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
- FED'S DALY SAYS RATE CUTS NEEDED TO KEEP LABOR MARKET HEALTHY
- NETANYAHU’S CONFLICTING MESSAGES CONFUSE CEASE-FIRE TALKS, OFFICIALS SAY
- BARNIER TIPPED FOR FRANCE PM AS FRUSTRATION W/MACRON GROWS
- JAPAN'S JULY REAL WAGES POST 2ND STRAIGHT RISE
Figure 1: Eurozone retail trade (M/M, %) disappoints, weakness driven by automotive fuel sales
Source: MNI/Eurostat
NEWS
FED (RTRS): Fed's Daly Says Rate Cuts Needed to Keep Labor Market Healthy
The Federal Reserve needs to cut interest rates to keep the labor market healthy, but it is now down to incoming economic data to determine by how much, San Francisco Fed President Mary Daly said on Wednesday. "As inflation falls, we've got a real rate of interest that's rising into a slowing economy; that's a basic recipe for over-tightening," Daly told Reuters in an interview. Labor market health, she said, has to be "sustained and protected, and we have to be very mindful that if policy is overly tight, you might get additional slowing in the labor market, and to my mind, that would be unwelcome."
US (BBG): Trump Says His Debate Strategy Is to Give Harris Room to Speak
Donald Trump said he plans to allow his opponent, Kamala Harris, to speak without interruption during their presidential debate next week, a shift for the reality-television-star-turned-politician who built a career on combative exchanges. “I’m going to let her talk,” Trump said Wednesday at a taping of a town hall in Harrisburg, Pennsylvania, with Fox News’ Sean Hannity. “Debates are interesting, you can go in with all the strategy you want, but you have to sort of feel it out.”
US (BBG): Biden to Block Nippon Steel’s Proposed Takeover of US Steel
US President Joe Biden is preparing to block Nippon Steel Corp.’s $14.1 billion takeover of United States Steel Corp., according to people familiar with the matter. But US Steel, responding on Wednesday evening, vowed to “pursue all possible options under the law to ensure” that the sale is completed. The proposed deal has been subject to a review by the secretive Committee on Foreign Investment in the United States, and Biden plans to kill it as soon as the CFIUS referral lands on his desk, said the people, who asked not to be identified because the move hasn’t yet been announced.
US (BBG): Biden to Award $7.3 Billion for Rural Energy in Boost for Harris
President Joe Biden will announce $7.3 billion in awards for more than a dozen rural electric cooperatives during a trip to Wisconsin on Thursday, as Democrats try to highlight efforts to combat inflation in a critical battleground state. The funding – spread across 16 cooperatives that serve rural residents and businesses across 23 different states – is expected to help underwrite the purchase of clean energy, as well as investments in transmission lines, substation upgrades, and software to help lower energy costs.
US (WSJ): Jeep Cuts Output of Wranglers and Grand Cherokees
Jeep’s parent company has pressed pause on making two of its top-selling U.S. models. Factories temporarily stopped producing the Jeep Wrangler and Grand Cherokee sport-utility vehicles in the past week, people familiar with the matter said. Those models were among Jeep’s bestsellers through the first half of the year.
ISRAEL (WaPo): Netanyahu’s Conflicting Messages Confuse Cease-fire Talks, Officials Say
Israeli Prime Minister Benjamin Netanyahu has insisted for weeks that his forces will not withdraw from the Gaza-Egypt border, a key demand of both Hamas and Egypt in talks to reach a cease-fire deal. But privately, his negotiating team offered to pull troops out as part of a phased agreement, according to three current and former officials from countries involved in the talks - confusing mediators at a critical time in the diplomatic efforts to end the war. At a news conference late Monday, Netanyahu described Israel's presence there - along a narrow strip of land known as the Philadelphi Corridor - as a "strategic imperative."
