Plethera of data and speakers sees repricing of eurozone rate expectations

Notes/observations

- Session highlighted by speakers and rate path expectations with Fed’s Bostic pushing back against hopes of easing policy, ECB’s Schnabel reiterated concern over underlying price pressures with no target for peak rate. BoE Pill stated preference for rates being held at currently restrictive levels for longer instead of a higher peak.

- For economic data, Euro Zone headline CPI ticked up but core remained steady. Germany Retail Sales and Unemployment missed expectations, while French CPI was hot and GDP revised upwards slightly. Italy unemployment missed.

- Out of Asia, Fitch affirmed China at A+ but cut 2023 GDP growth to 4.8% from 5.6%. Japan PM confirmed aim to raise minimum wage to ¥1,500, a nearly 50% increase but spread out until mid-2030s. Hong Kong markets likely to close tomorrow due to super typhoon Saola.

- Asia closed mixed with Shanghai Composite underperforming at -0.6%. EU indices are -0.1% to +0.4%. US futures are -0.1% to +0.3%. Gold +0.1%, DXY +0.4%; Commodity: Brent +0.2%, WTI +0.2%, TTF +5.2%; Crypto: BTC -0.7%, ETH -0.8%.

Asia

- China Aug Manufacturing PMI (Govt Official): 49.7 v 49.2e ((5th straight contraction).

- Japan July Retail Sales M/M: 2.1% v 0.8%e; Y/Y: 6.8% v 5.5%e.

- July Preliminary Industrial Production M/M: -2.0% v -1.4%e; Y/Y: -2.5% v -1.4%e.

- South Korea July Industrial Production M/M: -2.0% v -1.0%e; Y/Y: -8.0% v -6.0%e.

- BOJ board member Nakamura reiterated need to continue easing for the time being. Current rise in deflation driven by pass-through of import costs, yet to be driven by wage gains. Careful decision warranted for policy adjustment.

Europe

- Italy govt said to be planning sale of some state-owned stakes to improve govt finances.

- UK Aug Lloyds Business Barometer: 41 v 31 prior (Highest reading since Feb 2022).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.28% at 460.42, FTSE -0.08% at 7,467.63, DAX +0.51% at 15,972.65, CAC-40 -0.08% at 7,358.53, IBEX-35 +0.09% at 9,559.87, FTSE MIB +0.12% at 28,950.00, SMI +0.40% at 11,134.50, S&P 500 Futures +0.03%].

Market Focal Points/Key Themes: European indices open generally mixed, but took on a bias to the upside as the session progressed; financials and real estate are the sectors trending upwards; to the downside, consumer discretionary and healthcare sectors; Georg Fischer extends offer period of Uponor; focus on release of ECB minutes later in the day; reportedly Glencore considering offer for Alita assets; earnings expected in the upcoming US session include Lululemon, Broadcom and Hormel Foods.

Equities

- Consumer discretionary: Rockwool [ROCKA.DK] +6.0% (earnings).

- Consumer staples: Pernod Ricard [RI.FR] -3.5%, Remy Cointreau [RCO.FR] -2.5% (Pernod Ricard FY23 results and sales).

- Energy: Saipem [SPM.IT] -4.5% (prices bond offering).

- Financials: UBS [UBSG.CH] +5.5% (Q2 results; specifies number of job cuts; Credit Suisse (Schweiz) AG to be fully integrated).

- Healthcare: Ion Beam Applications [IBAB.BE] -12.0% (H1 results), Ambu [AMBUB.DK] -6.0% (Q3 results).

- Industrials: Siemens [SIE.DE] +0.5% (large order).

- Materials: Eramet [ERA.FR] +9.5% (resumes rail freight in Gabon).

Speakers

- ECB’s Schnabel (Germany) reiterated view that underlying price pressures remained stubbornly high; Could not predict where peak rate was going to be. Reiterated that ECB decisions to be data-dependent. Economic activity had moderated visibly, but Euro Area was not on the brink of deep recession (**Note: She did not mention 'upside risks' to the inflation outlook).

- ECB’s Holzmann (Austria, hawk) noted that recent Aug inflation was a conundrum for ECB but not yet at peak rate as inflation remains persistent. Could see another hike or two.

