Awaiting key central bank rate decisions during the week – Trump has stroke of luck on golf course

Notes/observations

- Bets accelerate again for a 50bps rate cut from the Fed this week, weakening US dollar. Elsewhere, Europe trades mixed as focus turns to BOJ, BoE and Fed rate decisions.

- Trump unharmed after second assassination attempt this year: Political violence turning up a gear as US election in Nov draws closer. Ex-Pres Trump was reportedly targeted at his golf club, from an assailant in the bushes with AK47, FBI confirmed. Not confirmed if shots were fired, but Trump is unharmed, and attacker is in custody.

- NATO/Russia tension puts world on edge: Following UK PM Starmer visit to US, which failed to receive approval for UK long missile ‘shadow storm’ use in Russia territory, reportedly Russia suggests one of its options in response could include conducting a real nuclear weapon test, if West uses any long-range missiles to strike deep in Russia. Could US rejection of UK plans show how close the world is to crossing Russia’s real red line?

- Norway 12-month bill auction fails to sell full indicated amount for first time in >15 years.

- Market closures for China, Japan, South Korea, Indonesia, Malaysia, Mexico, Sri Lanka.

- EU indices are -0.2% to +0.3%. US futures are +0.0-0.2%. Gold +0.4%, DXY -0.4%; Commodity: Brent +0.8%, WTI +1.0%; Crypto: BTC -1.7%, ETH -4.0%.

Asia

- China Aug Industrial Production Y/Y: 4.5% v 4.7%e.

- China; Aug Retail Sales Y/Y: 2.1% v 2.5%e.

- China Aug YTD Urban Fixed Assets Y/Y: 3.4% v 3.5%e.

- China Aug YTD Property Investment Y/Y: -10.2% v -10.0%e v -10.2% prior.

- China Aug Surveyed Jobless Rate: 5.3% v 5.2%e.

- China Aug New Home Prices M/M: -0.7% v -0.7% prior.

- Holiday in Asia overnight: China, Indonesia, Japan, Malaysia, South Korea.

Global conflict/tensions

- Yemen’s Houthi terror group struck central Israel for the first time; no injuries reported.

Europe

- UK Sept Rightmove House Prices M/M: +0.8% v -1.5% prior; Y/Y: 1.2% v 0.8% prior.

- ECB’s Wunsch (Netherlands) stated that should be able to reduce interest rates further if projections become reality.

- Fitch affirmed Germany sovereign rating at AAA; outlook stable.

- Moody's revised Greece outlook to Positive from Stable; Affirmed Ba1 sovereign rating.

Americas

- Former President Trump targeted in potential assassination attempt after gunman was spotted on golf course by Secret Service agent.

- WSJ op-ed: Fed should cut by a half point; FT noted about Powell’s rate cut conundrum and believe with inflation down and the jobs market cooling, the economics points to 50bps cut.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.05% at 515.72, FTSE -0.06% at 8,267.90, DAX -0.27% at 18,640.35, CAC-40 +0.05% at 7,469.27, IBEX-35 +0.32% at 11,576.95, FTSE MIB +0.24% at 33,648.00, SMI -0.09% at 12,027.24, S&P 500 Futures +0.10%].

Market Focal Points/Key Themes: European indices opened generally lower and maintained a depressed tone through the early part of the session; lack of risk appetitive seen attributed to disappointing macro data out of China over the weekend; among sectors clinging to gains are utilities real estate; sectors leading the decliners include industrials and energy; Unicredit CEO said would be an “active” holder of Commerzbank and that a merger would create value; TI Fluid rejects second offer from ABC Technologies; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Nestle [NESN.CH] -0.5% (Morgan Stanley cuts to underweight).

- Energy: Saipem [SPM.IT] +3.5% (awarded contract) - Financials: Icade [ICAD.FR] +6.5% (CitiGroup raised to Buy) - Healthcare: Virbac [BIRP.FR] +5.5% (CEO resigns; affirms outlook), Ipsen [IPN.FR] +5.5% (RBC raised to outperform) - Industrials: MTU Aero Engines [MTX.DE] -1.5% (CitiGroup cuts to sell) - Technology: Rexel [RXL.FR] +10.5% (rejects offer), TT Electronics [TTG.UK] -32.5% (trading update citing weakness in Aug and Sept-to-date).

Speakers

- ECB’s De Guindos (Spain) reiterated Council stance that did not have pre-determined path for rates; Projections showed that inflation would hover around 2% target by end-2025. Reiterates decisions would be done on meeting-by-meeting basis.

Currencies/fixed income

- Week of big rate decisions with Fed, BOE and BOJ among them.

- USD remained on the defensive as Fed was likely to commence its long-awaited easing cycle. Markets now significantly repriced the chance of a 50bps rate cut from approx. 15% to almost 60% over the past week. Various key op-ed article WSJ and FT) advocated for a 50bps move as well.

- EUR/USD holding above 1.11 level as ECB speak continued to note that inflation would pick up before year end before declining during 2025.