FRANCE (MNI): Barnier Tipped for PM Position as Frustration w/Macron Grows
France's prime ministerial carousel continued spinning overnight with former foreign minister and the EU's chief Brexit negotiator Michel Barnier the latest name to be posited as a potential occupant of Matignon. An announcement on Barnier, from the conservative Les Republicains (LR), has been trailed for today (5 Sep). However, this should be taken with some caution, given that rumours of announcements were also in place for Tuesday and Wednesday. Like the two other names that have circulated - former Socialist Party (PS) PM Bernard Cazeneuve and LR President of the Hauts-de-France region Xavier Bertrand - it is unclear if Barnier would garner requisite support to avoid a censure vote in the National Assembly.
BOJ (MNI): BOJ to Watch Markets Vigilantly - Takata
Bank of Japan board member Hajime Takata said on Thursday that the BOJ will raise the policy interest rate further if prices move in line with forecasts and solid capital investment and pass-through of cost increases are confirmed. However, Takata downplayed an imminent rate hike, saying the BOJ must monitor evolving market and economic conditions. “Developments of overseas economies following the rate hikes are the risk factor and the BOJ needs to monitor evolving conditions with high vigilance,” Takata told business leaders in Kanazawa City.
CHINA (MNI): PBOC Has Room for RRR Cuts - Official
MNI (Beijing) The People’s Bank of China will increase countercyclical adjustments with room to lower the reserve requirement ratio, though further interest-rate cuts will prove difficult, Zou Lan, head of the Monetary Policy Department at the PBOC, told reporters on Thursday. The current average reserve requirement for financial institutions is about 7%, leaving room for downward adjustments, Zou said. Monetary easing would require observation of economic trends, he noted, adding that the 50 basis point RRR cut at the beginning of the year is still affecting the economy.
CHINA (BBG): Xi Courts Africa With $50 Billion Pledge, Military Support
President Xi Jinping vowed to provide Africa with $50 billion in financial support over the next three years and strengthen military cooperation in a sweeping effort to deepen China’s relations with a continent seen as key to his geopolitical ambitions. The Chinese leader laid out his vision for closer ties in a speech to leaders from some 50 African nations Thursday at the opening ceremony of the Forum on China-Africa Cooperation in Beijing. He vowed to upgrade diplomatic relations and offered a range of economic perks to the continent even as China’s slowing growth has limited its ability to lend.
HONG KONG (MNI): HK Plans New Risk Tools for Connect Programme
MNI (Beijing) Hong Kong will incorporate more risk management tools into the mainland-HK Connect programme to address investor needs and provide more yuan-denominated products to facilitate its international use, said HK Financial Secretary Paul Chan on Thursday at the 2024 Bund Summit, co-hosted by CF40, a prominent think tank. The Connect Programme, which initially focused on stocks and bonds, has expanded to derivatives products such as exchange-traded funds, index futures and swap contracts, he noted.
HONG KONG (BBG): Hong Kong to Raise Alert Level as Super Typhoon Nears China
Hong Kong will issue its third-highest storm warning later Thursday as Super Typhoon Yagi skirts the city and tracks toward southern China, with coastal regions bracing for destructive winds and heavy rain. Yagi has maximum sustained winds of 130 knots (241 kilometers) per hour, according to the Joint Typhoon Warning Center. The system is equivalent to a Category 4 hurricane on the five-step Saffir-Simpson scale, which is considered a major storm that has the capacity to inflict catastrophic damage.
RBA (MNI): RBA Will Hike if Needed - Bullock
Reserve Bank of Australia Governor Michele Bullock has stressed the board could still hike rates should inflation not continue to moderate. Speaking at an industry conference, Bullock noted the Reserve is still aiming to lower demand to match supply without pushing the economy into recession. "Unlike some other countries, where they now have a negative output gap, in effect... we're trying to do something which means managing down the excess demand to a point where it's just in line with supply and that's the way we're trying to balance the two objectives," she said, pointing to the RBA’s dual labour and price mandate.
