German ZEW Survey continues to paint a weak economic growth picture for Germany

Notes/Observations

- Market participants continue to weight global growth concerns. Europe opens higher as sentiment shifts to timings of rate cuts as CPI peaks start to get penciled in. Traders look for clues in Central Bank shifts from inflation to growth. Following US CPI cooling last week, RBA said overnight the expect inflation to peak in late 2022 and UK CPI tomorrow could shed light on the path trajectory for the BOE.

- UK Tier 1 data was mostly positive as Jun unemployment rate matches estimates at 3.8%. Jun average weekly earnings beats at 5.1% compared to 4.5% consensus. UK labor market viewed as no longer tightening but viewed as not stopping BOE from more rate hikes.

- Germany ZEW survey for Aug came in bleak at -47.6 for current situation at -55.3 for expectations. In line with recent German data as the nation lags the EU on growth outlook.

- In Asia, China vowed to boost housing support for people with more kids, in an attempt to fix their population problem and stimulate growth.

- Russian Pres Putin commented on Pelosi trip for the first time and reiterated rhetoric from China in stating that the trip to Taiwan was purposefully provocative. Declared US wants to drag out the conflict in Ukraine.

- Asia closed mixed with Hang Seng underperforming at -1.1%. EU indices are higher at +0.3-1.1% with exception of SMI at -0.2%. EU bond yields are higher. Safe haven: Gold -0.4%, DXY +0.2%; Commodity: Brent -1.1%, WTI -0.8%; Crypto: BTC 0.0%, ETH -0.8%.

- Looking ahead, no speakers scheduled and US earnings from Walmart and Home Depot in the pre-market.

Asia

- RBA Aug Minutes reiterated stance that Board expected to take further steps in normalizing monetary conditions but not on a pre-set path.

- Taiwan Foreign Min Ou issued warning to China against escalation of regional tensions.

- Singapore Deputy PM Wong (incoming PM): CPI to peak near end-2022 and then ease.

Americas

- Jun TIC data showed China Total Holdings of US Treasuries registering its 7th month of decline and lowest level since May 2010 ($967.8B v $980.8B prior).

Energy

- Iran said to have sent written response to EU on draft nuclear deal. The response described as a final roadmap to restore its nuclear deal with world powers. No details on the substance of its response and Iran said to expect a response within next two days.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.46% at 444.40, FTSE +0.43% at 7,541.40, DAX +0.86% at 13,934.94, CAC-40 +0.55% at 6,606.22, IBEX-35 +1.14% at 8,522.84, FTSE MIB +0.56% at 23,100.00, SMI -0.15% at 11,155.30, S&P 500 Futures -0.02%].

Market Focal Points/Key Themes: European indices opened generally higher and stayed upbeat through the early part of the session (SMI notable exception); sectors leading to the upside indluce utilities and telecom; lagging sectors include consumer discretionary and financials; Ted Backer rescieves takeover offer from Authentic Brands; earnings expected during the upcoming US session include Home Depot, Walmart and Agilent Technologies.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] +5% (earnings), Ted Baker [TED.UK] +17% (offer confirmed), Pandora [PNDORA.DK] -7.5% (earnings).

- Industrials: Demant [DEMANT.UK] -8% (earnings).

- Technology: Darktrace [DARK.UK] +20% (offer).

- Materials: BHP Group [BHP.UK] +4% (earnings).

Speakers

- EU said to confirm it had received the Iranian response on nuclear deal. EU was now studying it and consulting with the other JCPOA participants and the US on the way ahead.

- German ZEW Economists noted that financial market experts expected a further decline in already weak economic growth in Germany. Still high inflation rates and expected additional costs for heating and energy lead to a decrease in profit expectations for private consumption sector.

- Indonesia President Joko Widodo budget speech set 2023 GDP growth target at 5.3% and inflation at 3.3%.

- China govt said to further improve policy to increase new birth guidelines; To boost housing support for people with more kids.

Currencies/Fixed income

- USD was holding steady after receiving a boost from safe-haven flows in the aftermath of a spat of weak global economic indicator. Recent Fed speak also noted of the need for continued rate hikes.

- GBP/USD testing below the 1.2040 area in the aftermath of UK employment and wage data. Dealers noted that UK jobs data was no longer falling some believe it will start to rise far sooner than the BOE anticipated. Nonetheless the data remained quite robust. Focus turns towards Wed UK inflation reading where CPI is expected to be close to double-digits and provide further reason for BOE to continue on its current trajectory for a higher interest rate environment.

- EUR/USD testing below the 1.0130 area after German ZEW Survey fell further in Aug amid energy sector concerns on the economy.

Economic data

- (UK) July Jobless Claims Change: -10.6K v -26.8K prior; Claimant Count Rate: 3.9% v 3.9% prior.

- (UK) Jun Average Weekly Earnings 3M/Y: 5.1% v 4.5%e; Weekly Earnings (ex-Bonus) 3M/Y: 4.7% v 4.5%e v.

- (UK) Jun ILO Unemployment Rate: 3.8% v 3.8%e; Employment Change 3M/3M: +160K v +268Ke.

