Focus turning to upcoming inflation data for largest economies

EU mid-market update: Focus turning to upcoming inflation data for largest economies; China notes international consensus on resolving Ukraine crisis after talks in Saudi Arabia.

Notes/Observations

- Weaker jobs data from Fri weighing on sentiment slightly this morning due to growth concerns, European indices given additional headwind from subdued German industrial production missing estimates; Next major test for the market will be China CPI on Wed and US CPI on Thurs.

- China July foreign reserves continued to show accumulation of gold with 9th straight monthly rise at 68.7M troy oz. Tonight will see China's July trade balance.

- Macro news is quiet so far, with smaller orbital topics waiting for developments incl. Niger military coup, Ukraine peace plan discussions and confirmation of LK-99 as a viable super-conductor material.

- Earnings Recap: Saudi Aramco Q2 beat on top line, updated dividend plan to be performance based off of 70% of FY23 FCF; Siemens Energy Q3 highlighted negative influence of its wind business, cut FY23 guidance and announced review of wind business.

- Asia closed mixed with KOSPI underperforming at -0.9%. EU indices are -0.4% to -0.8. US futures are +0.2-0.4%. Gold -0.3%, DXY +0.3%; Commodity: Brent -0.5%, WTI -0.6%, TTF +3.4%; Crypto: BTC -0.3%, ETH -0.1%.

Asia

- BOJ July Meeting Summary noted that it needed to patiently continue with monetary easing toward achieving the price stability target. Framework of YCC needed to be maintained. Achievement of 2% inflation in a sustainable and stable manner seemed to have clearly come in sight. Desirable that the increase the flexibility of yield curve control to a certain extent in advance while it was able to do so without turmoil. While conducting YCC with greater flexibility to assist market functioning the bank should maintain its basic stance that it will continue with monetary easing. Still a significantly long way to go before revising the negative interest rate policy.

-Chinese authorities said to be putting pressure on economists to avoid negative trends such as deflation or concerns over Beijing’s ability to boost the economic recovery.

Europe

- City of London said to have asked the BoE to delay the UK adopting new global banking capital rules by 6 months in order to avoid a period of regulatory divergence which could harm their ability to compete with Wall Street.

- Canadian ratings agency DBRS affirms Belgium sovereign rating to AA.

Americas

- Fed's Bowman (voter) stated that more US rate hikes were likely needed.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.31% at 457.86, FTSE -0.62% at 7,517.24, DAX -0.59% at 15,857.55, CAC-40 -0.52% at 7,277.11, IBEX-35 -0.81% at 9,292.79, FTSE MIB -0.64% at 28,402.00, SMI -0.32% at 11,062.50, S&P 500 Futures +0.30%].

Market focal points/key themes

Equities

European indices open down across the board; Iceland closed for holiday; all sectors start the day in the red; less negative sectors include utilities and health care; sectors leading the way lower include financials and industrials; OHB to be acquired by KKR; Renesas to acquire Sequans; Siemens Energy reversed earlier losses after it provided more clarity on Wind Turbines business losses and its review; earnings expected in the upcoming US session include Henry Schein, Clear Channel Outdoor and Tyson Foods.

- Consumer discretionary: PostNL [PNL.NL] +7.5% (Q2 results, raises FY23 guidance), PageGroup [PAGE.UK] -0.5% (H1 results, guidance unchanged), Card Factory [CARD.UK] +16.0% (Trading Update - FY ahead of expectations).

- Consumer staples:

- Energy: Siemens Energy [ENR.DE] +4.5% (Q3 results, cuts FY23 guidance; reviewing wind business).

- Financials: Eastnine [EAST.SE] +12.0% (divestment), LSL Property Services [LSL.UK] -14.0% (trading update).

- Healthcare: Moberg Pharma [MOB.SE] -29.5% (final terms of rights offering).

- Technology: OHB [OHB.SE] +33.5% (KKR to acquire for €44.0/shr), Siltronic [WAF.DE] -1.5% (CEO interview).

Speakers

- EU Foreign Policy Chief Borrell noted that discussed upcoming strategic dialogue in Beijing in preparation of the EU/China summit - follows meeting with China's Wang Yi.

- Fed's Williams stated in a press interview that rates may come down in 2024.

Currencies/fixed income

- USD was steady in quiet trade on Monday. Dealers noted mixed US jobs report provided little directional conviction. Focus will turn to upcoming inflation data (CPI on Thursday).

- USD/JPY was holding above 142 level as BOJ July Meeting Summary noted that it needed to patiently continue with monetary easing toward achieving the price stability target. The 145 area is viewed as key resistance for the time being.

- China CPI data due out on Wed with market participants watch for signs of deflation in the country.

Economic data

- (CH) Swiss July Unemployment Rate: 1.9% v 1.9%e; Unemployment Rate (seasonally adj): 2.1% v 2.0%e.

- (DE) Germany Jun Industrial Production M/M: -1.5-0.5%e; Y/Y: -1.7% v -0.2%e.

- (UK) July Halifax House Price Index M/M: -0.3% v -0.1% prior; Y/Y: -2.4% v -2.6% prior.

- (ZA) South Africa July Gross Reserves: $62.2B v $61.6B prior; Net Reserves: $55.6B v $54.9B prior.

- (SE) Sweden July Budget Balance (SEK): +6.5B v -34.3B prior.

