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:
- MNI US PCE PREVIEW - SPENDING IN FOCUS
- HARRIS PLEDGES TO TURN PAGE BUT FEW SPECIFICS IN FIRST INTERVIEW
- SCHNABEL FOCUSES ON HAWKISH-LEANING ALTERNATIVE SCENARIOS IN SPEECH
- EUROZONE FLASH INFLATION IN-LINE WITH TRACKING; SERVICES ACCELERATES
Figure 1: Eurozone inflation components (Y/Y)
Source: Eurostat, BBG, MNI
NEWS
MNI US PCE PREVIEW: Spending in Focus
Core PCE is seen increasing 0.15% M/M in July, potentially cementing a third month just below 2% annualized and with the latest path possibly softer still after Q2 downward revisions. The Y/Y is expected to increase a tenth to 2.7% but is exaggerated by rounding and has a good chance of technically disappointing after Q2 revisions. Base effects will increasingly come into effect into Q4. The consumer spending data could have a greater impact than inflation this month - analysts look for solid personal consumption growth after surprise strength in retail sales. A further firm print can pressure the 100bp of cuts over the three meetings left this year, but we expect particular sensitivity to surprise weakness in discretionary consumer spending in latest months.
US (BBG): Harris Pledges to Turn Page But Few Specifics in First Interview
Vice President Kamala Harris said helping address economic woes and bolstering the middle class would be her day one priority, in her critical first interview since capturing the Democratic presidential nomination. “I think that people are ready for a new way forward, in a way that generations of Americans have been fueled by hope and by optimism,” Harris told CNN, adding that she believed voters were ready “to turn the page” on former President Donald Trump, her Republican rival.
US (WSJ): Harris Has Narrow Lead Over Trump, WSJ Poll Finds
Voters have largely positive views of the Democratic nominee, who received 48% support to Donald Trump’s 47% in a head-to-head test of the two candidates.
ISRAEL/MIDEAST (BBG): Israel Kills Palestinian Gunmen in Extended West Bank Push
Israel’s army said it killed five gunmen at their hideout in a West Bank mosque, adding to the death toll from an unusually large military operation in the Palestinian territory. The campaign that kicked off with a series of attacks in northernly West Bank towns Wednesday has been mounted in parallel to the almost 11-month-old war with Hamas in Gaza, raising concerns internationally about the spread of violence.
MIDEAST (BBG): Houthi Video Shows Explosions on Ship Leaking Oil in Red Sea
Iranian-backed Houthi militants have released footage showing masked individuals boarding and setting off bombs on the Sounion, the Greek-flagged tanker that has been leaking oil into the Red Sea. A short video shared on social media platform X by Yahya Saree, a spokesperson for the Houthis, comes a week after the UK Navy said it had spotted fires on the vessel. The ship was carrying 150,000 tons of Iraqi crude, and the Pentagon said it appeared to be leaking oil, raising the risk of a major environmental disaster in the vital waterway.
ECB (MNI): Schnabel Focuses On Hawkish-Leaning Alternative Scenarios in Speech
ECB Schnabel's speech titled "The euro area inflation outlook: a scenario analysis" provides an unsurprisingly cautious outlook for monetary policy from one of the most hawkish Executive Board members. She continues to advocate for policy to "proceed gradually and cautiously", particularly as rates approach "the upper band of estimates of the neutral rate". The alternative scenarios Schnabel explores in her speech are all hawkish-leaning (i.e. they would imply a slower rate of policy easing than the current baseline). In particular, she discusses higher than expected unit labour costs, stronger wage pass-through and the impact of geopolitical uncertainty/protectionism.
EU (MNI): Member States Face Deadline to Nominate European Commissioners
The end of August marks the deadline for EU member states to nominate their candidates to be their European Commissioner, with three still yet to submit a name for Commission President Ursula von der Leyen's second term. Belgium, Bulgaria, and Italy have still to put forward a name. For Belgium and Bulgaria, the process has been complicated by long-running gov't coalition negotiations following elections in June, whereas for Italy the delay has been put down to the gov't choosing not to put forward preferred candidate Raffaele Fitto during the summer break.
CHINA (BBG): Yuan Hits Strongest in Over a Year as Flows Offset Fundamentals
The Chinese currency extended a recent advance to levels unseen in more than a year, as traders mulled signs of corporate buying amid broad dollar weakness. The offshore yuan gained 0.3% to 7.0752 per dollar, its strongest since June 2023. The currency has surged around 2% in August to erase its losses for the year and is now up about 0.7% in 2024 against the faltering greenback.
