Markets continue to anticipate that ECB will enact QE at some future point

Notes/Observations

- UK markets returns after extended weekend to digest the Jackson Hole conference

- European bond yields continue decline on hopes for activation of ECB QE program

Key Economic Data in session

- (SG) Singapore July Industrial Production M/M: 2.7% v 2.3%e; Y/Y: 3.3% v 3.3%e

- (JP) Aug Small Business Confidence: 47.7 v 49.5e

- (FI) Finland July Preliminary Retail Sales Volume Y/Y: -0.6 v -1.4% prior

- (FI) Finland July Unemployment Rate: 7.0% v 7.6%e

- (ZA) South Africa Jun Leading Indicator: 100.1 v 99.6 prior

- (EU) ECB €0,0M borrowed in overnight loan facility vs. €4.0M prior; €25.3B parked in deposit facility vs. €25.6B prior - Daily Eurosystem Liquidity Conditions

- (SE) Sweden July PPI M/M: 0.0% v -0.1% prior; Y/Y: 1.4% v 2.3% prior

- (VN) Vietnam Aug Trade Balance: +$100M v -$300Me

- (VN) Vietnam Aug Industrial Production Y/Y: 6.7% v 7.5% prior

- (VN) Vietnam Aug YTD Retail Sales Y/Y: 11.4% v 11.4% prior

- (PL) Poland July Retail Sales M/M: 4.7% v 4.7%e; Y/Y: 2.1% v 2.1%e

- (PL) Poland July Unemployment Rate: 11.9% v 11.9%e

- (UK) July BBA Loans for House Purchase: 42.8K v 44.1Ke

Fixed Income:

- (EP) Spain Debt Agency (Tesoro) sold total €3.51B vs. €2.5-3.5B indicated range in 3-Month and 9-Month Bills

- Sold €1.11B in 3-month Bills; Avg Yield: 0.034% v 0.127% prior; Bid-to-cover: 3.19x v 4.48x prior

- Sold €2.39B in 9-month Bills; Avg Yield: 0.107% v 0.205% prior; Bid-to-cover: 2.29x v 3.21x prior

- (IT) Italy Debt Agency (Tesoro) sold total €3.0B vs. €2.5-3.0B indicated range in Aug 2016 Zero Coupon CTZ; Avg Yield: 0.326% (record low) v 0.428% prior; Bid-to-cover: 1.43x v 2.00x

- (CH) Switzerland sold CHF671.1M in 3-month Bills; Yield: -0.040% v -0.087% prior

- (ZA) South Africa sold total ZAR2.35B in 2032, 2044 and 2048 bonds

- (EU) ECB allotted €131.8B in 7-Day Main Refinancing Tender at fixed 0.15% vs. €105Be

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities***

Indices [Stoxx50 -0.2%, FTSE 100 +0.3% at 6,795, DAX -0.3% at 9,478, CAC-40 flat at 4,341, IBEX-35 +0.2% at 10,710, FTSE MIB +0.1% at 20,396, SMI flat at 8,616, S&P 500 Futures flat at 1,994]

- Market Focal Points/Key Themes: Continental European bourses open slightly lower following the sharp gains seen on Monday's session, FTSE 100 rises after being closed during the prior session, WPP rises on higher than expected H1 results, Ukraine/EU/Russia high-level talks in Minsk

By Sector

- Industrials [Imtech IM.NL +13% (asset sale, financing agreement)]

- Basic Materials/Resources [Antofagasta ANTO.UK -2% (H1 profits declined)

- Consumer Discretionary [WPP WPP.UK +1.5% (H1 results above ests), Bunzl BNZL.UK +1.5% (raised dividend)]

- Technology [Telecity TCY.UK -4% (CEO to resign)]

- Energy [Circle Oil COP.UK +24% (oil find)]

- Stoxx50 sectors [Utilities -0.8%, Technology -0.5%, Telecom -0.4%, Consumer Non-Cyclical -0.4%, Basic Materials -0.3%, Consumer Cyclical -0.2%, Industrials -0.2%, Energy -0.1%; Financials +0.2%]

**Speakers***

- Austria Finance Minister Spindelegger confirmed he had resigned from his position due to lack of his Party support on tax and debt reform

- Russia Economy Min Ulyukayev commented on growth outlook and capital outflows. To maintain 2014 GDP growth forecast at 0.5% but cut 2015 GDP forecast from 2.0% to 1.0%. It raised both 2014 and 2015 inflation forecast (2014 went from 5.5-6.5% to 7.0-7.5% while 2015 CPI forecast went from 4.5-5.5% to 6.0-7.0%).

