Notes/observations
- European indices hold modest gains with attention focused on Powell's upcoming Jackson Hole testimony, which is expected to emphasize data dependence but avoid clear signals on monetary policy. Fed's next rate move remains debated between a 25 or 50 basis point cut, with markets leaning towards a smaller adjustment. Expected to also hear from Feds Bostic, Goolsbee and BoE Gov Bailey in US afternoon; Bailey text to be released at 11:00 ET (15:00 GMT).
- Meanwhile, the ECB is considering another rate cut in Sept, supported by market pricing following weak PMI’s earlier in week and comments from Kazaks and Vujcic this morning; ECB aims for a cautious and gradual approach to rate cuts, responding to developing inflation trends and economic forecasts.
- After Canada Labor Min has ordered Canada's two largest railway companies to enter in binding arbitration with Teamsters Union, Canadian National Railway workers announced to begin returning to work on Friday.
- In the UK, GFK consumer confidence was stable, but doubts about growth persist despite positive macro data. Seen strength in cable (GBP/USD) and weakness in Gilts. 10-year yield approaches 4.00% after rising from Aug 14th low of 3.816%.
- Asia closed mixed with Nikkei225 outperforming +0.6%. EU indices are -0.3% to +0.7%. US futures are +0.3-0.7 %. Gold +0.5%, DXY -0.1%; Commodity: Brent +1.0%, WTI +1.0%; Crypto: BTC +0.5%, ETH +1.4%.
Asia
- New Zealand Q2 Retail Sales (Ex Inflation) Q/Q: -1.2% v -0.9%e.
- Japan July National CPI Y/Y: 2.8% v 2.7%e; CPI Ex Fresh Food (Core) Y/Y: 2.7% v 2.7%e.
- BOJ Gov Ueda testified that If economy moved as expected then would move rates up to levels deemed neutral to economy.
- Japan Fin Min Suzuki reiterated Japan had not yet fully defeated deflation.
Europe
- UK Aug GfK Consumer Confidence: -13 v -12e.
- ECB's Kazaks (Latvia): stated that was very much open to a discussion on Sept rate cut and that policy would remain restrictive after a couple more cuts; Central bank won't hesitate to raise rates if necessary. Staff Projections showed room to cut interest rates possibly two more times this year as inflation remains broadly on the declining path.
Americas:
- Fed's Collins (non-voter for 2024) stated that the importance of preserving the healthy labor market as we continue to bring inflation down was one of the reasons why the timing seemed appropriate to begin easing.
- VP Harris DNC Speech officially accepted Democratic party nomination for President; pledged to create an opportunity economy; spoke about wanting to build the middle class as her goal for the Presidency.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 +0.14% at 516.48, FTSE +0.15% at 8,300.82, DAX +0.39% at 18,566.65, CAC-40 +0.37% at 7,552.27, IBEX-35 +0.55% at 11,217.40, FTSE MIB +0.76% at 33,564.00, SMI -0.36% at 12,281.64, S&P 500 Futures +0.41%].
Market focal points/key themes: European indices open generally higher and remained upbeat through the early part of the session; markets seen in holding pattern ahead of risk events later in the day, among sectors leading to the upside are energy and industrials; while consumer discretionary and technology sectors were unable to make it out of the red; oil & gas sector supported following bump up in crude prices in the wake of a Houthi attack on a Suezmax ship in the Red Sea; Nestle trades down about 3% on new CEO announcement; Ipos launches takeover of Infas; focus on Fed Chair Powell’s speech at Jackson Hole Symposium; no major corporate events expected in the upcoming US session.
Equities
- Consumer staples: Nestle [NESN.CH] -3.0% (appoint new CEO) - Energy: Kazatomprom [KAP.UK] +0.5% (earnings) - Financials: Hufvudstaden [HUFV.A.SE] +4.5% (analyst upgrade) - Healthcare: Galapagos [GLPB.BE] +4.5% (receives FDA clearance of IND application for Phase 1/2 ATALANTA-1 study of CD19 CAR-T, GLPG5101), Getinge [GETIB.SE] -2.0% (acquisition) - Industrials: VGP [VGP.BE] +4.0% (H1 results).
- Technology: Infineon Technologies [IFX.DE] -1.0% (Infineon and Qimonda insolvency administrator reach settlement).
