Notes/Observations

- Bond yields consolidating around record lows as recent weak Chinese and German data casted doubt on whether global growth would recover in the second half of 2019

- ECB said to be poised to announce a stimulus package in Sept that would overshoot investors' expectations

Asia:

- BOJ trims purchases of 5-10y zone in its regular operations

- South Korea Military: North Korea fired two projectiles towards East Sea (Note: sixth such launch since July 25th)

- China PBoC set yuan reference rate: 7.0312 v 7.0268 prior (1st weaker CNY fixing in 3 sessions)

Europe/Mideast:

- ECB's Rehn (Finland): ECB needed to have significant and impactful easing package in Sept; weakening economy justified a monetary policy response. ECB easing should include rate cuts and substantial bond purchases

Americas:

- Fed's Bullard (dove, voter): Would like to take action to make sure we hit our inflation target; did not want to prejudge what action Fed might take at next meeting, but wanted to take action. Fed certainly paid attention to markets and data; we're going to have to assess how global slowdown affected US economy

- Mexico Central Bank (Banxico) cut the Overnight Rate unchanged at 8.25% (not expected) for its 1st rate cut since Jun 2014

- US Jun Net Long-term TIC holdings saw Japan pass China as top foreign holder of Treasuries. Japan Total Holdings of US Treasuries: $1.12T with China Total holdings at $1.11T (Insight: China and Japan account for about one-third of all foreign ownership of Treasuries)

- Trump has said he had a call coming soon with Xi

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +1.06% at 368.96, FTSE +0.65% at 7,112.85, DAX +0.96% at 11,522.58, CAC-40 +0.96% at 5,287.38, IBEX-35 +1.06% at 8,609.65, FTSE MIB +1.25% at 20,270.50, SMI +1.07% at 9,709.50, S&P 500 Futures +1.00%]

Market Focal Points/Key Themes: European Indices trade higher across the board, tracking higher US futures following a mixed session in Asia. On the corporate front shares of Gurit Holdings gains on higher profits and Revenues and raised outlook; IMCD trades sharply lower on disappointing Q2 results citing a challenging environment; Ratos declines over 10% as impairment affected its H1 results, while Deutsche Euroshop also declines on flat earnings and affirmed outlook. Others earnings related gainers include Ades International and Volati, while Edomines, Apetit, Solgold and The Quarto Group are among other decliners on earnings. In other news United Internet gains as the CEO discusses plans for 5G expansion and his long term business model; Sunrise Communication also gains as Freenet is to vote against a proposed capital increase, with Pendragon gaining on the divestment of Puente Hills Chevrolet. Looking ahead notable earners include Hibbett Sports, Foot Locker and Buckle.

 

Equities

- Materials: IMCD [IMCD.NL] -16% (earnings)

- Financials: Ratos [RATOB.SE] -12% (earnings)

- Healthcare: Bayer [BAYN.DE] +2% (analyst action)

- Industrials: Pendragon [PDG.UK] +2.5% (divestment)

- Technology: AMS [AMS.CH] +3%, Infineon [IFX.DE] +2% (Nvidia results), United Internet [UTDI.DE] +6% (CEO interview)

- Telecom: Sunrise Communication [SPCG.CH] +3% (freenet to vote against the proposed capital increase)

 

Speakers

- UK Energy Min Kwarteng: UK quite likely to get a Brexit deal with EU. Believed that PM Johnson would win a confidence vote in parliament

- Indonesia President Jokowi 2020 budget speech set the 2020 GDP growth target at 5.3% vs. 5.2% y/y. He noted that upcoming economic challenges were getting heavier, complex. Indonesia should be vigilant on trade wars, weak exchange rates

 

Currencies/Fixed Income

- USD was firmer while global bond yields were consolidating around record low levels as recent weak Chinese and German data casted doubt on whether global growth would recover in the second half of 2019

- EUR/USD was softer by 0.2% to probe below the 1.11 level as reports circulated that ECB was poised to announce a stimulus package in Sept that would overshoot investors' expectations. On Thursday, ECB's Rehn talked about a substantial stimulus of rate cut and QE.

- GBP/USD higher after a spat of better UK data in recent days and reports that no-deal Brexit looked a little less certain as some UK MPs who are opposed to Brexit might be prepared to accept Labour leader Corbyn's unity government proposal.

- Gold prices poised for its 3rd week of gains on safe-haven flows amd lower interest rate costs.

 

Economic Data

- (CZ) Czech July PPI Industrial M/M: -0.1% v -0.1%e; Y/Y: 2.1% v 2.2%e

- (TR) Turkey Jun Industrial Production M/M-3.7% v +1.2% prior; Y/Y: -3.9% v -0.3%e

- (CN) Weekly Shanghai copper inventories (SHFE): 162.8K v 156.4K tons prior

- (RU) Russia Narrow Money Supply Narrow w/e Aug 9th (RUB): 10.53T v 10.42T prior

- (TW) Taiwan Q2 Final GDP Y/Y: 2.4% v 2.4%e

- (HK) Hong Kong Q2 Final GDP Q/Q: -0.4% v -0.3%e; Y/Y: 0.5% v 0.6%e

- (NG) Nigeria July CPI Y/Y: 11.1% v 11.2%e

- (EU) Euro Zone Jun Trade Balance (Seasonally Adj): €B v €18.5Be; Trade Balance NSA: €B v €23.0B prior

Fixed Income Issuance

 

Looking Ahead

- OPEC Monthly Report

- 05:30 (IN) India to sell 2024, 2029, 2043 and 2049 bonds

- 06:00 (UK) DMO to sell £6.5B in 1-month, 3-month and 6-month bills (£1.0B, £2.5B and £3.0B respectively)

- 07:00 (NO) Norway Central Bank (Norges) Dep Dir Matsen

- 07:30 (IN) India Weekly Forex Reserve w/e Aug 9th: No est v $429.0B prior

- 08:00 (PL) Poland July CPI Core M/M: 0.1%e v 0.4% prior; Y/Y: 2.1%e v 1.9% prior

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

- 08:30 (US) July Housing Starts: 1.257Me v 1.253M prior; Building Permits: 1.270Me v 1.232M prior (revised from 1.220M)

- 08:30 (CA) Canada Jun Int'l Securities Transactions(CAD): No est v 10.2B prior

- 09:00 (BE) Belgium Jun Trade Balance: No est v €0.4B prior

- 09:00 (RU) Russia July PPI M/M: +0.2%e v -0.6% prior; Y/Y: 3.4%e v 4.1% prior

- 10:00 (US) Aug Preliminary University of Michigan Confidence: 97.0e v 98.4 prior

- 11:00 (EU) Potential sovereign ratings after European close (Moody's on Netherlands; Fitch on Hungary; S&P on Hungary; Canadian Rating Agency DBRS on Austria and Belgium

- 13:00 (US) Weekly Baker Hughes Rig Coun

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