August Ends on a Risk-Off Note

Economic Data

- (PL) Poland Central Bank (NBP) Aug Inflation Expectations Survey: 0.2% v 0.2%e
- (ZA) South Africa July Trade Balance (ZAR): -0.4B v -1.6Be
- (IN) India Q2 GDP Y/Y: 7.0% v 7.4%e; GVA Y/Y: 7.1% v 6.9%e
- (CL) Chile July Unemployment Rate: 6.6% v 6.6%e
- (CL) Chile July Industrial Production Y/Y: -1.7% v +1.3%e; Manufacturing Production Y/Y: 0.7% v 1.3%e
- (CL) Chile July Retail Sales Y/Y: 2.9% v 3.4%e
- (CL) Chile July Total Copper Production: 455.1K v 513.8K tons prior
- (CA) Canada Q2 Current Account Balance: -$17.4B v -$16.9Be
- (BE) Belgium Q2 Final GDP Q/Q: 0.4% v 0.4% prelim; Y/Y: 1.3% v 1.3% prelim
- (US) Aug ISM Milwaukee: 47.70 v 50.00e
- (US) Aug Chicago Purchasing Manager: 54.4 v 54.5e
- (MX) Mexico July Net Outstanding Loans (MXN): 2.86T v 2.83T prior
- (US) Aug Dallas Fed Manufacturing Activity: -15.8 v -3.8e

US equities are under pressure this morning, in the final trading session of a very volatile August. Absent a big move up today, this will be the worst August for the major US indices since the financial crisis. Despite Beijing declaring that its equity buying campaign was over, the Shanghai Composite staged a miraculous late-session rally that saw much of today's big losses evaporate and the index down only 0.82% on the day. As of writing, the DJIA is down 0.65%, the S&P500 is off 0.84% and the Nasdaq is down 0.55%.

The tone of the Kansas City Fed's Jackson Hole symposium was fairly hawkish. The consensus was that the FOMC should begin tightening monetary policy as early as mid-September, despite the slowing Chinese economy, low inflation and the elevated volatility in financial markets. The highlight of the event was the speech from Fed Vice Chair Fischer, who said there was no need to wait for inflation to pick up to justify a rate hike. BoE Governor Carney also played down the Chinese situation, noting it did not yet warrant a change to BoE strategy. ECB Vice President Constancio applauded the very gradual increases in inflation seen in the Eurozone.

Last week, WTI crude prices rose from below $38 to above $44 in just two trading sessions, for the largest two-day gain since the financial crisis. WTI crude is more or less unchanged from the levels seen late on Friday, around $44.40 after some volatility earlier this morning. Brent is down 1.5% around $49.30 after failing to keep above $50 earlier in the European session. EUR/USD dropped below 1.1200 on Friday afternoon and then bounced as high as 1.1250 today in the Asia and Europe sessions, before heading back to 1.1200 or so.

Looking Ahead

- 15:00 (AR) Argentina July Construction Activity M/M: No est v % prior; Y/Y: No est v % prior
- 16:00 (US) Crop Condition Report
- 19:00 (KR) South Korea Aug CPI M/M: 0.2%e v 0.2% prior; Y/Y: 0.7%e v 0.7% prior; CPI Core Y/Y: 2.1%e v 2.0% prior
- 20:00 (KR) South Korea Aug Trade Balance: $6.1Be v $7.8B prior; Exports Y/Y: -5.9%e v -3.3% prior; Imports Y/Y: -15.0%e v -15.3% prior
- 21:00 (CN) China Aug Manufacturing PMI (official): 49.7e v 50.0 prior; Non-manufacturing PMI: No est v 53.9 prior
- 21:30 (JP) Japan July Labor Cash Earnings Y/Y: No est v -2.4% prior; Real Cash Earnings (ex-inflation) Y/Y: No est v -2.9% prior
- 21:30 (AU) Australia Q2 Current Account Balance: no est v -10.7B prior
- 21:35 (JP) Japan Aug Final Manufacturing PMI: No est v 51.9 prelim
- 21:40 (KR) South Korea Manufacturing PMI: No est v 47.6 prior
- 21:45 (CN) China Aug Final Caixin Manufacturing PMI: 47.2e v 47.1 prior
- 21:50 (TW) Taiwan Manufacturing PMI: No est v 47.1 prior
- 22:00 (VN) Vietnam Manufacturing PMI: No est v 52.6 prior
- 22:15 (MY) Malaysia Manufacturing PMI: No est v 47.7 prior
- 23:00 (ID) Indonesia Manufacturing PMI: No est v 47.3 prior