Geopolitical issues weight down PMI Manufacturing readings in session

Notes/Observations

- Chinese Aug Manufacturing PMI eases and brings up fresh stimulus speculation

- China Aug Manufacturing PMI registers its first sequential decline in 6 months (51.1 v 51.2e)

- China Aug HSBC Manufacturing PMI hits a 3-month low (50.2 V 50.3E)

- Euro Zone PMI Manufacturing basically come in below expectations weighed down by geopolitical issues

- Price action subdued with US participants out for labor day holiday

Key Economic Data in session

- (ID) Indonesia July Trade Balance: +$0.1B v -$0.4Be; Imports Y/Y: -19.3 v -10.0%e; Exports Y/Y: -6.0% v +0.2%e

- (ID) Indonesia Aug CPI M/M: 0.5% v 0.4%e; Y/Y: 4.0% v 3.7%e; CPI Core Y/Y: 4.5% v 4.6% prior

- (PE) Peru Aug CPI M/M: -0.1% v 0.2%e; Y/Y: 2.7% v 3.0%e; Wholesale Price Index M/M: % v 0.1% prior

- (JP) Japan Aug Vehicle Sales Y/Y: -5.0% v 0.6% prior

- (IE) Ireland Aug Manufacturing PMI: 57.3 v 55.4 prior

- (IN) India Aug Manufacturing PMI: 52.4 v 53.0 prior

- (RU) Russia Aug Manufacturing PMI: 51.0 v 50.5e

- (DE) Germany Q2 Final GDP Q/Q: -0.2% v -0.2%e; Y/Y: 0.8% v 0.8%e; GDP WDA Y/Y: 1.2% v 1.2%e

- (DE) Germany Q2 Final GDP Private Consumption Q/Q: 0.1% v 0.2%e; Government Spending Q/Q: 0.1% v 0.3%e; Capital Investment Q/Q: -2.3% v -1.3%e; Construction Investment Q/Q: -4.2% v -3.2%e; Domestic Demand Q/Q: 0.1% v 1.9% prior; Exports Q/Q: 0.9% v 0.2%e; Imports Q/Q: 1.6% v 0.5%e

- (SE) Sweden Aug PMI Manufacturing: 51.0 v 54.8e

- (AU) Australia Aug Commodity Index Y/Y: -11.5 v -13.8% prior; Commodity Index AUD: No est v 92.1 prior

- (NO) Norway Aug Manufacturing PMI: 51.8 v 50.2e

- (PL) Poland Aug Manufacturing PMI: 49.0 v 49.0e

- (HU) Hungary Aug Manufacturing PMI: 51.0 v 56.6 prior

- (TR) Turkey Aug Manufacturing PMI: 50.3 v 48.5 prior

- (NL) Netherlands Aug Manufacturing PMI: 51.7 v 53.5 prior

- (CH) SNB Sight Deposits for week ended Aug 29th (CHF): 314.3B v 314.0B prior

- (EU) ECB €917M borrowed in overnight loan facility vs. €320.0M prior; €30.9B parked in deposit facility vs. €26.9B prior - Daily Eurosystem Liquidity Conditions

- (ES) Spain Aug Manufacturing PMI: 52.8 v 53.3e (9th month of expansion but lowest since Apr)

- (CH) Swiss Aug PMI Manufacturing: 52.9 v 53.7e

- (CZ) Czech Republic Aug Manufacturing PMI: 54.3 v 55.5e

- (IT) Italy Aug Manufacturing PMI: 49.8 v 51.0e (1st contraction in 14 months and lowest level since Jun 2013)

- (FR) France Aug Final Manufacturing PMI: 46.9 v 46.5e; (confirms fourth straight month of contraction and lowest since May 2013)

- (DE) Germany Aug Final Manufacturing PMI: 51.4 v 52.0e (confirms 14th straight month of growth lowest reading since Sept)

- (EU) Euro Zone Aug Final Manufacturing PMI: 50.7 v 50.8e ((confirms 13th

straight month of growth but lowest since July 2013)

- (GR) Greece Aug Manufacturing PMI: 50.1 v 48.7 prior (first expansion in three months)

- (NO) Norway July Credit Indicator Growth Y/Y: 5.4% v 5.4%e

- (UK) July Net Consumer Credit: £1.1B v £0.6Be; Net Lending: £2.3B v £2.0Be

- (UK) July Mortgage Approvals: 66.6K v 66.0Ke

- (UK) July M4 Money Supply M/M: 0.3% v 0.1% prior; Y/Y: -1.0% v -0.6% prior; M4 Ex IOFCs 3M Annualized: 3.8% v 4.3%e

