BOE July minutes did not cast any dissenting votes on rates

Notes/Observations

- Australia Q2 CPI data hits 9 quarter high at 3.0% y/y and upper end of RBA inflation target

- BOE July minutes did not cast any dissenting votes on rates but perhaps set the tone for a more hawkish Aug inflation report

Key Economic Data in session

- (SG) Singapore Jun CPI M/M: -0.7% v +0.1%e; Y/Y: 1.8% v 2.4%e

- (FR) France July Business Confidence: 93 v 92e; Manufacturing Confidence: 97 v 98e

- (DK) Denmark July Consumer Confidence: 10.6 v 9.3 prior

- (NL) Netherlands May Consumer Spending Y/Y: +0.1% v -0.1% prior

- (IT) Italy Jun Non-EU Trade Balance: €2.2B v €2.5B prior

- (TW) Taiwan Jun Industrial Production Y/Y: 8.6% v 6.0%e ; Commercial Sales Y/Y: 4.1% v 4.0%e

- (ZA) South Africa Jun CPI M/M: 0.3% v 0.4%e; Y/Y: 6.6% v 6.7%e

- (ZA) South Africa Jun CPI Core M/M: 0.6% v 0.5%e; Y/Y: 5.6% v 5.6%e

- (PL) Poland Jun Retail Sales M/M: -1.1% v +1.8%e; Y/Y: 1.2% v 4.0%e

- (PL) Poland Jun Unemployment Rate: 12.0% v 12.1%e

- (UK) Bank of England (BOE) July Minutes Vote was unanimous (9 to 0) to leave both Interest Rates and Asset Purchase Target unchanged at current level of 0.50% and £375B (as expected)

- (UK) Jun BBA Loans for House Purchase: 43.3K v 41.4Ke

- (IS) Iceland July CPI M/M: -0.2% v +0.4% prior; Y/Y: 2.4% v 2.2% prior

- (IS) Iceland Wage Index M/M: 0.5% v 0.4% prior; Y/Y: 5.4% v 5.2% prior

- (EU) Euro Area (EU18) Q1 Government Budget Deficit to GDP Ratio at 2.7% v 2.6% q/q (first increase since Q2 2013)

Fixed Income:

- (EU) ECB allotted $75M in 7-day USD Liquidity Tender at fixed 0.60% vs. $75M prior (2nd straight week of allotment)

- (IN) India sold total INR150B vs. INR150B indicated in 3-month and 12-month Bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities***

Indices [FTSE 100 +0.2% at 6,805, DAX +0.4% at 9,768, CAC-40 +0.3% at 4,381, IBEX-35 flat at 10,651, FTSE MIB -0.4% at 20,795, SMI flat at 8,597, S&P 500 Futures +0.2% at 1,976]

- Market Focal Points/Key Themes: Equity markets open lower following Tuesday's gains, Russia opens higher amid EU commentary on possible sanctions, STMicroelectronics weighs on FTSE MIB, Daimler and Akzo Nobel rise on better than expected profits, ABB declines on weaker results, Banks trade mixed amid declines in Deutsche Bank, US earnings (Apple mixed, Microsoft above ests), Upcoming US Morning Earnings (Whirlpool, EMC, Dow Chemical, Pepsi, Glaxo, Boeing, Delta, Freeport, Biogen)

By Sector

- Financials [Banco Comercial Portugues BCP.PT +4% (confirmed capital raise); Deutsche Bank DBK.DE -1.5% (prior concerns raised by NY Fed)]

- Industrials [Daimler DAI.DE +1.5% (Q2 profits above ests, reaffirmed outlook), Syngenta SYNN.CH +1.5% (reaffirmed outlook); ABB ABBN.CH -1.5% (Q2 results below ests)]

- Basic Materials/Resources [Akzo Nobel AKZA.NL +3% (Q2 profits above ests), Lanxess LXS.DE +1.5% (broker commentary)]

- Technology [Renishaw RSW.UK +15% (FY results above ests); STMicroelectronics STMFR -1% (guided Q3 sales below expectations)]

- Stoxx50 sectors [Consumer Cyclical +0.7%, Financials +0.6%, Consumer Non-Cyclical +0.6%, Technology +0.6%, Telecom +0.5%, Industrial +0.5%, Utilities +0.2%, Basic Materials +0.1%, Energy +0.1%]

Speakers:

- Bank of England (BOE) July Minutes noted that the domestic recovery was looking more assured, some tentative signs of a slight slowdown that had been forecast in H2. Spare capacity was being absorbed faster than expected and it could assess spare capacity debate in Aug Quarterly Inflation Report Some MPC members reiterated the case for early rate hike to ensure a gradual rise in the trend and that risk of rate hike derailing recovery was receding. However, other MPC members believed that a premature rate hike might make economy more vulnerable.

