• European stock market, economy and companies update (August 28, 2015)

    ***Notes/Observations***
    - Risk appetite continues to rebound aided by renewed optimism about the US economy; focus turns to Fed's gathering at Jackson Hole
    - Japan CPI data hits 2-year low while spending slows but Japanese official paint a positive picture on future trends; job-to-applicant ratio rose to its best level since 1992
    - European CPI data registers softer MoM readings (Spain, Germany); confidence data (Italy, Portugal and Italy) mixed in session
    - Switzerland avoids a technical recession


    *** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
    **Equities**
    Indices [Stoxx50 -0.7%, FTSE -0.3% at 6,177, DAX -1.0% at 10,211, CAC-40 -0.5% at 4,633, IBEX-35 -0.3% at 10,256, FTSE MIB -1.2% at 21,929, SMI -0.8% at 8,744, S&P 500 Futures -0.9% at 1,971

    - Market Focal Points/Key Themes: European stocks slipped in early trading; Materials and Energy stocks resisted the trend tracking higher; attention switching to commentary from Fed officials out of Jackson Hole meeting; German stocks impacted by CPI data; UK stocks relatively flat heading into long weekend

    By Sector:
    - Consumer discretionary [888 Holdings 888.UK -0.9% (earnings), Hermes RMS.FR -1.2% (earnings), Ingenico ING.FR -1.0% (offer for Worldpay), Havas HAV.FR +1.5% (results)]
    - Energy [Tullow Oil TLW.UK +4.9% (broker move)]
    - Financials [Banco Santander SAN.ES +0.8% (broker move)]
    - Materials [Svenska Celullosa SCAB.SE +4.8% (restructuring)]

    **Speakers**
    - ECB's Draghi said to support concept of a European Finance Minister
    - Thailand Finance Ministry advisor: Govt to maintain 2015 GDP growth of 3.0%. Govt spending to help offset impact from recent bomb attack in Bangkok
    - Fed's Mester (Non-voter, hawk): US economy can support a rate hike
    - PBoC: Central bank conducted short-term liquidity operation (SLO); injected CNY60B at 2.35%
    - China Financial Futures Exchange (CFFEX) said to tighten rules to curb speculation in index futures trading

    **Currencies**
    - The EUR/USD was inching back towards the 1.13 level in effort to halt a 3 day slide despite softer German State CPI data from month ago.
    - The USD/JPY consolidated just under the 121 handle as the market digested a plethora of Japanese inflation and jobs data. For the time being the net effect seemed to soften expectation for more stimulus by BOJ

    **Fixed Income:
    - Bund futures trade at 153.90 up 16 ticks as weaker CPI data helped lift futures. Analysts cite a continuation to 154.52, with a break needed to see a move back to 155.30. To the downside analysts target 153.31 support with August lows at 152.91 next.
    Today sees Italy coming to market with a 5,10y BTP and 6y CCTeu for 8.0B. This is the equivalent to 43K BTPs or 35K Bund futures.
    - UK Gilt futures trades 117.46 up 50 ticks, Dec futures are quoted now after the expiration of Sep futures. Analysts look for initial resistance at 117.52, with 118.11 next. A break of today's lows have analysts looking for support at 116.36 the recent low with 116.10 needed to be broken to see 115.77.
    - Friday's liquidity report showed Thursday's excess liquidity fell to 483.6B a fall of 6.1B from 489.7B prior. This was despite a fall in AFs and MonPol portfolios to a record low of negative 70.0B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to 2.3B from 2.6B prior but still at elevated levels.
    - Corporate Issuance has been very quiet. Oil and Gas spreads has been widening considerably due to plunging Oil prices with the S&P distress ratio climbing to a 4 year high of 15.5%. The expansion in spreads has had a knock on effect on the broader High Yield space with 191 distressed issuers with issues trading over 1000bp according to S&P. This has an affect on about $128B of debt compared to 162 issuers affecting $108B on July.
    The Oil & Gas sector accounts for 34% of the distressed issues, as of August 14th.
    - Month End Pension re balance according to GS is to be large with a total of $34.59B of equities to buy for August. For calendar based month flow, estimates are a net $19.57B equities to buy.

