Euro region returns to growth in Q2

Notes/Observations

- Various EU GDP data showed a rebound in economic activity and was expected to continue.

- German economy returned to growth in Q2 but bounced back less strongly than expected.

- Risk aversion sentiment from Amazon’s warning and a fresh China selloff spilled over into EU trading session.

Asia

- Japan Jun Jobless Rate: 2.9% v 3.0%e.

- Japan Jun Preliminary Industrial Production M/M: 6.2% v 5.0%; Y/Y: 22.6% v 20.7%e.

- Japan Jun Retail Sales M/M: 3.1% v 2.7%e ; Y/Y: 0.1% v 0.2%e.

- BOJ Noguchi stated that might be able to begin debate on strategy for hitting price target around end 2021. BOJ must ease if economy suffered a severe downturn.

Europe

- ECB's De Guindos (Spain) noted that the normalization of monetary policy, and equally of fiscal policy, followed the normalization of the economy.

- Speculation that Chancellor of the Exchequer Sunak (Fin Min) might delay of the 2022 budget was said to be gaining traction after he instructed the OBR to publish new forecasts without announcing an accompanying fiscal event.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.48% at 461.60, FTSE -0.73% at 7,027.05, DAX -0.80% at 15,515.60, CAC-40 -0.10% at 6,627.42, IBEX-35 -0.69% at 8,726.00, FTSE MIB -0.36% at 25,424.50, SMI -0.10% at 12,074.38, S&P 500 Futures -0.65%].

Market Focal Points/Key Themes: European indices open generally lower but moderated losses as the session progressed; the only sector starting the day in the green was financials; while materials and health care sectors lead to the downside; Unicredit looking to acquire Monte Dei Paschi; focus on European bank stress test results after end of trading day; Heineken takes controlling interest in United Breweries; Neil to take larger stake of Illiad; earnings expected in the upcoming US session include Aon, Huntsman, Linde and Caterpillar.

Equities

- Consumer discretionary: International Consolidated Airlines [IAG.UK] -3% (earnings).

- Financials: BNP Paribas [BNP.FR] +1% (earnings), Unicredit [UCG.IT] +5% (earnings).

- Industrials: Renault [RNO.FR] +2.5% (earnings), Leonardo [LDO.IT] +2% (earnings), Vinci [DG.FR] +1% (earnings), Babcock International Group [BAB.UK] -12% (earnings).

- Technology: AMS [AMS.CH] +1% (earnings).

- Telecom: Iliad [ILD.FR] +60% (offer; earnings).

Speakers

- France Fin Min Le Maire maintained its 2021 GDP growth forecast at 6.0%. To spend 70% of stimulus plan by end-2021.

- South Africa Central Bank (SARB) Gov Kganyago: Upcoming harvest should help to offset food price inflation.

- Japan PM Suga formally announced the extension of the State of Emergency for Tokyo until end of Aug (as anticipated); added 4 more prefectures to emergency declaration.

- Thailand Central Bank reiterated stance to curb excessive FX volatility; to closely monitor to ensure stability.

- China Fin Min Liu Kun stated that there would be no sharp turn in fiscal policy; to keep policy continuous, stable and sustainable.

- China Banking and Insurance Regulatory Commission (CBIRC) stated that it would curb illegal financial activities and prevent illegal funds from flowing to property market.

- China Politburo stated that its economic recovery was not solid yet; pledged to stabilize commodity prices. To improve overseas listing supervisory system. To increase the autonomy of macro policy and support faster development of EV sector. To speed up resolution of bottleneck issues. Pledged to stabilize commodity prices and secure supply.

Currencies/Fixed income

- Weaker equity markets failed to provide any safe-haven flows into the USD. The greenback languished near a one-month low on Friday and was set for its worst weekly performance since May.

- EUR/USD firmer and edging towards the 1.19area for 1-month highs as various EU GDP data showed a rebound in economic activity and was expected to continue.

Economic data

- (NL) Netherlands Jun Retail Sales Y/Y: 7.2% v 7.8% prior.

- (FI) Finland Jun House Price Index M/M: -0.4% v 0.8% prior; Y/Y: 5.0% v 4.7% prior.

- (FR) France Q2 Preliminary GDP Q/Q: 0.9% v 0.8%e; Y/Y: 18.7% v 17.5%e.

- (FR) France Jun Consumer Spending M/M: 0.3% v 0.7%e; Y/Y: -2.4% v -2.1%e.

- (DK) Denmark Jun Gross Unemployment Rate: 3.8% v 4.0% prior; Unemployment Rate (seasonally adj): 3.3% v 3.5% prior.

