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
- HARRIS, WALZ PLAN POST-DEBATE TOUR OF SWING STATES IN TIGHT RACE
- SCHUMER WARNS OF GOVERNMENT SHUTDOWN AHEAD OF SEPT. 30 DEADLINE
- BANK OF ENGLAND BOND SALES COULD FREE UP BILLIONS FOR LABOUR
- CHINA AUG CPI RISES TO HALF-YEAR HIGH AT 0.6% Y/Y
Figure 1: Global inflation vs oil & food prices
Source: MNI/Bloomberg
NEWS
US (BBG): Harris, Walz Plan Post-Debate Tour of Swing States in Tight Race
Vice President Kamala Harris will travel to still-tight battleground states after Tuesday’s debate with Donald Trump, as a poll showed the former president ahead nationally and many voters saying they need to know more about Harris. Trump led Harris by 48% to 47% in a New York Times-Siena College poll published Sunday. While within the margin of error, the result suggests that Harris’ month-long rise in the polls may have stalled and Trump’s support remains resilient.
US (BBG): Schumer Warns of Government Shutdown Ahead of Sept. 30 Deadline
Senate Majority Leader Chuck Schumer emphasized the importance of avoiding a government shutdown on Sept. 30, as lawmakers return to Washington after the August break with the US election ahead in November. In a letter to his Democratic colleagues on Sunday, Schumer said his party favors a short-term funding extension, known as a continuing resolution, and called on Republicans to support a bipartisan effort.
UK (The Times): Bank of England Bond Sales Could Free up Billions for Labour
The Bank of England could ramp up the speed of its bond sales this month in a significant move for the chancellor’s spending plans before the budget on October 30. The Bank’s monetary policy committee will decide the pace of its “quantitative tightening” programme this month for the next 12 months, as it shrinks its balance sheet by selling gilts back to financial markets and allows existing bonds to mature without reinvestment.
EU (MNI): Draghi Calls for EU Funds to Support Huge Investments
The European Union needs to boost centralised funding whilst maintaining budget discipline to support an additional EUR750-800 billion in annual investment spending over the next few years, former ECB President Mario Draghi said on Monday in a long-awaited report on boosting European competitiveness. Boosting investment in the bloc to 27% of GDP from 22% today will entail a bigger rise than seen in the post-WW2 Marshall Plan, Draghi said, calling for a push to complete Cpital Markets Union to boost non-bank financing and for the EU to consider delaying repayments under its NGEU post-Covid recovery plan.
CHINA (MNI): Global Green Transition to Boost Yuan - PBOC Official
MNI (Beijing) The worldwide green and low-carbon transition will boost the global use of the yuan thanks to the expansion of related trade and investment, and China’s monetary and fiscal policymakers must provide diverse financing tools to meet significant funding demand, said Wang Xin, director at Research Bureau of People's Bank of China, at the 2024 Bund Summit in Shanghai over the weekend.
JAPAN (BBG): Japan’s Takaichi Touts Spending as She Enters Leadership Race
Economic Security Minister Sanae Takaichi launched a fresh bid to become Japan’s first woman prime minister with a pledge to use public money to boost jobs and growth. The protege of late Prime Minister Shinzo Abe and his aggressive monetary and fiscal policy views is the seventh Liberal Democratic Party lawmaker to formally enter the race to become ruling party leader at an election on Sept. 27. The winner is all but assured of becoming prime minister because of the LDP’s dominance in parliament.
JAPAN (BBG): Nvidia-Backed Sakana AI Eyes Strategic Partnerships in Japan
Sakana AI sees potential for more strategic investors in Japan as rising US-China tensions spur the country to boost its own AI ecosystem. Growing geopolitical risks are heightening interest in the Tokyo-based startup, which recently announced a $100 million-plus funding round that includes Nvidia Corp., according to Sakana’s co-founder and Chief Executive Officer David Ha. “We think that a strong economy like Japan would want to advance their own AI ecosystem, and we want to be part of that,” Ha said in an interview with Bloomberg TV Monday.