    **Political/In the Papers:
    - (GR) 1st Greece opinion polls ahead of Sept 20th snap election. Syriza seen with 23%; New Democracy with 19.5%; Popular Unity (set up by Lafazanis): 3.5%; Independent Greeks: 2%

    - (CN) China Fin Min Lou Jiwei: China govt confirms plans to increase local government debt swap program CNY3.2T; July YTD tax revenue CNY7.9T (5-yr low)
    - (CN) China vice Fin Min: to start local pension fund investment as soon as possible. Estimates local pension investment around CNY2T.

    **Looking Ahead***
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (US) Kansas City Fed hosts symposium in Jackson Hole, Wyoming
    - (IN) India Central Bank (RBI) Gov Rajan interview on CNBC
    - (IT) Italy Debt Agency (Tesoro) to sell combined 5.0-6.0BB in 5-year and 10-year Bonds
    - (IT) Italy Debt Agency (Tesoro) to sell 1.0-1.5B in Jun 2022 CCTeu (Floating Rate Bond
    - (DE) Germany Aug CPI Baden Wuerttemberg M/M: No est v 0.2% prior; Y/Y: No est v 0.2% prior
    - 06:00 (IE) Ireland July Retail Sales Volume M/M: No est v -3.9% prior; Y/Y: No est v 5.4% prior
    - 06:00 (PT) Portugal July Retail Sales M/M: No est v -0.1% prior; Y/Y: No est v 2.4% prior
    - 06:00 (PT) Portugal July Industrial Production M/M: No est v -1.3% prior; Y/Y: No est v 2.7% prior
    - 06:00 (MY) Malaysia July M3 Money Supply Y/Y: No est v 6.0% prior
    - 06:00 (UK) DMO to sell combined 4.5B in 1-month, 3-month and 6-month Bills (2.0B, 0.5B and 2.0B respectively)
    - 06:00 (IS) Iceland to sell Bonds
    - 06:45 (US) Daily Libor Fixing
    - 07:00 (BR) Brazil Aug FGV Inflation IGPM M/M: 0.2%e v 0.7% prior; Y/Y: 7.5%e v 7.0% prior
    - 07:30 (CL) Chile Central Bank (BCCh) Aug Minutes
    - 07:30 (IN) India Weekly Forex Reserves
    - 08:00 (ZA) South Africa July Budget Balance (ZAR): -66.2Be v +24.2B prior
    - 08:00 (BR) Brazil Q2 GDP Q/Q: -1.7%e v -0.2% prior; Y/Y: -2.1%e v -1.6% prior; GDP 4-quarters Accumulated: -1.1%e v -0.9% prior
    - 08:00 (ES) Spain Debt Agency (Tesoro) announces specific bonds in upcoming auction
    - 08:00 (DE) Germany Aug Preliminary CPI M/M: -0.1%e v +0.2% prior; Y/Y: 0.1%e v 0.2% prior
    - 08:00 (DE) Germany Aug Preliminary CPI EU Harmonized M/M: -0.1%e v +0.3% prior; Y/Y: 0.1%e v 0.1% prior
    - 08:10 (US) Baltic Dry Bulk Index
    - 08:30 (US) July Personal Income: 0.4%e v 0.4% prior; Personal Spending: 0.4%e v 0.2% prior; Real Personal Spending: 0.3%e v 0.0% prior
    - 08:30 (US) July PCE Deflator M/M: 0.1%e v 0.2% prior; Y/Y: 0.3%e v 0.3% prior
    - 08:30 (US) July PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.3%e v 1.3% prior
    - 08:30 (CA) Canada July Industrial Product Price M/M: 0.0%e v 0.5% prior; Raw Materials Price Index M/M: -4.3%e v 0.0% prior
    - 08:30 (US) Fed's Kocherlakota (non-voter, dove)
    - 09:00 (MX) Mexico July Unemployment Rate (unadj): 4.7%e v 4.4% prior; Unemployment Rate (Seasonally Adj): 4.4%e v 4.4% prior
    - 09:30 (BR) Brazil July Primary Budget Balance (BRL): -6.2Be v -9.3B prior; Nominal Budget Balance (BRL): -65.4Be v -36.3B prior; Net Debt to GDP Ratio: 34.6%e v 34.5% prior
    - 10:00 (US) Aug Final University of Michigan Confidence: 93.0e v 92.9 prelim
    - 11:00 (UR) Ukraine Sovereign Debt to Be rated by S&P
    - 13:00 (US) Weekly Baker Hughes Rig Count
    - 15:30 (MX) Mexico July YTD Budget Balance (MXN): No est v -345B prior