- GBP/USD reapproaching the 1.32 level with BOE in focus. Currently markets only see approx 20% that BOE would cut rates at this time and favored another pause in the current easing cycle.

- USD/JPY briefly touched 139.60 for its lowest since July 2023 as policy divergence between the Fed and BOJ kept the yen currency strong.

Economic data

- (NO) Norway Aug Trade Balance (NOK): 66.0B v 58.7B prior.

- (DK) Denmark Aug PPI M/M: 5.7% v 0.3% prior; Y/Y: 5.8% v 0.3% prior.

- (CH) Swiss Aug Producer & Import Prices M/M: 0.2%e v 0.0% prior; Y/Y: -1.2%e v -1.7% prior.

- (CZ) Czech Aug PPI Industrial M/M: -0.4% v -0.1%e; Y/Y: 1.1% v 1.5%e.

- (IT) Italy Aug Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 1.1% v 1.1% prelim.

- (IT) Italy Aug Final CPI EU Harmonized M/M: -0.2% v -0.1% prelim; Y/Y: 1.2% v 1.3% prelim.

- (CH) Swiss weekly Total Sight Deposits (CHF): 466.8 v 455.9B prior; Domestic Deposits: 458.2 v 447.3B prior.

- (TR) Turkey Aug Central Gov’t Budget Balance (TRY): -129.6B v -96.8B prior.

- (IT) Italy July General Government Debt: €2.947T v €2.949T prior (moves away from record level).

- (EU) Euro Zone July Trade Balance: €15.5B v €15.0Be; Trade Balance NSA (unadj): €21.2B v €22.3B prior.

- (EU) Euro Zone Q2 Labour Costs Y/Y: % v 5.1% prior.

- (IT) Italy July Total Trade Balance: €6.7B v €5.1B prior; EU Trade Balance: +€0.6B v -€1.0B prior.

Fixed income issuance

- (NO) Norway sold NOK6.0B vs. NOK6.0B indicated in 12-month Bills; Avg Yield: % v 4.40% prior; bid-to-cover: x v 1.50x prior.

- (SK) Slovakia Debt Agency (Ardal) sold total €511.8M in 2026, 2028, 2033 and 2035 Bonds.

Looking ahead

- (NG) Nigeria CPI Aug Y/Y: 32.3%e v 33.4% prior.

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

- 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- Sells €B vs. €1.0-2.0B indicated range in 3-month bills; Avg Yield: % v 3.369% prior; Bid-to-cover: x v 3.11x prior (Sept 2nd 2024).

- Sells €B vs. €1.0-2.0B indicated range in 6-month bills; Avg Yield: % v 3.179% prior; Bid-to-cover: x v 1.91x prior (Sept 2nd 2024).

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 05:50 (SI) ECB’s Vasle (Slovenia): in Budapest.

- 06:00 (IE) Ireland July Trade Balance: No est v €5.3B prior.

- 06:00 (IL) Israel Q2 Preliminary GDP Y/Y (2nd of 3 readings): No est v 1.2% advance.

- 06:00 (IL) Israel Aug Unemployment Rate: No est v 2.8% prior.

- 06:00 (IL) Israel to sell combined ILS2.50B in 2027, 2028, 2029, 2035 and 2052 bonds.

- 06:30 (TR) Turkey to sell Bonds (2 tranches).

- 07:00 (IS) Iceland to sell 3-month and 6-month Bills.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (PL) Poland Aug CPI Core M/M: 0.3%e v 0.4% prior; Y/Y: 3.8%e v 3.8% prior.

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

- 08:00 (IE) ECB’s Lane (Ireland, chief economist).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:30 (US) Sept Empire Manufacturing: -4.3e v -4.7 prior.

- 08:30 (CA) Canada July Manufacturing Sales M/M: +0.7%e v -2.1% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.9-7.1B in 3-month, 6-month and 12-month bills.

- 09:00 (CA) Canada Aug Existing Home Sales M/M: No est v -0.7% prior.

- 09:00 (AT) ECB's Holzmann (Austria) member Vujcic (Croatia) in Budapest.

- 11:00 (CO) Colombia July Industrial Production Y/Y: -1.9%e v -4.0% prior; Manufacturing Production Y/Y: -1.8%e v -4.8% prior.

- 11:00 (CO) Colombia July Retail Sales Y/Y: 2.8%e v 1.5% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 16:00 (US) Weekly Crop Progress Report.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 82.3 prior.

- 20:30 (SG) Singapore Aug Non-oil Domestic Exports M/M: -3.4%e v +12.2% prior; Y/Y: 15.0%e v 15.7% prior; Electronic Exports Y/Y: No est v 16.5% prior.

- 23:00 (NZ) New Zealand Aug Non-Resident Bond Holdings: No est v 59.6% prior.

- 23:00 (TH) Thailand Central Bank to sell combined THB95B in 3-month and 12-month bills.