Gold hits record high as Crude pulls back

EU mid-market update: Riksbank sees two to three more cuts this year; Gold hits record high as crude pulls back; Focus remains on Jackson Hole.

Notes/observations

- For EU interest rates, SEK (krona) currency is weaker after Swedish Central Bank (Riksbank) cut rates by 25bps as expected, with dovish statement adding forward guidance of 2-3 more cuts this year once again, which can be somewhat faster. ECB’s Rehn reinforced case for another rate cut in Sept following recent negative growth risks in Euro Zone.

- UK assets move opposingly to European peers as bets are made on more cautious rate cuts from BOE. Sterling (GBP) moves higher, Gilt yields climb and FTSE underperforms.

- Gold hit record high $2,522 and oil weakness seen off of lower China demand and alleviating geopolitical risk.

- Overnight saw China PBOC leave 1-year and 5-year LPR (used for mortgages) unchanged, as Australia’s RBA minutes pushed back against near term rate cuts.

- Looking ahead towards comments from Fed’s Bostic and Barr at 13:15 and 14:45 ET respectively.

- Asia closed mixed with Nikkei outperforming +2.0%. EU indices are -0.5% to +0.3%. US futures are +0.1%. Gold +0.7%, DXY -0.1%; Commodity: Brent -0.8%, WTI -0.9%; Crypto: BTC +3.9%, ETH +1.7%.

Asia

- China PBOC Monthly Loan Prime Rate (LPR) Setting left 1-year and 5-year rates unchanged at 3.35% and 3.85% respectively (as expected).

- RBA Aug Minutes noted that Members agreed unlikely rates that would be cut in the short term. Stressed that a longer rate pause than market implies might achieve CPI goal. Immediate hike in rates could be justified if risks to inflation had increased 'materially'.

- New Zealand July Trade Balance (NZD): -1.0B v +0.6B prior; Exports: 6.2B v 6.0B prior; Imports: 7.1 v 5.5B prior.

- China govt said to have unleashed rare financing tool to support start-ups; during the first 6 months of 2024 total new intellectual property-pledged financial loans rose by 57% y/y to CNY420B.

Global conflict/tensions

- Secretary of State Blinken said that PM Netanyahu had accepted a "bridging proposal" presented by Washington.

- Hamas senior official Osama Hamdan stated that US proposal raised many ambiguities.

Europe

- ECB Rehn (Finland) commented that the recent increase in negative growth risks in Euro Zone reinforced the case for a rate cut at Sept meeting.

Americas

- Vice President Harris said to be proposing to increase the corporate tax rate to 28% from 21%.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.01% at 514.54, FTSE -0.57% at 8,309.27, DAX +0.06% at 18,439.85, CAC-40 +0.13% at 7,511.92, IBEX-35 -0.04% at 11,098.42, FTSE MIB +0.12% at 33,305.00, SMI +0.11% at 12,298.63, S&P 500 Futures -0.03%].

Market focal points/key themes: European indices open slightly higher and stayed in the positive territory through the early part of the session; among sectors leading into the upside is tech, while energy sector lags; on corporate front, ASML trades first percent higher after press report that TSMC, Intel, and Samsung all to have ASML's High NA EUV equipment in place by the end-2024; shares of global staffing specialist Empresaria Group trade lower in London despite it believes it has seen the bottom of the hiring market and starting to see some cautious positive movement in demand in some areas; Antofagasta also slightly lower after reporting its results; earnings expected in the upcoming US session include Lowe's and Medtronic.

Equities

- Consumer discretionary: Empresaria Group [EMR.UK] -2.5% (earnings; believes it has seen the bottom of the hiring market and starting to see some cautious positive movement in demand in some areas).

- Energy: SFC Energy [FSC.DE] +4.0% (H1 results, notes capacity will be improved in H2).

- Industrials: Antofagasta [ANTO.UK] +1.0% (earnings), Huber & Suhner [HUBN.CH] +10.5% (H1 results, beats estimates, affirms guidance), John Wood Group [WG.UK] -1.0% (H1 results, affirms FY24 and FY25) - Technology: ASML [ASML.NL] +2.0% (TSMC, Intel, and Samsung all said to have ASML's high numerical aperture extreme ultraviolet (High NA EUV) equipment in place by the end-2024), STMicroelectronics [STM.FR] +1.0% (construction of TSMC's first factory in Europe, located in Dresden, Germany to start today) - Telecom: BT Group [BT.A.UK] -5.0% (Sky said to sign broadband deal with BT's rival Cityfibre).

Speakers

- Sweden Central Bank (Riksbank) Policy Statement noted that the key rate could be cut two or three times in H2. Outlook for inflation and economic activity was uncertain including geopolitical situation, economic activity in Sweden and abroad. SEK currency (krona) exchange rate that can lead to a different outcome for inflation and thereby a different monetary policy.

- Sweden Central Bank (Riksbank) Gov Thedeen post-rate decision press conference noted that it looked to move gradually on rates under our strategy. Inflation expectations were in line with our assessment.

- BOJ research note said to state that persistence of inflationary pressure in the economy keeps case to be made for another interest rate hike.

- Fitch affirmed New Zealand sovereign rating at AA+; Outlook Stable.

Currencies/fixed income

- USD continued to be on soft footing as market participant recalibrate central bank rate path outlook.

- GBP/USD moved above the 1.30 level as dealers expected BOE to cut interest rates more cautiously than its peers.