    **Economic data***
    - (CH) Swiss Q2 GDP (beat) Q/Q: +0.2% v -0.1%e; Y/Y: 1.2% v 0.9%e
    - (FR) France July PPI M/M: -0.1% v +0.1% prior; Y/Y: -1.6% v -1.8% prior
    - (DE) Germany Aug CPI Saxony M/M: -0.1% v +0.2% prior; Y/Y: 0.2% v 0.2% prior
    - (ES) Spain July Adjusted Retail Sales Y/Y: 4.1% v 2.7%e; Retail Sales Y/Y: 4.2% v 3.8% prior
    - (ES) Spain Aug Preliminary CPI M/M: -0.3% v -0.9% prior; Y/Y: -0.4% v -0.1%e
    - (ES) Spain Aug Preliminary CPI EU Harmonized M/M: -0.4% v -0.1%e; Y/Y: -0.5% v -0.3%e
    - (CZ) Czech Q2 Preliminary GDP Q/Q: 1.0% v 0.9% advance; Y/Y: 4.4% v 4.4% advance
    - (SE) Sweden July Retail Sales M/M: 0.5% v 0.5%e; Y/Y: 5.9% v 5.5%e
    - (IT) Italy Aug Consumer Confidence Index (beat): 109.0 v 107.0e; Business Confidence (miss): 102.5 v 103.6e; Economic Sentiment: 103.7 v 104.3 prior
    - (PL) Poland Q2 Final GDP Q/Q: 0.9% v 0.9% prelim; Y/Y: 3.3% v 3.3% prelim
    - (NO) Norway July Retail Sales W/Auto Fuel M/M: 0.5% v 0.5%e
    - (NO) Norway Aug Unemployment Rate: 3.1% v 3.1%e
    - (DE) Germany Aug CPI Brandenburg M/M: -0.2% v +0.2% prior; Y/Y: -0.1% v +0.1% prior
    - (DE) Germany Aug CPI Hesse M/M: 0.0% v 0.2% prior; Y/Y: 0.4% v 0.4% prior
    - (DE) Germany Aug CPI Bavaria M/M: 0.1% v 0.2% prior; Y/Y: 0.3% v 0.3% prior
    - (UK) Q2 Preliminary GDP (in line) Q/Q: 0.7% v 0.7%e; Y/Y: 2.6% v 2.6%e
    - (UK) Q2 Preliminary Private Consumption Q/Q: 0.7% v 0.7%e; Government Spending Q/Q: 0.9% v 0.0%e; Gross Fixed Capital Formation Q/Q: 0.9% v 0.5%e; Exports Q/Q: 3.9% v 2.0%e; Imports Q/Q: 0.6% v 0.6%e
    - (UK) Q2 Preliminary Total Business Investment Q/Q: 2.9% v 1.5%e; Y/Y: 5.0% v 3.8%e
    - (DE) Germany Aug CPI North Rhine Westphalia M/M: 0.1% v 0.1% prior; Y/Y: 0.2% v 0.2% prior
    - (PT) Portugal Aug Consumer Confidence Index: -18.1 v -19.0 prior; Economic Climate Indicator: 1.4 v 1.4 prior
    - (EU) Euro Zone Aug Business Climate Indicator (miss): 0.21 v 0.34e; Consumer Confidence (Final): -6.9 v -6.8e; Economic Confidence: 104.2 v 103.8e; Industrial Confidence: -3.7 v -3.2e; Services Confidence: 10.2 v 8.8e
    - (GR) Greece Q2 Final GDP (beat) Q/Q: 0.9% v 0.8% prelim; Y/Y: 1.7% v 1.5% prelim

    Fixed Income Issuance:
    - (DK) Denmark sold total DKK1.36B in 3-month and 6-month Bills
    - (IN) India sold total INR140B vs. INR140B indicated in 2023, 2025, 2033 and 2045 bonds

    Contributed by Trade The News
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