Flood of earnings ahead of Fed decision

EU mid-market update: Flood of earnings ahead of Fed decision; Massive 8.8 magnitude earthquake on Russia coastline has fortunate epicenter to avoid catastrophic damage; Tech investors on watch for Meta's and Microsoft's Capex outlook.

Notes/observations

- FOMC meeting is expected to hold rates steady despite questionable GDP estimates and conflicting growth signals, with Chair Powell likely emphasizing Fed independence while avoiding clear guidance on timing future cuts. Meanwhile, WSJ’s Timiraos reports that Fed officials are now split into three camps over what data should trigger easing, with Governors Waller and Bowman prepared to dissent in favor of immediate rate cuts - setting up what could be the first multi-dissent meeting since 2019.

- Dovish dissents by Fed Governors—rare at just 14 since 1987—often precede policy shifts, with markets front-running rate cuts as 10Y yields typically fall into FOMC day and further decline if dovish momentum or data persists.

- On trade front, US-China talks in Stockholm ended with no breakthrough, though discussions on rare earths flow deemed constructive. Tensions remain over China’s purchase of sanctioned Russian crude; Bessent expects another meeting in ~90 days.

- France seeks exemptions for wine and spirits in EU-US trade deal, adding confusion, joint statement due Friday.

- Traders recirculating UPS comments from yesterday’s earnings call: "If you're an SMB customer sourcing from China alone, you could see that your cost could increase by 55%; And they're now at a point where they need to replenish their inventories, but some SMB customers are finding that credit conditions have tightened up a bit, limiting their access to capital compared to prior years".

- For data, German retail sales, French Q2 GDP and spending beat; Spanish CPI accelerated in July.

- 8.8 mag earthquake off Russia's Kamchatka Peninsula caused limited damage due to its remote location, sparse population, and shallow depth at 19.3km, which directed much of the energy into triggering tsunamis rather than destruction on land. Tsunamis were also not too large due to vast distance to places like Japan, Hawaii and US mainland.

- Key tech investors’ focus tonight will be if Meta and Microsoft join Google from last week by raising Capex outlook sharply higher.

- Key EU earnings from: UBS, Santander, HSBC, CaixaBank, Aberdeen, RBI; Kering, Hermes, L’Oreal, Adidas, Porsche, Aston Martin, Mercedes-Benz, GSK, Siemens Healthineers, Grifols, JDE Peet’s, Kerry, Danone; Logitech, Just Eat, Capgemini, Sage; Wolters Kluwer, Securitas, Nexans, Vopak, BAE, Taylor Wimpey, Telefonica, BASF and Rio Tinto.

- Asia closed mixed with Hang Seng underperforming -1.4%. EU indices -0.4% to +0.5%. US futures 0.0% to +0.1%. Gold +0.2%, DXY -0.1%; Commodity: Brent -0.5%, WTI -0.4%; Crypto: BTC -0.3%, ETH -1.4%.

Asia

- Monetary Authority of Singapore (MAS) quarterly Monetary Policy Statement maintained its current policy stance No change to width of currency band and level at which it is centered; Slope of S$NEER band maintained.

- New Zealand July ANZ Business Confidence: 47.8 v 46.3 prior.

- Australia Q2 CPI Q/Q: 0.7% v 0.8%e; Y/Y: 2.1% v 2.2%e (lowest inflation rate since Mar 2021).

- China Finance Min Lan: China will make 'good use' of more proactive fiscal policies; will continue to boost consumption.

Americas

- An 8.8 mag earthquake in Kamchatka, Russia; a tsunami warning was issued for Japan & Hawaii (**Note: 8th largest-ever recorded earthquake and the strongest since the 9.1 mag Tohoku earthquake and tsunami of 2011 in Japan).

- Chile Central Bank (BccH) cut Overnight Rate Target by 25bps to 4.75% (as expected) to resume its easing.

Trade

- The 3rd round of China-US trade talks in Stockholm should be known later in the European day. Both sides had commented to media that the talks have been candid and in-depth, with a higher degree of rapport as relationships and understanding build. US understandably keen to keep rare earths and magnets flowing to US companies. Indications thus far from Tsy Sec Bessent that a further 90-day extension of the status quo was likely.

