Brexit drama: BoJo will call for snap election again today
|Market movers today
The next four days we will be waiting for Draghi like the audience waited for Godot in the Beckett play 'Waiting for Godot' from 1953. Remember Godot never showed up. However, it might be time for a rewrite and we believe that Draghi will actually show up and deliver this week. For more see our ECB Preview .
Today all eyes remain on Brexit and whether a snap election will be called as UK lawmakers are casting a second vote today - see Brexit Monitor . We will also watch out for the monthly UK GDP estimate for July, giving us a first hint where the economy is moving at the start of Q3. Based on PMIs, we cannot rule out the UK has fallen into a 'technical recession' (i.e. two quarters of GDP contraction).
In the euro area Sentix investor confidence for September is due for release. In August sentiment plunged to the lowest level in five years amid fears about an escalating trade war and we would be surprised to see an increase today amid the growing uncertainty on the global geopolitical stage.
In Scandinavia, it is time for Danish export figures for July.
Selected market news
Another eventful weekend in the UK. The division between the moderate Conservatives from the 'One Nation' group and the Brexiteers represented by the Johnson government and the European Research Group became even deeper with Amber Rudd stepping down from the Cabinet and leaving the Conservative parliamentary group. Rudd said she does not think leaving with a deal is the government's main objective and that she not seen a lot of energy going 'into our talks with the EU'. There is much speculation how PM Johnson may be able to get around the spirit of the Brexit delay bill, for more details read our Brexit see Brexit Monitor published this morning. The French foreign minister said yesterday that France would say 'no' to another Brexit delay right now. While the EU leaders have to grant another extension unanimously, we doubt France would not eventually cave in despite EU's Brexit fatigue (see also this excellent Twitter thread ).
On Friday we saw a reversal of some of the moves earlier in the week, which pushed European core yields higher and 10Y Germany dropped back to -0.64%. German industrial production numbers disappointed and the US non-farm report came out on the weak side. Employment growth came in at a disappointing 130k, somewhat below the median expectations at 160k. Fed Chairman Powell noted later in the day that the labour market is 'in a good place. Note that the FOMC silence period ahead of next week's meeting has now commenced.
Yesterday, we had Chinese trade data for August. They showed that exports dropped 1.0% y/y compared to an expected growth of 2.2% y/y. Sales to the US dropped a stunning 16% y/y, even as one should have expected some front-running of exports before tariffs kicked on 1 September. The data have fuelled speculations about further Chinese easing.
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