Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EXECUTIVE SUMMARY:
- NEW YORK AREA SWAMPED BY MASSIVE RAINS FROM IDA; AT LEAST 6 DEAD
- BOJ KATAOKA: DOWNSIDE RISK TO SPENDING INCREASES
- CHIP SHORTAGES IMPACT TESLA, APPLE PRODUCTION
- EVERGRANDE CONTAGION FEAR RETURNS AS BONDS TUMBLE BELOW 30 CENTS
Fig.1: European Stocks Gain, Again Near Record Highs
Source: BBG, MNI
NEWS:
NEW YORK / HURRICANE IDA (BBG): The remnants of Hurricane Ida ripped through New York, New Jersey and across the Northeast early on Thursday morning, triggering tornadoes, thunderstorms, and torrential rain that inundated streets and paralyzed transport services.Video of the flooding posted on social media showed major thoroughways, airport terminals, baseball stadiums and subway stations turned into wading pools. Tornadoes hit Maryland and New Jersey, where NBC News reported at least two deaths. Mayor Bill de Blasio declared an emergency for New York City and Governor Kathy Hochul did the same for the state. "We're enduring an historic weather event tonight with record breaking rain across the city, brutal flooding and dangerous conditions on our roads," de Blasio said in a tweet.
NEW YORK / HURRICANE IDA (TWITTER): @NBCNewYork #BREAKING: At least six people have been confirmed dead, two in Passaic, New Jersey, and four in New York City, after Ida remnants dumped a month's worth of rain and caused major flash floods across the region.
BOJ: Downside risks are growing on private consumption spending in Japan after the expanded and extended measures to stem Covid-19, infections, Bank of Japan board member Goushi Kataoka said on Thursday, adding that the central bank could take additional monetary steps if warranted. "The spread of coronavirus will lower private spending and corporate capital investment through a worsening of households' and firms' sentiment," Kataoka told business leaders in Nagasaki City via an online conference in prepared remarks. He added that would "in turn increases the risk that stagnation of prices would be prolonged."
OIL (BBG): Oil declined after OPEC+ stuck with a plan to boost crude production, with the cartel wagering that the global market can absorb the additional supply as demand improves and stockpiles get drawn down. West Texas Intermediate was 0.4% lower after closing little changed on Wednesday. Following a swift midweek meeting, ministers from the Organization of Petroleum Exporting Countries and its allies ratified the 400,000 barrel-a-day rise scheduled for October. In the U.S., a government report showed a further contraction in nationwide crude inventories.
EVERGRANDE (BBG): A worsening selloff in China Evergrande Group's dollar bonds is once again spreading to other developers, raising the stakes for Chinese authorities as they mull whether to support billionaire Hui Ka Yan's embattled property empire. One of the company's most widely held bonds is indicated at 28.2 cents on the dollar Thursday, set for a record low, after plunging nearly 6 cents the previous day. The rout -- triggered by Evergrande's warning of a potential default if its asset-sale plans fail to materialize -- is prompting a selloff in the bonds of other weaker-rated property firms.
APPLE / CHIPS (DigiTimes): The ongoing chip shortages that are in varying degrees may cause the launch of Apple's upcoming miniLED-backlit MacBook Pros to be scheduled in October or even November, instead of the usual September, according to industry sources.
TESLA / CHIPS (BBG): Tesla Inc. temporarily halted some operations at its factory in Shanghai last month, according to people familiar with the matter, as the global shortage of semiconductors hit the electric-car maker in one of its most important markets. Part of a production line at the China plant was halted for about four days in August because of a lack of key chips, the people said, asking not to be identified because the details are private.
DATA:
MNI: SWISS Q2 GDP +1.8% Q/Q (SA), +7.7% Y/Y
MNI: SWISS AUG CPI +0.2% M/M, +0.9% Y/Y;
MNI: EZ JUN PPI +2.3% M/M, +12.1% Y/Y; JUNE +10.2% Y/Y
EZ Producer Prices Surge In July
Eurozone industrial producer prices jumped by 2.3% in July, taking the index some 12.1% above its level a year earlier, levels of factory gate inflation last seen in the early 1980's.