Speakers
- Euro Zone July Consumer Expectation Survey: 1 Year CPI Expectations: 2.8% v 2.7%e; 3 Year CPI Expectations: 2.4% v 2.3%e.
- ECB’s Vujcic (Croatia) commented that have not seen any major surprises to Staff Projections at this time; gradual cuts possible if inflation outlook helds.
Currencies/fixed income
- USD price action was muted ahead of Fed Chair Powell’s speech at Jackson Hole later today. Greenback consolidating its recent losses. Dealers noted that DXY was on pace for its 3rd largest monthly drop since 2021. Market await the potential hints from Fed Chair on the magnitude of interest-rate cuts that are expected to start in September.
- EUR/USD at 1.1125 area in quiet trade. ECB survey on inflation expectations. ECB's Kazaks (Latvia): stated that was very much open to a discussion on Sept rate cut.
- GBP/USD steady at 1.3110. Cable strength attributed to the UK economy outperforming than the major peers this year.
- USD/JPY at 145.65. Dealers noted yen could strengthen in the near-term on expectations for further interest rate rises by the Bank of Japan. BOJ Gov Ueda testified that If economy moved as expected then would move rates up to levels deemed neutral to economy.
Economic data
- (SE) Sweden July Unemployment Rate: 7.7% v 9.4% prior; Unemployment Rate (seasonally adj): 8.6% v 8.4%e v; Trend Unemployment Rate: 8.3% v 8.3% prior.
- (NO) Norway July Credit Indicator Growth Y/Y: No est v 3.6% prior.
- (HU) Hungary July Unemployment Rate: 4.2% v 4.3%e.
- (FR) France Aug Business Confidence: 97 v 96e; Manufacturing Confidence: 99 v 96e; Production Outlook Indicator: -13 v -17e prior; Own-Company Production Outlook: +8 v -4e.
- (CN) Weekly Shanghai Copper Inventories (SHFE): 251.1K v 262.2K tons prior.
- (TH) Thailand May Foreign Reserves w/e Aug 16th: $234.5B v $232.2B prior.
- (TW) Taiwan July Industrial Production Y/Y: 12.3% v 12.2%e.
- (RU) Russia Narrow Money Supply w/e Aug 16th (RUB):18.37 T v 18.33T prior.
- (TR) Turkey July Foreign Tourist Arrivals Y/Y: 2.6% v 5.0% prior.
- (TW) Taiwan July M2 Money Supply Y/Y: 6.2% v 6.3% prior; M1 Money Supply Y/Y: 5.2% v 5.2% prior.
Fixed income issuance
- (IN) India sold total INR230B vs. INR230B indicated in 2029 and 2064 bonds.
Looking ahead
- (PE) Peru Q2 GDP Y/Y: 3.6%e v 1.4% prior.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2038 and 2046 Bonds.
- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).
- 07:30 (IN) India Forex Reserve w/e Aug 16th: No est v $670.1B prior.
- 07:30 (IN) India announces upcoming bill issuance (held on Wed).
- 07:30 (IS) Iceland to sell 2027 and 2035 RIKB Bonds.
- Sells ISK in Apr 2027 RIKB Bonds; Avg Yield: % v 8.410% prior; Bid-to-cover: x v 1.52x prior (Aug 9th 2024).
- Sells ISK in 7.0% Feb 2035 RIKB Bonds; Avg Yield: % v 6.81% prior; Bid-to-cover: x v 1.08x prior (Apr 10th 2024).
- 08:00 (PL) Poland July M3 Money Supply M/M: 0.5%e v 0.4% prior; Y/Y: 8.3%e v 8.4% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (CA) Canada Jun Retail Sales M/M: -0.3%e v -0.8% prior; Retail Sales (ex-auto) M/M: -0.2%e v -1.3% prior.
- 09:00 (CL) Chile July PPI M/M: No est v -1.6% prior.
- 10:00 (US) July New Home Sales: 624Ke v 617K prior.
- 10:00 (US) Fed Chair Powell speech at Jackson Hole symposium.
- 11:00 (US) Aug Kansas City Fed Services Activity: No est v 2 prior.
- 11:00 (MX) Mexico Q2 Current Account Balance: +$3.3Be v -$12.6B prior.
- (PE) Peru Q2 GDP Y/Y: 3.6%e v 1.4% prior.
- 13:00 (US) Weekly Baker Hughes Rig Count.
- 15:00 (UK) BOE Gov Baily at Jackson Hole symposium.
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