South Africa CPI continues to rise, Iceland hikes again to combat inflation

Notes/Observations

-Mild volatility amid slightly lower European markets, higher bond yields and a flat USD. Trading likely subdued due to upcoming Jackson Hole symposium, which starts tomorrow. BOJ Gov Kuroda confirmed earlier this morning, to attend the event.

-Iceland Central Bank (Sedibank) raised 7-day Term Deposit Rate by 75bps to 5.50%, as they see inflation peaking around 11% in 2022.

-Ukraine celebrates their Independence Day today, amid concerns about Russian aggression which appear to suggest an imminent attack, as speculated from multiple sources.

-Tropical storm Ma-on tracks across the Pacific towards Hong Kong and subsequently China coast, as Govt's raise wind warnings and alerts. Hong Kong to experience affects later tonight while China to receive impact on Thursday.

-In the UK, potential proposal to limit energy price cap at £2000 but not to be actioned until new PM in office (Sept 5th).

-Asia closed mixed with Shanghai underperforming at -1.9%. EU indices start mixed to flat with bond yields higher. US futures are flat. Safe haven: Gold +0.3%, DXY +0.1%; Commodity: Brent +1.4%, WTI +1.3%, UK Nat Gas +0.1%; Crypto: BTC -0.4%, ETH +1.6%.

Asia

- Focus on upcoming Fed Jackson Hole symposium that starts on Friday.

Asia

- Japan to consider extending the lifespan of nuclear reactors, to support the development of new-generation nuclear power plants.

Americas

- Fed's Kashkari (dove, non-voter) noted that lower oil was welcome but focused on underlying trend, it had not changed longer term outlook for inflation. Could only relax on rate hikes when saw compelling evidence inflation was heading to 2%.

- Fed Discount Rate Minutes: Nine Fed regional banks sought 75bps discount rate hike. Kansas City Fed board director wanted only a 50bps increase ahead of July meeting. St. Louis, Minneapolis sought 100bps hike.

Energy

- Weekly API Crude Oil Inventories: -5.6M v -0.4M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.05% at 431.56, FTSE -0.41% at 7,457.18, DAX -0.13% at 13,177.15, CAC-40 -0.07% at 6,357.64, IBEX-35 -0.19% at 8,210.38, FTSE MIB -0.09% at 22,360.00, SMI +0.14% at 10,948.31, S&P 500 Futures +0.03%].

Market Focal Points/Key Themes: European indices open mixed but later took on a negative bias as the session wore on; better performing sectors include financials and energy; sectors leading to the downside include materials and real estate; oil & gas subsector supported after Brent moves above $100/bbl; Richemont to sell its stake in Yoox Net-A-Porter to Farfetch; earnings expected during the upcoming US session include Salesforce, Nvidia and Autodesk.

Equities

- Consumer discretionary: Richemont [CFR.CH] +2.5% (divestment), CTS Eventim [EVD.DE] -2% (earnings), Camellia [CAM.UK] -1.5% (trading update).

- Financials: ASR Nederland [ASRNL.NL] +1.5% (earnings).

- Healthcare: Bavarian Nordic [BAVA.DK] -2% (earnings).

Speakers

- Iceland Central Bank Policy Statement reiterated stance that likely monetary policy stance would need to be further tightened to ensure inflation moves back to target within an acceptable time frame. Inflation outlook had continued to deteriorate and inflationary expectations had risen further by most measures. Saw inflation peaking around 11% in 2022 and 2022 GDP growth around 6.0%.

- BOJ Gov Kuroda to attend Jackson Hole symposium between Aug 25th thru 29th.

- Thailand's constitutional court said to have suspended PM Prayuth Chan-ocha from official duties starting Aug 24th.

- Kuwait Oil Min Khaled al-Fadhel reiterated stance to continue to support efforts to stabilize crude markets through OPEC+.

Currencies/fixed income

- A quiet EU session with USD holding steady just below recent cycle peaks. Market focus on the upcoming Fed Jackson Hole symposium to gauge the pace of rate hikes.

- EUR/USD hovering around 0.9950 area and remained under pressure amid growing recession fears for the Euro Zone fueled by a possible energy supply crunch. Gazprom said Russia to halt natural gas supplies to Europe for three upcoming days through Nord Stream 1 pipeline due to unscheduled maintenance.