Energy

- Weekly API Crude Oil Inventories: +1.5M v -0.6M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.08% at 550.80, FTSE -0.16% at 9,121.45, DAX +0.14% at 24,233.09, CAC-40 +0.47% at 7,894.15, IBEX-35 -0.40% at 14,274.50, FTSE MIB +0.26% at 41,343.00, SMI +0.26% at 11,981.82, S&P 500 Futures +0.06%].

Market Focal Points/Key Themes: European indices open generally lower, but were trading mixed after the first hours of trading; mass of earnings giving markets plenty to digest; among better performing sectors are technology and energy; underperforming sectors include materials and financials; IPF in talks to be acquired by BasePoint; Schneider Electric to take remaining stake in India JV from Temasek; reportedly Italian government looking to break up Iveco with asset sales to Tata and Leonardo; Sandoz to acquire Jut-Evotec Biologics from Evotec; focus on US flash GDP and FOMC meeting; earnings expected in the upcoming Americas session include Leonardo, Vinci, Arubus, ARM and Microsoft.

Equities

- Consumer discretionary: Kering [KER.FR] +4.5% (earnings; price increases), Adidas [ADS.DE] -6.0% (earnings), Just Eat Takeaway [JET.UK] -0.5% (earnings), Hermes [RMS.FR] -4.0% (earnings; does not plan more price hikes for now).

- Financials: Munich Re [MIV2.DE] -1.0% (8.8 earthquake in Pacific; tsunami impact in Hawaii), HSBC [HSBA.UK] -4.0% (earnings; buyback), UBS [UBSG.CH] +1.0% (earnings), Santander [SAN.ES] -1.0% (earnings; buyback) - Healthcare: GSK [GSK.UK] +0.5% (earnings) - Industrials: Mercedes-Benz [MBG.DE] -1.0% (earnings) - Technology: Capgemini [CAP.FR] +0.5% (earnings; buyback).

-Materials: Rio Tinto [RIO.UK] -1.5% (earnings).

Speakers

- Germany govt approved the 2026 budget and medium-term financing plan.

- China holds politburo meeting noted to hold Fourth Plenum in October; To accelerate issuance and use of govt bonds. Economy faced many risks and challenges and macroeconomic policies must continue to strengthen.

- China Commerce Ministry (MOFCOM) reiterated stance that it welcomed US businesses to invest in China.

Currencies/fixed income

- Focus on key rate decisions from the US Fed, BOC and the BOJ (all expected to hold). Fed meeting may see multiple governors dissenting for the first time since 1993. Fed has come under political pressure to ease policy and some dissenters could favor cutting rates. Dealers noted that a Fed hold could intensify Trump's campaign against Powell. Session to see US Q2 GDP data and Treasury's quarterly refunding announcement

- EUR/USD at 1.1555 area and little changed despite a rash of GDP and inflation data.

- USD/JPY at 148.00 area ahead of Thus BOJ rate decision and updated Staff Projections.

Economic data

- (NL) Netherlands July Producer Confidence: -4.9 v -5.0 prior.

- (FR) France Q2 Preliminary GDP Q/Q: 0.3% v 0.1%e; Y/Y: 0.9% v 0.5%e.

- (FR) France Jun Consumer Spending M/M: +0.6% v -0.3%e; Y/Y: 0.9% v 0.0%e.

- (DE) Germany Jun Retail Sales M/M: 1.0% v 0.5%e; Y/Y: 2.4% v 4.6% prior.

- (SE) Sweden Jun Retail Sales M/M: 2.5% v -4.6% prior; Y/Y: +2.0% v -1.9% prior.

- (SE) Sweden May Non-Manual Workers Wages Y/Y: 2.8% v 2.5% prior.

- (FI) Finland May Final Trade Balance: €0.1B v €0.12B prelim.

- (DK) Denmark Jun Unemployment Rate: 2.5% v 2.5% prior; Gross Unemployment Rate:2.9 % v 2.9% prior.

- (HU) Hungary Q2 Preliminary GDP Q/Q: 0.4% v 0.3%e; Y/Y: 0.1% v 0.1%e.

- (HU) Hungary Jun Trade Balance: €1.0B v €0.5B prior.

- (ES) Spain July Preliminary CPI M/M: -0.4% v -0.4%e; Y/Y: 2.7% v 2.4%e ; CPI Core Y/Y:2.3 % v 2.2%e.