- (FI) Finland May Final Trade Balance: -€0.2B v -€0.2B prelim.

- (FR) France July Preliminary CPI M/M: +0.1% v -0.1%e; Y/Y: 1.2% v 1.0%e.

- (FR) France July Preliminary CPI EU Harmonized M/M: +0.1% v -0.1%e; Y/Y: 1.6% v 1.4%e.

- (ES) Spain Q2 Preliminary GDP Q/Q: 2.8% v 2.1%e; Y/Y: 19.8% v 18.9%e.

- (ES) Spain Jun Adjusted Retail Sales Y/Y: 1.4% v 10.0%e; Retail Sales (unadj) Y/Y: 1.8% v 18.9% prior.

- (CH) Swiss July KOF Leading Indicator: 129.8 v 129.5e.

- (IT) Italy Jun Preliminary Unemployment Rate: 9.7% v 10.6%e.

- (AT) Austria Q2 GDP Q/Q: +4.3% v -1.1% prior; Y/Y: +11.4% v -4.5% prior.

- (AT) Austria July Preliminary CPI M/M: 0.1% v 0.5% prior; Y/Y: 2.7% v 2.8% prior.

- (AT) Austria Jun PPI M/M: 1.0% v 0.9% prior; Y/Y: 6.9% v 6.0% prior.

- (TR) Turkey Jun Trade Balance: -$2.9B v -$2.9Be.

- (CZ) Czech Q2 Advance GDP Q/Q: 0.6% v 2.0%e; Y/Y: 7.8% v 9.2%e.

- (HU) Hungary May Average Gross Wages Y/Y: 8.2% v 9.3%e.

- (HU) Hungary May Final Trade Balance: €0.1B v €0.1B prelim.

- (TH) Thailand Jun Current Account Balance: --$1.3B v $2.0Be; Overall Trade Balance: -$1.5B v -$1.6B prior; Trade Account Balance: $3.9B v $3.4B prior; Exports Y/Y: 46.1% v 44.4% prior; Imports Y/Y: 45.8% v 56.6% prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 94.1K v 96.1K tons prior.

- (TW) Taiwan Q2 Advance GDP Y/Y: 7.5% v 6.7%e.

- (DE) Germany Q2 Preliminary GDP Q/Q: 1.5% v 2.0%e; Y/Y: 9.6% v 9.6%e; GDP WDA (unadj) Y/Y: 9.2% v 9.6%e.

- (IT) Italy Q2 Preliminary GDP Q/Q: 2.7% v 1.3%e; Y/Y: 17.3% v 15.6%e.

- (NO) Norway Central Bank (Norges) Aug Bank Daily FX Purchases (NOK): -1.7B v -1.7B prior.

- (NO) Norway July Unemployment Rate: 3.1% v 2.9% prior.

- (RU) Russia Narrow Money Supply w/e July 23rd (RUB): 14.21T v 14.25T prior.

- (PL) Poland July Preliminary CPI M/M: 0.4% v 0.1%e; Y/Y: 5.0% v 4.7%e.

- (CZ) Czech Jun M2 Money Supply Y/Y: 10.7% v 10.7% prior.

- (TR) Turkey Jun Foreign Tourist Arrivals Y/Y: 853.4% v 3,038.8% prior.

- (ES) Spain May Current Account Balance: €0.9B v €0.4B prior.

- (PT) Portugal Q2 GDP Q/Q: 4.9% v 3.8%e; Y/Y: +15.5% v -5.3% prior.

- (PT) Portugal July Preliminary CPI M/M: -0.3% v +0.2% prior; Y/Y: 1.5% v 0.5% prior.

- (PT) Portugal July Preliminary CPI EU Harmonized M/M: -0.3% v +0.2% prior; Y/Y: +1.1% v -0.6% prior.

- (HK) Hong Kong Q2 Advance GDP Q/Q: -1.0% v -0.8%e; Y/Y: 7.5% v 7.8%e.

- (EU) Euro Zone Q2 Advance GDP (1st reading) Q/Q: 2.0% v 1.5%e; Y/Y: 13.7% v 13.2%e.

- (EU) Euro Zone Jun Unemployment Rate: 7.7% v 7.9%e.

- (EU) Euro Zone July Advance CPI Estimate Y/Y: 2.2% v 2.0%e; CPI Core Y/Y: 0.7% v 0.7%e; CPI M/M: -0.1% v -0.3%e.

- (BE) Belgium Jun Unemployment Rate: 6.2% v 6.5% prior.

