Global Markets Shrug Off Japan GDP Softness

Economic Data

- (RU) Russia July YTD Budget Balance (RUB): 680.0B v 649.3B prior - 07:00 (US) MBA Mortgage Applications w/e Aug 8th: -2.7% v +1.6% prior
- (IE) Ireland July Consumer Confidence Index: 89.4 v 81.1 prior
- (ZA) South Africa Jun Retail Sales M/M: -0.4% v +0.3%e; Y/Y: 0.0% v 2.0%e
- (PL) Poland Jun Current Account Balance: -0.4B v -€0.3Be; Trade Balance: €0.3B v €0.6Be
- (PL) Poland July CPI M/M: -0.2% v -0.2%e; Y/Y: -0.2% v -0.2%e
- (US) July Advance Retail Sales M/M: 0.0% v 0.2%e; Retail Sales Ex Auto M/M: 0.1% v 0.4%e; Retail Sales Ex Auto and Gas: 0.1% v 0.4%e; Retail Sales Control Group: 0.1% v 0.4%e
- (CA) Canada July Teranet/National Bank HPI M/M: 1.1% v 0.9% prior; Y/Y: 4.9% v 4.4% prior; House Price Index: 165.84% v 163.98 prior
- (US) Jun Business Inventories: 0.4% v 0.4%e
- (US) DOE Crude: +1.40M v -2Me; Gasoline: -1.16M v -1.5Me; Distillate: -2.42M v +0.5e

- Asian markets brushed off the decline in the Japan Q2 GDP data, although Shanghai slumped on weak July new loans data. Meanwhile European markets saw pretty solid gains, helping US futures advance in the premarket. As of writing, the DJIA is up 0.34%, the S&P500 is up 0.40% and the Nasdaq is gaining 0.80%.

- This morning's July retail sales numbers were flat, for the worst reading in the series in six months. The ex-autos figure was little better, at +0.1%. Analysts suggested that the weak July data is merely making up for unexpectedly strong numbers in May and June.

- The BoE Quarterly Inflation Report was nowhere near as hawkish as expected, as it merely amended its spare capacity view to 1.00-1.25% from 1.00-1.50% prior and trimmed the wage growth forecast for 2014 and 2015. The BoE said there were no numerical thresholds for wage growth to trigger a rate hike. This contrasts sharply with Governor Carney's earlier more hawkish tone. GBP/USD is testing two-month lows below 1.6696 in the aftermath of the report.

- In Russia, the humanitarian aid convoy sent from Moscow to Ukraine has been disowned by both Kiev and the International Red Cross. Russia has dismissed allegations that the aid would be used as cover for some form of military intervention, however the western powers remain highly skeptical. EU Foreign policy Chief Catherine Ashton has called a special meeting of EU foreign ministers on Friday to discuss both Ukraine and Iraq.

- Shares of Deere and Company are down slightly in the early going after the firm mowed down its FY14 forecasts, and saw both earnings and revenue decline on a y/y basis. Deere's third-quarter performance reflected moderating conditions in the global farm sector, which have negatively affected demand for farm machinery and contributed to lower sales.

- Retail analyst firm ChannelAdvisor released estimated July SSS figures for Amazon and eBay. It said that Amazon July SSS were +40.4% versus June SSS of +34.4%, and estimated eBay July SSS +9.7% versus June SSS +12.3%. Shares of AMZN are up 3.5% while EBAY is down -1.0%.

- Macys missed expectations in its second quarter, with growth in earnings and revenue disappointing expectations. The company also trimmed its full-year SSS guidance. On the conference call, executives warned Q3 sales comps would be lower than comps in Q4 and margins would be flat to down. Shares of Macys are down more than 4%.

Looking Ahead

- 12:00 (CA) Canada to sell 2-Year Bonds
- 13:00 (US) Treasury to sell $24B in 10-Year Notes
- 13:30 (MX) Mexico Central Bank Quarterly Inflation Report
- 21:00 (KR) Bank of Korea (BoK) Interest Rate Decision: Expected to cut 7-Day Repo Rate by 25bps to 2.25%
- 21:40 (AU) RBA Senior Manager Hancock speaks on panel