UK economy continues recovery from recession, waiting for Walmart earnings and jobless claims data

Notes/observations

- Easing inflation outlook enables more central banks to ease (Philippines cut during session; Norway amends it forward guidance to be less hawkish).

- UK Q2 GDP data provides no surprises; Jun production data beats.

-Press reports that China to impose export control on antimony-related materials from Sept 15th; Antimony’s key properties are its ability to harden and strengthen certain metals; It is also commonly used in semiconductors; As of 2020, antimony production in the US came only from recycling (mainly used lead-acid batteries), with negligible amounts coming from domestic mining.

-Shares of Bavarian Nordic surging as it said it could provide 10M Mpox vaccine doses by end of 2025 after WHO director Tedros declared MPOX outbreak a public health international emergency.

-US Medicare has reached price agreements for all 10 drugs selected for the initial round of negotiations under the Inflation Reduction Act; Medicare's negotiated drug prices said to save taxpayers $6B (v $3.7B initial estimate) in first year of 2026.

- Assumption Day holiday in European keeps participation light.

- Focus on more key US data later today (feature weekly Initial Jobless Claims data, Retail Sales and Industrial Production figures for July along with two regional Fed reports) and Walmart/Deere earnings for colour on US consumer state.

Asia

- Japan Q2 Preliminary GDP Q/Q: 0.8% v 0.6%e; Annualized Q/Q: 3.1% v 2.3%e.

- Australia July Employment Change +58.2K v +20.0Ke; ; Unemployment Rate: 4.2% v 4.1%e.

- Australia Aug Consumer Inflation Expectation Survey : 4.5% v 4.3% prior.

- China July Industrial Production Y/Y: 5.1% v 5.3%e.

- China July Retail Sales Y/Y: 2.7% v 2.6%e.

- China July YTD Urban Fixed Assets Y/Y: 3.6% v 3.9%e.

- China July YTD Property Investment Y/Y: -10.2% v -9.9%e.

- China July Surveyed Jobless Rate: 5.2% v 5.1%e.

- China July New Home Prices M/M: -0.8% v -0.7% prior; Used Home Prices M/M: -0.7% v -0.9% prior.

- RBNZ Gov Orr stated during medias rounds that CPI was sustainably returning to 1-3% target band; Had strong control over the inflation story.

Americas

- Fed's Bostic (hawk, voter) noted that the Fed could not afford to be late to ease policy; "Open" to Sept rate cut as inflation cooled.

- Fed's Goolsbee (non-voter for 2024): Rising unemployment might indicate worsening job market. Restrictive policy and the size of rate cuts dependent on data.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.21% at 505.14, FTSE +0.09% at 8,288.48, DAX +0.42% at 17,955.75, CAC-40 +0.09% at 7,339.83, IBEX-35 +0.17% at 10,771.06, FTSE MIB +1.00% at 32,328.03, SMI +0.19% at 12,096.20, S&P 500 Futures +0.10%]

Market Focal Points/Key Themes: European indices open higher across the board and stuck to the trend through the early part of the session; markets generally continuing upbeat trends from earlier on the week on lower volumes; several market closures for holidays, including Cyprus, Greece and Italy; among sectors leading the way higher are financials and technology; lagging sectors include materials and energy; oil & gas subsector under pressure following surprise inventory build in the US with Brent dipping below $80/bbl; focus on US retail sales figures later in the day; earnings expected in the upcoming Americas session include Walmart, Applied Materials, Deere and Alibaba.

Equities

- Consumer discretionary: Metro AG [B4B.DE] +3.5% (earnings).

- Energy: Orsted [ORSTED.DK] -7.5% (earnings; impairments due to project delay) - Financials: OSB Group [OSB.UK] -19.5% (earnings; cuts outlook; buyback) - Healthcare: Bavarian Nordic [BAVA.DK] +11.0% (can provide 10M Mpox vaccine doses by end of 2025 after WHO director Tedros declared MPOX outbreak a public health international emergency).