CHINA (BBG): PBOC Starts Trading Government Bonds to Influence Yield Curve
China’s central bank started trading its government bonds in an highly anticipated move, as a blistering rally sent benchmark yields to a record low. The People’s Bank of China sold long-dated bonds and bought short-term ones, an operation that resulted in a net purchase of 100 billion yuan ($14 billion) of debt in August, according to a statement on its website. It didn’t specify the tenors or dates it bought or sold.
CHINA (BBG): China Mulls Allowing Refinancing on $5 Trillion of Mortgages
China is considering allowing homeowners to refinance as much as $5.4 trillion of mortgages to lower borrowing costs for millions of families and boost consumption. Under the plan, homeowners would be able to renegotiate terms with their current lenders before January, when banks typically reprice mortgages, people familiar with the matter said, asking not to be identified discussing private information. They would also be allowed to refinance with a different bank for the first time since the global financial crisis, the people said.
CHINA (BBG): Chinese EV Makers Suffer Setback in Europe After Tariffs Start
Chinese automakers registered fewer electric cars across Europe in July, as new tariffs amplified the impact of a broader slump in EV sales. Brands including SAIC Motor Corp.’s MG and BYD Co. accounted for 9.9% of EV registrations in the region, down from 10.2% in July 2023, according to researcher Dataforce. Overall demand for EVs continued to weaken after Germany, Europe’s largest auto market, removed incentives late last year.
JAPAN (BBG): Japan’s Defense Ministry Seeks Record $59 Billion in Next Budget
Japan’s Defense Ministry is requesting a record budget allocation for next fiscal year as it aims to ramp up its military capabilities at a time of heightened regional tensions. The ministry will seek about ¥8.5 trillion ($59 billion) for its portion of the national budget for the fiscal year starting in April, a 10.5% increase from the current year’s initial budget. The record request includes funds needed to build a new satellite intelligence-gathering system to improve missile detection capabilities.
COMMODITIES (BBG): Libya’s Political Feud Threatens Return of Oil Supply Chaos
Libya’s political crisis is threatening to return the OPEC member’s oil production to the chaos that plagued it for years after the toppling of dictator Moammar Al Qaddafi. The North African nation’s crude output was slashed in half this week as authorities in the east shuttered more than 500,000 barrels a day amid a fight with the Tripoli-based government for control of the central bank. All the nation’s eastern export terminals closed on Thursday.
CORPORATE (BBG): Intel Weighs Options Including Foundry Split to Stem Losses
Intel Corp. is working with investment bankers to help navigate the most difficult period in its 56-year history, according to people familiar with the matter. The company is discussing various scenarios, including a split of its product-design and manufacturing businesses, as well as which factory projects might potentially be scrapped, said the people, who asked not to be identified because the deliberations are private.
DATA
EUROZONE DATA (MNI): Flash Inflation In-Line With Tracking; Services Accelerates
- EUROZONE AUG FLASH HICP +2.2% Y/Y
- EUROZONE AUG FLASH CORE HICP +2.8% Y/Y
- EUROZONE JUL UNEMPLOYMENT RATE 6.4%
Eurozone August flash headline printed broadly in-line with MNI's tracking estimate at 2.2% Y/Y (vs 2.2% cons; 2.6% prior) and 0.2% M/M (vs 0.2% cons; 0.0% prior). On an unrounded basis, headline was 2.18% Y/Y and 0.16% M/M. Core HICP printed in-line with consensus on a rounded basis, at 2.8% Y/Y (vs 2.8% cons; 2.9% prior). On an unrounded basis, core was 2.84% Y/Y and 0.33% M/M. Looking at the individual categories, services inflation rose to 4.2% Y/Y after falling to 4.0% in July, which was expected as outlined in MNI's inflation preview due to potential lagged effects from the Paris Olympics.
FRANCE DATA (MNI): France Flash Inflation A Touch Firmer Than Expected
- FRANCE AUG HICP +0.6% M/M, +2.2% Y/Y
- FRANCE AUG CPI +0.6% M/M, +1.9% Y/Y
- FRANCE JUL PPI +0.2% M/M, -5.4% Y/Y
The latest set of August flash inflation prints from France saw HICP and CPI both on an annual and sequential basis come in firmer than expected. HICP came in at +2.23% Y/Y (vs 2.1% consensus, 2.70% prior) and 0.64% M/M (vs 0.5% consensus, 0.20% prior). CPI came in at 1.88% Y/Y (vs 1.8% consensus, 2.30% prior) and 0.58% M/M (vs
0.5% consensus, 0.18% prior). Looking at the national CPI: Services CPI (which makes up 51.6% of the national CPI index) rose to 3.09% Y/Y (vs 2.59% in July) - the highest reading since February 2024, driven by the price of accommodation and transport services. On a monthly basis however, services prices rose 0.60% (vs 1.22% prior), which had been highlighted ahead of the release due to the Olympics.