- Bank of Spain (BoS) Monthly Bulletin raised both 2014 and 2015 GDP growth forecasts. Raises 2014 GDP growth forecast from 1.2% to 1.3% and raises 2015 GDP growth outlook from 1.7% to 2.0%. it noted that activity was recovering faster than expected

- Spain PM Rajoy to meet Socialist leader Sanchez to seek possible common ground on Catalonia referendum vote

- Belgium Monitoring Committee: 2014 Federal Deficit seen at €10.6B vs. €8.8B target (equates to 2.7% of GDP vs. 2.2% target)

- Indonesia Central Bank (BI) Gov Martowardojo: Have sufficient FX Reserves to anticipate moderate outflows. Convinced that IDR currency (Rupiah) pressure to diminish

- Troubled China construction company Huatong Road and Bridge said to have made bond payment which avoids default

Currencies/Fixed Income:

- Dealers noted that the gradual widening in interest rate differentials between US/Europe gave the greenback an advantage. The premium offered by two-year U.S. Treasuries over German debt has widened to around 46 basis points, levels not seen since 2007. The key break below 1.3477 in EUR/USD providing the hope that the EUR/USD could fall further

- The GBP held above the key 1.7050 level ahead of the BOE Minutes and remain there afterwards. Dealers had braced for potential for a more hawkish tone among some members but in the end it remained too early for a dissenting vote for a rate hike. Today's minutes seemed to set the tone to prepare the market for a more hawkish Inflation Report in August

Political/In the Papers:

- (CN) State Administration of Foreign Exchange (SAFE) official Guan: Saw some capital outflows in Q2

-(RU) EU reportedly planning to name new names for the Russia sanction list on Thursday

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (EU) EU General Affairs Ministers hold Meeting in Brussels

- 06:00 (UK) July CBI Industrial Reported Sales: 15e v 4 prior

- 06:00 (IE) Ireland Jun PPI M/M: No est v 0.1% prior; Y/Y: No est v -3.1% prior

- 06:00 (PL) Poland to sell Bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e July 18th: No est v -3.6% prior

- 07:30 (EU) ECB's Praet (Belgium) in Lithuania

- 07:45 (UK) BOE Gov Carney in Glasgow

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (CA) Canada May Retail Sales M/M: 0.6%e v 1.1% prior; Retail Sales Ex Auto M/M: 0.3%e v 0.7% prior

- 08:30 (BR) Brazil Jun Tax Collections (BRL): 90.6Be v 8.7897T prior

- 08:30 (CL) Chile Central Bank's Traders Survey

- 10:00 (EU) Euro Zone July Advance Consumer Confidence: -7.5e v -7.5 prior

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

- 11:00 (US) Fed to purchase $2.50-3.25B in Notes

- 15:00 (AR) Argentina Jun Trade Balance: No est v $1.3B prior

- 17:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to raise Official Cash Rate by 25bps to 3.50%

- 17:00 (CO) Colombia May Retail Sales Y/Y: 6.8%e v 7.2% prior

- 17:00 (CO) Colombia May Industrial Production Y/Y: +4.0%e v -2.2% prior

- 17:00 (KR) South Korea Jun Department Store Sales: No est v 0.8% prior

- 19:00 (KR) South Korea Q2 Preliminary GDP Q/Q: 0.7%e v 0.9% prior; Y/Y: 3.7%e v 3.9% prior

- 19:50 (JP) Japan Jun Trade Balance: -¥642.9Be v -¥909.0B prior; Adj Trade Balance: -¥1.119Te v -¥862.2B prior

- 21:35 (JP) Japan July Preliminary Manufacturing PMI: No est v 51.5 prior

- 21:45 (CH) China July Preliminary HSBC Manufacturing PMI: No est v 50.7 prior