Maersk does not see US recession

EU mid-market update: BoJ message of keeping rates on pause during any market volatility gives green light for global assets to run; Maersk does not see US recession.

Notes/observations

- Risk appetite steadily builds upon oversold bounce yesterday as yen carry trade takes a back seat after BOJ Dep Gov Uchida states ‘will not raises rates while markets are unstable’. Moving USD/JPY back to 147 and lifting Nikkei 2.5%. VIX drops below 30.

- Concern about further unwinding of the carry trade has not dissipated, but the pace in which it is likely to unfold has, as analysts see a more sustained, calmer move than was seen on Monday.

- Fed's Overnight Reverse Repo Program (O/N RRP) facility usage dropped below $300B level for the first time since 2021, trending lower again since the second half of July; Some analysts see it as a sign that US financial system has lost excess liquidity.

- Shipping giant Maersk said that data it looks at does not indicate a US recession; Meanwhile, during its earnings call, Redfin noted low number of offers cited broadening economic anxieties.

- EU earnings remain in full flow, with Continental trimming FY outlook after disappointing Q2 results; Ahold Delhaize rose off earnings that cited improved US growth rates and positive volume trends; ABN Amro raised NII guidance; Maersk trades lower after Q2 results see improved demand outlook but no buybacks planned for 2024; Novo Nordisk missed estimates and withdraws submission to FDA of Wegovy trial results; Puma trimmed EBIT outlook; Commerzbank declared buyback but trades lower; Beiersdorf missed estimates.

- During its earnings call, Super Micro confirmed NVIDIA's Blackwell solution "pushed out a little bit".

- Upcoming earnings before open: Shopify, Disney, CVS Health, Global Payments, Emerson, Aurora, Lyft, Dynatrace.

- Notable earnings after close: Robinhood, Magnite, AppLovin.

- Asia closed higher with Nikkei225 outperforming +2.5%. EU indices are +0.8-1.6%. US futures are +0.7-1.1%. Gold +0.2%, DXY +0.2%; Commodity: Brent +0.5%, WTI +0.6%; Crypto: BTC +4.4%, ETH +2.6%.

Asia

- China July Trade Balance: $84.7B v $98.2Be; Exports Y/Y: 7.0% v 9.1%e; Imports Y/Y: 7.2% v 3.0%e.

- New Zealand Q2 Unemployment Rate: 4.6% v 4.7%e.

- South Korea Jun Current Account: $12.3B v $8.9B prior.

- BOJ Dep Gov Uchida text of speech indicated that central bank would not raise rates while markets were unstable; Recent market moves were extremely volatile, so watching impacts of their moves on the economy, prices with extreme vigilance.

- Japan ruling-party (LDP) 'heavyweight' Ishiba stated that BOJ was on the right policy track to gradually align with global interest rates; Ideal range for USD/JPY was between 110-140.

- RBA Asst Gov (Econ) Hunter testified it was focusing more closely on Trimmed Mean CPI.

Global conflict/tensions

- US Officials had been in constant contact with allies and partners in the Mid-East region and there was a "clear consensus" that no one should escalate the situation.

- Hezbollah has pledged to respond alone or with allies to Israeli killing of commander.

- Hamas named Oct 7th mastermind Sinwar as leader following Haniyeh assassination.

Europe

Austria Labor Min Kocher to be named central bank governor; term to begin in 2025.

Energy

- Weekly API Crude Oil Inventories: +0.2M v -4.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +1.04% at 493.54, FTSE +0.77% at 8,088.61, DAX +1.31% at 17,550.55, CAC-40 +1.49% at 7,236.53, IBEX-35 +1.39% at 10,534.50, FTSE MIB +1.67% at 31,627.00, SMI +1.45% at 11,685.76, S&P 500 Futures +0.98%].

Market focal points/key themes: European indices open higher across the board and maintained the trend through the early part of the session; return of improved risk sentiment following central bank pushback on notion of economic slowdown; among sectors leading the way to the upside are real estate and materials; lagging sectors include consumer discretionary; Glencore will not demerge its coal assets; reportedly Roche considering sale of its Flatiron Health unit; reportedly WPP near deal to sell FGS unit; earnings expected in the upcoming US session include Walt Disney, Equinix, CVS and Shopify.