FRANCE DATA (MNI): France Final GDP Revised Down A Tenth From Flash
- FRANCE GDP Q2 2ND EST +0.2% Q/Q, +1% Y/Y
- FRANCE JUL CONSUMER MANUF SPENDING +0.5% M/M, -0.8% Y/Y
- FRANCE JUL CONSUMER SPENDING +0.3% M/M, -0.6% Y/Y
France Q2 Final GDP came in a touch softer than expected on both a quarterly and yearly basis at 0.2% Q/Q (vs 0.3% flash, 0.3% prior), and 1.0% Y/Y (vs 1.1% flash, 1.5% prior revised from 1.3%).Foreign trade growth is estimated to have contributed 0.1% (vs 0.2% flash estimate, 0.3% in Q1) to Q2 quarterly GDP with imports one tenth higher than previously estimated at 0.1% Q/Q (vs -0.4% prior), and exports growing less than the flash estimate at 0.4% Q/Q (vs 0.6% flash estimate, 0.7% in Q1), whilst final domestic demand (excluding stocks) contributed 0.0% to Q2 GDP. Imports were supported by imports of energy, water, waste and agri-food products in particular.
GERMANY DATA (MNI): Labour Market Data Marginally Weak, Slightly Brighter Than Lastly
- GERMANY AUG UE RATE (SA) 6.0% (FCST 6.0%); JUL 6.0%
- GERMANY AUG UE NET CHANGE (SA) +2K; JUL +17K
- GERMANY AUG UE TOTAL (SA) 2.801 MN; JUL 2.799 MN
German labour market data remains soft overall, but some parts of today's release were marginally better than last month. Unemployment rose less, employment still rose slightly, and worker state benefits are set to be used a bit less. Labour demand decreased slightly, however, and looking ahead, some more softening appears to be in the pipeline. Unemployment rose less than expected in August, by 2k (vs +16k cons); that was the lowest rise since July 2023 (17k prior, revised from 18k) on a seasonally-adjusted basis. The (seasonally-adjusted) unemployment rate remained at 6.0%, as expected.
GERMANY DATA (MNI): VDMA Machinery Orders Yearly Rate Recovers But Still Bleak
German machinery orders came in at -5% Y/Y in July. While that was again an improvement over June's -9% (and May's -27%), the overall trend remains contractionary: With the exception of April, the machinery orders' Y/Y rate has printed below 0% for a consecutive 22 months, and VDMA adds that a trend reversal is not in sight as as the same month last year had only achieved a meagre order volume. Looking at a geographical split, the decline in July was evenly distributed (both -5% Y/Y).
GERMANY IMPORT PRICE INDEX +0.9 % Y/Y, -0.4% M/M (MNI)
SWEDEN DATA (MNI): Real Wages Notably Higher in June as Inflation Receded
Swedish real wage growth saw a notable uptick in June, owing to the sharp fall in headline CPIF inflation that month. The recovery in real wages should start to support consumption a little more in H2 2024, particularly as Riksbank rate cuts progress. The National Mediation Office (NMO) estimated that nominal wage growth was 4.0% Y/Y (vs 3.8% in May, 4.2% in April), driven by a 4.3% estimated rise in private sector wages and a 3.5% estimated rise in public sector wages.
UK DATA (BBG): UK House Prices Post Surprise Fall Despite BOE Rate Reduction
UK house prices fell unexpectedly in August, a sign affordability remained stretched even after the Bank of England eased borrowing costs, according to one of the top mortgage lenders. Nationwide Building Society said its index of house prices declined 0.2%, the first drop since April. Economists surveyed by Bloomberg had expected a 0.2% increase. The figures suggest an uneven recovery is under way after last year’s dip.
UK JUL M4 MONEY SUPPLY +0.3% M/M, +2.1% Y/Y (MNI)
UK BOE JUL CONSUMER CREDIT GBP1.22 BLN (MNI)
UK BOE JUL MORTGAGE APPROVALS 61,985 (MNI)
UK BOE JUL SECURED LENDING GBP2.79 BLN (MNI)
SWISS KOF AUG ECONOMIC BAROMETER 101.6 (MNI)
JAPAN DATA (MNI): Japan Aug Tokyo Core CPI Rises 2.4% vs. July 2.2%
- JAPAN AUG TOKYO CORE CPI +2.4% Y/Y; JULY +2.2%
- JAPAN AUG TOKYO CORE-CORE CPI +1.6% Y/Y; JULY +1.5%
The year-on-year rise in the Tokyo core inflation rate accelerated to 2.4% in August from July’s 2.2%, the fourth straight rise, and remained above 2% for the third consecutive month, data from the Ministry of Internal Affairs and Communications showed on Friday. Higher energy price (+17.4% vs. +14.5%) drive the increase. The core CPI was within forecasts by Bank of Japan officials who expected inflation to rise as the impact of the pass-through of cost increases continues, although the pace is slowing.