- BOE’s Pill (chief economist): Facing a second round of inflation effects. Needed to see the job through on inflation and sought a lasting return to the 2.0% inflation target. MPC emphasis was on sufficiently restrictive. Noted that the bulk of past hikes had yet to work their way through the economy.

- Sweden Central Bank (Riksbank) Gov Thedeen commented that the SEK currency (Krona) weakness was not justified; saw element of speculation.

- Fed’s Bostic spoke from South Africa and noted that the current Fed rate stance was appropriately restrictive. He was but not in favor of easing policy any time soon as domestic inflation was still too high.

- Thailand Central Bank noted that 2023 GDP growth forecast likely to be revised lower. 2024 GDP growth seen higher than in 2023.

- China Commerce Ministry (MOFCOM) spokesperson noted that Wang and his US counterpart Raimondo had specific and pragmatic outcomes during recent talks. China and US working groups to focus on business concerns.

- China govt said to have raised its deduction in personal income tax collection.

- Fitch affirmed China sovereign rating at 'A+'; Outlook stable.

Currencies/fixed income

- Inflation in EU remained stubborn as more Aug readings were released. However, Euro currency and EU yields traded lower following ECB's Schabel comments. Dealers noted that the usual ECB hawk did not mention 'upside risks' to the inflation outlook. Market pricing of a Sept ECB rate hike of 25bps fell from 50% to approx 30%.

- EUR/USD drifted from session highs to be around 1.0870 by mid-session. Dealers noted that Aug Core CPI did not worsen and seemed to reinforce that inflation would again improve in coming months.

- USD/JPY holding below the 146 level as markets continue to watch for any sign of Japanese verbal/official intervenmtion to cap yen weakness.

Economic data

- (NL) Netherlands Aug Preliminary CPI Y/Y: 3.0% v 4.6% prior; CPI EU-Harmonized M/M:0.5% v 0.4%e; Y/Y: 3.4% v 3.3%e.

- (NL) Netherlands July Retail Sales Y/Y: 3.7 v 6.3% prior.

- (FI) Finland Q2 GDP Q/Q: 0.6% v 0.3% prior; Y/Y: -0.4% v -0.4% prior.

- (FI) Finland July House Price Index M/M: -1.4% vs. 0.3% prior; Y/Y: -8.0% v -7.3% prior.

- (DE) Germany July Retail Sales M/M: -0.8% v +0.3%e; Y/Y: -2.2% v -1.4%e.

- (DK) Denmark Q2 Preliminary GDP Q/Q: 0.3% v 0.7% prior; Y/Y: 1.5% v 2.0% prior.

- (DK) Denmark July Unemployment Rate: 2.5% v 2.5% prior; Gross Unemployment Rate: 2.8% v 2.8% prior.

- (CH) Swiss July Real Retail Sales Y/Y: -2.2% v +1.0% prior.

- (HU) Hungary July PPI M/M: +0.9% v -1.3% prior; Y/Y: 1.3% v 5.7% prior.

- (FR) France Q2 Final GDP Q/Q: 0.5% v 0.5% prelim; Y/Y: 1.0% v 0.9% prelim.

- (FR) France Aug Preliminary CPI M/M: 1.0% v 0.8%e; Y/Y: 4.8% v 4.6%e.

- (FR) France Aug Preliminary CPI EU-Harmonized M/M: 1.1% v 1.0%e; Y/Y: 5.7% v 5.4%e.

- (FR) France July PPI M/M: -0.2% v -1.1% prior; Y/Y: 0.9% v 3.1% prior.

- (FR) France July Consumer Spending M/M: 0.2% v 0.3%e; Y/Y: -1.1% v -2.8% prior.

- (ES) Spain Jun Total Mortgage Lending Y/Y: -16.0% v -19.7% prior; Mortgage Approvals Y/Y: -21.9% v -24.0% prior.

- (AT) Austria Aug Preliminary CPI M/M: 0.4% v 0.1% prior; Y/Y: 7.5% v 7.0% prior.

- (TR) Turkey Q2 GDP Q/Q: 3.5% v 2.3%e; Y/Y: 3.8% v 3.1%e.

- (TH) Thailand July Current Account Balance: -$0.5B v +$0.1Be; Overall Balance of Payments (BoP): +$0.3B v -$2.7B prior; Trade Account Balance: $0.4B v $2.0B prior; Exports Y/Y: -5.5% v -5.9% prior; Imports Y/Y: -12.0% v -9.3% prior.

