Focus on Jackson Hole as uncertainty over the spread of the Delta variant

Notes/Observations

- German Q2 Final GDP reading revised higher.

- Risk aversion and appetite sentiments battling it out for the upper hand ahead of Jackson Hole symposium. Uncertainty over the spread of the Delta variant and how central bank authorities would respond.

Asia

- Japan PM Suga and LDP Official Nikai said to be meeting on Aug 25th to discuss elections.

Coronavirus

- President Biden stated that the FDA had officially approved the Pfizer COVID-19 vaccine.

Americas

- US Labor Sec Walsh expressed concern that America’s latest wave of Covid-19 could dent its economic recovery. Raised the prospect of a slowdown in jobs growth next month.

- Biden administration said to have ask the Supreme Court to keep the evictions moratorium in place because the pandemic had gotten 'far worse' in the last two months.

- SEC has given new disclosure requirements to Chinese companies looking to list in the US. related to the use of variable interest entities (VIEs).

Energy

- US Energy Dept to auction 20M barrels of crude from Strategic Petroleum Reserve, since it is holding its largest reserve in 7-years.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 +0.09% at 472.30, FTSE -0.14% at 7,098.81, DAX +0.30% at 15,899.85, CAC-40 -0.18% at 6,671.40, IBEX-35 -0.15% at 8,955.00, FTSE MIB -0.09% at 26,023.50, SMI +0.01% at 12,477.60, S&P 500 Futures +0.20%].

Market Focal Points/Key Themes: European indices open modestly higher across the board but then slipped to trade mixed; sectors leading to the upside include technology and energy; utilities and telecom sectors among the laggard sectors; Santander announces formal terms of Santander Consumer takeover; Science Group raises offer for TP Group; Spectris sells NDC Tech to Nordson; Lanxess acquires microbial control unit of IFF; earnings expected during the upcoming US session include Medtronic, Intuit and Best Buy.

Equities

- Energy: President Energy [PPC.UK] -6% (earnings).

- Industrials: Voltabox [VBX.DE] +24% (earnings), John Wood Group [WG.UK] -4% (earnings).

- Technology: Landis+Gyr Group [LAND.CH] +3% (contract), Spectris [SXS.UK] +1% (divestment).

- Materials: Lanxess [LXS.DE] +1% (acquisition).

Speakers

- RBNZ Assistant Gov Hawkesby noted that its delayed rate hike on communication challenge. Considered raising interest rate by 50bps at last meeting in Aug and that the upcoming Oct 6th meeting was a live meeting. Stressed that policy decisions would not be tightly linked to covid as have learned that lockdowns only delayed spending. Demand had been more resilient than expected.

Currencies/Fixed Income

- Risk-on appetite helped to soften the greenback ahead of the highly anticipated Fed Jackson Hole symposium. Dealers eyeing whether Fed Chair Powell might provide clues on prospects of tapering bond purchases but member Kaplan last Friday did offer some prospects of a delay to tapering. Some dealers note that advanced warning on tapering would most likely to come at the September FOMC meeting. Concerns over the Delta variant have also fueled concerns about the global economic recovery.

- New Zealand currency (kiwi) was firmer in the session after RBNZ official made some hawkish comments.

Economic data

- (FI) Finland July PPI M/M: 3.4% v 1.6% prior; Y/Y: 14.8% v 11.0% prior.

- (FI) Finland July Unemployment Rate: 7.1% v 7.6% prior.

- (GE) Germany Q2 Final GDP Q/Q: 1.6% v 1.5%e ; Y/Y: 9.8% v 9.6%e; GDP WDA (unadj) Y/Y: 9.4% v 9.2%e.

- (GE) Germany Q2 Private Consumption Q/Q: 3.2% v 4.0%e; Government Spending Q/Q: 1.8% v 0.9%e; Capital Investment Q/Q: 0.5% v 1.4%e.

- (CZ) Czech Aug Consumer Confidence Index: -1.5 v -5.3 prior; Business Confidence: 9.3 v 11.8 prior; Composite Confidence (Consumer & Business): 7.2 v 8.4 prior.

- (ZA) South Africa Jun Leading Indicator: 125.8 v 128.8 prior.

- (PL) Poland July Unemployment Rate: 5.8% v 5.8%e; Q2 Quarterly Unemployment Rate: 3.5% v 4.0% prior.

- (TW) Taiwan July M2 Money Supply Y/Y: 8.7% v 9.2% prior; M1 Money Supply Y/Y: 16.7% v 17.4% prior.

Fixed income Issuance

- (FI) Finland opened book to sell new EUR-denominated Sept 2026 RFGB bond via syndicate; guidance seen -23bps to mid-swaps.

- (EU) European Investment Bank (EIB) opened its book to sell EUR-denominated Oct 2026 bond via syndicate; guidance seen -1bps to mid-swaps.

- (ID) Indonesia sold total IDR9.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk).

- (AT) Austria Debt Agency (AFFA) sold total €B vs. €2.0B indicated in 3-month and 12-month bills.

- (UK) DMO sold £3.0B in 0.375 Oct 2026 Gilts; Avg Yield: 0.324% v 0.334% prior; bid-to-cover: 2.11x v 2.50x prior; Tail: 0.9bps v 0.4bps prior.

Looking Ahead

- (IL) Israel July Leading 'S' Indicator M/M: No est v 0.1% prior.

- 05:15 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (ZA) South Africa Q2 Unemployment Rate: No est v 32.6% prior.

- 05:30 (DE) Germany to sell €3.0B in 0.25% Nov 2028 Bunds.

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

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

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2031, 2032 and 2035 bonds.

- (IL) Israel to sell bonds.

- 06:45 (US) Daily Libor Fixing.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision; Expected to raise Base Rate by 30bps to 1.50%; Expected to raise Overnight Deposit Rate by 30bps to 0.55%.

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

- 08:30 (DE) ECB’s Schnabel (Germany).

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

- 09:00 (CL) Chile July PPI M/M: No est v -0.8% prior.

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate statement.

- 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

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

- 10:00 (US) Aug Richmond Fed Manufacturing Index: 24e v 27 prior.

- 10:00 (US) July New Home Sales: 697Ke v 676K prior.

- 10:00 (MX) Mexico Weekly International Reserve data.

- 12:00 (US) President Biden on Afghanistan.

- 13:00 (US) Treasury to sell new 2-Year Notes.

- 15:00 (AR) Argentina Jun Supermarket Sales Y/Y: No est v -2.6% prior; Shop Center Sales Y/Y: No est v 421.3% prior.

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

- 17:00 (KR) South Korea Sept Business Manufacturing Survey: No est v 92 prior; Non-Manufacturing Survey: No est v 78 prior.

- 18:45 (NZ) New Zealand July Trade Balance (NZD): No est v 0.3B prior; Exports: No est v 6.0B prior; Imports: No est v 5.7B prior.

- 21:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years and 25 Years~ maturities.

- 21:30 (AU) Australia Q2 Construction Work Done Q/Q: 2.8%e v 2.4% prior.