German inflation in focus as 'sick man' of Europe looks dovish for ECB

 EU mid-market update: Nvidia beat failed to impress investors with high expectations; German inflation in focus as 'sick man' of Europe looks dovish for ECB.

Notes/observations

- German state CPI’s point to national reading below ECB target: In line with cooler than expected state CPI readings from North Rhine Westphalia, Hesse, Bavaria and Baden Wuerttemberg, bets for ECB rate cut in Sept and beyond are increased, pushing DAX to record high and pulling Euro off recent highs back below 1.11.

- Investors parse through Nvidia earnings: Despite the top and bottom-line beat, as well as strong guidance, market reading tea leaves of commentary for mid to long-term views on gross margin, coming in below estimates as fears of competition will act as a headwind. NVDA trade in after-hours was volatile, closing After-Hours approx -8% lower. Currently -4.5% in Pre-Market, with worries regarding future margin performance and Super Micro’s accounting issues (SMCI is one of biggest NVDA’s customers) appear to overweigh dissipating concerns about Blackwell chip delay and AI demand. European chips names are marginally higher for now.

- Looking ahead, second reading of US Q2 GDP at 08:30 ET, also Advance Goods Trade Balance, Preliminary Wholesale Inventories and Weekly Jobless Claims.

- Asia closed mixed with KOSPI underperforming -1.0%. EU indices are +0.3-0.8%. US futures are +0.0-0.5%. Gold +0.5%, DXY +0.2%; Commodity: Brent -0.6%, WTI -0.5%; Crypto: BTC -0.6%, ETH -0.5%.

Asia

- New Zealand Aug ANZ Business Confidence: 50.6 v 27.1 prior (highest level in a decade).

- Australia Q2 Private Capex registered its largest decline since Q3 2021 (-2.2% v +1.0%e).

- China Commerce Ministry (MOFCOM): Some Chinese experts proposed increasing import tariffs on large engine cars and argued that such duties are in line with WTO rules.

Europe

- Italy govt said to be planning to confirm its commitment to bringing budget deficit-to-GDP ratio below EU's 3% ceiling in 2026.

Americas

- Fed's Bostic (hawk, voter for 2024) noted that inflation still had a distance to go but stressed the Fed could not wait until 2% to move away from restrictive stance.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.48% at 523.08, FTSE +0.22% at 8,361.80, DAX +0.39% at 18,862.95, CAC-40 +0.47% at 7,613.52, IBEX-35 +0.41% at 11,377.95, FTSE MIB +0.61% at 34,087.00, SMI +0.42% at 12,395.73, S&P 500 Futures +0.01%].

Market focal points/key themes: European indices open mixed with a modest upward bias and maintained the trend through the early part of the session; among better performing sectors are communication services and consumer discretionary; sectors still in the red include energy and technology; tech stocks weighed down following disappointment out of Nvidia’s earnings yesterday; Concentric receives takeover offer from Moller Holding unit; focus on German flash CPI figures later in the day; earnings expected in the upcoming US session include Best Buy, Campbell’s Soup and AutoDesk.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] +4.5% (Q2 results and prepares IPO of Talabat business on Dubai exchange).

- Consumer staples: Pernod Ricard [RI.FR] +3.5% (earnings; outlook), Diageo [DGE.UK] +1.0% (read across from Pernod Ricard), Corbion [CRBN.NL] +4.5% (analyst upgrade).

- Energy: Equinor [EQNR.NO] -1.5% (analyst downgrade), Repsol [REP.ES] -1.5% (analyst downgrade).

- Financials: Adler [ADJ.DE] -10.0% (H1 results).

- Industrials: Concentric [COIC.SE] +58.5% (to be acquired) - Technology: ASML [ASML.NL] +1.5%, Infineon [IFX.DE] +1.0% (read across from Nvidia).

Speakers

- Sweden Central Bank (Riksbank) Dep Gov Bunge reiterated stance that saw two or three more rate cuts this year. Inflation was in process of stabilizing at target with country in a mild recession.

- Turkey govt said to be poised to cut its growth outlook (**Note: Turkey Q2 GDP data set to be released on Mon, Sept 2nd).

- Russia Central Bank (CBR) reiterated stance to maintain tight monetary policy for a prolong period to achieve a sustainable decrease of inflation.

- China Pres Xi met with White House National Security Adviser Sullivan. Xi hoped for way for US to get along with country; meet half way. Hoped US look at China in a positive and rational manner.

- China Pres Xi said to demands all-out efforts to carry out reform tasks.
Japan Cabinet Office (Govt) Monthly Report raised its overall assessment for the 1st time in 16 months. Saw the economy recovering moderately though some pausing in parts.