- (DE) Germany Aug Net Unemployment Change: +18.0K v+10.0Ke; Unemployment Claims Rate: 5.7% v 5.7%e.

- (ES) Spain Jun Current Account: €2.8B v €4.0B prior.

- (IT) Italy July Unemployment Rate: 7.6% v 7.4%e.

- (NO) Norway Central Bank (Norges) Daily FX Purchases (NOK): 1.1B v 1.0B prior.

- (PL) Poland Aug Preliminary CPI M/M: 0.0% v 0.0%e; Y/Y: 10.1% v 10.0%e.

- (PL) Poland Q2 Final GDP Q/Q: -2.2% v -3.7% prelim; Y/Y: -0.6% v -0.5% prelim.

- (CZ) Czech July M2 Money Supply Y/Y: 9.3% v 8.1% prior.

- (PT) Portugal Aug Preliminary CPI M/M: +0.3% v -0.4% prior; Y/Y: 3.7% v 3.1% prior.

- (PT) Portugal Aug CPI EU-Harmonized M/M: +0.8% v -0.4% prior; Y/Y: 5.3% v 4.3% prior

- (HK) Hong Kong July Retail Sales Value Y/Y: 16.5% v 18.0%e; Retail Sales Volume Y/Y: 14.0% v 17.3%e.

- (HK) Hong Kong July M3 Money Supply Y/Y: +0.3% v -0.1% prior.

- (HK) Hong Kong July Budget Balance (HKD): -41.8B v -30.0B prior.

- (EU) Euro Zone Aug Advance CPI Estimate Y/Y: 5.3% v 5.1%e; CPI Core Y/Y: 5.3% v 5.3%e.

- (EU) Euro Zone July Unemployment Rate: 6.4% v 6.4%e.

- (IT) Italy Aug Preliminary CPI M/M: 0.4% v 0.4%e; Y/Y: 5.5% v 5.4%e.

- (IT) Italy Aug Preliminary CPI EU-Harmonized M/M: 0.2% v 0.3%e; Y/Y: 5.5% v 5.6%e.

- (BE) Belgium Q2 Final GDP Q/Q: 0.2% v 0.2% prelim; Y/Y: 0.9% v 0.9% prelim.

- (GR) Greece July Unemployment Rate: 10.8% v 11.0% prior.

- (GR) Greece Jun Retail Sales Value Y/Y: -7.6% v +0.2% prior; Retail Sales Volume Y/Y: -1.0% v 7.8% prior.

- (IS) Iceland Q2 GDP Q/Q: 2.2% v 1.6% prior; Y/Y: 4.5% v 7.1% prior.

- (IS) Iceland July Final Trade Balance (ISK): -46.7B v -44.9B prelim.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (ZA) South Africa July PPI M/M: +0.5%e v -0.3% prior; Y/Y: 3.0%e v 4.8% prior.

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

- 06:00 (CA) Canada Aug CFIB Business Barometer: No est v 54.2 prior.

- 06:00 (PT) Portugal Q2 Final GDP Q/Q: No est v 0.0% prelim; Y/Y: No est v 2.3% prelim.

- 06:00 (RO) Romania to sell RON500M in 7.20% May 2027 bonds.

- 06:30 (IN) India July Fiscal Deficit (INR): No est v 2.411T prior.

- 07:30 (US) Aug Challenger Job Cuts Y/Y: No est v 23.7K prior; Y/Y: No est v -8.2% prior.

- 07:30 (BR) Brazil July Nominal Budget Balance (BRL): -75.0Be v -89.6B prior; Primary Budget Balance: -30.2Be v -48.9B prior; Net Debt to GDP Ratio: 59.5%e v 59.1 prior.

- 07:30 (IN) India July Eight Infrastructure (Key) Industries: No est v 8.2% prior.

- 07:30 ECB July Meeting Account (Minutes).

- 07:30 (DE) ECB’s Schnabel (Germany).

- 08:00 (IN) India Q2 GDP Y/Y: 7.8%e v 6.1% prior; GVA Y/Y: 7.7%e v 6.5% prior.

- 08:00 (ZA) South Africa July Trade Balance (ZAR): -1.3Be v -3.5B prior.

