Economic Data

- (GE) German July Import Price Index M/M: -0.2% v -0.4%e; Y/Y: 9.9% v 9.7%e

- (FI) Finland Aug Business Confidence: 4.0 v 4.0e; Consumer Confidence: 21.9 v 19.0e

- (FI) Finland July Preliminary Retail Sales Volume Y/Y: 4.5% v 3.0%e

- (GE) Germany Aug CPI Saxony M/M: 0.0% v 0.2% prior; Y/Y: 1.1% v 1.2% prior

- (HU) Hungary July Unemployment Rate: 11.0% v 11.1%e

- (SP) Spain July Real Retail Sales Y/Y: -2.2% v 0.9% prior; Adjusted Real Retail Sales Y/Y: -2.4% v -2.5%e

- (SW) Sweden July Retail Sales M/M: 0.5% v 1.0%e; Y/Y: 2.0% v 1.1%e

- (GE) Germany Aug CPI North Rhine Westphalia M/M: 0.2% v 0.2% prior; Y/Y: 1.0% v 1.1% prior

- (GE) Germany Aug CPI Brandenburg M/M: 0.0% v 0.3% prior; Y/Y: 1.0% v 1.1% prior

- (GE) Germany Aug CPI Hesse M/M: 0.1% v 0.3% prior; Y/Y: 0.7% v 1.9% prior

- (NO) Norway Q2 Manufacturing Wage Index Q/Q: 0.1% v 0.0% prior

- (TT) Taiwan July Leading Index M/M: -0.2% v -0.1% prior (second monthly decline); Coincident Index: 1.0% v 0.3% prior

- (UK) Q2 Preliminary GDP Q/Q: 1.2% v 1.1%e; Y/Y: 1.7% v 1.6%e

- (UK) Q2 Preliminary Private Consumption: 0.7% v 0.5%e; Government Spending: 0.3% v 0.3%e; Gross Fixed Capital Formation: -2.4% v 1.8%e; Exports: 1.1% v 2.1%e; Imports: 0.9% v 1.8%

- (UK) Q2 Preliminary Total Business Investment Q/Q: -1.6% v 3.0%e; Y/Y: 1.9% v 6.2%e

- (UK) Jun Index of Services 3M/3M: 0.7% v 1.08% prior

- (SZ) Swiss Aug KOF Leading Indicator: 2.18 v 2.20e


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM


Notes/Observations

- Markets poised to hear clarification of the Fed's strategy from Chairman Bernanke later during the NY morning. Traders note that undertone of gloom and doom should disappoint markets (risk back off)

- The 20-year JGB yields rise 10bps, largest daily rise in two years as PM Kan vows to announce steps (action) to cope with JPY currency strength

- US GDP revision key data during NY morning

Equities:

- As of 5:40am ET Euro Stoxx 50 Index -0.3% at 2,598; DAX Index -0.1% at 5,907; CAC-40 Index -0.4% at 3,461 and FTSE 100 Index -0.2% at 5,147

- European equities markets are broadly weaker after the US DOW closed below the 10,000 level for the first time since July 6th. At the start of the session, Spain's IBEX 35 and Italy's FTSE MIB indices were among the biggest losers in Europe following Spanish retail sales data and ahead of Italian bank earnings. Looking ahead, markets are awaiting the later today speech by US Fed chairman Bernanke and the revisions to the US' Q2 GDP data. - In terms of individual equities, decliners in the UK include Heritage Oil [HOIL.UK] and Tullow Oil [TLW.UK] on concerns about their exploration prospects in Uganda. Also, shares of Rolls Royce [RR.UK] are lower after Boeing announced plans to delay the delivery date for the first 787 Dreamliner due to engine availability issues. Gainers in the UK include shares of Independent News & Media [INM.UK], following the company's earnings and guidance. In Spain, Iberia [IBLA.SP] is declining, despite better than expected earnings. Other decliners include Commerzbank [CBK.GE] on share sale speculation and EADS [EAD.FR] on speculation that the company might cut production rates for its A350 plane. Shares of Vopak [VPK.NV] are trading higher by more than 6%, after the company raised its FY10 guidance.

