Notes/Observations
-Eurozone CPI turns negative, core remains unchanged
-UK Q2 GDP y/y revised lower to 2.4% from 2.6%
-UK Supermarkets gain on Sainsbury's outlook
-Stocks rise on month end positioning
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +2.2% at 3,104, FTSE +1.91% at 6,036, DAX +2.2% at 9,678, CAC-40 +2.2% at 4,455, IBEX-35 1.7% at 9,550, FTSE MIB 2.0% at 21,150, SMI 2.1% at 8,495, S&P 500 Futures +1.1%]
- Market Focal Points/Key Themes: European stocks rise in early trading, with no major data out of China; automotive stocks rose as markets digest the Volkswagen scandal; prospects of slow growth said to already be priced in; consumer discretionary stocks lead gains; Glencore shares jumped after it said it had no solvency issues
Sectors:
- Consumer discretionary [Group Fnac FNAC.FR -2.2% (acquisition), Lufthansa LHA.DE +6.9% (broker move)]
- Consumer staples [Sainsbury's SBRY.UK +13.6% (results)]
- Energy [Scottish & Southern Power SSE.UK +3.4% (trading update)]
- Industrials [Volkswagen VOW3.DE +2.4%]
- Materials [Glencore GLEN.UK +11% (solvency commentary)]
Speakers
- (EU) ECB's Hansson (Estonia): Sees moderate inflation pressures in the Euro Area
-Everything is possibleon continuing QE
-Too early to discuss changes in QE
- (PL) Poland Central Bank Chief Belka: Low interest rates have not led to too much indebtedness
Currencies
- FX markets against the dollar were rather mixed on the morning session with USD/JPY showing further continued strength from yesterday after a weak session last week; the EUR/USD relatively weak on session; with a highly volatile session of morning trade in cable following a lower than expected q/q GDP reading
- The EUR/USD has had a generally weak early morning session, and trades in a range between 1.1260 at the morning highs to lows of 1.1212
- The GBP/USD trades in a range between 1.5131 at the morning lows to highs of 1.5188 with an initial spike down after release of a weaker than expected q/q UK GDP reading being completely retraced, trading near the highs at time of writing
- The USD/JPY rallies further after yesterdays bounce from its lows. USD/JPY hit a lows of 119.792 and has rallied to a highs in the late morning session of 120.217 showing continuing strength on the week
Fixed Income:
Bund futures trade at 155.98, down 19 ticks as Core CPI remained unchanged despite a negative headline reading. Analysts see downside support at 155.68 initially, followed by 155.42, then 155.13. To the upside, analysts eye a break of today's highs at 156.21 to target 156.68 initially, with a break challenging 156.83 the August high.
UK Gilt futures trades 118.84 down 34 ticks as continued risk off sentiment takes hold despite Q2 Final y/y GDP came coming in weaker. Analysts look for downside at 118.77, followed by 118.49. To the upside, initial resistance lies at 119.35 high with a break seeing continued strength to 119.46 contract highs.
Wednesday's liquidity report showed Tuesday's excess liquidity rose to €483.4B, a rise of €4.9B from €478.5B prior. This was primarily due to AFs and MonPol portfolios falling to negative €-69.3B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to €54M from €68M.
Political/In the Papers:
None seen
Looking Ahead
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 06:00 (PT) Portugal Aug Retail Sales M/M: No est v 1.2% prior; Y/Y: No est v 1.6% prior
- 06:00 (PT) Portugal Aug Industrial Production M/M: No est v -0.1% prior; Y/Y: No est v 1.4% prior
- 06:00 (MY) Malaysia Aug M3 Money Supply Y/Y: No est v 3.9% prior
- 06:00 (IT) Italy Aug PPI M/M: No est v % prior; Y/Y: No est v % prior
- 06:30 (IN) India Aug Fiscal Deficit (INR): No est v 9.8B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Sept 25th: No est v % prior
- 07:00 (RU) Russia to sell OFZ Bonds
- 08:00 (PL) Poland Sept Preliminary CPI M/M: No est v -0.4% prior; Y/Y: No est v 0.6% prior; CPI Expectations: 0.2%e v 0.2% prior
- 08:00 (ZA) South Africa Aug Trade Balance (ZAR): No est v -0.4B prior
- 08:00 (ZA) South Africa Aug Budget Balance (ZAR): No est v -71.8B prior
- 08:00 (CL) Chile Aug Unemployment Rate: No est v 6.6% prior
- 08:00 (CL) Chile Aug Manufacturing Production Y/Y: No est v 0.7% prior; Industrial Production Y/Y: No est v % prior
- 08:00 (CL) Chile Aug Retail Sales Y/Y: No est v 2.9% prior