- (UK) Aug PMI Manufacturing: 52.5 v 55.1e (18th month of expansion and lowest since June 2013)

- (GR) Greece Q2 Final GDP Y/Y: -0.3% v -0.2% prelim

- (ZA) South Africa Aug Kagiso Manufacturing PMI: 49.0 v 47.8e

- (DK) Denmark Aug PMI Survey: 48.6 v 50.7 prior (first contraction in 16 months)

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities***

Indices [Stoxx50 -0.3%, FTSE 100 -0.2% at 6,802, DAX -0.2% at 9,449, CAC-40 -0.4% at 4,364, IBEX-35 -0.1% at 10,719, FTSE MIB -0.7% at 20,315, SMI +0.5% at 8,704, S&P 500 Futures -0.1% at 1998]

- Market Focal Points/Key Themes: Equity markets opened just below flat then drifted slightly lower after overall disappointing Aug Manufacturing PMIs. Tensions over the Ukraine/Russia situation added to the negative sentiment as a near-term solution seems unlikely. The Swiss market outperformed on positive news out of several drug makers. Volumes were light ahead of the US Labor Day holiday.

By Sector

- Consumer Discretionary [HEIA.NL +0.5% (to sell Mexican packaging unit), ITV.UK +1.8% (rumored bid), HAV.FR +1.2% (confident on H2), TSCO.UK -1.7% (major shareholder cuts stake)]

- Industrials [PER.UK +26% (260p offer from Access Industries)]

- Telecom [ILD.FR -3.4% (earnings)]

- Healthcare [NOVN.CH +3.4% (positive drug results)

- Financials [BARC.UK -0.5% (Sells Spanish unit)]

- Technology [SIE.DE -0.2% (No change on delay of Olkiluoto 3 EPR project)

Speakers

- Russia President Putin stated that he hoped neither Russia nor its partners would suffer effects of new sanctions

Currencies/Fixed Income:

- The USD basically consolidated its recent against various currencies. The ongoing tensions in the Ukraine prompted the Russia Ruble to hit record lows against the greenback while the EUR/USD pair moved off 11-month lows set on Friday.

Political/In the Papers:

- EU vows to hit Russia with fresh sanctions if Ukraine situation worsens

- German Chancellor Merkel's CDU wins Bavaria state election but anti-euro party surges to 10%

- German Fin Min Schaeuble warns EU and ECB about further fiscal easing

- France asks for more ECB action to further correct overvalued euro currency

- Iraqi govt forces broke a 2-month Islamic State siege of Amerli

- Hong Kong braces for protests as China ruled out full democracy

- BOJ Officials said to s PM Abe following through and raising the next phase of the planned sales tax

Looking Ahead

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

- (EU) EU Foreign Affairs Min Ashton meets Iran Foreign Min in Brussels

- (EU) NATO Sec Gen Rasmussen holds pre-summit press conference

- (UK) Commons reconvenes after Summer Recess

- (CZ) Czech Aug Budget Balance (CZK): No est v 0.0B prior (revised from 4.5B)

- (RO) Romania Aug International Reserves: No est v $34.1B prior

- (RU) Russia Aug Sovereign Wealth Fund Balances: Reserve Fund: No est $86.6B prior; Wellbeing Fund: No est v $86.5B prior

- (IT) Italy Aug Budget Balance: No est v -€1.6B prior

- (IT) Italy Aug New Car Registrations Y/Y: No est v 5.0% prior

- (CL) Chile Central Bank Meeting Minutes

- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-Month and 6-month Bills

- 06:45 (US) Daily Libor Fixing

- 07:30 (BR) Brazil Central Bank Weekly Economists Survey

- 08:15 (US) Baltic Dry Bulk Index

- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming 2024 and 2044 bond auction

- 08:50 (FR) France Debt Agency (AFT) to sell combined €6.9-8.1B in 3-month, 6-month and 12-month Bills

- 09:00 (BR) Brazil Manufacturing PMI: No est v 49.1 prior

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 10:00 (MX) Mexico July Total Remittances: No est v $2.0B prior

- 10:30 (MX) Mexico Aug Manufacturing PMI: No est v 51.5 prior

- 13:00 (MX) Mexico Aug IMEF Manufacturing Index: No est v 49.1 prior; Non-Manufacturing Index: No est v 50.1 prior

- 14:00 (BR) Brazil Aug Trade Balance: No est v $1.6B prior; Total Exports: No est v $23.0B prior; Total Imports: No est v $21.5B prior

- (AU) RBA Interest Rate Decision (early Tuesday)