Speakers:

- Japan PM Kan reiterated his views on FX that excessive currency moves were bad for Japanese economy. He vowed to take 'decisive action' on the issue when deemed appropriate. He clarified that excessive currency moves could harm financial stability and hoped the BOJ would take appropriate monetary policy steps. He stated that he would meet with BOJ Gov Shirakawa in person following the Gov's trip from the Jackson Hole, WY after his return from the overseas trip on Aug 30th

- China's State Administration of Foreign Exchange (SAFE): To allow exporters to deposit foreign exchange overseas under a 1-yr trial program which would begin on Oct 1 in certain parts of the country. Under the plan, companies would have a limit on how much foreign exchange they could deposit overseas.- The program would start in Beijing and three other provinces.

- Thai PM Abhisit reiterated view that price movements in baht currency was in line with the regional trend

Currencies/Fixed Income:

- The JPY was weaker against the major pairs as the trading day moved into the NY session. Although Japanese Japan Kan reiterated his stance on FX the market seems to somewhat believe that Japan might implement some 'decisive action' to curb the JPY's recent strength at the appropriate time. Dealers note that if somehow the USD/JPY can muster a close above 85.00 then the probability of such action rises a bit. USD/JPY traded as high as 84.85 before stalling. The GBP reacted little to the slight upwards revision in the UK Q2 GDP. GBP/USD pair was lower compared to its Tokyo open and just below the 1.55 handle. EUR/USD hovering just above the 1.27 handle throughout the session ahead of the key speech by Fed's Bernanke later today.

- In fixed income Bund and Gilt futures were higher on risk aversion flows as equity markets registered declines as uncertainty about the global growth outlook remained. The German 30-year Bund Yield continued to hit all-time lows below 2.63% level while the spread between the German 2-year and 30-year bonds narrowed below 200bps.

In the Papers-Geopolitical:

- The Financial Times reported that large global banks are supporting the idea of using the reniminbi currency to settle trades with China. An increasing number of Chinese companies are requesting foreign trading partners to settle payments with renminbi. The article sized the values of goods and services traded across China last year at roughly $2.8 trillion, $10 billion of which were involved in the renminbi for the first half of 2010.

- In the Wall Street Journal, the Swedish government proposed various reforms, including tax cuts and investment in welfare, worth around SEK32.7B for the four-year mandate period. Note the proposals come ahead of the next general election on the 19th of September.

- Britain's Shadow Education Secretary Ed Balls stated in the press that an economic 'hurricane' may negatively impact the country. He particularly criticized plans by the coalition government to tackle the deficit have risked the country of a double dip.


Looking Ahead

- (GE) Germany Aug CPI Baden Wuerttemberg M/M: % v 0.2% prior; Y/Y: % v 1.3% prior

- 6:00 (GE) Germany Aug CPI Bavaria M/M: % v 0.3% prior; Y/Y: % v 1.2% prior

- 6:00 (MA) Malaysia July Money Supply Y/Y: % v 8.8% prior

- 6:00 (IR) Ireland Jun Trade Balance: € v €4.1B prior

- 8:30 (CL) Chile Central Bank Meeting Minutes

- 8:30 (US) Q2 Advanced GDP Q/Q Annualized: 1.4%e v 2.40% prelim; Personal Consumption: 1.6%e v 1.6% prelim

- 8:30 (US) Q2 Advanced GDP Price Index: 1.8%e v 1.8% prelim; Core PCE Q/Q: 1.1%e v 1.1% prior

- tba (GE) Germany Aug Consumer Price Index M/M: 0.0%e v 0.3% prior; Y/Y: 1.1% v 1.2% prior

- tba (GE) Germany Aug CPI EU Harmonized M/M: 0.1%e v 0.3% prior; Y/Y: 1.0% v 1.2% prior

- 9:55 (US) Aug Final University of Michigan Confidence: 69.6e v 69.6 prelim

- 10:00 (US) Fed's Bernanke speaks on economic outlook at Jackson Hole, WY

- 12:00 (GE) German Chancellor Merkel briefing on energy policy

- 14:00 (US) ECB'S Trichet from Jackson Hole

- 15:00 (AR) Argentina July Shop Center Sales Y/Y: No est v 23.8% prior

- (PE) Peru Q2 GDP Y/Y: No est v 6.0% prior