- EUR/USD approaching the 1.1 neighborhood.

- USD/JPY lower after a report circulated that a BOJ research note kept the case open for another interest rate hike.

Economic data

- (FI) Finland July Unemployment Rate: 7.9% v 8.3% prior.

- (DE) Germany July PPI M/M: 0.2% v 0.2%e; Y/Y: -0.8% v -0.8%e.

- (CH) Swiss July Trade Balance (CHF): 4.9B v 6.1B prior; Real Exports M/M: -1.8% v -0.2% prior; Real Imports M/M: 0.0% v 0.8% prior; Watch Exports Y/Y: +1.6% v -7.0% prior.

- (DK) Denmark Q2 Preliminary GDP Q/Q: +0.6% v -1.0% prior; Y/Y: % v 1.9% prior.

- (SE) Sweden Q2 Industry Capacity: 89.2% v 88.6% prior.

- (ZA) South Africa Jun Leading Indicator: 111.4 v 111.9 prior.

- (AT) Austria July Final CPI M/M: 0.0% v 0.0% prelim; Y/Y: 2.9% v 2.9% prelim.

- (SE) Sweden Central Bank (Riksbank) cut Repo Rate by 25bps to 3.50% (as expected) to resume its easing cycle.

- (TW) Taiwan July Export Orders Y/Y: 4.8% v 2.7%e.

- (EU) Euro Zone Jun Current Account Balance: €50.5B v €36.7B prior.

- (TW) Taiwan Q2 Current Account Balance: $21.8B v $29.7B prior.

- (GR) Greece Jun Current Account Balance: +€0.3B v -€2.4B prior.

- (IT) Italy Jun Current Account Balance: €4.9B v €2.1B prior.

- (PT) Portugal Jun Current Account: +€1.3B v -€0.8B prior.

- (EU) Euro Zone July Final CPI Y/Y: 2.5% v 2.5% advance; Core CPI Y/Y: 2.9% v 2.9% advance.

- (EU) Euro Zone Jun Construction Output M/M: +1.7% v -0.9% prior; Y/Y: +1.0% v -2.1% prior.

- (CY) Cyprus July CPI EU Harmonized M/M: 0.7% v 0.4% prior; Y/Y: 2.4% v 3.0% prior.

Fixed income issuance

- (FI) Finland opened its book to sell EUR-denominated 5-year RFGB bond via syndication; guidance seen +12bps to mid-swaps.

- (ID) Indonesia sold total IDR27.0T vs. IDR22.0T indicated in bills and bonds.

Looking ahead

- (MX) Citibamex Survey of Economists.

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

- 05:30 (CH) SNB President Jordan.

- 05:30 (DE) Germany to sell combined €1.5B in 2033 and 2050 green Bunds.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2031, 2040 and 2053 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (IL) Israel July Unemployment Rate: No est v 3.2% prior.

- 06:00 (PT) Portugal July PPI M/M: No est v 0.8% prior; Y/Y: No est v 2.0% prior.

- 06:30 (EU) ESM to sell €1.1B in 6-month bills.

- 06:30 (TR) Turkey to sell Bonds.

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 50.00%.

- 08:00 (MX) Mexico Jun Retail Sales M/M: 0.2%e v 0.1% prior; Y/Y: -2.1%e v +0.3% prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Aug Philadelphia Fed Non-Manufacturing Activity Regional Index: No est v -19.1 prior.

- 08:30 (CA) Canada July CPI M/M: +0.4%e v -0.1% prior; Y/Y: 2.5%e v 2.7% prior; CPI Core-Trim Y/Y: 2.8%e v 2.9% prior; Core-Median Y/Y: 2.5%e v 2.6% prior; Consumer Price Index: 162.0e v 161.4 prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 11:00 (US) Treasury TIPS Purchase Announcement.

- 13:35 (US) Fed’s Bostic.

- 14:45 (US) Fed’s Barr.

- 15:00 (AR) Argentina July Trade Balance: $1.7Be v $1.9B prior; Exports: No est v $6.6B prior; Imports: No est v $4.7B prior.

- 16:30 (US) Weekly API Oil Inventories.

- 17:00 (KR) South Korea July PPI Y/Y: No est v 2.5% prior.

- 17:00 (KR) South Korea Sept Business Manufacturing Survey: No est v 72 prior; Non-Manufacturing Survey: No est v 72 prior.

- 19:50 (JP) Japan July Trade Balance: ¥350.0Be v ¥224.0B prior; Adjusted Trade Balance: -¥753.5Be v -¥816.8B prior; Exports Y/Y: 11.4%e v 5.4% prior; Imports Y/Y: 14.6%e v 3.2% prior.

- 20:00 (KR) South Korea Aug 1-20 Exports Y/Y: No est v 18.8% prior; Imports Y/Y: No est v 14.2% prior.

- 20:30 (AU) Australia July Westpac Leading Index M/M: No est v 0.0% prior.

- 21:00 (AU) Australia to sell A$800M indicated in 3.00% Nov 2033 bond.

- 21:10 (JP) BOJ Bond buying operation.

- 21:30 (KR) Bank of Korea to sell KRW1.1T in 3-Year Bonds.

- 22:35 (CN) China to sell 30-year Special Bonds.

- 23:00 (KR) South Korea Q2 Short-Term External Debt: No est v $141.0B prior.