CORPORATE (BBG): Couche-Tard Pushes for Seven & I Deal Talks After Rejection
Alimentation Couche-Tard Inc. told Seven & i Holdings Co. that it wants to work together to agree on a “friendly” takeover, after the Japanese convenience-store operator pushed back on the Canadian company’s initial proposal. In a sign that talks are set to intensify, Circle K owner Couche-Tard said in a statement that it remains “highly focused on consummating a transaction with 7&i that is in the best interests of all constituencies,” confirming an earlier Bloomberg News report. Seven & i followed that up with a short statement later on Monday, saying that it would be willing to talk if Couche-Tard tables a proposal that “fully recognizes Seven & i’s standalone intrinsic value.”
COMMODITIES (BBG): Iron Ore Sell-Off Deepens as Global Growth Fears Hit Commodities
Iron ore sank below $90 a ton for the first time since 2022 as industrial commodities faced sustained pressure from tepid Chinese demand and gathering worries over global growth. Futures for iron ore have fallen by more than a third this year as an unresolved steel crisis in China threatens demand for the raw material. But there are broader headwinds, with base metals and crude oil also retreating in recent weeks as 2024 turns out to be a jittery year across the commodities complex.
DATA
CHINA DATA (MNI): China Aug CPI Rises to Half-Year High at 0.6% Y/Y
- CHINA AUG CPI +0.6% Y/Y VS MEDIAN +0.7%; JUL +0.5% Y/Y
- CHINA AUG CPI +0.4% M/M VS +0.5% M/M JUL
- CHINA AUG PPI -1.8% Y/Y VS MEDIAN -1.5% Y/Y; JUL -0.8% Y/Y
- CHINA AUG PPI -0.7% M/M VS -0.2% M/M JUL
MNI (Beijing) China's Consumer Price Index rose 0.6% y/y in August to a six-month high, accelerating from July’s 0.5% but underperforming the 0.7% consensus, data from the National Bureau of Statistics showed Monday. Food prices rose 2.8% y/y led by a 21.8% increase in vegetable prices due to extreme weather, driving up CPI by 0.51 percentage points. Non-food prices rose 0.2%, pushing up the headline figure by 0.13 pp. On a monthly basis, CPI rose 0.4%, moderating from July's 0.5%, as travel demand declined by the end of summer holiday with air tickets and tourism prices falling by 5.1% and 0.7% m/m.
CHINA DATA (MNI): China Steel Output Down in August
MNI (Beijing) China's daily crude steel production decreased 6.3% m/m to 1.96 million tonnes in August, a 1.3 percentage points expansion from June-July, but down 8.3% year-on-year, Lange Steel Research Group reported on Monday, citing statistics from the China Iron and Steel Industry Association. Ge Xin, researcher at Lange Steel, said the steel market was clearly affected by insufficient demand and sustained losses, with a weak outlook in the short term.
JAPAN DATA (MNI): Japan Q2 GDP Revised Lower on CAPEX
- JAPAN Q2 ANNUALIZED GDP REV +2.9%; PRELIM +3.1%; MEDIAN +3.2%
- JAPAN Q2 GDP REV +0.7% Q/Q; PRELIM +0.8%; MEDIAN +0.8%
Japan's economy for the April-June period grew at 0.7% q/q, 10 basis points lower than market expectations, as capital investment and public investment were revised down from first preliminary estimates, second preliminary data released by the Cabinet Office showed on Monday. Capex rose 0.8% q/q, revised down from 0.9% seen in the preliminary release. The positive contribution from capital investments was revised to 0.1 percentage points from 0.2 pp.
JAPAN DATA (MNI): Japan August Sentiment, Outlook Indexes Rise
Japan's sentiment and outlook indexes ahead both posted their third straight rise in August, supporting the view that consumer sentiment remained solid on the back of improving income conditions, the Economy Watchers report released by the Cabinet Office showed Monday. The Economy Watchers sentiment index stood at a seasonally adjusted 49.0 in August, up from 47.5 in July, while the outlook index for two to three months ahead rose 2.0 points to 50.3 in August from 48.3 in July. All indexes rose from the previous month.
FOREX: Equity Bounces Helps USD/JPY Progress Toward Resistance
- The JPY is offered early Monday, helping undo a large part of the correction lower off post-payrolls highs. As a result, USD/JPY is making good progress toward the Friday high of 144.01, and a break above here exposes next resistance of 144.23, the September 5th high.