- Technology: Adyen [ADYEN.NL] +8.5% (earnings), accesso Technology Group [ACSO.UK] -26.0% (trading update; cuts outlook) - Telecom: Ericsson [ERICB.SE]. +0.5%, Nokia [NOKIA.FI] +0.5% (Cisco results and guidance).

Speakers

- Norway Central Bank Policy Statement reiterated stance that policy rate would likely be kept at current level for some time ahead but did removed the phase that it might be needed somewhat longer than previously projected. Inflation had fallen considerably from its peak but particularly concerned with NOK currency (Krone) developments. Rise in business costs to slow disinflation. Growth had slowed from prior tightening cycle. To have more economic developments at the Sept meeting

- Norway Central Bank (Norges) Gov Bache post rate decision press conference noted that NOK currency (Krone) weakness was due to external factors. Threshold for FX intervention was very high. Had no target for FX but aware of its impact on inflation.

- Philippines Central Bank Statement noted it was moving to a less restrictive policy stance and to take a measured approach to price stability. Risks to the inflation outlook was tilted to the downside with inflation expectations being well anchored. Growth prospects to remain firm. Could ease by 25bps again at either Oct, Dec meetings.

- Japan FY25/25 (next fiscal year) budget request seen over ¥115T (record level). Govt said to be considering raising assumed long-term interest rate to 2.1%.

Currencies/fixed income

- USD was basically steady in the aftermath of Wed CPI data. Dealers noted that the reading should have the Fed beginning to cut interest rates in September but dialing back the probability of an aggressive 50bps.

- GBP/USD at 1.2850 as markets evaluate a string of mixed economic data. Dealers concluding that the BOE did not need to rush into cutting interest rates again. There were no surprises in the sessions UK GDP reading.

- EUR/USD at 1.1010 area in quiet trade. Pair off its fresh 2024 high of 1.1050 following the US CPI reading yesterday.

- USD/JPY holding above 147 level.

Economic data

- (NL) Netherlands July Unemployment Rate: 3.6% v 3.7%e.

- (UK) Jun Monthly GDP M/M: 0.0% v 0.0%e.

- (UK) Q2 Preliminary GDP Q/Q: 0.6% v 0.6%e; Y/Y: 0.9% v 0.9%e.

- (UK) Q2 Preliminary Private Consumption Q/Q: 0.2% v 0.5%e; Government Spending Q/Q: 1.4% v 0.3%e; Gross Fixed Capital Formation Q/Q: 0.4% v 0.4%e; Exports Q/Q: +0.8% v -1.2%e; Imports Q/Q: +7.7% v +1.5%e.

- (UK) Q2 Preliminary Total Business Investment Q/Q: -0.1% v +0.4%e; Y/Y: -1.1% v -1.0% prior.

- (UK) Jun Industrial Production M/M: 0.8% v 0.1%e; Y/Y: -1.4% v -2.1%e.

- (UK) Jun Manufacturing Production M/M: 1.1% v 0.2%e; Y/Y: -1.5% v -2.3%e.

- (UK) Jun Construction Output M/M: 0.5% v -0.4%e; Y/Y: -1.7% v -2.1%e.

- (UK) Jun Index of Services M/M: -0.1% v +0.1%e; 3M/3M: 0.8% v 0.9%e.

- (UK) Jun Visible Trade Balance: -£18.9B v -£15.9Be; Overall Trade Balance: -£5.3B v -£3.5Be.

- (NO) Norway July Trade Balance (NOK): 59.3B v 60.9B prior.

- (DK) Denmark July PPI M/M: 0.3% v 0.5% prior; Y/Y: +0.3% v -0.5% prior.

- (CH) Swiss July Producer & Import Prices M/M: 0.0% v 0.0% prior; Y/Y: -1.7% v -1.9% prior.

- (PH) Philippines Central Bank (BSP) cut Overnight Borrowing by 25bps to 6.25% (as expected) to move into easing.

- (CH) Swiss Q2 Preliminary GDP Q/Q: 0.5% v 0.4%e.

