Fed in focus at upcoming Jackson Hole conference later this week

Notes/Observations

Overnight

Asia:

- BOJ Gov Kuroda reiterated view of having room to take rates further into negative territory with sufficient chance of more easing in Sept

- Urjit Patel was named as the new RBI Governor to replace Rajan when term ends in early Sept

Europe:

- London mayor Sadiq Khan said to back Owen Smith to replace Jeremy Corbyn as Labour leader

- EU leaders expected to meet and discuss post Brexit plan (German Chancellor Merkel would meet with 16 EU leaders during week of Aug 22nd)

US:

- Fed Vice Chair Fischer signals 2016 rate hike as economy nears goals on employment and inflation

Energy:

- Iraq said to raise oil shipments by 5% over the next few days

Economic data

- (JP) Japan July Supermarket Sales Y/Y: +0.2% v -0.5% prior

- (JP) Japan July Convenience Store Sales Y/Y: 0.3% v 0.8% prior

- (HK) Hong Kong July CPI Composite Y/Y: 2.3% v 2.3%e

**Fixed Income Issuance:

- (NO) Norway sold NOK4.0B vs. NOK4.0B indicated in 4-month Bills; Yield: 0.62% v 0.75%; bid-to-cover: 1.72x v 3.26x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Index snapshot (as of 10:00 GMT)**

Indices [Stoxx50 +0.8% at 2,993, FTSE flat at 6,860, DAX +0.8% at 10,631, CAC-40 +0.6% at 4,429, IBEX-35 +0.7% at 8,506, FTSE MIB +1.2% at 16,507, SMI +0.7% at 8,187, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading higher in the morning session; Very quiet session on the corporate earnings front; Homebuilders leading the gains in the FTSE 100, financial stocks also trading notably higher; Commodity and mining stocks trading notably lower in the index on the back of lower intraday oil prices.

Equities (as of 09:50 GMT)

- Consumer Discretionary: [Teleperformance RCF.FR +6.4% (Acquires LanguageLine Solutions LLC for $1.52B)]

- Energy: [Fred Olsen Energy FOE.NO +19.3% (Reportedly resolved dispute with Bollsta, HHI by commercial agreement)]

- Healthcare: [Getinge AB GETIB.SE -3.5% (Board replaces President/CEO)]

- Industrials: [Syngenta SYNN.CH +11.1% (Receives clearance from the Committee on Foreign Investment in the US with ChemChina)]

- Materials: [Kingspan SGP.UK +11.3% (H1 results)]

- Telecom: [Ascom Holding ASCN.CH +9.1% (Planning to sell network testing unit to Infovista; to receive $30M in cash and remainder $15M in form of sub vendor loan)]

Speakers

- Poland Finance Ministry forecasted its 2017 budget deficit was seen between PLN59.0-59.5B making the deficit to GDP ratio at 2.9% vs. 2.6% y/y. The budget forecasted 2017 GDP growth at 3.6% vs. 3.4% prior

- China's State Council reiterates view to maintain ample liquidity in banking system. To effectively lower companies funding costs and reiterated view of CNY500B annual tax cut via reform. To contain rise in labor costs and greatly increase corporate profitability over three-year period. Supported debt-to-equity agreements among companies

Currencies

- The USD was firmer in quiet trade on Monday as hawkish Fed speak on potential rate hike in 2016 thus highlighting the policy divergence trade.

- TheUSD/JPY pair as additionally supported by dovish BOJ commentary that there was technically room to take rates further into negative territory. USD/JPY pair trying to regain a foothold above the 101 level but yet to find the momentum to sustain the direction.

**Fixed Income:

- Bund futures trade at 167.11 up 14 ticks in thin trade in what is expected to be a low volume week. Continued upside sees 167.32 followed by 167.86 high. A break above targets resistance at 168.02-06 followed by a run to 168.86 post brexit highs. A reversal looks to test 166.65 with a move back below testing 166.36/38 base.

- Gilt futures trade at 132.05 up 24 ticks continuing to bounce from 131.65 double bottom. A break of 131.65 support targets 131.28 then 130.98. A continued move higher targets 132.36 followed by 132.97 contract high. Short Sterling futures trade flat in lackluster trade with Jun17Jun18 trading 2bp choice.

- Mondays excess liquidity report showed Friday's excess liquidity rising to €982.9B a rise of €11.3B from €971.6B prior. This was primarily due to AFs and MonPol portfolios falling to negative €573.9. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to €26M from a prior €2M.

- Corporate issuance saw just under $10B come to market last week marking a slowdown from the prior week putting the month's issuance at $99.4B, and YTD at $951.7B 1.5% ahead of 2015. For the remainder of the month analyst estimate some $5-6B come to market as full summer mode takes effect. For September analyst estimate some $110-120B come to market with the higher estimates attributed to talk issuers pulling forward their issuance.

Looking Ahead

- (UK) Ballot Papers Sent Out in Labour Leadership Election

- (PT) Portugal Jun Current Account: No est v -€0.9B prior

- (AR) Argentina July Budget Balance (ARS): No est v -45.1B prior

- (PE) Peru Q2 GDP Y/Y: 3.7%e v 4.4% prior

- 05:30 (DE) Germany to sell €1.5B in 12-month BuBills

- 06:00 (RO) Romania to sell 2.25% 2020 Bonds

- 06:00 (IL) Israel July Unemployment Rate: No est v 4.8% prior

- 06:00(IE) Ireland July PPI M/M: No est v 0.6% prior; Y/Y: No est v -1.3% prior

- 06:45 (US) Daily Libor Fixing

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

- 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) July Chicago Fed National Activity Index: 0.20e v 0.16 prior

- 08:30 (CA) Canada Jun Wholesale Trade Sales M/M: 0.1%e v 1.8% prior

- 08:50 (FR) France Debt Agency (AFT) to sell €3.8-5.0B in 3-month, 6-month and 12-month Bills

- 09:00 (MX) Mexico Q2 Final GDP Q/Q: -0.3%e v -0.3% prelim; Y/Y: 2.4%e v 2.4% prelim, GDP Nominal Y/Y: 5.2%e v 5.3% prior

- 09:00 (MX) Mexico Jun IGAE Economic Activity (Monthly GDP) Y/Y: 1.9%e v 2.2% prior

- 09:30 (EU) ECB announces Covered-Bond Purchases

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

- 09:45 (UK) BOE to buy £1.17B in APF Gilt purchase operation

- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills

- 16:00 (US) Weekly Crop Progress Report

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 117.6 prior

- 23:00 (TH) Thailand Central bank to sell combined THB80B in 1-month, 3-month and 6-month Bills

- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills

- 23:45 (JP) Japan to sell 20-Year JGB Bonds