- Equity futures are mixed, with a soft Asia-Pac session countered by general strength in European shares. The Eurostoxx 50 future is higher by 1.1% at typing, staging the beginnings of a bounce off last week's pullback low. For now, a real recovery in risk is stalling below the 200-dma in the index at 4832.90.
- The weaker JPY is aiding a recovery in the greenback, with the USD Index again above 101.50. The firming USD is evident against most others in G10 with the exception of CAD, as USD/CAD fails on the test of the 200-dma at 1.3587 last week, re-orienting the focus back lower.
- US wholesale inventories and trade sales numbers are next on the schedule, with the NY Fed's 1-year inflation expectations metric also set for release. There are no central bank speakers of note after the late run of Fed members last week, and the ECB remain inside their pre-decision media blackout period.
EGBS: Equity Recovery Weighs, German 2s10s Eyes Disinversion
Core/semi-core EGBs have weakened through the morning, with the recovery of major equity benchmarks leaving Bund futures -69 ticks today at 133.86.
- The 20-day EMA at 133.70 provides the first support in Bunds, though bears will need to push through the 50-day EMA at 133.09 to signal scope for a deeper retracement.
- The September Sentix survey was weaker-than-consensus at -15.4 (vs -12.2 cons, -13.9 prior). While not market moving, this signals a soft start to the September sentiment round.
- The German cash curve has bear steepened, with 2s10s (currently -4.5bps) looking to disinvert for the first time since August 2022. This would follow the disinversion of US 2s10s since Friday's payrolls report.
- The 10-year OAT/Bund spread is 1bp wider at 71bps, after the French finance ministry requested a deadline extension for the submission of its medium-term fiscal-structural plan to the EU Commission.
- Broader peripheral spreads to Bunds are a little tighter though, owing to the equity rally.
- Thursday’s ECB meeting headlines the regional calendar this week, with a 25bp cut unanimously expected and fully priced by ECB-dated OIS.
GILTS: Equity Rally Weighs, Swelling IG Issuance Limits Any Recoveries
Spill over from swelling EUR & GBP IG issuance pipelines has limited recoveries in gilts, with a recovery from Friday’s lows in equity markets providing most of the selling pressure.
- Futures last -62 at 99.35 vs. lows of 99.29.
- Technical set up in the contract remains bullish, support at the 20-day EMA (99.08).
- Yields 3.5-5.0bp higher on the day, 10s lead the sell off.
- The DMO has opened the consultation for a tender of a gilt with a sub-3 year maturity this morning. It has requested feedback by 15:30 today, with Thursday flagged as a potential operation date. No tangible impact on the front end, at least when it comes to RV performance on the curve, with plans for such an operation outlined in the DMO’s quarterly issuance calendar.
- SONIA futures at/just off lows, flat to -7.0.
- BoE-dated OIS shows ~43.5bp of cuts through year end, little changed on the da
- BoE will sell GBP650mn of long dated gilts from its APF this afternoon.
- Looking ahead, the monthly labour market report (Tuesday) & GDP data (Wednesday) headline this week’s UK data releases.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Sep-24 | 4.923 | -2.7 |
Nov-24 | 4.683 | -26.7 |
Dec-24 | 4.514 | -43.6 |
Feb-25 | 4.268 | -68.2 |
Mar-25 | 4.092 | -85.8 |
May-25 | 3.900 | -105.0 |
Jun-25 | 3.788 | -116.2 |
EQUITIES: E-Mini S&P Remains in Bear-Mode with Scope Seen for Deeper Retracement
Eurostoxx 50 futures reversed course last week and a bearish tone - a correction - remains intact for now. The move down has resulted in a break of both the 20- and 50-day EMAs. Friday’s sharp sell-off signals scope for an extension lower and sights are on 4686.53, a Fibonacci retracement point. Initial key short-term resistance has been defined at 4998.00, the Sep 3 high. First resistance is at 4880.84, the 50-day EMA. Last week’s move lower in S&P E-Minis highlighted the start of a corrective cycle. The contract remains in a bear-mode condition for now and scope is seen for a deeper retracement near-term. An extension lower would open 5330.00, 61.8% retracement of the Aug 5 - Sep 3 bull leg. Key resistance has been defined at 5669.75, the Sep 3 high. Initial firm resistance to watch is 5544.68, the 20-day EMA.