- (NO) Norway Jun Industrial Production M/M: +0.2% v -3.4% prior; Y/Y: -11.0% v -11.1% prior.

- (NO) Norway Jun Manufacturing Production M/M: 0.0% v 1.4% prior; Y/Y: 1.4% v 1.5% prior.

- (CZ) Czech Jun Industrial Output Y/Y: +0.9% v -0.8%e; Construction Output Y/Y: +1.0% v -2.7% prior.

- (CZ) Czech Jun National Trade Balance (CZK): 18.2BB v 17.8Be.

- (CH) Swiss July Foreign Currency Reserves (CHF): 697.6B v 725.2B prior.

- (AT) Austria July Wholesale Price Index M/M: -0.4% v -0.3% prior; Y/Y: -6.3% v -7.3% prior.

- (MY) Malaysia end-July Foreign Reserves: $112.9B v $111.8B prior.

- (CN) China July Foreign Reserves: $3.204T v $3.203Te.

- (CH) Swiss weekly Total Sight Deposits (CHF): 493.0B v 490.1B prior; Domestic Sight Deposits: 477.4B v 479.3B prior.

- (HK) Hong Kong July Foreign Reserves: $421.6B v $417.3B prior.

- (EU) Euro Zone Aug Sentix Investor Confidence: -18.9 v -24.5e.

- (SG) Singapore July Foreign Reserves: $340.8B v $331.19b prior.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel July Foreign Currency Balance: No est v $201.9B prior.

- (UR) Ukraine Central Bank (NBU) July Minutes.

- (IT) Bank of Italy Reports on Balance-Sheet Aggregates.

- (MX) Mexico CitiBanamex Survey of Economists.

- (UR) Ukraine July Official Reserve Assets: No est v $39.0B prior.

- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 7.00%.

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

- 05:30 (DE) Germany to sell combined €5.0B in 3-month and 9-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel to sell bonds.

- 06:00 (RO) Romania to sell RON500M in 7.9% Feb 2038 Bonds; Avg Yield: % v 6.64% prior, bid-to-cover: x v 1.48x prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (BR) Brazil July FGV Inflation IGP-DI M/M: -0.4%e v -1.5% prior; Y/Y: -7.5%e v -7.4% prior.

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

- 08:00 (PL) Poland July Official Reserves: No est v $180.8B prior (revised from $180.7B).

- 08:00 (MX) Mexico July Consumer Confidence: No est v 45.2 prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:30 (CL) Chile July Trade Balance: $1.3Be v $1.6B prior; Exports: No est v $7.9B prior; Imports: No est v $6.4B prior; Copper Exports: No est v $3.9B prior.

- 08:30 (CL) Chile July International Reserves: No est v $39.5B prior.

- 08:30 (US) Fed's Bostic at Fed Listens Event.

- 08:30 (US) Fed's Bowman at Fed Listens Event.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.7-5.9B in 3-month, 6-month and 12-month bills.

- 09:00 (CL) Chile Jun Nominal Wage Y/Y: No est v 10.1% prior.

- 09:00 (RU) Russia July Official Reserve Assets: No est v $582.4B prior.

- 09:45 (UK) BOE Gilt Sale operation.

- 10:30 (TR) Turkey July Cash Budget Balance (TRY): No est v -206.3B prior.

- 11:30 (US) Treasury to sell 13-Week Bills.

- 12:00 (UK) BOE's Pill (chief economist).

- 15:00 (US) Jun Consumer Credit: $13.6Be v $7.24B prior.

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (KR) South Korea Jun Current Account Balance: No est v $1.9B prior; Balance of Goods (BVOP): No est v $1.8B prior.

- 19:01 (UK) July BRC LFL Sales Y/Y: No est v 4.2% prior.

- 19:05 (AU) RBA's Schwartz.

- 19:30 (JP) Japan Jun Labor Cash Earnings Y/Y: 3.0%e v 2.9% prior (revised from 2.5%); Real Cash Earnings Y/Y: -0.9%e v -0.9% prior (revised from -1.2%).

- 19:30 (JP) Japan Jun Household Spending Y/Y: -3.8%e v -4.0% prior.

- 19:30 (AU) Australia ANZ/Roy Morgan Weekly Consumer Confidence: No est v 78.4 prior.

- 19:50 (JP) Japan Jun Current Account Balance: ¥1.453Te v ¥1.9T prior; Adj Current Account: ¥2.240Te v ¥1.7T prior; Trade Balance (BoP basis): ¥0.2Be v -¥1.18T prior.

- 19:50 (JP) Japan July Bank Lending Y/Y: No est v 3.2% prior; Bank Lending (ex-trusts) Y/Y: No est v 3.5% prior.

- 20:30 (AU) Australia Aug Westpac Consumer Confidence: No est v 81.3 prior.

- 21:00 (PH) Philippines Jun Trade Balance: -$4.6Be v -$4.4B prior; Exports Y/Y: -8.8%e v 1.9% prior; Imports Y/Y: -14.4%e v -8.8% prior.

- 21:30 (AU) Australia July NAB Business Confidence: No est v 0 (flat) prior; Business Conditions: No est v 9 prior.

- 21:30 (KR) South Korea to sell KRW600B in 2-year Bonds.

- 23:00 (TH) Thailand Central Bank (BOT) to sell THB65B in 3-month bills.

- 23:35 (JP) Japan to sell 30-Year JGB Bonds.