Quiet session in EU, focus on upcoming US CPI data later in the week

Notes/Observations

- Markets begin the week with risk on as upcoming US CPI on Wednesday shows a consensus at 8.7%, lower than last month's 9.1%. Concern still lies with ever growing geopolitical tensions between China and US.

- China Foreign Min Spokesperson declared that military drills are being conducted in China's own waters and that it provides a training opportunity for Taiwan's military. Taiwan MOD did confirm that Chinese aircraft and ships never entered Taiwan waters.

- On the energy front, Russia Dep Ambassador to UN said that technical work on Nord Stream 1 pipeline is impossible due to anti-Russian sanctions. Follows last weeks comments from Siemens that the turbine is ready and waiting for Russia to accept it.

- Dry summer weather starts to affect supply chains in Europe as the Rhine river through the heart of Europe gets shallower. Cargo ships are partially loading to reduce their depth during sailing.

- Nordic industrial production and emerging market foreign reserves trend lower across the board.

- Asia closed mixed with India's Nifty 50 outperforming at +0.8%. EU indices are higher at +0.3-0.7%. EU bond yields are lower. US futures are positive. Safe haven: Gold -0.1%, DXY -0.1%; Commodity: Brent -0.8%, WTI -0.8%; Speculative: BTC +5.5%, ETH +5.8%.

- Looking ahead, we enter the latter half of earnings season as US pre-market earnings expected from: D, DINO, GOLD, TSN.

Asia

- China July Trade Balance registered a record surplus ($101.3B v $88.1Be). Exports Y/Y: 18.0% v 14.2%e; Imports Y/Y: 2.3% v 4.0%e.

- China July Foreign Reserves $3.104T v $3.051Te.

- Japan PM Kishida expected to retain Taro Aso and Toshimitsu Motegi in the Cabinet and party leadership reshuffle on Wed. **Note: Motegi currently serves as the Secretary-General of the Liberal Democratic Party and Aso is the Vice President of the Liberal Democratic Party).

- Japan Fin Min Suzuki noted that was aware of the news report of reappointment as Fin Min, denied any conversation on reshuffle.

Taiwan

- Chinese military will from now on conduct regular drills on the eastern side of the median line of the Taiwan Strait. To hold military drills with live fire in the southern part of the Yellow Sea on Aug 6-15th.

Ukraine conflict

- Ukraine President Zelenskiy stated that if Russia performed referendums in occupied areas on joining Russia, there would be no talks.

Europe

- ECB injected billions of euros into weaker eurozone debt markets; the central bank was using reinvestments from maturing bonds.

- Italy's centrist Azione party withdrew from centre-left electoral alliance with Democratic Party (PD).

- Turkey President Erdogan noted that five domestic banks to adopt Russian MIR payments system with payment in RUB currency (rubles).

- Moody's revised Italy outlook lower from stable to negative; Affirmed sovereign rating at Baa3.

- Fitch affirmed France sovereign rating at AA, outlook negative.

Americas

- Fed's Daly (non-voter, dove) noted that saw signs of slowdown in spending; Still believed needed to move interest rates up, but did not need to be too aggressive in raising rates. Fed was far from done yet in bringing down inflation but need to be data-dependent.

- Fed's Bowman (voter) noted that a 75bps rate hikes should be on the table until inflation declined meaningfully; Had seen few, if any, concrete indications that inflation had peaked earlier in the year.

- Senate Democrats pass climate, tax and health care package (bill heads to the House later this week).

Energy

- Libya Oil & Gas Min: Libya's daily production of crude oil exceeded 1.2Mbpd.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.47% at 437.78, FTSE +0.42% at 7,470.78, DAX +0.41% at 13,629.70, CAC-40 +0.65% at 6,514.38, IBEX-35 +0.64% at 8,220.17, FTSE MIB +0.14% at 22,621.00, SMI +0.38% at 11,164.92, S&P 500 Futures +0.28%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed in the green through the early part of the session; sectors among those leading to the upside are technology and industrials; lagging sectors include telecom and health care; Veolia to sell Suez UK waste unite to Macquire; UPS to acquire Bomi; Joules confirmed is in talks with Next on equity investment; earnings expected during the upcoming US session include Barrick, Dominion Energy, American International and Airbus deliveries.

Equities

- Consumer discretionary: PostNL [PNL.NL] +4% (earnings; cuts outlook), Joules Group [JOUL.UK] +33% (discussions with Next), Bertrandt [BDT.DE] +2% (final earnings), PageGroup [PAGE.UK] -7% (earnings).

- Energy: Siemens Energy [ENR.DE] -2.5% (earnings).

- Healthcare: HUTCHMED China [HCM.UK] +8% (trial results), Eco Animal Health [EAH.UK] -21% (trading update).

- Utilities: Veolia [VIE.FR] +2% (divestment).

Speakers

- China Foreign Min spokesperson Wang Wenbin stated that Taiwan was part of the country and thus conducting normal military exercises in its own waters.

- Taiwan Ministry of Defense noted that its Chinese aircraft and ships never entered Taiwanese territorial waters during drills. Added that it had calmly handled the situation.