Currencies/fixed income

- USD continues to consolidate its recent losses with focus on a plethora of US data later in the session that could cement rate cut expectations for the Fed.

- Focus on inflation data and to see if it was on a stable path to target. Spain CPI fell to a 1-year low at 2.2% and seemed to support ECB rate cut at its next meeting. EUR/USD fell from 1.1130 to test under 1.11 as German CPI appeared to be heading to target for the 1st time since Apr 2021.

Economic data

- (EU) EU27 July New Car Registrations: 0.2% v 4.3% prior.

- (NL) Netherlands Aug Producer Confidence: -.9 v -2.7 prior.

- (SE) Sweden Q2 GDP Q/Q: -0.3% v -0.8%e; Y/Y: 0.5% v 0.0%e.

- (SE) Sweden July Retail Sales M/M: +0.5% v -0.8% prior; Y/Y: -0.5% v -1.4% prior.

- (NO) Norway July Retail Sales (ex-auto) M/M: +1.2% v -5.1% prior.

- (ES) Spain Aug Preliminary CPI M/M: 0.0% v 0.2%e; Y/Y: 2.2% v 2.4%e; CPI Core Y/Y: 2.7% v 2.6%e.

- (ES) Spain Aug Preliminary CPI EU Harmonized M/M: 0.0% v 0.2%e; Y/Y: 2.4% v 2.5%e.

- (SE) Sweden Aug Consumer Confidence: # v 96.2 prior; Manufacturing Confidence: 97.1 v 97.0 prior; Economic Tendency Survey: 94.7 v 94.9prior.

- (TR) Turkey Aug Economic Confidence: 93.1 v 94.4 prior.

- (DE) Germany Aug CPI North Rhine Westphalia M/M: -0.1% v +0.3% prior; Y/Y: 1.7% v 2.3% prior (below 2% ECB target for the first time since spring 2021).

- (DE) Germany Aug CPI Hesse M/M:-0.1 % v +0.3% prior; Y/Y: 1.5% v 1.8% prior.

- (DE) Germany Aug CPI Bavaria M/M: -0.1% v +0.3% prior; Y/Y: 2.1% v 2.5% prior.

- (DE) Germany Aug CPI Brandenburg M/M: -0.2% v +0.3% prior; Y/Y: 1.7% v 2.6% prior.

- (DE) Germany Aug CPI Saxony M/M: -0.2% v +0.6% prior; Y/Y: 2.6% v 3.1% prior.

- (DE) Germany Aug CPI Baden Wuerttemberg M/M: -0.3% v +0.3% prior; Y/Y: 1.5% v 2.1% prior.

- (PL) Poland Q2 Final GDP Q/Q: 1.5% v 1.5% prelim; Y/Y: 3.2% v 3.2% prelim.

- (PT) Portugal Aug Consumer Confidence: -14.3 v -15.4 prior; Economic Climate Indicator: 1.7 v 1.8 prior.

- (EU) Euro Zone Aug Economic Confidence: 96.6 v 96.0e; Industrial Confidence: -9.7 v -10.8e; Services Confidence: 6.3 v 5.2e; Consumer Confidence (final): -13.5 v -13.4 advance.

- (IS) Iceland Aug CPI M/M: 0.1% v 0.5% prior; Y/Y: 6.0% v 6.3% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €7.75B vs. €6.75-7.75B indicated range in 5-year and 10-year BTP Bonds.

- Sold €4.5B vs. €4.0-4.5B indicated range in new 3.00% Oct 2029 BTP bonds; Avg Yield: 3.08% v 3.18% prior; Bid-to-cover: 1.48x v 1.55x prior (prior under 3.35% July 2029 BTP )July 30th 2023).

- Sold €3.25B vs. €2.75-3.25B indicated range in 3.85% Feb 2035 BTP bonds; Avg Yield: 3.68% v 3.76% prior; bid-to-cover: 1.62x v 1.42x prior.

- (IT) Italy Debt Agency (Tesoro) sold €1.5B vs. €1.0-1.5B indicated range in Apr 2032 Floating Rate Note (CCTeu); Real Yield: 4.94% v 4.89% prior; Bid-to-cover: 1.92x v 1.68x prior.

Looking ahead

- (BR) Brazil July Total Federal Debt (BRL): No est v 7.068T prior.

- (BE) Belgium Aug CPI M/M: No est v 0.7% prior; Y/Y: No est v 3.6% prior.

- (AR) Argentina Aug Consumer Confidence: No est v 39.1 prior.

- (BR) Brazil July Central Govt Budget Balance (BRL): No est v -38.8B prior.

- 05:15 (IE) ECB’s Lane (Ireland, chief economist).

