Concerns over Delta spread linger, European PMI services data revised lower

Notes/Observations

- Major European PMI Services remain in expansion territory (Beats: UK; Misses: Euro Zone, Germany, France, Italy, Spain).

- Worsening amid the spread of the Delta variant helping to keep bond yields capped for the time being over recovery concerns.

Asia

- Australia July Final PMI Services: 44.2 v 44.2 prelim (confirmed its 1st contraction in 11 months).

- Australia Jun Final Retail Sales M/M: -1.8% v -1.8%e; Q/Q: .8% v 0.8%e.

- China July Caixin PMI Services: 54.9 v 50.5e (15th consecutive expansion).

- Japan July Final PMI Services: 47.4 v 46.4 prelim (confirmed its 18th month of contraction).

- New Zealand Q2 Unemployment rate 4.0%vV 4.4%e.

Coronavirus

- Total global cases 200.3M (+0.3% d/d); total deaths: 4.3M (+0.2% d/d).

Europe

- Times Shadow Committee reiterated Bank of England (BOE) should cancel the final £50.0B of QE, BOE should deliver clear signal that it was concerned about rising inflation.

Americas

- Biden administration announced a targeted Federal eviction ban to replace the current and last until Oct 3rd.

Energy

- Weekly API Crude Oil Inventories: -0.9M v -4.7M prior.

- Tanker ship Asphalt Princess said to be detained near Fujairah. Iranian-backed forces believed to have seized the tanker.

- Iran Revolutionary Guards spokesperson denied that Iranian forces or allies were involved in ship incident off UAE coast; Called it a pretext for 'hostile action' against Iran.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.49% at 467.68, FTSE +0.25% at 7,123.75, DAX +0.64% at 15,654.35, CAC-40 +0.46% at 6,754.56, IBEX-35 -0.37% at 8,740.00, FTSE MIB +0.17% at 25,399.50, SMI +0.18% at 12,185.66, S&P 500 Futures -0.08%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed upbeat as the session progressed (notable exception being the IBEX); technology and consumer discretionary sectors among those leading to the upside; while underpeformers include health care and energy; Thales enters negotiations to sell GTS unit; Rolls Royce confirms sale of Bergen Engines; financials weighed on after Commerzbank results disappoint; THG raises guidance after acquiring Cult Beauty; earnings expected during the upcoming US session include The New York Times, General Motors, Patrizia, Uber.

Equities

- Consumer discretionary: Hugo Boss [BOSS.DE] +2.5% (earnings; targets).

- Financials: Commerzbank [CBK.DE] -4% (earnings).

- Industrials: Thales [HO.FR] +2% (confirms discussions; adjusts outlook).

- Materials: Ferrexpo [FXPO.UK] -5% (earnings), Rheinmetall [RHM.DE] -1% (earnings).

Speakers

- ECB's Kazaks (Latvia) stated that the new forward guidance was not tying ECB's hands as language could change; ECB decision on PEPP future in Sept would be premature as ECB to give reasonable warning before ending Pandemic Bond Buying program.

- Poland Central Bank's Lon stated that it was still too early to begin raising interest rates but could consider raising rates after Nov Staff Projections.

- Thailand Central Bank Policy Statement noted that the vote was 4-2 to keep policy steady. Financial measures were more helpful than cutting the key rate. Policy to remain accommodative and prepared to use policy tools as appropriate. Saw significant downside risks to outlook and noted that fiscal policy and exports to support the economy.

Currencies/Fixed income

- EUR/USD drifted lower as the major European PMI Services data for July were revised lower although at multi-year highs.

- Worsening amid the spread of the Delta variant helping to keep bond yields capped for the time being over recovery concerns. Italy 2-year govt bond yield trading below the ECB Deposit rate of -0.50% for the 1st time ever.

Economic data

- (RU) Russia July PMI Services: 53.5 v 55.7e (7th straight expansion); PMI Composite: 51.7 v 55.0 prior.

- (SE) Sweden July PMI Services: 69.1 v 67.9 prior; PMI Composite: 68.0 v 67.2 prior.

- (HU) Hungary Jun Retail Sales Y/Y: 5.8%4.0%e.

- (TH) Thailand Central Bank (BoT) left the Benchmark Interest Rate unchanged at 0.50% (as expected).

- (ES) Spain July Services PMI: 61.9 v 63.2e (4th month of expansion); Composite PMI: 61.2 v 62.2e.