- India said to seek ousting China firms from selling smartphone devices cheaper than $150; India said to have launched several investigations into Chinese firms.

Currencies/Fixed income

- USD holding onto recent gains in the after math of the US payroll beat. Markets have raised the probability of another 75bps hike at the next FOMX to approx. 70%. Focus on Wed’s release of July CPI data.

- EUR/USD staying below the 1.02 area; USD/JPY above 135.

Economic data

- (SE) Sweden July SEB Housing-Price Indicator: -42 v -16 prior.

- (CH) Swiss July Unemployment Rate: 2.0% v 2.0%e; Unemployment Rate (seasonally adj): 2.2% v 2.2%e.

- (NO) Norway Jun Industrial Production M/M: -1.7% v +1.1% prior; Y/Y: % v 4.9% prior.

- (NO) Norway Jun Manufacturing Production M/M: +0.3% v -2.3% prior; Y/Y: % v -2.1% prior.

- (DK) Denmark Jun Industrial Production M/M: 1.1% v 3.1% prior.

- (AU) Australia July Foreign Reserves: A$79.1B v A$79.9B prior.

- (CZ) Czech July Unemployment Rate: 3.3% v 3.2%e.

- (CZ) Czech Jun National Trade Balance (CZK): -12.1B v -20.5Be.

- (CZ) Czech Jun Industrial Output Y/Y: 1.7% v 2.3%e; Construction Output Y/Y: 0.8% v 3.3% prior.

- (HU) Hungary Jun Preliminary Trade Balance: -€0.5B v -€0.1B prior.

- (TW) Taiwan July Trade Balance: $5.0B v $3.9Be; Exports Y/Y: 14.2% v 11.1%e; Imports Y/Y: 19.4% v 20.1%e.

- (NO) Norway July PMI Manufacturing: 54.6 v 56.0 prior (23rd month of expansion.

- (CH) Swiss weekly Total Sight Deposits (CHF): 749.6B v 747.1B prior; Domestic Sight Deposits: 642.1B v 635.3B prior.

- (EU) Euro Zone Aug Sentix Investor Confidence: -25.2 v -29.0e.

- (IS) Iceland July Preliminary Trade Balance (ISK): -31.0B v -17.9B prior.

- (GR) Greece July CPI Y/Y: 11.6% v 12.1% prior; CPI EU Harmonized Y/Y: 11.3% v 11.6% prior.

- (HU) Hungary July YTD Budget Balance (HUF): -2.636T v -2.892T prior.

- (SG) Singapore July Foreign Reserves: $288.2B v $314.3B prior.

Fixed income issuance

- None seen.

Looking ahead

- (CO) Colombia July Consumer Confidence Index: No est v 2.9 prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IE) Ireland July Live Register Monthly Change: No est v +7.3K prior; Live Register Level: No est v 184.6K prior.

- 06:00 (IL) Israel to sell bonds.

- 06:55 (US) Daily Libor Fixing.

- 07:00 (TR) Turkey to sell Bonds.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 Spain Debt Agency (Tesoro) size announcement.

- 08:00 (CL) Chile July CPI M/M: 1.3%e v 0.9% prior; Y/Y: 13.0%e v 12.5% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CL) Chile July Trade Balance: $0.5Be v $0.0B prior; Total Exports: No est v $84.9B prior; Total Imports: No est v $85.0B prior; Copper Exports: No est v $4.0B prior.

- 08:30 (CL) Chile July International Reserves: No est v $45.8B prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.6-5.8B in 3-month, 6-month and 12-month bills.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 16:00 (US) Weekly Crop Progress Report.

- 18:00 (NZ) New Zealand July Heavy Truckometer M/M: No est v -2.7% prior.

- 18:45 (NZ) New Zealand July Total Card Spending M/M: No est v 0.1% prior; Retail Card Spending M/M: No est v 0.1% prior.

- 19:00 (AU) Australia July CBA Household Spending M/M: No est v 0.9% prior; Y/Y: No est v 11.9% prior.

- 19:01 (UK) July BRC Sales LFL Y/Y: No est v -1.3% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v +2.1% prior.

- 19:50 (JP) Japan July M2 Money Supply Y/Y: 3.3%e v 3.3% prior; M3 Money Supply Y/Y: 3.0%e v 3.0% prior.

- 21:00 (PH) Philippines Jun Unemployment Rate: No est v 6.0% prior.

- 21:00 (PH) Philippines Jun Trade Balance: -$5.4Be v -$5.7B prior; Exports Y/Y: 4.0%e v 6.2% prior; Imports Y/Y: 22.3%e v 31.4% prior.

- 21:30 (AU) Australia July NAB Business Confidence: No est v 1 prior; Business Conditions: No est v 13 prior.

- 22:00 (PH) Philippines Q2 GDP Q/Q: 0.1%e v 1.9% prior; Y/Y: 8.2%e v 8.3% prior.

- 23:30 (TH) Thailand July Consumer Confidence: No est v 41.6 prior; Economic Confidence: No est v 35.7 prior.

- 23:30 (JP) Japan to sell 6-Month Bills.

- 23:35 (JP) Japan to sell 30-Year JGB Bonds.