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

- 05:30 (ZA) South Africa July PPI M/M: +0.1%e v -0.3% prior; Y/Y: 4.5%e v 4.6% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE allotment in 7-day short-term repo operation (STR).

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

- 06:00 (IE) Ireland July PPI M/M: No est v 2.3% prior; Y/Y: No est v 2.8% prior.

- 06:00 (PT) Portugal July Retail Sales M/M: No est v -0.9% prior; Y/Y: No est v 4.0% prior.

- 06:00 (FI) Finland to sell Bonds via Ori auction.

- 07:00 (CA) Canada Aug CFIB Business Barometer: No est v 55.4 prior.

- 07:00 (BR) Brazil Aug FGV Inflation IGPM M/M: 0.5%e v 0.6% prior; Y/Y: 4.4%e v 3.8% prior.

- 07:30 (BR) Brazil July Total Outstanding Loans (BRL): No est v 6.019T prior; M/M: No est v 1.2% prior; Personal Default Rate: No est v 5.5% prior.

- 08:00 (DE) Germany Aug Preliminary CPI M/M: 0.0%e v 0.3% prior; Y/Y: 2.1%e v 2.3% prior.

- 08:00 (DE) Germany Aug Preliminary CPI EU Harmonized M/M: 0.0%e v 0.5% prior; Y/Y: 2.2%e v 2.6% prior.

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

- 08:30 (US) Q2 Preliminary GDP Annualized (2nd of 3 readings) Q/Q: 2.8%e v 2.8% advance reading; Personal Consumption: 2.2%e v 2.3% advance reading.

- 08:30 (US) Q2 Preliminary GDP Price Index (2nd of 3 readings): 2.3%e v 2.3% advance reading; Core PCE Price Index Q/Q: 2.9%e v 2.9% advance reading.

- 08:30 (US) July Advance Goods Trade Balance: -$97.9Be v -$96.6B prior (revised from -$96.8B).

- 08:30 (US) July Preliminary Wholesale Inventories M/M: 0.3%e v 0.2% prior; Retail Inventories M/M: 0.5%e v 0.7% prior.

- 08:30 (US) Initial Jobless Claims: 232Ke v 232K prior; Continuing Claims: 1.87Me v 1.863M prior.

- 08:30 (CA) Canada Q2 Current Account Balance: -$6.0Be v -$5.4B prior.

- 08:30 (CL) Chile Central Bank Traders Survey.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 23rd: No est v $609.9B prior.

- 09:00 (CL) Chile July Unemployment Rate: 8.5%e v 8.3% prior.

- 10:00 (US) July Pending Home Sales M/M: 0.2%e v 4.8% prior; Y/Y: -2.0%e v -7.8% prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CH) SNB President Jordan.

- 13:00 (DE) ECB’s Nagel (Germany).

- 13:00 (US) Treasury to sell 7-Year Notes.

- 15:30 (US) Fed’s Bostic.

- 18:00 (NZ) New Zealand Aug ANZ Consumer Confidence: No est v 87.9 prior.

- 18:45 (NZ) New Zealand July Building Permits M/M: No est v -13.8% prior.

- 19:00 (KR) South Korea July Industrial Production M/M: No est v 0.5% prior; Y/Y: No est v 3.8% prior; Cyclical Leading Index Change: No est v 0.2% prior.

- 19:01 (UK) Aug Lloyds Business Barometer: 46e v 50 prior.

- 19:30 (JP) Japan July Jobless Rate: 2.5%e v 2.5% prior; Job-to-Applicant Ratio: No est v 1.23 prior.

- 19:30 (JP) Japan Aug Tokyo CPI Y/Y: 2.3%e v 2.2% prior; CPI (ex-fresh food) Y/Y: 2.2%e v 2.2% prior; CPI (ex-fresh food and energy) Y/Y: 1.4%e v 1.5% prior.

- 19:50 (JP) Japan July Retail Sales M/M: 0.4%e v 0.6% prior; Y/Y: 2.8%e v 3.7% prior; Dept. Store, Supermarket Sales Y/Y: No est v 6.6% prior.

- 19:50 (JP) Japan July Preliminary Industrial Production M/M: +3.5%e v -4.2% prior; Y/Y: +2.7%e v -7.9% prior.

- 21:30 (AU) Australia July Retail Sales M/M: No est v 0.5% prior.

- 21:30 (AU) Australia July Private Sector Credit M/M: No est v 0.6% prior; Y/Y: No est v 5.6% prior.

- 22:00 (SG) Singapore July M2 Money Supply Y/Y: No est v 1.4% prior; Y/Y: No est v 4.0% prior.

- 23:30 (JP) Japan to sell 3-Month Bills.