• European stock market, economy and companies update (August 24, 2015)

    ***Notes/Observations***
    - Risk aversion flows have shifted into an even higher gear as worries over Chinese slowdown; more uncertainty and noise around the timing of the Fed liftoff
    - China's central bank was said to be preparing measures to support the economy but failed to materialize over the weekend
    - WTI and Brent hit fresh 6 year lows after Iran stated it would defend market share at any cost


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -2.4%, FTSE-2.7% at 6,021, DAX -2.6% at 9,860, CAC-40 -2.5% at 4,516, IBEX-35 -2.6% at 10,005, FTSE MIB -2.6% at 21,178, SMI -2.3% at 8,598, S&P 500 Futures -1.7% at 1,937

    - Market Focal Points/Key Themes: European markets open down, following the worst weekly performance in four years; Mining stocks were the worst hit (BHP Billiton BHP.AU -4.9%, Rio Tinto RIO.AU -4.2%, Glencore GLEN.UK -5.1%) as well as automotive stocks opening lower on China jitters (Peugeot UG.FR -3.8%, Volkswagen VOW3.DE -1.9%) ; commodities tracked towards lows not seen since 1999; Abengoa (ABG.ES +5.9%) was the only company to buck the trend with, following loan repayment

    By Sector:
    - Consumer discretionary [Bunzl BNZL.UK -3.5% (results), UTV UTV.UK +7.5% (asset sale)]
    - Financials [FBD FBD.IE -14.7% (results)]
    - Telecom [Vodafone VOD.UK -2.8%]

    **Speakers**
    - Chancellor Osborne: Believes China is doing all to stabilize its market
    - Czech Central Bank Gov Singer: Ending stimulus measures at this time would be the wrong step
    - Russia Econ Min Ulyukayev: Oil might be below $40/barrel for short period time
    - Chinese Academy of Social Sciences (CASS) official Zhang: Capital account opening could lead to outflows; Q3 capital outflows could be larger than Q2. CNY currency (Yuan) depreciation might persist for a while
    - China National Development and Reform Commission (NDRC) reiterated view that domestic economy was within a reasonable range but faced challenges. Believed China could achieve its economic targets
    - China Fin Min Lou Jiwei: Govt to set ceiling for local govt debt which would cover end2014 local debt plus 2015 quota
    - Iran Oil Min: Would support holding an emergency Opec meeting; could be effective to stabilize prices. Iran would raise oil production at any cost to defend market share

    **Currencies**
    - Global risk aversion highlighted the session prompting safe haven flows and liquidation. There was speculation that the PBOC would cut its RRR ratio after the Shanghai slumped over 11% last week. The lack of news out of China on any fresh policy action fed into concerns over the global economy. The JPY and EUR currencies were the main beneficiaries (CHF to some extent). Safe haven flows did not include gold as the metal was unable to move above $1,160/oz
    - Markets continued to discount the probability of a Sept rate hike by the Fed due to the volatility in global markets
    - The EUR/USD briefly tested the 1.15 area for 7-month highs while USD/JPY probed below 120.30 for 3-month lows.
    - Commodity-related currencies were softer as oil and base metals continued their slump over the Chinese economic slowdown. Front-month NYMEX crude hit a fresh 6-year low of $39.01 while Brent tested below $45/barrel. USD/CAD at 12-year highs near 1.3260 while AUD/USD hit a 6-mpnth low
    - China onshore currency ends Far East session at 6.4044 vs. 6.3862 fixing (1st weaker close in 1 week)

    **Fixed Income:
    - Bund futures trade at 155.72 up 11 ticks on the back of a slump in Equities. Bunds traded as high as 156.32 early in the session taking out key levels including topside resistance at 156.20. Analysts now look for a move a break of the high to target 156.54 followed by 157.25. To the downside support moves to 155.64 followed by 155.40. A break below would target strong support in the 154.50 region.
    - UK Gilt futures trade 119.29 up 14 ticks as risk aversion pushes Gilts to new contract highs. With the early break of 119.38, analysts look for resistance at 120.00 with 122.20 the eventual target. To the downside support moves to 118.93 with gap support standing at 118.67. Analysts eye 118.15 as the next level of support followed by 117.80.
    - Monday's liquidity report showed Friday's excess liquidity rose to 485.0B a rise of 1.7B from 483.3B prior. This was due primarily to a fall in AFs and MonPol portfolios to a record low of negative 64.5B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 101M from 93M prior.
    - Corporate Issuance: Early estimates for September issuance has come in at $90-110B, this is below the $150B in the prior year, with pending rate hike and general economic conditions cited as a factor.