- The euro began circulating in 1999 and this the highest level seen since the European Central Bank has been the overseer.
- A 28.9% surge in energy prices accounted for much of the rise, but intermediate goods prices jumped by 12.6%. Excluding energy, industrial prices rose by 6.7%, up from 5.6% in June.
- The data follow a shock rise in consumer price inflation to an annual rate of 3.0% in August, but the July leap in industrial prices could continue to feed through to retail inflation for months to come.
- The ECB will shortly receive updated economic projections on which to base policy discussions at next week's governing council meeting. Austrian Central Bank Governor Robert Holzmann has recently joined his Bundesbank counterpart Jens Weidmann in arguing for immediate deliberations on slowing monetary stimulus to the euro area.
FIXED INCOME: Better bid during the European morning session
- A range bound start for EGB's, with investors taking the opportunity ahead of US ISM and NFP tomorrow, to roll position into December.
- Bobl was the standout yesterday, but Bund is leading today, with a massive 322k outright spread already traded.
- Peripheral spreads are mostly wider versus the German 10yr, Greece by 2bps.
- Overall markets are better bid.
- Gilts have traded in line with EGBs, with very little new in terms of news.
- Curve leans bull flatter.
- US Treasuries trade in the green, but Tnotes remains in a 4.5 ticks range (133.14/133.18+)
- Markets are unlikely to go far too fast, with ALL EYES on the US data tomorrow, ahead of a long Bank holiday weekend for the US.
- Looking ahead, US IJC, Factory orders, and Durable goods, but final reading for the latter.
- Speakers include Sweden Ingves (Mon Pol), US Fed Bostic (Eco opportunity), and Daly (Inclusive Economy)
FOREX: AUD Extends Recent Gains as Exports Surge
- AUD is making further progress early Thursday, rising through the Wednesday highs to cement the move through the $0.7378 50-dma. Trade balance numbers came in ahead of expectations, with exports growth firmer than forecast and helping support recent AUD strength.
- NZD is stronger in sympathy, helping NZD/USD secure its third consecutive session of gains, prompting the rate to top the 100-dma for the first time since June.
- CHF is underperforming, but USD/CHF holds within the week's range. Further strength in equity markets could work further against haven FX, with European indices higher across the board.
- Weekly US jobless claims and trade balance numbers from the US and Canada are the calendar highlights going forward. Fed's Bostic and Daly are also on the docket.
EQUITIES: Asia Sets Positive Tone For Europe And U.S. Gains
- Asian stocks closed higher, with Japan's NIKKEI up 92.49 pts or +0.33% at 28543.51 and the TOPIX up 2.78 pts or +0.14% at 1983.57. China's SHANGHAI closed up 29.941 pts or +0.84% at 3597.042 and the HANG SENG ended 62.14 pts higher or +0.24% at 26090.43
- European equities are up slightly, with the German Dax up 36.23 pts or +0.23% at 15855.64, FTSE 100 up 2.96 pts or +0.04% at 7154.46, CAC 40 up 15.84 pts or +0.23% at 6775.33 and Euro Stoxx 50 up 10.12 pts or +0.24% at 4236.29.
- U.S. futures are also edging higher, with the Dow Jones mini up 67 pts or +0.19% at 35357, S&P 500 mini up 9.25 pts or +0.2% at 4530.5, NASDAQ mini up 36.25 pts or +0.23% at 15646.
COMMODITIES: Oil Bounces From OPEC+ Induced Intraday Lows
- WTI Crude up $0.17 or +0.25% at $68.77
- Natural Gas up $0.01 or +0.22% at $4.613
- Gold spot up $1.56 or +0.09% at $1815.62
- Copper up $0.5 or +0.12% at $428.25
- Silver up $0.05 or +0.2% at $24.1908
- Platinum down $3.66 or -0.36% at $1001.71
LOOK AHEAD:
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.