- (ZA) South Africa July PMI (whole economy): 46.1 v 49.0e (1st contraction in 10 months).

- (IT) Italy July Services PMI: 58.0 v 58.7e (3rd month of expansion and highest reading since July 2007); Composite PMI: 58.6 v 59.5e.

- (FR) France July Final Services PMI: 56.8 v 57.0e (confirmed 4th month of expansion); Composite PMI: 56.6 v 56.8e.

- (DE) Germany July Final Services PMI: 61.8 v 62.2e (confirmed 3rd month of expansion and a record high);; Composite PMI: 62.4 v 62.5e.

- (EU) Euro Zone July Final Services PMI: 59.8 v 60.4e (confirmed 4th month of expansion and highest since Jun 2006); Composite PMI: 60.2 v 60.6e.

- (IT) Italy Jun Retail Sales M/M: 0.7% v 1.9%e; Y/Y: 7.7% v 13.6% prior.

- (UK) July Final Services PMI: 59.6 v 57.8e (confirmed 5th month of expansion); Composite PMI: 59.2 v 57.7e.

- (UK) July Official Reserves Changes: +$1.0B v -$2.2B prior.

- (FR) France Jun YTD Budget Balance: -€131.3B v -€118.8B prior.

- (EU) Euro Zone Jun Retail Sales M/M: 1.5% v 1.7%e; Y/Y: 5.9% v 4.4%e.

- (NO) Norway July House Prices M/M: -1.1% v -0.2% prior; Y/Y: 8.5% v 10.1% prior.

Fixed income issuance

(VN) Vietnam sold total VND 7.3T vs. VND6.5T target in 5-year, 10-year and 15-year bonds.

- (IN) India sold total INR 170B vs. INR170B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK4.69B in 2024, 2030 and 2031 DGB bonds.

- (SE) Sweden sold total SEK10B vs. SEK10B indicated in 3-month and 9-month bills.

Looking ahead

- (EG) Egypt July Gross Official Reserves: No est v $40.6B prior; Net Reserves: No est v $40.6B prior.

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

- 05:30 (DE) Germany to sell €4.0B in 0% Oct 2026 BOBL.

- 05:30 (GR) Greece Debt Agency (PDMA) to sell 13-Week Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

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

- 06:45 (US) Daily Libor Fixing.

- 07:00 (RU) Russia to sell 2031 and 2041 OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e July 30th: No est v 5.7% prior.

- 07:00 (MX) Mexico July Domestic Vehicle Sales: No est v 87.1K prior.

- 07:30 (TR) Turkey July Real Effective Exchange Rate (REER): No est v 59.77 prior.

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

- 08:15 (US) July ADP Employment Change: +683Ke v +692K prior.

- 08:30 (CA) Canada Jun Building Permits M/M: 6.3%e v -14.8% prior.

- 08:30 (US) Treasury Quarterly Funding Announcement.

- 09:00 (BR) Brazil July PMI Services: No est v 53.9 prior; PMI Composite: No est v 54.6 prior.

- 09:45 (US) July Final Markit Services PMI: 59.8e v 59.8 prelim; Composite PMI: # v 59.7prelim.

- 09:45 (UK) BOE to buy £1.147B in APF Gilt purchase operation (7-20 years).

- 10:00 (US) July ISM Services Index: 60.5e v 60.1 prior.

- 10:00 (US) Fed’s Clarida at Peterson Institute Event.

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

- 12:00 (CA) Canada to sell C$5.5B in 1.5% 2031 Bonds.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to raise the Selic Target Rate by 100bps to 5.25%.

- 20:01 (IE) Ireland July PMI Services: No est v 63.1 prior; PMI Composite: No est v 63.4 prior.

- 20:30 (AU) Australia to sell combined A$2.0B in 3-month and 6-month bills.

- 21:00 (PH) Philippines July CPI Y/Y: 4.0%e v 4.1% prior.

- 21:30 (AU) Australia Jun Trade Balance: A$10.5Be v A$9.7B prior; Exports M/M: 6%e v 6% prior; Imports M/M: 4%e v 3% prior.

- 23:30 (TH) Thailand July CPI M/M: 0.4%e v 0.4% prior; Y/Y: 0.9%e v 1.3% prior; CPI Core Y/Y: 0.2%e v 0.5% prior.

- (JP) Japan to sell 6-Month Bills.

- 23:35 (JP) Japan to sell CPI Linked 10-Year JGB Bonds.