Consolidation mode in calm trading, focus on corporate profits


Remarks / Observations

– The RBA was deemed hawkish because it maintained the reduction in its obligations scheduled for September despite recent virus lockdowns.

Asia

– The RBA left its cash rate target unchanged at 0.10% and kept its 3-year yield target at 0.10% (both as expected). Reiterated his prediction that the conditions for raising rates would not be met until 2024 at the earliest. Maintain its reduction plan for bond purchases but remains flexible. The economy was still expected to experience strong growth next year.

– Japan July Tokyo CPI Y / Y: -0.1% against + 0.1% ev 0.0% previously; CPI (excluding fresh food) Y / Y: 0.1% against 0.0% e.

– South Korea’s July CPI remained above target for the 4th month and equaled the fastest annual pace in nearly a decade (Y / Y: 2.6% vs. 2.4% e) .

– Japan Fin Min Aso noted that Japan’s budgetary situation is deteriorating but should return to normal once vaccinations have started; Don’t consider extra extra budget at this point.

– The Reserve Bank of New Zealand (RBNZ) may restrict high leveraged mortgages to 10% of loans, effective October 1.

Europe

– UK Prime Minister Johnson said he canceled plans for an ‘orange’ COVID watchlist after Cabinet vehemently opposed and worried about UK vacations being canceled as a result.

– German CDU Wirtschaftsrat Business Group Sec General Steiger: Rising inflation was a worrying signal, ECB interest rate policy is a threat to the euro.

Americas

– Treasury Sec Yellen’s letter to Congress noted that the United States will reach statutory debt limit on August 1; The Treasury will begin implementing special measures by August 2 to extend the maturity of the debt.

– Fed Waller (hawk, voter): personal opinion is that the Fed could make an announcement on the tap in September; If we get 800,000 to 1 million new jobs in the next two jobs reports, we will have recovered 85% of the jobs lost, which is “significant further progress”.

Speakers / Fixed income / FX / Commodities / Erratum

Actions

Indices [Stoxx600 +0.22% at 465.48, FTSE +0.29% at 7,101.95 , DAX +0.08% at 15,580.45, CAC-40 +0.76% at 6,726.51, IBEX-35 -0.02% at 8,757.00, FTSE MIB +0.16% at 25,392.50, SMI +0.19% at 12,193.68, S&P 500 Futures +0.35%].

Market focal points / Key themes: European indices opened mixed and failed to gain direction as the session progressed; rising sectors include energy and financials; while sectors leading to the decline include technology and materials; the energy sector is supported following BP’s outlook; Sanofi to acquire Translate Bio; Smiths sells a medical unit; earnings expected in the next US session include Blue Apron, Under Armor Eli Lilly and Lyft.

Actions

Consumer discretionary: Domino’s Pizza [DOM.UK] + 2% (gains).

Energy: BP [BP.UK] + 3% (earnings; redemption).

Finances: Societe Generale [GLE.FR] + 5% (gains), Generali [G.IT] -1.5% (gains), Standard Chartered [STAN.UK] + 1.5% (gains)

Health: Sanofi [SAN.FR] + 1% (acquires Translate Bio).

Industrial: Maersk [MAERSKB.DK] + 1% (preliminary gains), Bmw [BMW.DE] -4% (gains), Stellantis [STLA.IT] + 5% (gains).

Technology: TeamViewer [TMV.DE] -4% (gains), Infineon [IFX.DE] -2% (gains).

Telecom:

Loudspeakers

Iran’s new president Raisi said he would take steps to lift US sanctions.

China city of Beijing to ban train passengers from 23 regions from fighting the spread of the coronavirus. The regions included Zhengzhou, Nanjing, Yangzhou, Shenyang and Dalian and were labeled with higher Covid-19 risks after a number of infections were found.

Currency / Fixed Income

– The forex market was relatively calm in dismal trading on Tuesday. Brokers noted that the recent bipartisan infrastructure bill in the United States has helped boost risk appetite and keep the greenback on the defensive for now.

GBP / USD returned above the 1.39 level focusing on Thursday’s BOE rate decision. Dealers believe BOE will signal that it has been reported that it is in no rush to scale back its Gilt buyout schedule from current levels of £ 875 billion. The likely reopening of borders in Thursday’s review of UK travel restrictions also helped the currency GBP, which was seen as improving the story of the recovery.

– The AUD currency strengthened after the RBA indicated it would continue with its plan to start cutting bond purchases in September. Dealers noted the move came as a hawkish surprise and had predicted that the RBA would delay cutback plans in response to the negative impact of the latest round of lockdowns.

Economic data

– (AU) Australia July Commodity Index: 142.3 against 131.1 previously.

– (CH) Confidence of Swiss consumers in the 3rd quarter of SECO: + 7.8-5.3e.

– (ES) Spain Net change in unemployment in July: -197.8K versus -166.9K previously.

– (TR) Turkey July CPI M / M: 1.9% vs. 1.6% e; Y / Y: 19.0% vs. 18.6% e; Core CPI Y / Y Index: 17.2% vs. 17.7% e.

– (TR) Turkey July PPI M / M: 2.5% vs. 1.7% e; Y / Y: 44.9% against 43.9% e.

– (BR) Brazil July FIPE CPI M / M: 1.0% v 0.9% e.

– (EU) Euro zone June PPI M / M: 1.4% vs. 1.4% e; Y / Y: 10.2% against 10.3% e.

