BoJ, Fed, BoE and Friday Payrolls deemed more important

EU mid-market update: Traders sit on hands despite collection of economic data and continued earnings; BoJ, Fed, BoE and Friday payrolls deemed more important.

Notes/observations

- Data driven EU session of preliminary CPI and GDP readings failed to move any needles ahead of more important catalysts later in week, with Fed decision and US payrolls on Wed and Fri respectively. German Q2 GDP QoQ declined -0.1%, lagging behind Euro Zone, Italy, Spain and France, which saw slight growth.

- Analysts point out to China Politburo meeting lacked more detailed reform plans and property measures; China announced it plans to shift policy focus to consumption boost.

- Delta Air said to have hired law firm to seek compensation from Microsoft and Crowdstrike due to global IT outage outage.

- Earnings season stays in top gear with BP and Standard Chartered reporting Q2, BP trades higher after improved quarterly profit and raised dividend, with buyback pace maintained. Standard Chartered raised guidance for FY24-26 and announced largest ever buyback at $1.5B. Drinks maker Diageo underperforms after weakness in organic volumes, particularly in LATAM.

- Upcoming earnings before open: Sofi, PayPal, Pfizer, P&G, Corning, Merck, JetBlue.

- Notable earnings after close: AMD, Microsoft, Starbucks, Pinterest, First Solar, Lemonade, Electronic Arts, GeneDx.

- Asia closed mixed with Hang Seng underperforming -1.4%. EU indices are -0.4% to +0.3%. US futures are +0.1-0.2%. Gold +0.2%, DXY 0.0%; Commodity: Brent -0.2%, WTI -0.2%; Crypto: BTC -3.8%, ETH -1.6%.

Asia

- Japan Jun Jobless Rate: 2.5% v 2.6%e.

- Australia Jun Building Approvals M/M: -6.5% v -2.5%e.

- South Korea Jun Retail Sales Y/Y: 11.1% v 8.8% prior.

Europe

- UK July BRC Shop Price Index Y/Y: 0.2% v 0.2% prior.

- UK Chancellor of the Exchequer (Fin Min) Reeves: Total pressures on the budgets are an additional £35B with a £22B short fall in 2024; If left unaddressed this would result in a 25% budget increase in deficit in 2024; Plans to cut spending projects worth a total of £5.5B in 2024/2025.

Americas

- Treasury Quarterly Funding Estimates noted that it would borrow $740B in the July-Sept period compared to $760Be and blow the $847B prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.16% at 512.60, FTSE -0.49% at 8,251.77, DAX +0.28% at 18,377.95, CAC-40 +0.27% at 7,464.01, IBEX-35 +0.23% at 11,143.00, FTSE MIB +0.29% at 33,738.00, SMI +0.11% at 12,218.31, S&P 500 Futures +0.19%].

Market focal points/key themes: European indices open generally higher and maintained the trend through the early part the of the session; among sectors leading the way higher are technology and consumer discretionary; among lagging sectors are energy and materials; drop in crude prices seen weighing on FTSE 100 and oil & gas subsector; Basler acquires remaining interest in i2S; focus on German CPI later in the day; earnings expected in the upcoming US session include Leonardo, Microsoft, Procter & Gamble and Merck.

Equities

- Consumer discretionary: Diageo [DGE.UK] -8.0% (FY results, volumes down), Ocado [OCDO.UK] -5.5% (convertible offering), Poste Italiane [PST.IT] +3.5% (earnings).

- Energy: BP [BP.UK] +2.5% (Q2 results, guides Q3 upstream production lower, maintains buyback pace) - Financials: Standard Chartered [STAN.UK] +5.5% (Q2 results, announces largest ever buyback), Raiffeisen Bank [RBI.AT] +6.5% (Q2 results, raises guidance; accelerates Russia exit), St. James’s Place [STJ.UK] +18.0% (earnings).

- Industrials: Croda International [CRDA.UK] -5.0% (earnings), Heidelberg Materials [HEI.DE] -1.5% (Q2 results).