JAPAN DATA (MNI): Japan July Factor Output Rises First in Two Months
- JAPAN JULY INDUSTRIAL OUTPUT +2.8% M/M; JUNE +4.2%
Japan's industrial output rose 2.8% m/m in July for the first rise in two months following June's 4.2% decline, thanks to higher production of motor vehicles and electric machinery, and information and communication electronics equipment, data released by the Ministry of Economy, Trade and Industry showed on Friday. Production of motor vehicles rebounded like Bank of Japan officials expected but bank officials are vigilant against the outlook for production as the survey showed weaker production in August and September.
JAPAN JULY RETAIL SALES +2.6% Y/Y; JUNE +3.8% (MNI)
JAPAN JULY RETAIL SALES +0.2% M/M; JUNE +0.6% (MNI)
AUSTRALIA DATA (MNI): Retail Sales Below Forecast, Discretionary Spending Curbed in July
July retail sales were flat in m/m terms, against a 0.3% forecast rise. The prior two months had seen back to back rises of 0.5%. The July outcome is the weakest since March's -0.4% dip. The y/y print was +2.3%, down slightly from recent highs (2.9% seen in June). In terms of the details, food was the only sector that recorded a rise (up
0.2%m/m). We saw cafe spending fall -0.2%m/m, this sector's third straight monthly fall. Apparel and department store spending was negative as well. Household goods retailing was flat, after three straight monthly gains of 1.1%.
FOREX: Chicago PMI Could Set Data Tone for Next Week
- The USD Index is holding the bounce off the August pullback low, with the 101.00 handle seen steady into the end of the month. Month-end flow impacts are expected to be mild, particularly for the greenback, while EUR weakness this week could be attributed to corporate flow tied into the value-date month-end that passed on Wednesday.
- GBP is modestly outperforming, helping keep EUR/GBP under pressure and extend the recent spell of weakness. The cross is testing 0.8400 at typing, and a break below would be the first since late July, adding to the focus to key support and the bear trigger of 0.8383.
- Growth-proxy currencies have carried over the short-term momentum into the second-half of the week, allowing AUD/USD to build a base above 0.6800. 0.6824 and 0.6871 remain the key levels here, and a particularly soft set of US dataprints today could see these resistance marks come under pressure.
- US PCE data takes focus in the session ahead, with markets expecting both the headline and core PCE price indices to hold steady at 0.2% on the month, and both above 2.5% on a Y/Y basis. MNI Chicago PMI is set to follow, with expectations of continued weak growth likely to help lay the groundwork for next week's run of ISM and NFP data.
EGBS: Rally Through Morning, August HICP Ends Up In Line With Initial Consensus
Major EGB futures have rallied through the morning, with participants seemingly re-assessing yesterday afternoon’s US data/crude-induced selloff.
- Eurozone flash headline and core inflation was in line with initial consensus at 2.2% Y/Y and 2.8% Y/Y respectively, after this morning’s higher-than-expected French/Dutch data reduced hopes for a downward surprise following yesterday’s Spanish/German outturns.
- In particular, EZ services inflation accelerated to 4.2% Y/Y (vs 4.0% prior), underscoring cautious commentary from ECB Schnabel, who advocated for a gradual policy easing cycle in a speech today.
- Bund futures are +22 ticks today at 134.10, though remain well-short of yesterday’s high at 134.49.
- The German cash curve has lightly bull flattened, but remains steeper on the week after yesterday’s price action.
- The recovery in European equities from overnight lows has allowed 10-year EGB spreads to Bunds to narrow away from opening wides, leaving spreads little changed on the day.
- Broader focus now turns to the US monthly PCE report.
GILTS: Off Yesterday's Lows
Gilts firmer alongside Bunds, with participants fading yesterday afternoon’s U.S. data-/oil-driven weakness.
- Futures +52 at 99.01.
- The technical backdrop is bullish. Initial resistance at this week’s high (99.21).
- Yields 3-4bp lower across the curve, light flattening bias.
- The DMO’s quarterly issuance calendar did not provide any real shocks.
- The most meaningful surprise probably came via the announcement of a consultation to gather views on continuing demand for a short conventional gilt tender (for a maturity of under three years) in the coming period.