- 08:00 (CL) Chile Aug Total Copper Production: No est v 455.1K tons prior
- 08:15 (US) Sept ADP Employment Change: No est v +190K prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (CA) Canada July GDP M/M: No est v 0.5% prior; Y/Y: No est v 0.6% prior
- 09:00 (US) Sept ISM Milwaukee: no est v 47.7 prior
- 09:30 (BR) Brazil Aug Primary Budget Balance (BRL): No est v -10.0B prior; Nominal Budget Balance (BRL): No est v -72.8B prior; Net Debt to GDP Ratio: No est v 34.2% prior
- 09:45 (US) Sept Chicago Purchasing Manager: No est v 54.4 prior
- 10:00 (MX) Mexico Aug Net Outstanding Loans (MXN): No est v 2.859T prior
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (CO) Colombia Aug Urban Unemployment Rate: No est v 9.0% prior; National Unemployment Rate: No est v 8.8% prior
- 11:30 (BR) Brazil Weekly Currency Flows
- 12:00 (US) USDA Quarterly Report
- 12:00 (CA) Canada to sell 5-Year Bonds
- 12:00 (DE) German Finance Ministry's Spahn speaks at Public Bank Lobby
- 15:00 (AR) Argentina Aug Construction Activity M/M: No est v 0.2% prior; Y/Y: No est v 13.3% prior
- 15:00 (US) Fed Chair Yellen with member Bullard speak on Community Banking in St. Louis
- 19:00 (KR) South Korea Aug Industrial Production M/M: No est v -0.5% prior; Y/Y: No est v 3.3% prior
- 19:50 (JP) Japan Q3 Tankan Large Non-Manufacturer Index: 2e v 23 prior; Large Non-Manufacturer Outlook Survey: 21e v 21 prior
- 20:00 (KR) South Korea Sept Trade Balance: No est v $4.4B prior; Exports Y/Y: No est v -14.7% prior; Imports Y/Y: No est v -18.3% prior
- 20:00 (US) Fed's Brainard speaks on Community Banking in St. Louis
- 21:00 (CN) China Sept Manufacturing PMI (official): No est v 49.7 prior; Non-manufacturing (Services) PMI: No est v 53.4 prior
- 21:35 (JP) Japan Sept Final PMI Manufacturing: No est v ## prelim
- 21:40 (KR) South Korea PMI Manufacturing: No est v 47.9 prior
- 21:45 (CN) China Sept Final Caixin PMI Manufacturing: No est v ## prelim; PMI Composite: No est v 48.8 prior; PMI Services: No est v 51.5 prior
- 21:50 (TW) Taiwan Sept PMI Manufacturing: No est v 46.1 prior
- 22:00 (VN) Vietnam Sept PMI Manufacturing: No est v 51.3 prior
- 22:15 (MY) Malaysia Sept PMI Manufacturing: No est v 47.2 prior
- 23:00 (ID) Indonesia Sept PMI Manufacturing: No est v 48.4 prior
- 23:30 (TH) Thailand Sept Consumer Confidence: No est v 72.3 prior; Economic Confidence: No est v 61.5 prior
- 23:45 (JP) Japan to sell 10-Year JGB Bonds
- 23:45 (JP) Japan to sell 10-Year JGB Bonds
Economic data
(DE) GERMANY AUGUST RETAIL SALES M/M -0.4% V 0.2%E; Y/Y: 2.5% V 3.1%E
(UK) SEPT NATIONWIDE HOUSING PRICES M/M: 0.5% V 0.4%E; Y/Y: 3.8% V 3.8%E
(FR) FRANCE AUG PPI M/M: -0.9% V -0.1% PRIOR; Y/Y: -2.1% V -1.6% PRIOR
(FR) France Aug Consumer Spending M/M: 0.0% v 0.1%e
(CH) Swiss Sept KOF Leading Indicator: 100.4 v 100.9e
(CZ) CZECH Q2 FINAL GDP Q/Q: 1.1% V 0.9%E; Y/Y: 4.6% V 4.4%E
(DK) DENMARK AUG UNEMPLOYMENT RATE: 3.8% V 3.9% PRIOR; GROSS UNEMPLOYMENT RATE: 4.5% V 4.6% PRIOR
(DK) DENMARK Q2 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.8% V 2.0%E
(TR) TURKEY AUG TRADE BALANCE: -$4.89B V -$4.88BE
(AT) AUSTRIA AUG PPI M/M: -0.5% V -0.2% PRIOR; Y/Y: -1.5% V -1.1% PRIOR
(HU) HUNGARY AUG PPI M/M: -0.8% V -0.7% PRIOR; Y/Y: -0.8% V 0.3% PRIOR
(TH) Thailand Aug Current Account Balance: $2.91B v $2.1B prior, Trade Balance: $2.7B v $ 2.7B prior;
*(DE) GERMANY SEPT UNEMPLOYMENT CHANGE: +2K V -5KE; UNEMPLOYMENT RATE: 6.4% V 6.4%E
(IT) ITALY AUG PRELIMINARY UNEMPLOYMENT RATE: 11.9% V 11.9%E
(ES) Spain July Current Account Balance: €2.98B v €1.3B prior
*(UK) Q2 FINAL GDP Q/Q: 0.7% V 0.7%E; Y/Y: 2.4% V 2.6%E
*(UK) Q2 CURRENT ACCOUNT BALANCE: -£16.8B V -£22.2BE
*(UK) Q2 FINAL TOTAL BUSINESS INVESTMENT Q/Q: 1.0% V 2.9% PRELIM; Y/Y: 3.1% V 5.0% PRIOR
(UK) Sept Lloyds Business Barometer: 45 v 45 prior
*(IS) ICELAND CENTRAL BANK (SEDLABANKI) LEAVES 7-DAY LENDING RATE AT 6.25%
(EU) EURO ZONE SEPT ADVANCE CPI Y/Y: -0.1% V 0.1% PRIOR; CPI CORE Y/Y: 0.9% V 0.9% PRIOR
(EU) EURO ZONE AUG UNEMPLOYMENT RATE: 11.0% V 10.9%E
(IT) ITALY SEPT PRELIMINARY CPI (NIC INCL. TOBACCO) M/M: -0.3% V -0.3%E; Y/Y: 0.3% V 0.3%E
(GR) Greece Retail Sales Value Y/Y: -0.4% v -0.4% prior; Retail Sales Volume Y/Y: -8.7% v -5.7%e
(BE) Belgium Aug Unemployment Rate: 8.8% v 8.5% prior
Contributed by Trade The News
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