prices Y/Y: -2% v -5% prior.
- (NL) Netherlands Jun Manufacturing Production M/M: 0.7% v 0.8% prior; Y/Y: -7.7% v -9.5% prior; Industrial Sales Y/Y: No est v -6.5% prior.
- (FI) Finland Jun Industrial Production M/M: -3.3% v +2.0% prior; Y/Y: -6.1% v +0.7% prior.
- (SE) Sweden Jun Private Sector Production M/M: -1.6% v -0.4% prior; Y/Y: -3.4% v -0.7% prior.
- (SE) Sweden Jun Industrial Orders M/M: -7.1% v +7.1% prior; Y/Y: 0.3% v 13.6% prior.
- (SE) Sweden Jun Industry Production Value Y/Y: -2.8% v +3.9% prior; Service Production Value Y/Y: -2.2% v -0.3% prior.
- (SE) Sweden Jun Household Consumption M/M: -0.1% v -0.4% prior; Y/Y: -1.7% v -1.7% prior.
- (NO) Norway July CPI M/M: 0.4% v 0.9%e; Y/Y: 5.4% v 5.9%e.
- (NO) Norway July CPI Underlying M/M: 0.9% v 0.9%e; Y/Y: 6.4% v 6.4%e.
- (NO) Norway July PPI (including oil) M/M: -2.9% v +0.3% prior; Y/Y: -35.4% v -28.5% prior.
- (DK) Denmark July CPI M/M: 1.8% v 0.3% prior; Y/Y: 3.1 v 2.5% prior.
- (DK) Denmark July CPI EU Harmonized M/M: 2.1% v 0.3% prior; Y/Y: 3.2% v 2.4% prior.
- (AT) Austria Jun Industrial Production M/M: -1.4% v -1.4% prior; Y/Y: -3.4% v -1.9% prior.
- (CZ) Czech July CPI M/M: 0.5% v 0.4%e; Y/Y: 8.8% v 8.8%e.
- (CZ) Czech Jun Export Price Index Y/Y: -3.0% v -2.6% prior; Import Price Index Y/Y: -9.4% v -8.0% prior.
- (TR) Turkey Jun Unemployment Rate: 9.6% v 9.5% prior.
- (TR) Turkey Jun Industrial Production M/M: +1.6% v -2.3%e; Y/Y: +0.6% v -3.0%e.
- (IT) Italy July Final CPI M/M: 0.0% v 0.1% prelim; Y/Y: 5.9% v 6.0% prelim; CPI Index (ex-tobacco): 118.7 v 118.6e.
- (IT) Italy July Final CPI EU-Harmonized M/M: -1.6% v -1.5% prelim; Y/Y: 6.3% v 6.4% prelim.
- (GR) Greece Jun Industrial Production Y/Y: -3.6% v +1.9% prior.
Fixed income issuance
- (IT) Italy Debt Agency (Tesoro) sold €B vs. €8.0B indicated in 12-month Bills; Avg Yield: 3.820% v 3.947% prior; Bid-to-cover: 1.32x v 1.33x prior.
- (SE) Sweden sold total SEK500M in I/L 2027 and 2032 inflation-linked Bonds.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (ZA) South Africa Jun Total Mining Production M/M: +0.5%e v -3.8% prior; Y/Y: +0.3%e v -0.8% prior; Gold Production Y/Y: No est v 27.3% prior; Platinum Production Y/Y: No est v -7.2% prior.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays); To sell ZAR3.9B in bonds on Aug 15th.
- 06:00 (IE) Ireland July CPI M/M: No est v 0.8% prior; Y/Y: No est v 6.1% prior.
- 06:00 (IE) Ireland July CPI EU Harmonized M/M: No est v 0.8% prior; Y/Y (final): No est v 4.6% prelim.
- 06:00 (PT) Portugal July Final CPI M/M: No est v -0.4% prelim; Y/Y: No est v 3.1% prelim.
- 06:00 (PT) Portugal July CPI EU-Harmonized M/M: No est v -0.4% prelim; Y/Y: 4.3%e v 4.3% prelim.
- 06:00 (IL) Israel July Consumer Confidence: No est v 69 prior.
- 06:00 (IL) Israel July Trade Balance: No est v -$2.1B prior.
- 06:00 (CZ) Czech Republic to sell Bills.
- 06:00 (RO) Romania to sell RON500M in 7.2% Oct 2026 bonds.
- 07:00 (ZA) South Africa Jun Manufacturing Production M/M: +0.7%e v -1.3% prior; Y/Y: 3.0%e v 2.5% prior.
- 07:00 (CZ) Czech Central Bank to comment on CPI data.
- 08:00 (BR) Brazil CONAB crop report.
- 08:00 (BR) Brazil Jun IBGE Services Volume M/M: 0.5%e v 0.9% prior; Y/Y: 4.3%e v 4.7% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) July CPI M/M: 0.2%e v 0.2% prior; Y/Y: 3.3%e v 3.0% prior.
- 08:30 (US) July CPI (ex-food/energy) M/M: 0.2%e v 0.2% prior; Y/Y: 4.7%e v 4.8% prior.
- 08:30 (US) July CPI Index NSA: 305.851e v 305.109 prior; CPI Core (seasonally adj): 308.941e v 308.309 prior.
- 08:30 (US) July Real Avg Hourly Earning Y/Y: No est v 1.2% prior; Avg Weekly Earnings Y/Y: No est v 0.6% prior.
- 08:30 (US) Initial Jobless Claims: 230Ke v 227K prior; Continuing Claims: 1.71Me v 1.700M prior.
- 08:30 (CL) Chile Central Bank Economist Survey.
- 08:30 (US) Weekly USDA Net Export Sales.
- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 4th: No est v $594.0B prior.
- 10:30 (US) Weekly EIA Natural Gas Inventories.
- 11:30 (US) Treasury to sell 8-Week Bills.
- 13:00 (US) Treasury to sell 30-Year Bonds.
- 14:00 (US) July Monthly Budget Statement: -$109.3Be v -$211.1B prior.
- 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 11.25%.
- 15:00 (AR) Argentina Jun Wages M/M: No est v 7.5% prior.
- (MX) Mexico July ANTAD Same-Store Sales Y/Y: No est v 9.3% prior.
- 15:00 (US) Fed’s Bostic.
- 18:30 (NZ) New Zealand July Manufacturing PMI: No est v 47.5 prior.
- 18:45 (NZ) New Zealand July Food Prices M/M: No est v 1.6% prior.
- 19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 7.75%.
- 20:00 (SG) Singapore Q2 Final GDP Q/Q: No est v 0.3% prelim; Y/Y: No est v 0.7% prelim.
- 22:30 (KR) South Korea to sell KRW400B in 50-year Bonds.
- 23:00 (KR) South Korea Jun M2 Money Supply M/M: No est v -0.3% prior; “L” Money Supply M/M: No est v 0.2% prior.
- 23:00 (TH) Thailand July Consumer Confidence: No est v 56.7 prior; Economic Confidence: No est v 51.2 prior.
- 23:00 (TH) Thailand to sell THB30B in 6-month Bills.
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