All eyes on US Payrolls revision

EU Mid-Market Update: All eyes on US payrolls revision; UK public borrowing jumped as pressure on govt to fix budget mounts.

Notes/observations

- Marginal gains for EU equities amidst unchanged narrative: Most traders said to be sitting on hands ahead of Fed Chair Powell comments at Jackson Hole, combined with typically light liquidity for August and no notable change in macro narrative overnight.

- Emphasis on US revisions to nonfarm payrolls: Expected at 10:00 ET, revisions going back to Apr 2023 could reveal insight on true health of the US job market and recession timing.

- UK public sector borrowing higher than expected: Follows Chancellor Reeve’s comments yesterday that she plans to raise taxes and cut spending at Autumn budget.

- Emerging market Central Banks hold policy steady: Thailand, Indonesia and Iceland all left policy unchanged. Respective currencies little changed.

- Iran sends ambiguous message: Crude oil is little changed after Iran noted its response to Israeli attacks will be orchestrated for maximum surprise but not substantial enough to interfere with cease-fire talks.

- Home construction firm Toll Brothers became the first US firm to offer macroeconomic color for the first 3 weeks of August. It noted solid deposit and traffic activity through the first three weeks of this month.

- Asia closed mixed with Hang Seng underperforming -0.7%. EU indices are -0.2% to +0.3%. US futures are +0.1%. Gold -0.3%, DXY +0.1%; Commodity: Brent +0.1%, WTI +0.1%; Crypto: BTC -2.3%, ETH -3.0%.

Asia

- Japan July Trade Balance: -¥621.8B v -¥350.0Be; Exports Y/Y: 10.3% v 11.4%e; Imports Y/Y: 16.6% v 14.6%e.

- South Korea July PPI Y/Y: 2.6% v 2.5% prior.

- South Korea Sept Business Manufacturing Survey: 73 v 72 prior.

- Australia July Westpac Leading Index M/M: -0.04% v +0.01% prior.

Mid-East

- Iran stated that its response to Israeli attacks would be orchestrated for 'maximum surprise'.

- US officials stated that the Gaza peace deal was on the brink of collapse.

- Hamas has rejected President Joe Biden’s claim that it is “backing off” from a ceasefire-for-hostages deal.

Americas

- Fed’s Bowman (voter, hawk) stated that still saw upside risk to inflation; Needed to pay close attention to price-stability side of mandate while watching for a risks of a material weakening in the labor market.

- Robert F Kennedy said to be considering quitting election to join forces with Trump.

Energy

- Weekly API Crude Oil Inventories: +0.3M v -5.2M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.17% at 513.16, FTSE +0.07% at 8,278.76, DAX +0.24% at 18,399.15, CAC-40 +0.24% at 7,503.90, IBEX-35 -0.09% at 11,077.85, FTSE MIB +0.29% at 33,170.00, SMI -0.06% at 12,268.30, S&P 500 Futures +0.03%].

Market focal points/key themes: European indices open generally higher and continued the trend through the early part of the session; trading appetite seen somewhat muted ahead of major risk events later in the week; among sectors leading to the upside are materials and technology; lagging sectors include financials and health care; SoftwareOne confirms receipt of several going private offers; Taiwan Cement raises offer for NHOA; focus on release of FOMC minutes; earnings expected in the upcoming US session include Macy’s, Target and TJX.

Equities

- Consumer discretionary: Watkin Jones [WJG.UK] -30.5% (trading update) - Consumer staples: Mobico Group [MCG.UK] +6.5% (H1 results, affirms guidance) - Energy: BKW [BKW.CH] +2.0% (H1 results, raises guidance) - Financials: Sydbank [SYDB.DK] -0.5% (Q2 results, beats estimates).

- Industrials: Demant [DEMANT.DK] +3.5% (analyst upgrade).

- Technology: ASML Holding [ASML.NL] +0.5% (South Korea Aug chip export data), SoftwareOne [SWON.CH] -1.0% (H1 results, cuts rev guidance, notes 'going private' talks are progressing), Sonova [SOON.CH] -3.0% (analyst downgrade).

Speakers

- Hungary Econ Min Nagy stated that saw 2024 GDP growth at ~2% (prior view was between 2-3%). Cautioned that the central bank was too focused on inflation.

- Iceland Central Bank Policy Statement noted that the current monetary policy stance was sufficient to bring inflation back to target. Persistent inflation and strong domestic demand called for caution. Inflation had risen marginally since last policy meeting and underlying inflation remains high; price increases were widespread. Inflation expectations remained above target and largely unchanged since last meeting.

- Thailand Central Bank Policy Statement noted that the vote to keep policy steady was not unanimous (6-1). Dissenter again sought 25bps cut. Current rate was conducive for safeguarding stability; consistent with economy. To assess both economy and inflation for monetary policy outlook. Domestic economy likely to expand as forecasted; exports slowly recovering. Headline Inflation to return to target in late 2024 and could be below forecast.

- Indonesia Central Bank Policy Statement noted that the decision to keep policy steady was consistent with pro-stability monetary stance. Steady policy stance to support IDR currency (Rupiah) and ensure inflation remains within target range.