Issue of fixed income securities

– (IDENTIFIER) Indonesia sold total IDR34.0T against target IDR33.0T in bills and bonds
v 2.14x before.

– (UK) DMO sold £ 2.0 billion in 1.25% gilts in July 2051; Average return: 0.972% vs. 1.274% previously; cover offer: 2.41xv 2.24x front; Tail: 0.5 bps against 0.2 bps before.

– (TO) Austrian Debt Agency (AFFA) sold a total of 1.495 billion euros against 1.495 billion euros indicated in the RAGB 2025 and 2031 bonds.

– Sold for € 805m in RAGB 0% Bonds Apr 2025; Average return: -0.742% against -0.596% previously; bid-to-cover: 2.05xv 2.42x front.

– Sold € 690m in RAGB 0% Bonds February 2031; Average return: -0.271% vs. -0.059% previously; cover offer: 2.08 x.

Look ahead

– (United States) Data on total vehicle sales for July during the session.

– (EG) July gross official reserves of Egypt: no estimate against 40.6 billion dollars previously; Net reserves: no estimate against 40.6 billion dollars previously.

– 05:15 (CH) Switzerland sells 3-month bills.

– 5.25 am (EU) Daily liquidity statistics from the ECB.

– 05:30 (HU) The Hungarian Debt Agency (AKK) sells 3-month bonds.

– (BE) Belgium Debt Agency (BDA) to sell 3-month bills; Average yield:% v -0.672% before; Bid to cover: xv 4.41x.

– 05:30 am (EU) ECB award as part of the 7-day Main Refinancing Call (MRO).

– 5:30 a.m. (ZA) South Africa will sell ZAR 3.9 billion in 2030, 2040 and 2048 bonds.

– 06:30 (EU) ESM to sell up to 1.5 billion euros in 3-month invoices.

– 6:45 am (US) Correction of the daily Libor.

– 07:00 (MX) Mexico June Advanced indicators M / M: No is v 0.27 before.

– 07:00 (MX) Mexico July Consumer Confidence: No est v 44.5 before.

– 08h00 (BR) Brazil June Industrial production M / M: 0.3% ev 1.4% before; Y / Y: 12.3% ev 24.0% before.

– 08h00 (UK) Daily Baltic Dry Bulk Index.

– 08:30 (CA) Canada June MLI Leading indicator M / M: No is v 1.4% before.

– 08:30 am (CL) Survey of traders from the central bank of Chile.

– 8:55 am (US) Weekly Redbook LFL sales data.

– 09h00 (EU) Weekly foreign exchange reserves of the ECB.

– 9:00 am (UK) Announcement from Russia on the next OFZ bond issue (held on Wednesday).

– 09:30 (CA) Canada July Manufacturing PMI: No est v 56.5 before.

– 9.45am (UK) BOE buys £ 1.147bn in a deal to buy gilt APF (20+).

10:00 am (US) Factory orders in June: 1.0% ev 1.7% before; Factory orders (excluding transport): none is vv 0.7% before.

10:00 (US) June Final durable goods orders: 0.8% ev 0.8% preliminary; Durable goods (excluding transport): No est v 0.3% prelim; Capital goods orders (excluding defense / excluding aircraft): No est v 0.5% prelim; Shipments of capital goods (excluding defense / excluding aircraft): no est v 0.6% prelim.

– 10h00 (MX) Mexico Weekly data from the international reserve.

– 10:30 am (CA) Canada to sell 3-month, 6-month and 12-month tickets.

– 11h00 (DK) Denmark July Foreign reserves (DKK): No est v 458.4B prior.

-2:00 p.m. (US) Fed Bowman at Fed Conference.

– 4:30 p.m. (US) Weekly API oil inventories.

– 5:00 p.m. (KR) South Korea July Foreign reserves: no estimate against 454.1 billion dollars previously.

– 6:00 p.m. (CO) July report from the Central Bank of Colombia.

– 18:45 (NZ) New Zealand Job change Q2 Q / Q: 0.7% ev 0.6% before.

– 6:45 p.m. (NZ) New Zealand’s second quarter unemployment rate: 4.4% compared to 4.7% previously.

– 7:00 p.m. (AU) Australia July Final PMI Services: no est v 44.2 prelim; Composite PMI: No is v 45.2 prelim.

– 20:30 (JP) Japan July Final PMI Services: No est v 46.4 prelim; Composite PMI: no est v 47.7 prelim.

– 8:30 p.m. (SG) Singapore July PMI (whole economy): no est v 50.1 before.

– 8:30 p.m. (HK) Hong Kong July PMI (whole economy): no est v 51.4 before.

– 9:00 p.m. (NZ) New Zealand Commodity Price Index July: Not valued at 0.8% previously.

– 9:00 p.m. (AU) Australia sells A $ 800 million of 1.75% 2032 bonds.

– 9:10 p.m. (JP) Purchase of firm BOJ bonds with maturities of 1 to 3 years and 10 to 25 years.

– 9:30 pm (AU) Australia June Final retail sales M / M: -1.8% ev -1.8% prelim; Q / Q: 0.8% ev 0.5% before.

– 9:30 p.m. (KR) The Bank of Korea (BOK) will sell KRW 2.2T in 2-year bonds.

21:45 (CN) China July Caixin PMI Services: 50.5ev 50.3 before; Composite PMI: No earlier version than version 50.6.

– 11:00 p.m. (CN) China will sell 3- and 7-year Upsize Bonds.

– 11:00 p.m. (TH) The Thai government will sell THB 13 billion in 2042 bonds.

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