- SONIA futures flat to +4.0.
- BoE-dated OIS remains sticky, showing ~41bp of cuts through year end.
- Economic resilience and a lack of commitment to follow up cuts from the BoE has allowed SONIA markets to decouple from SOFR & EUR peers in recent weeks.
- Wider macro matters are set to dominate into the weekend, with little of note on the UK calendar.
- Further out, final PMIs, the BoE DMP survey and comments from BoE’s Breeden headline next week’s UK agenda (note Breeden will speak on supervisory matters, not monetary policy).
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Sep-24 | 4.908 | -4.2 |
| Nov-24 | 4.684 | -26.6 |
| Dec-24 | 4.544 | -40.7 |
| Feb-25 | 4.342 | -60.8 |
| Mar-25 | 4.197 | -75.3 |
| May-25 | 4.031 | -91.9 |
| Jun-25 | 3.934 | -101.6 |
EQUITIES: Eurostoxx 50 Futures Trade Higher, Extending Current Bull Cycle
Eurostoxx 50 futures traded higher Thursday, marking an extension of the bull cycle that started Aug 5. The break higher means that all key retracement points of the Jul 12 - Aug 5 bear leg have been cleared. SIghts are on 4997.00 next, the Jul 17 high, where a breach would open 5087.00, the Jul 12 high. Initial firm support to watch is seen at 4866.04, the 20-day EMA. A break would signal scope for a corrective pullback. A bullish theme S&P E-Minis remains intact and the contract is trading closer to its recent highs. A resumption of gains would pave the way for a climb towards key resistance and the bull trigger at 5721.25, the Jul 16 high. A break would resume the primary uptrend. Support to watch lies at 5512.95, the 50-day EMA. A clear breach of it is required to instead highlight a potential bearish threat. The latest move lower appears corrective.
- Japan's NIKKEI closed higher by 285.22 pts or +0.74% at 38647.75 and the TOPIX ended 19.61 pts higher or +0.73% at 2712.63.
- Elsewhere, in China the SHANGHAI closed higher by 19.108 pts or +0.68% at 2842.214 and the HANG SENG ended 202.75 pts higher or +1.14% at 17989.07.
- Across Europe, Germany's DAX trades higher by 15.75 pts or +0.08% at 18927.57, FTSE 100 higher by 30.87 pts or +0.37% at 8410.76, CAC 40 up 37.57 pts or +0.49% at 7678.65 and Euro Stoxx 50 up 6.93 pts or +0.14% at 4973.41.
- Dow Jones mini up 67 pts or +0.16% at 41503, S&P 500 mini up 22.5 pts or +0.4% at 5632.25, NASDAQ mini up 124.75 pts or +0.64% at 19518.
Time: 09:50 BST
COMMODITIES: WTI Futures Recover From This Week's Lows
WTI futures have recovered this month from their early August lows. More recently, the contract traded sharply higher Monday before pulling back. A stronger resumption of gains would refocus attention on key resistance at $78.54, the Aug 12 high. Clearance of this level would highlight a stronger bullish reversal. For bears, an extension lower would once again expose the $70.88 key support, Aug 5 low. Trend conditions in Gold are unchanged and remain bullish. The recent breach of $2483.7, the Jul 17 high, confirmed a resumption of the primary uptrend. Note that moving average studies are still in a bull-mode set-up and this highlights a dominant uptrend. The focus is on a climb towards $2536.4 next, a Fibonacci projection. Initial support to watch lies at $2479.7, the 20-day EMA. Short-term weakness would be considered corrective.
- WTI Crude up $0.4 or +0.53% at $76.27
- Natural Gas up $0.01 or +0.47% at $2.147
- Gold spot up $2.66 or +0.11% at $2524.53
- Copper up $4.75 or +1.12% at $427
- Silver up $0.1 or +0.34% at $29.5343
- Platinum up $3.73 or +0.4% at $945.54
Time: 09:50 BST
MNI (LONDON)
| Date | GMT/Local | Impact | Country | Event |
| 30/08/2024 | 1230/0830 | *** |  US | Personal Income and Consumption |
| 30/08/2024 | 1230/0830 | *** |  CA | GDP - Canadian Economic Accounts |
| 30/08/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 30/08/2024 | 1230/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 30/08/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 30/08/2024 | 1345/0945 | *** | US | MNI Chicago PMI |
| 30/08/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 30/08/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 30/08/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 31/08/2024 | 0130/0930 | *** |  CN | CFLP Manufacturing PMI |
| 31/08/2024 | 0130/0930 | ** | CN | CFLP Non-Manufacturing PMI |
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.