- Japan's NIKKEI closed lower by 175.72 pts or -0.48% at 36215.75 and the TOPIX ended 17.69 pts lower or -0.68% at 2579.73.
- Elsewhere, in China the SHANGHAI closed lower by 29.319 pts or -1.06% at 2736.488 and the HANG SENG ended 247.34 pts lower or -1.42% at 17196.96.
- Across Europe, Germany's DAX trades higher by 90.02 pts or +0.49% at 18392.07, FTSE 100 higher by 40.5 pts or +0.5% at 8221.98, CAC 40 up 31.52 pts or +0.43% at 7383.82 and Euro Stoxx 50 up 30.74 pts or +0.65% at 4768.8.
- Dow Jones mini up 175 pts or +0.43% at 40582, S&P 500 mini up 30.5 pts or +0.56% at 5449.5, NASDAQ mini up 142 pts or +0.77% at 18598.75.
Time: 09:50 BST
COMMODITIES: Last Week's Sell-Off Reinforces Bear Theme in WTI Futures
WTI futures maintain a softer tone and last week’s impulsive sell-off reinforces the bear theme. The move lower resulted in a breach of key support at $70.88, the Aug 5 low. The clear break of this level confirms a resumption of the downtrend that started Apr 12 and opens $66.66, a Fibonacci projection. MA studies are in a bear-mode position highlighting a clear downtrend. Initial firm resistance is at $73.09, the 20-day EMA. The trend condition in Gold is unchanged and the primary direction remains up. Moving average studies are in a bull-mode set-up and this continues to highlight a dominant uptrend. Furthermore, a bullish price sequence of higher highs and higher lows remains intact. Sights are on $2536.4 next, a Fibonacci projection. The 20-day EMA has recently been pierced. The next firm support to watch is $2446.0, the 50-day EMA. S/T weakness is considered corrective.
- WTI Crude up $0.93 or +1.37% at $68.63
- Natural Gas down $0.08 or -3.56% at $2.194
- Gold spot down $4.78 or -0.19% at $2491.64
- Copper up $6.9 or +1.69% at $414.4
- Silver up $0.15 or +0.54% at $28.068
- Platinum up $12.48 or +1.35% at $937.51
Time: 09:50 BST
MNI (LONDON)
| Date | GMT/Local | Impact | Country | Event |
| 09/09/2024 | 1400/1000 | ** |  US | Wholesale Trade |
| 09/09/2024 | 1500/1100 | ** | US | NY Fed Survey of Consumer Expectations |
| 09/09/2024 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 09/09/2024 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 09/09/2024 | 1900/1500 | * | US | Consumer Credit |
| 10/09/2024 | 0600/0800 | *** |  DE | HICP (f) |
| 10/09/2024 | 0600/0700 | *** |  GB | Labour Market Survey |
| 10/09/2024 | 0600/0800 | *** |  NO | CPI Norway |
| 10/09/2024 | 0700/0900 | ** |  ES | Industrial Production |
| 10/09/2024 | 0800/1000 | * |  IT | Industrial Production |
| 10/09/2024 | 0900/1000 | * | GB | Index Linked Gilt Outright Auction Result |
| 10/09/2024 | 1000/0600 | ** | US | NFIB Small Business Optimism Index |
| 10/09/2024 | 1100/1200 | GB | BOE's Breeden remarks from Wharton-IMF Dialogue - Text release | |
| 10/09/2024 | - | *** |  CN | Trade |
| 10/09/2024 | - | *** | CN | Money Supply |
| 10/09/2024 | - | *** | CN | New Loans |
| 10/09/2024 | - | *** | CN | Social Financing |
| 10/09/2024 | 1210/0810 |  CA | BOC Governor Macklem speech in London UK | |
| 10/09/2024 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 10/09/2024 | 1400/1000 | US | Fed Vice Chair Michael Barr | |
| 10/09/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 10/09/2024 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
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.