Spain July Net Unemployment falls for the 6th straight month

EU Market Update: Spain July Net Unemployment falls for the 6th straight month but clear slowdown in its pace

Notes/Observations

- China July Non-Manufacturing PMI: 54.2 v 55.0 prior (6-month low; 2nd consecutive decline)

- Australia Jun Retail sales M/M: 0.6% v 0.3%e (5-month high)

- Banco Espirito Santo was granted a €4.9B bailout by the Portuguese central bank

- Spain July Net Unemployment falls for the 6th straight month but clear slowdown in its pace

Key Economic Data in session

- (ID) Indonesia Jun Trade Balance: -$0.3B v -$0.4Be; Exports Y/Y: -1.8%e; Imports Y/Y: -4.1%e

- (ID) Indonesia July CPI M/M: 0.9% v 0.8%e; Y/Y: 4.5% v 4.4%e; CPI Core Y/Y: 4.6% v 4.6%e

- (ES) Spain July Net Unemployment M/M: -29.8K v -111.9Ke ; 6th straight monthly decline

- (TR) Turkey July CPI M/M: 0.5% v 0.1%e; Y/Y: 9.3% v 8.9%e; CPI Core Index Y/Y: 9.8% v 9.4%e

- (TR) Turkey July PPI M/M: 0.7% v 0.1% prior; Y/Y: 9.5% v 9.8% prior

- (CH) SNB Sight Deposits for week ended Aug 1st (CHF): 309.9B v 310.3B prior

- (EU) ECB €45M borrowed in overnight loan facility vs. €189M prior; €44.1B parked in deposit facility vs. €20.2B prior - Daily Eurosystem Liquidity Conditions

- (CH) Swiss July PMI Manufacturing: 54.3 v 53.1e

- (EU) Euro Zone Aug Sentix Investor Confidence: 2.7 v 9.0e

- (UK) July Construction PMI: 62.4 v 62.0e; 15th month of expansion

- (EU) Euro Zone Jun PPI M/M: 0.1% v 0.0%e; Y/Y: -0.8% v -1.0%e

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities***

Indices [Stoxx50 +0.2%, FTSE 100 flat at 6,683, DAX -0.3% at 9,179, CAC-40 +0.4% at 4,220, FTSE MIB +0.3% at 20,413, SMI -0.9% at 8,337, S&P 500 Futures +0.3% at 1,923]

- Market Focal Points/Key Themes: Equity markets open slightly higher following Friday's losses as Banco Espirito Santo remains in focus, European banks open mostly higher amid the public bailout of BES, HSBC H1 profits above in line amid lower impairment charges (revenues decline)

By Sector

- Industrials [PostNL PNL.NL +1% (reaffirmed outlook)]

- Consumer Discretionary [Hugo Boss BOSS.DE -0.9% (share placement speculation)]

- Stoxx50 sectors [Utilities +1%, Consumer Cyclical +0.5%, Energy +0.3%, Telecom +0.1%, Financials +0.1%, Industrials flat; Technology -0.6%, Basic Materials -0.2%, Consumer Non-Cyclical -0.1%]

Speakers:

- ECB's Draghi: Communication is a core element of central bank policy but a constant challenge

- Israel Central Bank: Sees no major imbalances despite low interest rates

- Russia Industry Min Manturov stated that he saw recovery trend in May-July period; Industral Production could grow between 1.0-2.0% vs. 1.0% official target

- China NDRC (planning Agency) reiterated govt view to keep economic policies stable and speed up reforms in key areas. It would adjust port fees to promote stable trade growth

Currencies/Fixed Income:

- FX markets were steady in quiet trade on Monday. Thin August market conditions has historically seen 'erratic price action'. EUR/USD pair was holding above the 1.34 handle despite the bailout of Portugal's Banco Espirito Santo and rekindling of memories of the Euro Zone's banking crisis. The upcoming ECB drate decision on Thursday is expected to have no surprices as the central bank remains in a 'wait-and-see' mode following the June measures.

- The GBP/USD was slightly bid after Construction PMI slightly beat expectations

- USD/JPY was consolidating its recent gains in the post payroll environment and off the 3-month highs of 103.09 set last week

Political/In the Papers:

- (DE) Germany's IFO institute: German Q2 GDP to shrink toward zero due to Ukraine crisis and sanctions on Russia

- (GR) Moody's raises Greece govt bond rating two notches to Caa1 from Caa3 (from Aug 1st)

- (IT) Italy PM Renzi: Recently lowered growth outlook has not led to planning any new extraordinary budget measures

- (PT)Banco Espirito Santo [BES.PT]: Bank of Portugal Chief: Confirms Banco Espirito Santo to be recapitalized through bank resolution fund

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected cut Interest Rates by 25bps to 3.25%

- 06:00 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-Month and 6-Month Bills

- 06:00 (TR) Turkey to sell 2019 and 2021 bonds

- 06:45 (US) Daily Libor Fixing

- 07:30 (BR) Brazil Central Bank Weekly Economists Survey

- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming 2020 and 2024 auction

- 08:00 (RO) Romania Central Bank Gov Isarescu post rate decision press conference

- 08:15 (US) Baltic Dry Bulk Index

- 08:50 (FR) France Debt Agency (AFT) to sell combined €6.5-7.7B in 3-month, 6-month and 12-month Bills

- 09:30 (SG) Singapore July Purchasing Managers Index: 50.6e v 50.5 prior; Electronics Sector Index: 50.7e v 50.7 prior

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 09:45 (US) July ISM New York: No est v 60.5 prior

-10:00 (DK) Denmark July Foreign Reserves (DKK): No est v 438.2B prior

- 11:00 (US) Fed to purchase $0.95-1.15B in bonds

- 11:30 (US) Treasury to sell $53b in 3-Month and 6-Month Bills

- 16:00 (US) Crop Progress Winter Report

- 17:00 (CO) Colombia July PPI M/M: No est v -0.3% prior; Y/Y: No est v 2.5% prior

- 17:00 (CO) Colombia Jun Exports: $4.8Be v $5.5B prior

- 21:30 (AU) Australia Jun Trade Balance: -A$2.0Be v -A$1.9B prior

- 21:35 (JP) Japan July Services PMI: No est v 49.0 prior

- 21:45 (CN) China HSBC Services PMI: No est v 53.1 prior

- (AU) RBA Interest Rate Decision on Tuesday

- (MX) Mexico Senate plans to debate energy bills (**passed by lower house last week)