- (NO) Norway Central Bank (Norges) left the Deposit Rates unchanged at 4.50% (as expected).

- (TR) Turkey July Central Gov't Budget Balance (TRY): -96.8B v -275.3B prior.

- (UK) Q2 Preliminary Output Per Hour Y/Y: -0.1%v +0.1% prior.

- (IS) Iceland Q2 Unemployment Rate: 3.6% v 4.2% prior.

Fixed income issuance

- None seen.

Looking ahead

- (NG) Nigeria July CPI Y/Y: 33.3%e v 34.2% prior.

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

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

- 06:00 (IE) Ireland Jun Trade Balance: No est v €7.1B prior.

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

- 08:30 (US) Aug Empire Manufacturing Index: -6.0e v -6.6 prior.

- 08:30 (US) Aug Philadelphia Fed Business Outlook: 5.0e v 13.9 prior.

- 08:30 (US) July Advance Retail Sales M/M: 0.1%e v 0.0% prior; Retail Sales (ex-auto) M/M: 0.1%e v 0.4% prior; Retail Sales (ex-auto/gas): 0.2%e v 0.8% prior; Retail Sales (Control Group): 0.1%e v 0.9% prior.

- 08:30 (US) July Import Price Index M/M: -0.1%e v 0.0% prior; Y/Y: 1.5%e v 1.6% prior; Import Price Index (ex-petroleum) M/M: 0.1%e v 0.2% prior;

- 08:30 (US) July Export Price Index M/M: 0.0%e v -0.5% prior; Y/Y: 0.1%e v 0.7% prior.

- 08:30 (US) Initial Jobless Claims: 235Ke v 233K prior; Continuing Claims: 1.87Me v 1.875M prior.

- 08:30 (CA) Canada Jun Wholesale Sales (ex-petroleum) M/M: -0.6%e v -0.8% prior.

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

- 09:00 (CA) Canada July Existing Home Sales M/M: No est v 3.7% prior.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 9th: No est v $606.1B prior.

- 09:10 (US) Fed Musalem.

- 09:15 (US) July Industrial Production M/M: -0.3%e v +0.6% prior; Manufacturing Production: -0.3%e v +0.4% prior; Capacity Utilization: 78.5%e v 78.8% prior.

- 10:00 (US) Aug Mar NAHB Housing Market Index: 42e v 42 prior.

- 10:00 (US) Jun Business Inventories: 0.3%e v 0.5% prior.

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

- 11:00 (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: 1.8%e v 5.0% prior.

- 11:00 (PE) July Unemployment Rate: No est v 6.6% prior.

- 11:30 (IL) Israel July CPI M/M: 0.5%e v 0.1% prior; Y/Y: 3.1%e v 2.9% prior.

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

- 12:00 (CO) Colombia Q2 GDP Q/Q: No est v 1.1% prior; Y/Y: 3.1%e v 0.7% prior.

- 12:00 (CO) Colombia Jun Economic Activity Index (Monthly GDP) NSA Y/Y: 1.8%e v 2.5% prior.

- 12:00 (ZA) South Africa Central bank (SARB) Gov Kganyago.

- 13:10 (US) Fed’s Harker.

- 16:00 (US) Jun Total Net TIC Flows: No est v $15.8B prior; Net Long-term TIC Flows: No est v -$54.6B prior.

- 18:30 (NZ) New Zealand July Manufacturing PMI: No est v 41.1 prior.

- 18:45 (NZ) New Zealand Q2 PPI Input Q/Q: No est v 0.7% prior; Output Q/Q: No est v 0.9% prior.

- 20:30 (SG) Singapore July Non-oil Domestic Exports M/M: +2.1%e v -0.4% prior; Y/Y: +1.2%e v -8.7% prior.

- 22:30 (KR) South Korea to sell KRW300B in 50-year Bonds.- 23:30 (JP) Japan to sell 3-Month Bills.

- 23:35 (JP) Japan to sell 10-year inflation-linked JGB Bonds.