RBA (MNI EXCLUSIVE): Markets Overplaying End-of-Year RBA Cut - Ex-Economists
Former RBA economists discuss the cash rate outlook - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
RUSSIA (MNI): Putin Claims He Will Support Harris Amid US Crackdown on Kremlin Media
At the Eastern Economic Forum in Vladivostok President Vladimir Putin speaks on the US presidential election. Putin claims that "Our favourite was [Joe] Biden", and that as Biden shifted his support to VP Kamala Harris, "we will do the same". Says that "Trump introduced sanctions and restrictions", while "Maybe Harris will abstain from sanctions". Adds that "We will respect the US people's choice." Putin's comments come after joint action from the US Treasury, State, and Justice departments on 4 September that charged and sanctioned executives from Russian state media and put restrictions on outlets linked to the Kremlin. The US accused the Putin gov't of a campaign of disinformation intended to influence the upcoming election.
RUSSIA (RTRS): China, India and Brazil Could Mediate Russia-Ukraine Talks, Russia's Putin Says
Russian President Vladimir Putin said on Thursday that China, India and Brazil could act as mediators in potential peace talks over Ukraine. Putin said a preliminary agreement reached between Russian and Ukrainian negotiators in the first weeks of the war at talks in Istanbul, which was never implemented, could serve as the basis for talks.
MALAYSIA (BBG): Malaysia Holds Key Rate as Prices Stay Muted and Ringgit Gains
Malaysia left its benchmark interest rate unchanged on Thursday, while remaining upbeat about the country’s growth prospects, inflation trajectory and currency outlook. Bank Negara Malaysia kept the overnight policy rate at 3%, as predicted by all 22 economists in a Bloomberg News survey. The monetary policy stance - last adjusted in May 2023 - “remains supportive of the economy” and is consistent with the current assessment on Malaysia’s outlook, the central bank said in a statement Thursday.
CORPORATE (BBG): Nvidia Says It Has ‘Not Been Subpoenaed’ by the DOJ in Probe
Nvidia Corp., responding to a Bloomberg News report about the US Department of Justice sending out subpoenas as part of an antitrust probe, said it has been in contact with the government agency but hasn’t been subpoenaed. The DOJ often sends requests for information in the form of what’s known as a civil investigative demand, which is commonly referred to as a subpoena. The Department of Justice has sent such a request seeking information about Nvidia’s acquisition of RunAI and aspects of its chip business, according to one person with direct knowledge of the matter.
DATA
EUROZONE DATA (MNI): Retail Trade Disappoints, Weakness Driven by Automotive Fuel Sale
- EUROZONE JUL RETAIL SALES +0.1% M/M, -0.1% Y/Y
Eurozone volume of retail trade growth came in a touch below expectations at 0.1% M/M in July (vs 0.2% consensus) after a downward revised -0.4% M/M in June (-0.3% initially). On an annual basis, volumes of retail trade also disappointed at -0.1% Y/Y (vs 0.2% consensus, -0.4% prior ) - a second consecutive negative print. The soft reading was driven by a large fall in 'Automotive fuel' component which fell 1.0% M/M (vs -0.6% prior) - the largest fall since February 2024. This was followed by a marginal rise in Non-food products (ex-fuel) rising 0.1% M/M (vs -0.2% prior) Meanwhile, the 'Food, drinks, tobacco' component rose 0.4% M/M (following a fall of 0.7% in June).
EUROZONE AUG CONSTRUCTION PMI 41.4; JUL 41.4 (MNI)
GERMANY DATA (MNI): July Factory Orders Pulled up by Other Vehicles One-Offs
- GERMANY JUL FACTORY ORDERS +2.9% M/M
German factory orders surprised to the upside again in July [corrected from August in prior bullet], rising 2.9% M/M (vs -1.7% cons; +4.6% prior, upwardly revised from +3.9%). The headline figure was pulled up by one-off large orders in the "other vehicles" sector, however with underlying core orders declining slightly. The bigger picture remains that underlying factory orders remain at a weak level overall despite July's upside headline surprise. Sentiment questions if this is subject to change. On a 3m/3m basis, orders were +1.7% while the Y/Y figure was pulled up by a base effect (but also came in above expectations) at +3.7% Y/Y (vs -1.9%
cons; -11.2% prior, revised from -11.8%).