Equities

- Consumer discretionary: Ahold Delhaize [AD.NL] +5.0% (earnings; saw a sequential improvement in growth rates in US during the quarter, as volume trends continued on a positive trajectory), Puma [PUM.DE] -12.5% (Q2 results, trims EBIT outlook), Just Eat Takeaway [JET.UK] +7.5% (analyst upgrade) - Communications services: WPP [WPP.UK] -1.5% (earnings; divestment) - Energy: Siemens Energy [ENR.DE] -1.5% (earnings) - Financials: Commerzbank [CBK.DE] -5.5% (earnings; buyback), ABN Amro [ABN.NL] +3.5% (Q2 results, raises NII guidance) - Healthcare: Novo Nordisk [NOVOB.BK] -5.0% (Q2 results, misses estimates; withdrawal of the submission to FDA of the results from the Wegovy STEP HFpEF trials) - Industrials: Maersk [MAERSKB.DK] -2.0% (Q2 results, notes its data does not indicate a US recession; demand outlook is positive; sees no buybacks this year), Continental [CON.DE] +5.0% (Q2 results, trims outlook) - Technology: ASML [ASML.NL] +1.0% (SMCI earnings, outlook and positive comments during the call; SMCI confirmed NVDA Blackwell chip delayed 'a little bit'; Barclays strategists say it’s time to buy the dip in European technology stocks) - Materials: Glencore [GLEN.UK] +0.5% (H1 results).

Speakers

- Russia said to have cut its oil production deeper to be more in line with OPEC+ quota.

Currencies/fixed income

- Overall USD price action was listless with little in terms of economic moving data.

- Focus remained on the JPY currency (Yen) as volatility lessened but remain prevalent, USD/JPY tested above 147 level after BOJ member Uchida noted that BoJ had to be more cautious with respect to the timing of the next interest rate hike due to recent volatility.

- GBP/USD remains near 1-month lows but holding above the 1.27 level.

- EUR/USD holding above 1.09 area.

Economic data

- (UK) July Halifax House Price Index M/M: +0.8% v -0.2% prior; Y/Y: 2.3% v 1.6% prior.

- (DE) Germany Jun Trade Balance: €20.4B v €21.5Be; Exports M/M: -3.4% v -1.5%e; Imports M/M: 0.3% v 2.5%e.

- (DE) Germany Jun Industrial Production M/M: 1.4% v 1.0%e; Y/Y: -4.1% v -4.2%e.

- (SE) Sweden July Budget Balance (SEK): +6.4B v -40.9B prior.

- (NO) Norway Jun Industrial Production M/M: 7.9% v 0.6% prior; Y/Y: 14.9% v 6.0% prior.

- (NO) Norway Jun Manufacturing Production M/M: 1.4% v 1.8% prior; Y/Y: +2.1% v -0.8% prior.

- (FI) Finland Jun Preliminary Trade Balance: €1.0B v €0.0B prior.

- (ZA) South Africa July Gross Reserves: $62.3B v $62.1B prior; Net Reserves: $59.2B v $58.4B prior.

- (HU) Hungary Jun Industrial Production M/M: 0.5% v 0.0%e; Y/Y: -3.7% v -3.8%e.

- (FR) France Jun Trade Balance: -€6.1B v -€7.7B prior; Current Account: -€2.6B v -€2,5B prior.

- (CH) Swiss July Foreign Currency Reserves (CHF): 703.5B v 711.8B prior.

- (MY) Malaysia mid-July Foreign Reserves: $114.7B v $113.3B prior.

- (CZ) Czech July International Reserves: $147.9B v $146.6B prior.

- (CN) China July Foreign Reserves: $3.256T v $3.252Te; continued to halt gold purchases for the 3rd straight month.

- (HK) Hong Kong July Foreign Reserves: $419.3B v $416.3B prior.

- (SG) Singapore July Foreign Reserves: $378.2B v $371.7B prior.