Currencies/fixed income

- USD consolidated its recent losses as market participants awaited US Bureau of Labor Statistics announcement regard preliminary benchmark revisions to Nonfarm Payroll data. Session will see the release of FOMC July minutes and hints of the potential rate path outlook.

- EUR/USD holding above the 1.11 level for a 2nd day.

- GBP/USD just off fresh 1-year highs and at 1.3020 by mid-session.

- USD/JPY rebounded slight to retest the 146 area.

Economic data

- (NL) Netherlands Aug Consumer Confidence: -24 v -24 prior.

- (UK) July Public Finances (PSNCR): £19.2B v £6.5B prior; PSNB (ex-banking groups): £3.1B v £1.5Be; Net Borrowing: £2.2B v £0.4Be; Central Government NCR: £29.6B v £14.5B prior.

- (CH) Swiss July M3 Money Supply Y/Y: 0.3% v 0.2% prior.

- (TH) Thailand Central Bank (BoT) left the Benchmark Interest Rate unchanged at 2.50% (as expected) for its 5th straight pause in the current tightening cycle.

- (ID) Indonesia Central Bank (BI) left BI Rate unchanged at 6.25% (as expected) for its 4th straight pause in the current tightening cycle.

- (ZA) South Africa July CPI M/M: 0.4% v 0.7%e; Y/Y: 4.6% v 4.8%e (13th month within target range).

- (ZA) South Africa July CPI Core M/M: 0.3% v 0.4%e; Y/Y: 4.3% v 4.5%e.

- (PL) Poland July Sold Industrial Output M/M: -3.3% v -0.6%e; Y/Y: 4.9% v 7.5%e.

- (PL) Poland July Employment M/M: 0.1% v 0.0%e; Y/Y: -0.4% v -0.4%e.

- (PL) Poland July Average Gross Wages M/M: 1.6% v 2.1%e; Y/Y: 10.6% v 10.8%e.

- (PL) Poland July PPI M/M: 0.0% v 0.2%e; Y/Y: -4.8% v -5.0%e.

- (IS) Iceland Central Bank (Sedibanki) left 7-day Term Deposit Rate unchanged at 9.25% (as expected) for its 6th straight pause in the current tightening cycle.

Fixed income issuance

- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK2.65B in 2033 and 2034 DGB bonds.

- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 3-month Bills; Avg Yield: 3.2221% v 3.2723% prior; Bid-to-cover: 2.76x v 3.47x prior.

- (NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2032 and 2039 Bonds.

- (UK) DMO sold £3.75B in 3.75% Mar 2027 Gilts; Avg Yield: 4.068% v 4.441% prior; bid-to-cover: 3.33x v 3.26x prior; Tail: 0.3bps v 0.4bps prior.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 6-month Bills; Avg Yield: 3.09% v 3.30% prior; Bid to cover: 1.64x v 2.39x prior.

Looking ahead

- (IL) Israel Aug 12-month CPI Forecast: No est v 3.0% prior.

- (AR) Argentina July Leading Indicator: No est v -4.1% prior.

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

- 05:30 (DE) Germany to sell €4.5B in 2.60% Aug 2034 bunds.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (PL) Poland to sell bonds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (IL) Israel Jun Manufacturing Production M/M: No est v 1.4% prior.

- 06:00 (CZ) Czech Republic to sell combined CZK8.5B in 2033, 2036 and 2057 bonds.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Aug 16th: No est v16.8 % prior.

- 07:00 (IT) ECB’s Panetta (Italy).

- 08:00 (MX) Mexico Jun Mexico Gold Production: No est v 5.46K kg prior; Silver Production: No est v 344.5K kg prior; Copper Production: No est v 37.5K tons prior.

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

- 08:30 (CA) Canada July Industrial Product Price M/M: -0.3%e v 0.0% prior; Raw Materials Price Index M/M: -0.8%e v -1.4% prior.

- 10:00 (US) BLS annual payroll revisions.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (RU) Russia July PPI M/M: No est v -1.5% prior; Y/Y: No est v 14.0% prior.

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 13:00 (US) Treasury to sell 20-Year Bonds.

- 14:00 (US) FOMC July Minutes.

- 15:00 (AR) Argentina Jun Economic Activity Index (Monthly GDP) M/M: 0.4%e v 1.3% prior; Y/Y: -1.6%e v +2.3% prior.

- 19:00 (AU) Australia Aug Preliminary Manufacturing PMI: No est v 47.5 prior; Services PMI: No est v 50.4 prior; Composite PMI: No est v 49.9 prior.

- 20:30 (JP) Japan Aug Preliminary Manufacturing PMI: No est v 49.1 prior; Services PMI: No est v 53.7 prior; Composite PMI: No est v 52.5 prior.

- 21:00 (KR) Bank of Korea (BoK) Interest Rate Decision: Expected to leave 7-day Repo Rate unchanged at 3.50%.

- 21:00 (CN) China July Swift Global Payments (CNY): No est v 4.6% prior.

- 22:00 (NZ) New Zealand to sell bonds.

- 23:00 (ID) Indonesia Q2 Current Account Balance: -$2.1Be v -$2.2B prior.