- Sweden PM Reinfeldt: Not preparing any change to mortgage cost deduction and warned against excessive tax increases. Raising taxes by SEK100B by 2018 would hurt Swedish competitiveness

- Finland President Niinistoe: Keeping NATO membership as a future policy option (**Reminder: On Aug 25th Finland Govt stated that Russia might have violated Finland airspace)

- BoJ officials said to support extending Yen-settlement system to NY trading hours. The move said to be aimed at increasing the global use of JGBs and yen.

- Iran Oil Minister: Current decline in oil prices should be short-lived, driven by seasonal factors

- Japan Cabinet Office (Govt) Aug Monthly Report maintained its overall economic assessment that domestic moderate recovery trend remained intact with impact of sales-tax hike easing. It did caution that any prolong effect of sales-tax drop was a new downside risk

Currencies/Fixed Income:

- USD was consolidating its post Jackson Hole symposium gains as dealers noted that it could be 'overbought' on a technical basis. Nonetheless the EUR bounce was limited as fallout from the Draghi dovish tone from Jackson Hole reverberated as UK participant s returned from their extended weekend. European peripheral yields continued to move lower with both Italy and Spain 10-year bonds at fresh record lows.

- Political fallout in Europe also simmered. Today saw the resignation of Austria' Fin Min Spindelegger who stepped down citing lack of his Party support on tax and debt reform (France Govt resigned on Monday)

Political/In the Papers:

- (SY) US said to have started surveillance flights over Syria amid the concerns related to ISIS (ISIL)

- (US) Fed's Bullard (moderate, non-voter): Fed will need to change guidance as economy improves, asset purchases end

- (NZ) S&P affirms New Zealand sovereign rating at AA; Outlook Stable

- (UR) Ukraine Parliamentary elections set for Oct 26th - press

Looking Ahead

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

- (UR) Ukraine, the EU and Russia to hold high-level talks in Minsk, Belarus (includes Putin and Poroshenko)

- (EU) EU Trade and Energy Min in Minsk

- 05:30 (ZA) South Africa Q2 GDP Q/Q Annualized: +0.9%e v -0.6% prior; Y/Y: 1.2%e v 1.6% prior

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

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Aug FGV Construction Costs M/M: 0.2%e v 0.8% prior

- 07:45 (US) Weekly ICSC Chain Store Sales

- 08:00 (HU) Hungary Central Bank (NBH) Interest Rate Decision: Expected to leave Base Rate unchanged at 2.10%

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) July Durable Goods Orders: 8.0%e v 1.7% prior (revised from 0.7%); Durables Ex Transportation: 0.5%e v 1.9% prior (revised from 0.8%); Capital Goods Shipment (non-defense/ex-aircraft): +0.7%e v -0.3% prior (revised from -1.0%); Capital Goods Orders (non-defense/ex-aircraft): 0.2%e v 3.3% prior (revised from 1.4%): Durables Ex-Defense: No est v 0.7% prior

- 08:55 (US) Weekly Redbook Retail Sales

- 09:00 (US) Jun FHFA House Price Index M/M: 0.3%e v 0.4% prior; Q/Q: No est v 1.3% prior

- 09:00 (US) Jun S&P/Case-Shiller 20 City M/M: 0.00%e v -0.31% prior; Y/Y: 8.30%e v 9.34% prior; Home Price Index: 172.84e v 170.64 prior

- 09:00 (US) Q2 S&P/Case-Shiller House Price Index Y/Y: No est v 10.35% prior; HPI: No est v 150.76 prior

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

- 09:00 Hungary Central Bank Gov Matolcsy post rate decision statement

- 09:30 (BR) Brazil July Total Outstanding Loans (BRL): No est v 2.830T prior; Outstanding Loans M/M: No est v 0.9% prior; Private Banks Lending (BRL): No est v 1.340T prior; Personal Loan Default Rate: No est v 6.5% prior

- 10:00 (US) Aug Consumer Confidence Index: 89.0e v 90.9 prior

- 10:00 (US) Aug Richmond Fed Manufacturing Index: 6e v 7 prior

- 10:00 (MX) Mexico Weekly International Reserves

- 10:00 (MX) Mexico Fin Min Videgaray at event

- 10:30 (UK) DMO announces size of upcoming 2020 Gilt auction

- 11:00 (UR) Ukraine to sell 2-Year, 5-year and 7-year Bonds

- 11:00 (US) Fed to purchase $2.00-2.50B in Notes

- 11:15 (BR) Brazil to sell I/L 2019, 2023, 2030, 2040 and 2050 Bonds

- 11:30 (US) Treasury to sell 4-Week Bills

- 13:00 (US) (US) Treasury to sell $29B in 2-Year Notes

- 16:30 (US) Weekly API Oil Inventories

- 17:00 (KR) South Korea Aug Consumer Confidence: No est v 105.0 prior

- (US) Arizona Holds Primary Elections

- (US) Florida Holds Primary Elections

- (US) Vermont Holds Primary Elections