- Materials: Covestro [1COV.DE] +1.0% (Q2 results, cuts outlook; talks with Adnoc), DSM-firmenich [DSFIR.NL] +2.5% (H1 results, raises guidance), Clariant [CLN.CH] -7.0% (Q2 results), Glencore [GLEN.UK] -1.0% (H1 production results).

Speakers

- France Fin Min Le Maire commented that better than expected Q2 GDP growth could have a positive impact on public deficit.

- Bank of Korea (BOK) July Minutes: One member said risks from policy loosening have grown.

- China Pres Xi stated that the country could overcome challenges facing its economy; To enhance positive trend of economic recovery.

- US Sec State Blinken stated that would provide $500M of military aid to Philippines; Concerned about China's actions in South China Sea.

Currencies/fixed income

- Focus was various EU growth and inflation data which saw inflation hold roughly steady and staying above ECB target while German GDP contracted.

- EUR/USD continue to hold above the 1.08 level. Despite soft German Economic data. The French and Italian GDP reading proved to be of better stock.

- GBP/USD stay off recent 3-week lows to linger around 1.2850 area.

- USD/JPY probing the 155 neighborhood ahead of the BOJ rate decision on Wed. Consensus is that BOJ would keep its policy steady. However there is an outside chance of a surprise hike possible due to recent hawkish BOJ rhetoric based on calls to address yen currency weakness.

Economic data

- (NL) Netherlands July Producer Confidence: -2.7 v -2.4 prior.

- (FI) Finland Jun Retail Sales Volume Y/Y: 0.1 v 1.2% prior.

- (FR) France Q2 Preliminary GDP Q/Q: 0.3% v 0.2%e; Y/Y: 1.1% v 0.7%e.

- (FR) France Jun Consumer Spending M/M: -0.5% v -0.2%e; Y/Y: -1.0% v -0.2%e.

- (SE) Sweden May Non-Manual Worker Wages Y/Y: 4.2% v 4.7% prior.

- (HU) Hungary Q2 Preliminary GDP Q/Q: -0.2% v 0.5%e; Y/Y: 1.5% v 2.2%e.

- (ES) Spain Q2 Preliminary GDP Q/Q: 0.8% v 0.5%e; Y/Y: 2.9% v 2.5%e.

- (ES) Spain July Preliminary CPI M/M: -0.5% v -0.3%e; Y/Y: 2.8% v 3.0%e.

- (ES) Spain July Preliminary CPI EU Harmonized M/M: -0.7% v -0.3%e; Y/Y: 2.9% v 3.3%e; Core Y/Y: 2.8% v 2.8%e.

- (CH) Swiss July KOF Leading Indicator: 101.0 v 102.5e.

- (AT) Austria Q2 GDP Q/Q: 0.0% v 0.2% prior; Y/Y: 0.0% v -1.3% prior.

- (AT) Austria Jun PPI M/M: 0.2% v 0.1% prior; Y/Y:-2.5 % v -3.5% prior.

- (SE) Sweden July Consumer Confidence: 96.6 v 93.7 prior; Manufacturing Confidence : 97.0 v 99.2 prior; Economic Tendency Survey: 95.0 v 96.4 prior.

- (CZ) Czech Q2 Advance GDP Q/Q: 0.3% v 0.5%e; Y/Y: 0.4% v 0.6%e.

- (TR) Turkey July Economic Confidence: 94.4 v 95.8 prior.

- (DE) Germany Q2 Preliminary GDP Q/Q: -0.1% v +0.1%e; Y/Y: -0.1% v 0.0%e; GDP NSA (unadj) Y/Y: 0.3% v 0.3%e.

- (DE) Germany July CPI North Rhine Westphalia M/M: 0.3% v 0.1% prior; Y/Y: 2.3% v 2.2% prior.

- (DE) Germany July CPI Hesse M/M: 0.3% v 0.1% prior; Y/Y: 1.8% v 1.8% prior.