- (ES) Spain July Preliminary CPI EU Harmonized M/M: -0.4% v -0.4%e; Y/Y:2.7 % v 2.6%e.

- (CH) Swiss July KOF Leading Indicator: 101.1 v 97.9e.

- (AT) Austria Q2 GDP Q/Q: 0.1% v 0.1% prior; Y/Y: +0.1% v -0.4% prior.

- (AT) Austria Jun PPI M/M: -0.2% v -0.3% prior; Y/Y: -0.9% v -0.6% prior.

- (SE) Sweden July Consumer Confidence: 90.7 v 84.9 prior; Manufacturing Confidence : 96.3 v 98.7 prior; Economic Tendency Survey: 94.3 v 92.7 prior.

- (CZ) Czech Q2 Advance GDP Q/Q: 0.2% v 0.4%e; Y/Y: 2.4% v 2.5%e.

- (TR) Turkey Jun Unemployment Rate: 8.6% v 8.4% prior.

- (TR) Turkey July Economic Confidence: 96.3 v 96.7 prior.

- (NL) Netherlands Q2 Preliminary GDP Q/Q: 0.1% v 0.2%e; Y/Y: 1.5% v 2.2% prior.

- (DE) Germany Q2 Preliminary GDP Q/Q: -0.1% v -0.1%e; Y/Y: 0.0% v 0.1%e; GDP NSA (unadj) Y/Y: 0.4% v 0.2%e.

- (IT) Italy Q2 Preliminary GDP Q/Q: -0.1% v +0.1%e; Y/Y: 0.4% v 0.6%e.

- (CH) Swiss July UBS Expectations Survey: +2.4 v -2.1 prior.

- PT) Portugal Q2 Preliminary GDP Q/Q: +0.6% v -0.4% prior; Y/Y: 1.9% v 1.7% prior.

- (PT) Portugal July Consumer Confidence: -15.7 v -17.6 prior; Economic Climate Indicator: 2.8 v 2.6 prior.

- (EU) Euro Zone Q2 Advance GDP Q/Q: 0.1% v 0.0%e; Y/Y: 1.4% v 1.2%e.

- (EU) Euro Zone July Economic Confidence: 95.8 v 94.5e; Industrial Confidence: -10.4 v -11.1e; Services Confidence: 4.1 v 3.2e; Consumer Confidence (final): -14.7 v -14.7 advance.

- (IT) Italy May Industrial Sales M/M: -2.2% v +1.4% prior; Y/Y: -1.8% v +0.9% prior.

Fixed income issuance

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

- (UK) DMO sold £300M in 3.75% 2052 Gilts via tender; Avg Yield: 5.383%; bid-to-cover: 4.62x; Tails: bps.

- (IT) Italy Debt Agency (Tesoro) sold total €7.0B vs. €5.5-7.0B indicated range in 5-year and 10-year BTP Bonds (3 tranches).

- Sold €1.5B vs. €1.0-1.5B indicated range in 1.35% Apr 2030 BTP; Avg Yield: 2.60% v 1.44% prior; Bid-to-cover: 1.78x v 1.53x prior.

- Sold €2.0B vs. €1.5-2.0B indicated range in 2.7% Oct 2030 BTP bonds; Avg Yield: 2.80% v 2.74% prior; Bid-to-cover: x v 1.80x prior.

- Sold €3.5B vs. €3.0-3.5B indicated range in 3.60% Oct 2035 BTP bonds; Avg Yield: 3.52% v 3.48% prior; bid-to-cover: 1.59x v 1.51x prior.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in 2034 Floating Rate Notes (CCTeu); Real Yield: 3.13% v 3.16% prior; bid-to-cover 1.68x v 1.56x prior.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 3-month Bills; Avg Yield: % v 1.70% prior; Bid to cover: x v 2.53x prior.

Looking ahead

- (BE) Belgium July CPI M/M: No est v 0.4% prior; Y/Y: No est v 2.2% prior.

- (MX) Mexico Jun Public Balance (MXN): No est v -251.0B prior.

- (CO) Colombia Jun Retail Confidence: No est v 21 prior; Industrial Confidence: No est v 6.1 prior.

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

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

- 06:00 (IT) Italy Jun Hourly Wages M/M: No est v 0.4% prior; Y/Y: No est v 4.0% prior.

- 06:00 (IE) Ireland Jun Retail Sales Volume M/M: No est v -0.6% prior; Y/Y: No est v 1.6% prior.