- GBP/USD at 1.1825 in a quiet session.

- USD/JPY at 136.50 by mid-session.

Economic data

- (FI) Finland July PPI M/M: -0.5% v +3.3% prior; Y/Y: 28.9% v 33.9% prior.

- (NO) Norway July Credit Indicator Growth Y/Y: 5.2% v 5.1% prior.

- (JP) Japan July Final Machine Tool Orders Y/Y: 5.5% v 5.5% prelim.

- (CZ) Czech Aug Business Confidence: 9.6 v 12.6 prior; Consumer Confidence: -29.8 v -33.0 prior; Composite Index (Consumer & Business Confidence): 1.7 v 3.5 prior.

- (HU) Hungary Jun Average Gross Wages Y/Y: % v 14.3%e.

- (ZA) South Africa July CPI M/M: 1.5% v 1.5%e; Y/Y: 7.8% v 7.8%e.

- (ZA) South Africa July CPI Core M/M: 0.7% v 0.6%e; Y/Y: 4.6% v 4.5%e.

- (PL) Poland July Unemployment Rate: 4.9% v 4.8%e; Q2 Unemployment Rate: 2.6% v 2.8%e.

- (TW) Taiwan July M1 Money Supply Y/Y: 6.7% v 8.1% prior; M2 Money Supply Y/Y: 7.0% v 7.7% prior.

- (IS) Iceland Central Bank (Sedibank) raised the 7-day Term Deposit Rate by 75bps to 5.50%.

Fixed income issuance

- (IN) India sold total INR210B va. INR210B indicated in 3-month, 6-month and 12-month bills.

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.75% Mar 2025 bonds ; Avg Yield: 3.50% v 1.72% prior; bid-to-cover: 2.67x v 3.93x prior.

- (SE) Sweden sold SEK2.0B vs. SEK2.0B indicated in 2.25% Jun 2032 bonds; Avg Yield: 1.7314% v 1.5654% prior; bid-to-cover: 3.07x v 3.56x prior.

Looking ahead

- (CO) Colombia July Retail Confidence: No est v 33.7 prior; Industrial Confidence: No est v 11.5 prior.

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

- 05:30 (DE) Germany to sell €4.0B in 1.7% Aug 2032 Bunds.

- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 26-week Bills.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (CZ) Czech Republic to sell 2024, 2028 and 2030 bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (US) MBA Mortgage Applications w/e Aug 19th: No est v -2.3% prior.

- 08:00 (BR) Brazil mid-Aug IBGE Inflation IPCA-15 M/M: -0.8%e v +0.1% prior; Y/Y: 9.5%e v 11.4% prior.

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

- 08:00 (US) Fed’s Jackson Hole agenda published.

- 08:30 (US) July Preliminary Durable Goods Orders: 0.8%e v 2.0% prior; Durables (ex-transportation): 0.2%e v 0.4% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.3%e v 0.7% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.5%e v 0.7% prior.

- 09:00 (CL) Chile July PPI M/M: No est v 1.1% prior.

- 10:00 (US) July Pending Home Sales M/M: -2.6%e v -8.6% prior; Y/Y: -21.4%e v -19.8% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 12:00 (RU) Russia July Industrial Production Y/Y: -2.3%e v -1.8% prior.

- 13:00 (US) Treasury to sell 2-Year FRN Notes.

- 13:00 (US) Treasury to sell 5-Year Notes.

- 15:00 (AR) Argentina Jun Shop Center Sales Y/Y: No est v 284% prior; Supermarket Sales Y/Y: No est v -0.6% prior.

- 17:00 (KR) South Korea July PPI Y/Y: No est v 9.9% prior.

- 18:45 (NZ) New Zealand Q2 Retail Sales (ex-inflation) Q/Q: +1.7%e v -0.5% prior.

- 19:50 (JP) Japan July PPI Services Y/Y: 2.2%e v 2.0% prior.

- 21:00 KR) Bank of Korea (BOK) Interest Rate Decision: Expected to raise 7-day Repo Rate by 25bps to 2.50%.

- 21:30 (JP) BOJ’s Nakamura.