- (DE) Germany July CPI Bavaria M/M: 0.3% v 0.2% prior; Y/Y: 2.5% v 2.7% prior.

- (DE) Germany July CPI Brandenburg M/M: 0.3% v 0.1% prior; Y/Y: 2.6% v 2.6% prior.

- (DE) Germany July CPI Saxony M/M: 0.6% v 0.1% prior; Y/Y: 3.1% v 2.8% prior.

- (DE) Germany July CPI Baden Wuerttemberg M/M: 0.3% v 0.1% prior; Y/Y: 2.1% v 1.9% prior.

- (IT) Italy Q2 Preliminary GDP Q/Q: 0.2% v 0.2%e; Y/Y: 0.9% v 1.0%e.

- (PT) Portugal Q2 Preliminary GDP Q/Q: 0.1% v 0.3%e; Y/Y: 1.5% v 1.5% prior.

- (PT) Portugal July Consumer Confidence: -15.4 v -17.2 prior; Economic Climate Indicator: 1.8 v 1.9 prior.

- (EU) Euro Zone Q2 Advance GDP Q/Q: 0.3% v 0.2%e; Y/Y: 0.6% v 0.5%e.

- (EU) Euro Zone July Economic Confidence: 95.8 v 95.2e; Industrial Confidence: -10.5 v -10.9e; Services Confidence: 4.8 v 5.9e; Consumer Confidence (final): -13.0 v -13.0 prelim.

Fixed income issuance

- (ID) Indonesia sold total IDR8.0T vs. IDR8.0T target in Islamic bills and bonds (sukuk).

- (DK) Denmark sold total DKK0M (nil) in 1-month and 3-month bills; rejected all bids.

- (UK) DMO sold £3.75B in new 4.25% July 2034 Gilts; Avg Yield: 4.082% v 4.371% prior; bid-to-cover: 2.93x v 3.10x prior; Tail: 0.5bps v 1.0bps prior.

- (IT) Italy Debt Agency (Tesoro) sold total €7.75B vs. €6.5-7.75B indicated range in 5-year and 10-year BTP Bonds (3 tranches).

- Sold €1.5B vs. €1.25-1.5B indicated range in 4.10% Feb 2029 BTP bonds; Avg Yield: 3.14% v 3.61% prior; Bid-to-cover: 1.58x v 1.45x prior (Nov 29th 2023).

- Sold €1.75B vs. €1.25-1.75B indicated range in 3.35% July 2029 BTP bonds; Avg Yield: 3.18% v 3.55% prior; Bid-to-cover: 1.55x v 1.42x prior (Jun 27th 2024).

- Sold €4.5B vs. €4.0-4.5B indicated range in new 3.85% Feb 2035 BTP bonds; Avg Yield: 3.76% 4.01% prior; bid-to-cover: 1.42x v 1.44x prior.

- (IT) Italy Debt Agency (Tesoro) sold €1.5B vs. €1.0-1.5B indicated in Apr 2032 Floating Rate Note (CCTeu); Real Yield: % v 5.04% prior; Bid-to-cover: x v 1.61x prior.

Looking ahead

- (BE) Belgium July CPI M/M: No est v 0.2% prior; Y/Y: No est v 3.7% prior.

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

- 05:30 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €4.39 with 31 bids recd).

- 06:00 (IE) Ireland July Preliminary CPI EU Harmonized Y/Y: No est v 1.5% prior.

- 06:00 (IE) Ireland Jun Retail Sales Volume M/M: No est v -0.6% prior; Y/Y: No est v -1.0% prior.

- 07:00 (BR) Brazil July FGV Inflation IGPM M/M: 0.5%e v 0.8% prior; Y/Y: 3.7%e v 2.5% prior.

- 08:00 (DE) Germany July Preliminary CPI M/M: 0.3%e v 0.1% prior; Y/Y: 2.2%e v 2.2% prior.