Fixed income issuance

- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK2.76B in 2026 and 2033 DGB bonds.

- (UK) DMO sold £4.0B in 4.125% July 2029 Gilts; Avg Yield: 3.854% v 4.023% prior; bid-to-cover: 2.87x v 3.10x prior; Tail: 0.9bps v 0.9bps prior.

- (SE) Sweden sold SEK7.5B vs. SEK7.5B indicated in 3-month bills; Avg Yield: 3.2723% v 3.5091% prior; Bid-to-cover: 3.47x v 3.27x prior.

- (NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2027 and 2034 bonds.

Looking ahead

- (IL) Israel July Foreign Currency Balance: No est v $210.3B prior.

- (EG) Egypt July Net Reserves: No est v $46.4B prior.

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 6.75%.

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

- 05:30 (DE) Germany to sell combined €2.0B indicated in 2038 and 2041 Bunds.

- 05:30 (PL) Poland to sell Bonds.

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

- 06:00 (PT) Portugal Q2 Unemployment Rate: No est v 6.8% prior.

- 06:00 (CZ) Czech Republic to sell combined CZK11,0B in 2032, 2034 and 2036 bonds.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Aug 2nd: No est v -3.9% prior.

- 07:00 (BR) Brazil July FGV Inflation IGP-DI M/M: 0.7%e v 0.5% prior; Y/Y: 4.0%e v 2.9% prior.

- 08:00 (PL) Poland July Official Reserves: No est v $209.5B prior.

- 08:00 (HU) Hungary Central Bank (MNB) July Minutes.

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

- 08:30 (CL) Chile July Trade Balance: $1,4Be v $2.0B prior; Exports: No est v $7.7B prior; Imports: No est v $5.7B prior; Total Copper Exports: No est v $4.1B prior.

- 08:30 (CL) Chile July International Reserves: No est v $44.1B prior.

- 09:00 (US) Manheim Used Vehicle Value Index Release.

- 09:00 (CL) Chile Jun Nominal Wage Y/Y: No est v 6.9% prior.

- 09:00 (BR) Brazil July Vehicle Production: No est v 211.0K prior; Vehicle Sales: No est v 214,3K prior Vehicle Exports: No est v 29.0K prior.

- 09:00 (RU) Russia July Official Reserve Assets: No est v $593.5B prior.

- 10:00 (CA) Canada July Ivey Purchasing Managers Index (seasonally adj): No est v 62.5 prior.

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

- 11:30 (US) Treasury to sell 17-Week Bills ."

- 12:00 (CA) Canada to sell 5-year Bonds.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 13:30 (CA) Bank of Canada (BoC) Summary of Deliberations.

- 15:00 (US) Jun Consumer Credit: $10.0Be v +$11.4B prior.

- 19:01 (UK) July RICS House Price Balance: -11%e v -17% prior.

- 19:50 (JP) BOJ Summary of Opinions for July.

- 19:50 (JP) Japan Jun Current Account Balance: ¥1.865Te v ¥2.850T prior; Adjusted Current Account Balance: ¥2.276Te v ¥2.406T prior; Trade Balance (BoP Basis): ¥350.7Be v -¥1.1T prior.

- 19:50 (JP) Japan July Bank Lending Y/Y: No est v 3.2% prior; Bank Lending (ex-trusts) Y/Y: No est v 3.6% prior.

- 22:00 (PH) Philippines Q2 GDP Q/Q: 0.9%e v 1.3% prior; Y/Y: 6.3%e v 5.7% prior.

- 22:00 (JP) Japan July Tokyo Avg Office Vacancies: No est v 5.2% prior.

- 22:00 (NZ) New Zealand to sell NZ$500M in 2031, 2035 and 2041 bonds.

- 22:40 (AU) RBA Gov Bullock.

- 23:00 (NZ) New Zealand Q3 RBNZ Business Inflation Expectations Survey (2-year): No est v 2.3% prior.

- 23:30 (JP) Japan to sell 6-month Bills.

- 23:35 (JP) Japan to sell 30-Year JGB Bonds.