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

- 06:00 (CZ) Czech Republic to sell combined CZK8.0B in 2030 and 2036 Bonds.

- 07:00 (US) MBA Mortgage Applications w/e July 25th: No est v 0.8% prior.

- 07:00 (BR) Brazil July FGV Inflation IGPM M/M: -0.9%e v -1.7% prior; Y/Y: 2.9%e v 4.4% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (ZA) South Africa Jun Monthly Budget Balance (ZAR): +55.7Be v -10.1B prior.

- 08:00 (MX) Mexico Q2 Preliminary GDP Q/Q: 0.4%e v 0.2% prior; Y/Y: -0.1%e v +0.8% prior.

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

- 08:15 (US) July ADP Employment Change: +75Ke v -33K prior.

- 08:30 (US) Q2 Advance GDP Annualized Q/Q: +2.5%e v -0.5% prior; Personal Consumption: 1.5%e v 0.5% prior.

- 08:30 (US) Q2 Advance GDP Price Index: 2.2%e v 3.8% prior; Core PCE Price Index Q/Q: 2.3%e v 3.5% prior.

- 08:30 (US) Treasury Quarterly Funding Announcement.

- 09:00 (CL) Chile Jun Unemployment Rate: 9.0%e v 8.9% prior.

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 2.75%.

- 10:00 (US) Jun Pending Home Sales M/M: +0.3%e v 1.8% prior; Y/Y: -2.8%e v -0.3% prior.

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

- 10:30 (CA) Bank of Canada (BOC) Gov Macklam post rate decision press conference.

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

- 12:00 (RU) Russia Jun Real Retail Sales Y/Y: 1.7%e v 1.8% prior.

- 12:00 (RU) Russia Jun Unemployment Rate: 2.2%e v 2.2% prior; May Real Wages Y/Y: 3.7%e v 4.6% prior.

- 14:00 (US) FOMC Interest Rate Decision: Expected to leave Target Range unchanged at 4.25-4.50%.

- 14:30 (US) Fed Chair Powell post rate decision press conference.

- 17:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Target Rate unchanged at 15.00%.

- 19:00 (KR) South Korea Jun Industrial Production M/M: +2.5%e v -2.9% prior; Y/Y: 2.6%e v 0.2% prior; Cyclical Leading Index Change: No est v -0.1 prior.

- 19:01 (UK) July Lloyds Business Barometer: No est v 51 prior; Own Price Expectations: No est v 61 prior.

- 19:20 (AU) RBA's Hauser.

- 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: -0.8%e v -0.1% prior; Y/Y: +1.3%e v -2.4% prior.

- 19:50 (JP) Japan Jun Retail Sales M/M: +0.5%e v -0.6% prior (revised from -0.2%); Y/Y: 1.8%e v 1.9% prior (revised from 2.2%); Dept. Store, Supermarket Sales Y/Y: No est v 0.6% prior.

- 21:30 (CN) China July Manufacturing PMI (Govt Official): 49.7e v 49.7 prior; Non-manufacturing PMI: 50.2e v 50.5 prior; Composite PMI: No est v 50.7 prior.

- 21:30 (AU) Australia Jun Retail Sales M/M: 0.4%e v 0.2% prior.

- 21:30 (AU) Australia Q2 Retail Sales (ex-inflation) Q/Q: 0.1%e v 0.0% prior.

- 21:30 (AU) Australia Jun Building Approvals M/M: 1.8%e v 3.2% prior; Private Sector Houses M/M: No est v 0.5% prior.

- 21:30 (AU) Australia Jun Private Sector Credit M/M: 0.5%e v 0.5% prior; Y/Y: No est v 6.9% prior.

- 21:30 (AU) Australia Q2 Export Price Index Q/Q: -3.0%e v 2.1% prior; Import Price Index Q/Q: -0.4%e v 3.3% prior.

- 22:00 (SG) Singapore Jun M2 Money Supply Y/Y: No est v 7.3% prior; M1 Money Supply Y/Y: No est v 9.2% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$400M in 2030 and 2034 bonds.

- (JP) Bank of Japan (BOJ) Interest Rate Decision: Expected to leave Target Range unchanged at 0.50%.

- (JP) BOJ Quarterly Outlook for Economic Activity and Prices (aka Staff Projections).