- 08:00 (DE) Germany July Preliminary CPI EU Harmonized M/M: 0.4%e v 0.2% prior; Y/Y: 2.5%e v 2.5% prior.

- 08:00 (ZA) South Africa Jun Monthly Budget Balance (ZAR): +43.7Be v -12.8B prior.

- 08:00 (MX) Mexico Q2 Preliminary GDP Q/Q: 0.4%e v 0.3% prior; Y/Y: 2.4%e v 1.6% prior.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (US) May FHFA House Price Index M/M: 0.3%e v 0.2% prior.

- 09:00 (US) May S&P CoreLogic House Price Index (20-city) M/M: 0.30%e v 0.38% prior; Y/Y: 6.31%e v 7.20% prior; House Price Index (overall) Y/Y: No est v 6.29% prior.

- 10:00 (US) Jun JOLTS Job Openings: 8.000Me v 8.140M prior.

- 10:00 (US) July Consumer Confidence: 99.7e v 100.4 prior.

- 10:30 (US) July Dallas Fed Services Activity: No est v -4.1 prior.

- 10:30 (CA) Canada to sell 1-month, 3-month, 6-month and 12-month bills.

- 13:30 (BR) Brazil Jun Total Formal Job Creation: 165.0Ke v 131.8K prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:45 (NZ) New Zealand Jun Building Permits M/M: No est v -1.7% prior.

- 19:00 (KR) South Korea Jun Industrial Production M/M: +0.8%e v -1.2% prior; Y/Y: 2.8%e v 3.5% prior; Cyclical Leading Index Change: No est v -0.1% prior.

- 19:01 (UK) July Lloyds Business Barometer: No est v 41 prior; Own Price Expectations: No est v 53 prior.

- 19:50 (JP) Japan Jun Retail Sales M/M: 0.2%e v 1.6% prior (revised from 1.7%); Y/Y: 3.2%e v 2.8% prior (revised from 3.0%); Dept. Store, Supermarket Sales Y/Y: No est v 4.1% prior.

- 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: -4.5%e v 3.6% prior; Y/Y: -6.4%e v 1.1% prior.

- 21:00 (NZ) New Zealand July ANZ Business Confidence: No est v 6.1 prior; Activity Outlook: No est v 12.2 prior.

- 21:30 (CN) China July Manufacturing PMI (Govt Official): 49.4e v 49.5 prior; Non-manufacturing PMI: 50.2e v 50.5 prior; Composite PMI: No est v 50.5 prior.

- 21:30 (AU) Australia Jun CPI Y/Y: 3.7%e v 4.0% prior; CPI Trimmed Mean Y/Y: No est v 4.4% prior.

- 21:30 (AU) Australia Q2 CPI Q/Q: 1.0%e v 1.0% prior; Y/Y: 3.8%e v 3.6% prior.

- 21:30 (AU) Australia Q2 CPI Trimmed Mean Q/Q: 1.0%e v 1.0% prior; Y/Y: 4.0%e v 4.0% prior.

- 21:30 (AU) Australia Q2 CPI Weighted Median Q/Q: 1.0%e v 1.1% prior; Y/Y: 4.3%e v 4.4% prior.

- 21:30 (AU) Australia Jun Retail Sales M/M: 0.2%e v 0.6% prior.

- 21:30 (AU) Australia Q2 Retail Sales (ex-inflation) Q/Q: -0.2%e v -0.4% prior.

- 21:30 (AU) Australia Jun Private Sector Credit M/M: 0.4%e v 0.4% prior; Y/Y: No est v 5.2% prior.

- 22:00 (SG) Singapore Jun M2 Money Supply Y/Y: No est v 2.0% prior; M1 Money Supply Y/Y: No est v 5.1% prior.

- 22:30 (SG) Singapore Jun Unemployment Rate : 2.1%e v 2.1% prior.

- (JP) Bank of Japan (BOJ) Interest Rate Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at between 0.0-0.1%.