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MNI EUROPEAN MARKETS ANALYSIS: EU Recession Probability Estimates Near Zero

  • Japan July labor earnings data was much stronger than expectations. USD/JPY fell to fresh lows back to August 5, but had no follow through. JGB futures are richer but well off the session high, +10 compared to settlement levels. It has been a slow session for US tsys today, futures are off session highs and now trade little changed for the day.
  • RBA Governor Bullock has stuck to her view that it is “premature to be thinking about rate cuts”.
  • Elsewhere, our 6-month ahead recession probability estimates are now close to zero, despite the stagnation of the Germany economy, helped by stronger equities, lower oil prices, recovering economic sentiment and lower rates/yields. See below for more details.
  • Later there are US August Challenger job cuts and ADP employment, services/composite PMI/ISM, jobless claims and Q2 final productivity/ULC, as well as euro area July retail sales and German factory orders. The ECB’s Tuominen speaks. Friday’s US payrolls data are a focus for crude markets as they await Fed easing to support demand.

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  • Japan July labor earnings data was much stronger than expectations. USD/JPY fell to fresh lows back to August 5, but had no follow through. JGB futures are richer but well off the session high, +10 compared to settlement levels. It has been a slow session for US tsys today, futures are off session highs and now trade little changed for the day.
  • RBA Governor Bullock has stuck to her view that it is “premature to be thinking about rate cuts”.
  • Elsewhere, our 6-month ahead recession probability estimates are now close to zero, despite the stagnation of the Germany economy, helped by stronger equities, lower oil prices, recovering economic sentiment and lower rates/yields. See below for more details.
  • Later there are US August Challenger job cuts and ADP employment, services/composite PMI/ISM, jobless claims and Q2 final productivity/ULC, as well as euro area July retail sales and German factory orders. The ECB’s Tuominen speaks. Friday’s US payrolls data are a focus for crude markets as they await Fed easing to support demand.

MARKETS

Keep reading...Show less