UK DATA (MNI): DMP Data Confirm Price and Wage Data Continue to Gradually Moderate
Price and wage growth continued to moderate but the 3-month readings of moderating employment growth masked some pick ups in the single month metrics over the last couple of months. Overall, this should still be encouraging data for those on the MPC who want to cut further - but is probably broadly in line with their expectations. Expected own price growth and realised own price growth continue to moderate - both on the single month and 3-month metrics. Expected price growth is now 3.6%Y/Y in the 3-months to August, 0.1ppt lower than prior, the lowest since September 2021 and down from a peak of 6.6%Y/Y in September 2022. Realised price growth fell to 4.0%Y/Y in the 3-months to August, 0.3ppt below
SWISS AUG UNEMPLOYMENT +3.4% M/M, +23.9% Y/Y (MNI)
SWISS AUG UNEMPLOYMENT RATE +2.5% (MNI)
JAPAN DATA (MNI): Japan's July Real Wages Post 2nd Straight Rise
Inflation-adjusted real wages, a barometer of households' purchasing power, stayed in positive territory in July for the second straight month, up 0.4% vs. 1.1% in June, 1% higher than market expectations, preliminary data released by the Ministry of Health, Labour and Welfare on Thursday showed. July’s real wages were boosted by summer bonuses (+6.2% in July vs. +7.8% in June) on the back of solid corporate profits. The positive real wages showed households’ income has caught up with price rises, easing the impact of inflation on consumers.
AUSTRALIA DATA (MNI): Soft Prices & Volumes of Key Commodities Weigh on Export Growth
- AUSTRALIA JUL TRADE BALANCE A$+6009
The merchandise trade surplus widened around $500mn to $6009mn in July with exports outpacing imports. Exports rose 0.7% m/m driven by rural goods, while imports fell 0.8% m/m due to fuels. The series are nominal and so are impacted by moves in global prices. July exports fell 1.4% y/y improving from -2.8% in June. Rural goods rose 6% m/m to be down 2.9% y/y while non-rural fell 0.4% m/m to be down 4.5% y/y, due to weak coal and other mineral fuel shipments. Coal, iron ore and LNG unit values were lower in July and then volumes were also down on the month for iron ore and coal ex thermal, making the shipments of our key commodities weak around mid-year.
FOREX: Greenback on the Backfoot as Markets Await Deluge of Jobs Data
- The USD starts the session on the backfoot, drifting slightly lower against all others in G10. The action picked up throught the European morning on a slight pick-up in volumes through a phase of EUR/USD buying. Currency futures saw a small, but notable, uptick in activity, but was largely isolated to EUR/USD and GBP/USD - with no leading move in US rates or equity markets.
- Options interest clustered in EUR/USD just above spot - with the most notable strikes today including: $1.1075-90(E3.0bln), $1.1100(E1.1bln), $1.1120-25(E1.6bln), $1.1145-55(E2.6bln), $1.1180-00(E2.1bln).
- Reversing a small part of yesterday's weakness, Scandi currencies are recovering slightly, but the broader trend remains higher in the short-term as high beta and growth-proxy currencies remain sensitive to a US rate shock, and S/T DMAs remain in bull mode for both EUR/NOK and EUR/SEK.
- A stacked session for data should keep markets on edge Thursday, with participants looking to glean any final clues on the state of the US labour market ahead of tomorrow's labour market report. ADP employment change, Challenger job cuts, weekly claims data, ISM Services and the final services PMI for August.
BONDS: Back From Highs, Little Changed on Day
Bonds are off early highs, with EGB & gilt supply, coupled with a recovery from session lows in equities, countering the early rally.