    **Weekly Debt Supply**
    - Europe: will see around 8.0B with Italy coming to market with a 5,10y BTP and 6y CCTeu for 8.0B.
    Net cash flow for the week is negative with no coupon to be repaid.
    - UK: will not sell any Gilts this week, weekly cash flow is positive with 0.48B to be repaid on Tuesday.
    - US: will launch a new 2y offering, reopen a 2y FRN and sell a new 5 and 8 year not for a total of $103.0B this week. Cash flow is negative with no C&R to be repaid.

    **Political/In the Papers:
    - (GR) Greece govt said to target Sept 20th for snap elections. Greek opposition parties began the process of trying to form a coalition after Tsipras resigned last Thursday
    - (CN) China approves measures to allow national pension fund ($548B net assets) to invest in the stock market
    - (CN) PBoC reportedly planning to cut RRR ratio by 50bps to help boost lending, releasing CNY678B into system. Report noting the move could come before the end of this month or early next month (Sept).

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (UR) Germany chancellor Merkel, France's Hollande and Ukraine's Poroshenko hold talks
    - 06:00 (IR) Ireland July PPI M/M: No est v 0.3% prior; Y/Y: No est v 6.3% prior
    - 06:00 (IL) Israel July Unemployment Rate: No est v 5.2% prior
    - 06:00 (RO) Romania to sell RON 300M in 7-year bonds
    - 06:45 (US) Daily Libor Fixing
    - 07:15 (SE) Sweden Fin Min Andersson with UK Chancellor Osborne
    - 07:25 (BR) Brazil Central Bank Weekly Economists Survey
    - 08:00 (CL) Chile July PPI M/M: No est v -2.2% prior
    - 08:00 (IN) India announces details of upcoming bond auction
    - 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
    - 08:10 (US) Baltic Dry Bulk Index
    - 08:30 (US) July Chicago Fed National Activity Index: 0.20e v 0.08 prior
    - 08:30 (BR) Brazil July Total Federal Debt (BRL): No est v .2584T prior
    - 08:50 (FR) France Debt Agency (AFT) to sell combined 5.8-7.0B in 3-month, 6-month, 10-month and 12-month bills
    - 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base unchanged at 0.10%
    - 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
    - 09:45 (EU) ECB announces Covered-Bond Purchases
    - 11:30 (US) Treasuries to sell $48B in 3-Month and 6-Month Bills
    - 15:00 (AR) Argentina July Trade Balance: $0.3Be v $0.5B prior
    - 16:00 (US) Crop Report
    - 18:00 (DE) German Chancellor Merkel host Citizens Dialog Event in Duisburg
    - 21:00 (PH) Philippines Jun Trade Balance: $0.9Be v $0.5B prior; Imports Y/: -9.2%e v -13.4% prior
    - 23:00 (NZ) New Zealand Q3 2-Year Inflation Expectation Survey: No est v 1.9% prior
    - 23:00 (TH) Thailand to sell 3-month and 6-month Bills
    - 23:30 (HK) Hong Kong to sell 3-month, 6-Month Bills
    - 23:30 (HK) Hong Kong to sell 3-month, 6-Month Bills
    - 23:45 (JP) Japan to sell 40-Year JGB Bonds
    - (AR) Argentina Aug Consumer Confidence Index: No est v 56.09 prior
    - (CO) Colombia July Retail Confidence: No est v 20.6 prior; Industrial Confidence: No est v 0.1 prior


    **Economic data***
    - (SG) Singapore July CPI M/M: -0.4% v 0.0%e; Y/Y: -0.4% v -0.2%e; CPI Core Y/Y: 0.4% v 0.3%e
    - (TW) Taiwan July Industrial Production Y/Y: -3.0% v -2.0%e

    Fixed Income Issuance:
    - (NO) Norway sold NOK4.0B vs. NOK4.0B indicated in 4-month Bills; Yield: 0.75%; bid-to-cover: 3.26x

    Contributed by Trade The News
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