- 08:00 (MX) Mexico July Unemployment Rate (unadj): 2.9%e v 2.7% prior.

- 08:00 (BR) Brazil July National Unemployment Rate: 7.9%e v 8.0% prior.

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

- 08:01 (NZ) New Zealand Aug CoreLogic House Prices Y/Y: No est v -10.1% prior.

- 08:30 (US) July Personal Income: 0.3%e v 0.3% prior; Personal Spending: 0.7%e v 0.5% prior, Personal Spending (PCE): 0.5%e v 0.4% prior.

- 08:30 (US) July PCE Deflator M/M: 0.2%e v 0.2% prior; Y/Y: 3.3%e v 3.0% prior.

- 08:30 (US) July PCE Core M/M: 0.2%e v 0.2% prior; Y/Y: 4.2%e v 4.1% prior.

- 08:30 (US) Initial Jobless Claims: 235Ke v 230K prior; Continuing Claims: 1.71Me v 1.702M prior.

- 08:30 (CA) Canada Q2 Current Account Balance: -$11.5Be v -$6.2B prior.

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

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

- 09:00 (CL) Chile July Manufacturing Production Y/Y: -3.2%e v -5.2% prior; Industrial Production Y/Y: -0.9%e v -2.7% prior; Total Copper Production: No est v 457.9K prior.

- 09:00 (CL) Chile July Retail Sales Y/Y: -9.8%e v -13% prior; Commercial Activity Y/Y: No est v -7.9% prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 25th: No est v $579.5B prior.

- 09:00 (US) Fed’s Collins.

- 09:45 (US) Aug Chicago Purchase Manager’s Index (PMI): 44.2e v 42.8 prior.

- 10:01 (AU) Australia Aug CoreLogic House Prices M/M: No est v 0.8% prior.

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

- 11:00 (MX) Mexico July Net Outstanding Loans (MXN): No est v 5.67T prior.

- 11:00 (CO) Colombia July National Unemployment Rate: No est v 9.3% prior; Urban Unemployment Rate: 9.5%e v 8.8% prior.

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

- 12:00 (CA) Canada to sell 10-year notes.

- 12:00 (ES) ECB’s De Guindos (Spain) at seminar.

- 18:00 (NZ) New Zealand Aug ANZ Consumer Confidence: No est v 83.7 prior.

- 19:00 (AU) Australia Aug Final PMI Manufacturing: No est v 49.4 prelim.

- 19:50 (JP) Japan Q2 Capital Spending (capex) Y/Y: 8.3%e v 11.0% prior; Capital Spending (ex-software) Y/Y: 7.5%e v 10.0% prior; Company Profits Y/Y: -0.1%e v+4.3% prior; Company Sales Y/Y: 4.3%e v 5.0% prior.

- 20:00 (KR) South Korea Aug Trade Balance: -$0.6Be v +$1.7B prior (revised from +$1.6B); Exports Y/Y: -11.8%e v -16.4% prior (revised from -16.5%); Imports Y/Y: -23.4%e v -25.4% prior.

- 20:01 (IE) Ireland Aug PMI Manufacturing: No est v 47.0 prior.

- 20:30 (JP) Japan Aug Final PMI Manufacturing: No est v 49.7 prelim.

- 20:30 (KR) South Korea Aug PMI Manufacturing: No est v 49.4 prior.

- 20:30 (TW) Taiwan Aug PMI Manufacturing: No est v 44.1 prior.

- 20:30 (PH) Philippines Aug PMI Manufacturing: No est v 51.9 prior.

- 20:30 (ID) Indonesia Aug PMI Manufacturing: No est v 53.3 prior.

- 20:30 (MY) Malaysia Aug PMI Manufacturing: No est v 47.8 prior.

- 20:30 (TH) Thailand Aug PMI Manufacturing: No est v 50.7 prior.

- 21:30 (AU) Australia July Home Loans Value M/M: 0.0%e v -1.0% prior.

- 21:45 (CN) China Aug Caixin PMI Manufacturing: 49.0e v 49.2 prior.

- 22:00 (ID) Indonesia Aug CPI M/M: 0.1%e v 0.2% prior; Y/Y: 3.3%e v 3.1% prior; CPI Core Y/Y: 2.3%e v 2.4% prior.

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