- (UK) Q2 Preliminary Output per hour Y/Y: -1.0% v -0.8% prior.

- (IN) India July Wholesale Prices (WPI) Y/Y: 13.9% v 13.7%e.

- (CZ) Czech July PPI Industrial M/M: 0.3% v 1.2%e; Y/Y: 26.8% v 27.9%e.

- (IT) Italy Jun General Government Debt: €2.766T v €2.755T prior (record high).

- (DE) Germany Aug ZEW Current Situation Survey: -47.6 v -49.0e; Expectations Survey: -55.3 v -52.7e.

- (EU) Euro Zone Aug ZEW Expectations Survey: -54.9 v -51.1 prior.

- (EU) Euro Zone Jun Trade Balance (seasonally adj): -€30.8B v -€22.0Be; Trade Balance NSA (unadj): -€24.6B v -€26.3B prior.

- (IS) Iceland July International Reserves (ISK): 879B v 881B prior.

Fixed income issuance

- (ID) Indonesia sold total IDR21.65T vs. IDR19.0T target in bills and bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €1.69B vs. €1.5-2.5B in 3-month and 9-month bills.

- (UK) DMO sold £2.75B in 0.5% Jan 2029 Gilts; Avg Yield: 1.955% v 1.636% prior; bid-to-cover: 2.x v 2.48x prior; Tail: bps v 1.2bps prior.

Looking ahead

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

- 05:30 (DE) Germany to sell €4.0B in 1.30% Oct 2027 BOBL.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2030, 2037 and 2048 bonds.

- 06:00 (IL) Israel Q2 Advance GDP (1st reading) Y/Y: +2.2%e v -1.8% prior.

- 06:00 (FI) Finland to sell combined €1.5B in 6-month and 9-month bills.

- 06:30 (EU) ESM to sell €1.1B in 6-month Bills.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (TR) Turkey to sell Inflation-Linked Bonds.

- 08:00 (PL) Poland July CPI Core M/M: 0.5%e v 0.6% prior; Y/Y: 9.2%e v 9.1% prior.

- 08:00 (RO) Romania Central Bank (NBR) Aug Minutes.

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

- 08:15 (CA) Canada July Annualized Housing Starts: 264.6Ke v 273.8K prior.

- 08:30 (US) July Housing Starts: 1.530Me v 1.559M prior; Building Permits: 1.650Me v 1.696M prior (revised from 1.685M).

- 08:30 (CA) Canada July CPI M/M: 0.2%e v 0.7% prior; Y/Y: 7.6%e v 8.1% prior; CPI Core- Common Y/Y: 4.7%e v 4.6% prior; CPI Core- Median Y/Y: 4.9%e v 4.9% prior; CPI Core- Trim Y/Y: 5.4%e v 5.5% prior; Consumer Price Index: 153.3e v 152.9 prior.

- 08:30 (CA) Canada Jun Int'l Securities Transactions (CAD): No est v 2.4B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (FR) France Debt Agency (AFT) to sell €4.6-5.8B in 3-month, 6-month and 12-month bills.

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (EU) ECB weekly QE bond buying update.

- 09:15 (US) July Industrial Production M/M: +0.3%e v -0.2% prior; Capacity Utilization: 80.2%e v 80.0% prior; Manufacturing Production: +0.4%e v -0.5% prior.

- 11:00 (CO) Colombia Jun Trade Balance: -$0.2Be v -$1.7B prior; Total Imports: $6.2Be v $6.8B prior.

- 12:00 (CO) Colombia Q2 GDP Q/Q: 1.9%e v 1.0% prior; Y/Y: 11.9%e v 8.5% prior.

- 12:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) Y/Y: 9.1%e v 16.5% prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:45 (NZ) New Zealand Q2 PPI Input Q/Q: No est v 3.6% prior; PPI Output Q/Q: No est v 2.6% prior.

- 19:50 (JP) Japan Jun Core Machine Orders M/M: 1.0%e v -5.6% prior; Y/Y: 7.7%e v 7.4% prior.

- 19:50 (JP) Japan July Trade Balance: -¥1.363Tev -¥1.398T prior (revised from -¥1.384T); Adj Trade Balance: -¥1.915Te v -¥1.929T prior; Exports Y/Y: 17.6%e v 19.3% prior (revised from 19.4%); Imports Y/Y: 45.5%e v 46.1% prior.

- 20:30 (AU) Australia July Leading Index M/M: No est v -0.2% prior.

- 20:30 (SG) Singapore July Non-Oil Domestic Exports M/M: -3.1%e v +3.7% prior; Y/Y: 6.4%e v 9.0% prior; Electronic Exports Y/Y: No est v 4.1% prior.

- 21:30 (AU) Australia Q2 Wage Price Index Q/Q: 0.8%e v 0.7% prior; Y/Y: 2.7%e v 2.4% prior.

- 22:00 (NZ) Reserve Bank of New Zealand (RBNZ) Interest Rate Decision: Expected to raise Official Cash Rate by 50bps to 3.00%.

- 23:00 00 (NZ) New Zealand Central Bank (RBNZ) Gov Orr post rate decision press conference.