- (IT) Italy July Preliminary CPI M/M: 0.3% v 0.1%e; Y/Y: 1.8% v 1.6%e.

- (IT) Italy July Preliminary CPI EU Harmonized M/M: -1.1% v -1.1%e; Y/Y: 0.9% v 1.0%e.

- (GR) Greece May Retail Sales Value Y/Y: 15.3% v 39.1% prior; Retail Sales Volume Y/Y: 15.0% v 38.8% prior.

- (IS) Iceland Jun Final Trade Balance (ISK): -30.2B v -30.2B prelim.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (SL) Sri Lanka July CPI Y/Y: 5.4%e v 5.2% prior.

- 05:30 (IN) India to sell combined INR320B in 2026, 2033, 2035 and 2050 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2025, 2038 and 2046 Bonds.

- 06:00 (PT) Portugal Jun Industrial Production M/M: No est v -4.5% prior; Y/Y: No est v 27.1% prior.

- 06:00 (UK) DMO to sell £3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively).

- 06:30 (IN) India Jun Fiscal Deficit (INR): No est v 444.8B prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (MX) Mexico Q2 Preliminary GDP Q/Q: 1.8%e v 0.8% prior; Y/Y: +19.8%e v -3.6% prior.

- 07:30 (IN) India Weekly Forex Reserve w/e July 23rd: No est v $612.7B prior.

- 07:30 (IS) Iceland to sell 2022 and 2024 RIKB Bonds.

- 08:00 (IN) India Jun Eight Infrastructure (key) Industries: No est v16.8% prior.

- 08:00 (ZA) South Africa Jun Trade Balance (ZAR) 54.0Be v 54.6B prior.

- 08:00 (ZA) South Africa Jun Monthly Budget Balance (ZAR) +65.0Be v -5.4B prior.

- 08:00 (BR) Brazil May National Unemployment Rate: 14.5%e v 14.7% prior.

- 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance.

- 08:30 (US) Jun Personal Income: -0.3%e v -2.0% prior; Personal Spending: 0.7%e v 0.0% prior; Real Personal Spending (PCE): +0.3%e v -0.4% prior.

- 08:30 (US) Jun PCE Deflator M/M: 0.6%e v 0.4% prior; Y/Y: 4.0%e v 3.9% prior.

- 08:30 (US) Jun PCE Core Deflator M/M: 0.6%e v 0.5% prior; Y/Y: 3.7%e v 3.4% prior.

- 08:30 (US) Q2 Employment Cost Index (ECI): 0.9%e v 0.9% prior.

- 08:30 (CA) Canada May GDP M/M: -0.3%e v -0.3% prior; Y/Y: 14.8%e v 20.0% prior.

- 08:30 (CA) Canada Jun Industrial Product Price Index M/M: -0.4%e v +2.7% prior; Raw Materials Price Index M/M: No est v 3.2% prior.

- 08:30 (BR) Brazil Jun Primary Budget Balance (BRL): -70.1Be v-15.5 B prior; Nominal Budget Balance: -74.5Be v -37.4B prior; Net Debt to GDP Ratio: 60.3%e v 59.7% prior.

- 08:30 (CL) Chile Central bank July Minutes.

- 09:00 (CL) Chile Jun Unemployment Rate: 10.0%e v 10.0% prior.

- 09:00 (CL) Chile Jun Retail Sales Y/Y: 67.0%e v72.1 % prior; Commercial Activity Y/Y: No est v 47.6% prior.

- 09:00 (CL) Chile Jun Manufacturing Production Y/Y: 8.4%e v 8.9% prior; Industrial Production Y/Y: No est v 3.5% prior; Total Copper Production: No est v 493.4K tons prior.

- 09:45 (US) July Chicago Purchase Managers Index: 64.1e v 66.1 prior.

- 10:00 (US) July Final University of Michigan Confidence: 80.8e v 80.8 prelim.

- 10:00 (MX) Mexico Jun Net Outstanding Loans (MXN): No est v 4.589T prior.

- 11:00 (CO) Colombia Jun National Unemployment Rate: No est v 15.6% prior; Urban Unemployment Rate: 16.0%e v 16.0% prior.

- 11:00 (EU) Potential sovereign ratings after European close.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 1.75%.

- 15:00 (AR) Argentina May Wages M/M: No est v 3.2% prior.

- 21:00 (CN) China July Manufacturing PMI: 50.8 v 50.9 prior; Non-manufacturing PMI: 53.3e v 53.5 prior; Composite PMI: No est v 52.9 prior.