Global equities have been stomped by the second consecutive day of devaluation in the Chinese Yuan, which was fixed another 1.6% lower during the Asian session. USD/CNY was set at 6.33, the softest level for the yuan since Oct 2012. In Europe, the DAX and CAC closed down 3.3% and 3.4%, respectively, while the FTSE closed down 1.9%. The 10-year UST yield is down more than five basis points to 2.089%, its lowest level since the beginning of May, slamming the stocks of banks, brokerages and asset managers; the XLF is down 1.9%, while utility names are rallying. The DJIA, S&P500 and the Nasdaq are down 1.2% each.
The dollar has gained nearly 3.8% against the yuan over the last two sessions, causing havoc in FX markets. EUR/USD has gained one and a half big figures today, rising above 1.1200, while the USD/JPY has dropped to 123.84. Emerging market currencies have seen even steeper losses than yesterday. During the European session, crude prices rose off yesterday's multi-year lows, with WTI rising to $43.80 from $42.80 and Brent back above $50. This morning's DoE inventory report showed a return to drawdowns in the US and WTI ticked off its session highs, to around $43.30. LME copper saw two-year lows earlier before bouncing higher in late European trading.
The JOLTS report - Fed Chair Yellen's favorite gauge of labor market health - showed job openings were slightly fewer than expected, while the hiring rate rose to a YTD high of 3.7%. Other details in the survey stayed relatively unchanged for the month, with the quits rate steady at 1.9%. Despite the narrow miss, job openings are up more than 11% y/y.
German tabloid Bild published a story in the US premarket suggesting that the German government reportedly believes the third Greek bailout package isn't big enough and officials still have doubts about debt sustainability and IMF involvement. This followed reports during the European session that the Germans were investigating whether the EU could guarantee Greece's debt in order to keep the IMF on board and reduce need for significant debt relief. There has been no official comment on either story, however the German Finance Ministry issued a report that argued the debt sustainability and privatization components of the current Greece deal are not sufficient. Separately, officials warned that the government's views were not entirely represented in the Finance Ministry report.
***Looking Ahead***
- 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
- 13:00 (MX) Mexico Central Bank Quarterly Inflation Report
- 14:00 (US) July Monthly Budget Statement: -137.0Be v -$94.6B prior
- 18:30 (NZ) New Zealand July Manufacturing PMI: No est v 55.2 prior
- 19:01 (UK) July RICS House Price Balance: No est v 40% prior
- 19:50 (JP) Japan Jun Machine Orders M/M: -4.8%e v 0.6% prior; Y/Y: 17.6%e v 19.3% prior
- 21:00 (AU) Australia Aug Consumer Inflation Expectation Survey: No est v 3.4% prior
- 22:05 (NZ) New Zealand to sell NZD200M in 4.5% 2027 Bonds
- 22:15 (CN) China PBoC to hold briefing on CNY currency (Yuan)
***Economic data***
- (PT) Portugal July CPI M/M: -0.7% v -0.5%e; Y/Y: 0.7% v 1.0%e
- (PT) Portugal July CPI EU Harmonized M/M: -0.9% v -0.1% prior; Y/Y: 1.0% v 0.8% prior
- (US) MBA Mortgage Applications w/e Aug 7th: 0.1% v 4.7% prior
- (IN) India Jun Industrial Production Y/Y: 3.8% v 3.3%e
- (IN) India July CPI Y/Y: 3.8% v 4.4%e (record low)
- (BR) Brazil Jun Retail Sales M/M: -0.4% v -0.4%e; Y/Y: -2.7% v -2.9%e
- (BR) Brazil Jun Broad Retail Sales M/M: -0.8% v -1.0%e; Y/Y: -3.5% v -4.9%e
- (CA) Canada July Teranet/National Bank HPI M/M: 1.2% v 0.7%e ; Y/Y: 5.1% v 5.1% prior; House Price Index: 174.33 v 172.27 prior
- (US) Jun JOLTS Job Openings: 5.249M v 5.350Me
- (US) DOE Crude: -1.7M v -2.0Me; Gasoline: -1.3M v -1.0Me; Distillate: +3.0M v +1.0Me
[I]Contributed by Trade The News[/I]
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