Quiet session as markets await key US inflation data on Wed

Notes/Observations

- USD softens ahead of US July CPI tomorrow with consensus of a flat to lower YoY reading compared to last month, potentially suggesting the Fed rate path trajectory might be less aggressive than anticipated.

- Macro economic data and news is light. Underlying themes revolve around China-US geopolitical tensions as well as Europe’s energy shortage, which continues to be tested via lackluster Russian supply and unusually hot summers across Europe and the UK.

- 'Meme' stocks continue surprise rally in pre-market after so-called 'short squeeze' pushes by social media groups. Pre-market BBBY +12.2%, AMC +2.6%, GME +0.7%. High-growth stocks in general gain momentum as spotlight seems to focus on the 'value' since the large declines over the last 12-18 months.

- Asia closed mixed with Nikkei 225 underperforming at -0.9%. EU indices are flat. EU bond yields are mixed. US futures are flat. Safe haven: Gold+0.1 %, DXY -0.4%; Commodity: Brent -1.2%, WTI -1.4%; Crypto: BTC -1.3%, ETH 0.0%.

Asia

- Japan Trade Min Hagiuda expected to become the LDP policy chief under the cabinet reshuffle.

- Hong Kong Govt refuted earlier press speculation on relaxing housing stamp duties. Reports circulated that Hong Kong might consider waiving extra stamp duty on homes for mainland Chinese buyers as a way to shore up the economy. Proposal was given by a top adviser Ip to Hong Kong’s leader.

Taiwan

- Approx two dozen China and Taiwan warships stayed close to Taiwan Strait median line on Tuesday morning, with some Chinese ships briefly attempting to cross the line.

- Taiwan Foreign Min Wu stated that China continued its sea and military exercises especially around the median line which should be of international concern. Exercises had hindered one of the world’s busiest shipping routes.

Europe

- UK July BRC Sales LFL Y/Y: +1.6% v -1.3% prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.27% at 437.72, FTSE +0.11% at 7,490.71, DAX -0.35% at 13,640.14, CAC-40 +0.02% at 6,525.65, IBEX-35 +0.33% at 8,300.11, FTSE MIB -0.02% at 22,726.00, SMI -0.14% at 11,150.26, S&P 500 Futures +0.19%].

Market Focal Points/Key Themes: European indices open modestly lower across the board but later traded mixed with a bias towards the red; sectors leading to the upside include financials and energy; sectors among those leading to the downside are materials and technology; insurance subsector supported following Munich Re’s results; Kongsberg Automotive sells part of Shawinigan to BRP; earnings expected in the upcoming US session include Coinbase, Warner Music, ClearChannel and Perrigo.

Equities

- Consumer discretionary: RPS Group [RPS.UK] +75% (to be acquired), Dufry [DUFN.CH] +3% (earnings), InterContinental Group [IHG.UK] -2% (earnings; dividend; buyback), International Workplace Group [IWG.UK] -17% (earnings).

- Energy: Capricorn Energy [CNE.UK] +3% (holder statement on merger).

- Financials: Munich Re [MUV2.DE] +1% (earnings).

- Healthcare: 4SC [VSC.DE] +16% (earnings).

- Industrials: Continental [CON.DE] -1.5% (final earnings).

Speakers

- BOE Ramsden stated that he believe it's more likely than not that MPC would have to raise Bank Rate further. But had yet reached a firm decision on that. Had to act forcefully to ensure inflation did not become embedded. MPC could be in a situation where it was cutting rates and selling assets at the same time.

- Germany Labor Agency IAB study: Domestic economy to lose >€260B in added value by 2030 due to Ukraine war and energy prices.

- Romania Central Bank Gov Isarescu stated that it slowed the pace of tightening due to the first signs that CPI was easing. Policy normalization meant heading towards positive real interest rates. Inflation pressure from Ukraine conflict to ease from 2023 and saw CPI back within target range in Jun 2024.

- China said to have ordered a surprise audit of the entire $3.0T trust industry.

Currencies/Fixed income

- FX markets were subdued as participant waited for key inflation data in the coming sessions. Forecasts for the US July CPI reading suggesting that perhaps the need for further aggressive Fed rate hikes was easing.

- EUR/USD just above the 1.0235 area with USD/JPY staying below 135 handle.

Economic data

- (JP) Japan July Preliminary Machine Tool Orders Y/Y: 5.5% v 17.1% prior.

- (NO) Norway Q2 Average Monthly Earnings Y/Y: 3.3% v 3.3% prior.

- (DK) Denmark Jun Current Account Balance (DKK): 28.6B v 26.1B prior; Trade Balance: 3.2B v 1.1B prior.

- (HU) Hungary July CPI M/M: 2.3% v 1.5%e; Y/Y: 13.7% v 13.0%e (16th month above target range and highest annual pace since June 2001).

- (CZ) Czech July International Reserves: $147.5B v $154.6B prior.

- (IT) Bank of Italy releases Banks and Money Monthly Statistics: July Gross Non-performing Loans (NPLs): €35.0B vs. €36.8B prior.

Fixed income issuance

- (ID) Indonesia sold total IDR10.6T vs. IDR7.0T target in Islamic bills and bonds (sukuk).

- (ES) Spain Debt Agency (Tesoro) sold total €4.815B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £1.75B in 1.25% July 2051 Gilts; Avg Yield: 2.360% v 2.531% prior; bid-to-cover: 2.52x v 2.24x prior; Tail: 0.2bps v 0.4bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €1.15B vs. €1.15B indicated in 2032 and 2044 RAGB Bonds.

Looking ahead

- (PT) Bank of Portugal Releases Data on Banks.

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

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

- 05:30 (DE) Germany to sell €6.0B in New Sept 2024 Schatz.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills.

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

- 06:00 (US) July NFIB Small Business Optimism: 89.5e v 89.5 prior.

- 06:00 (PT) Portugal Jun Trade Balance: No est v -€2.4B prior.

- 06:55 (US) Daily Libor Fixing.

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

- 07:00 (BR) Brazil Central Bank (BCB) Aug Minutes.

- 07:00 (MX) Mexico July CPI M/M: 0.7%e v 0.8% prior; Y/Y: 8.1%e v 8.0% prior.

- 07:00 (MX) Mexico July CPI Core M/M: 0.6%e v 0.8% prior; Y/Y: 7.6%e v 7.5% prior.

- 08:00 (BR) Brazil July IBGE Inflation IPCA M/M: -0.6%e v +0.7% prior; Y/Y: 10.1%e v 11.9% prior.

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

- 08:30 (US) Q2 Preliminary Nonfarm Productivity: -4.7%e v -7.3% prior; Unit Labor Costs: 9.5%e v 12.6% prior.

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

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

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

- 11:30 (US) Treasury to sell 52-week bills.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 15:00 (AR) Argentina Jun Industrial Production Y/Y: No est v 11.9% prior; Construction Activity Y/Y: No est v 19.9% prior.

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

- 19:00 (KR) South Korea July Unemployment Rate: 2.9%e v 2.9% prior.

- 19:50 (JP) Japan Jun PPI (CGPI) M/M: 0.4%e v 0.7% prior; Y/Y: 8.4%e v 9.2% prior.

- 21:10 (JP) BOJ bond purchase operations for 1-3-year, 3-5-year and 5-10-year maturities.

- 21:30 (CN) China July CPI Y/Y: 2.9%e v 2.5% prior; PPI Y/Y: 4.9%e v 6.1% prior.

- 22:00 (JP) Japan July Tokyo Avg Office Vacancies: No est v 6.4% prior.

- 22:35 (CN) China to sell 2-year and 5-year Upsized Bonds.