- Bund and gilt futures traded through yesterday’s highs before fading. Bulls failed to test the next meaningful levels of resistance.
- German yields are ~1bp lower across the curve.
- EGB spreads to Bunds are 0.5-2.0bp wider on the day, with the early flight-to-quality and presence of Spanish & French supply driving moves there.
- Both sets of auctions were smoothly digested.
- German ASWs were wider at the open but have pulled back from highs.
- Gilt yields are 1bp lower across the curve.
- Soft pricing metrics at the latest 5-Year gilt auction applied modest pressure.
- Short end markets are back to little changed on the day.
- ECB-dated OIS shows ~24bp of cuts for this month and ~61bp of easing through year end.
- BoE-dated OIS shows ~43bp of cuts through year end, with the next ~25bp cut fully discounted through the Nov MPC.
- BoE’s Pill will appear on a panel later this morning, although we are unsure if there will be any media coverage.
- U.S. data is set to continue to dominate the macro landscape ahead of tomorrow’s NFP release.
EQUITIES: Bullish Theme in E-Mini S&P Intact Despite This Week's Sell-Off
Eurostoxx 50 futures have reversed course this week and a bearish tone remains intact for now. The move down has resulted in a break of both the 20- and 50-day EMAs. This highlights the start of a corrective cycle, paving the way for a pullback towards 4805.47 initially, a Fibonacci retracement. Initial firm short-term resistance has been defined at 4998.00, the Sep 3 high. A break of this level would reinstate the recent bullish theme. A bullish theme S&P E-Minis remains intact, however, Tuesday’s sharp sell-off signals the start of a corrective cycle. Price has traded through the 20-day EMA and pierced support at the 50-day average, at 5520.21. A clear break of the 50-day EMA would signal scope for a deeper retracement towards 5459.75, a Fibonacci retracement. Key near-term resistance has been defined at 5669.75, the Sep 3 high. A breach of it would be bullish.
- Japan's NIKKEI closed lower by 390.52 pts or -1.05% at 36657.09 and the TOPIX ended 12.73 pts lower or -0.48% at 2620.76.
- Elsewhere, in China the SHANGHAI closed higher by 4.036 pts or +0.15% at 2788.314 and the HANG SENG ended 13.04 pts lower or -0.07% at 17444.3.
- Across Europe, Germany's DAX trades higher by 15.67 pts or +0.08% at 18615.22, FTSE 100 higher by 5.13 pts or +0.06% at 8276.45, CAC 40 down 16.28 pts or -0.22% at 7485.85 and Euro Stoxx 50 down 6.37 pts or -0.13% at 4843.74.
- Dow Jones mini up 51 pts or +0.12% at 41104, S&P 500 mini up 5.5 pts or +0.1% at 5535.75, NASDAQ mini up 4.75 pts or +0.03% at 18974.75.
Time: 09:50 BST
COMMODITIES: WTI Futures Remain Below Key Support at $70.88
WTI futures maintain a softer tone following this week’s sharp sell-off. The break lower has 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 paves the way for an extension towards $66.66, a Fibonacci projection. MA studies are in a bear-mode position highlighting a clear downtrend. Initial resistance is at $74.13, the 20-day EMA. The trend in Gold is unchanged and remains bullish. Moving average studies are in a bull-mode set-up and this continues to highlight a dominant uptrend. The recent breach of $2483.7, the Jul 17 high, confirmed a resumption of the primary uptrend and the focus is on $2536.4 next, a Fibonacci projection. The 20-day EMA has been pierced. The next firm support to watch lies at $2440.9, the 50-day EMA. Short-term weakness is considered corrective.
- WTI Crude up $0.4 or +0.58% at $69.65
- Natural Gas down $0 or -0.09% at $2.144
- Gold spot up $18.37 or +0.74% at $2515.21
- Copper up $2.1 or +0.51% at $409.9
- Silver up $0.46 or +1.62% at $28.7188
- Platinum up $16.09 or +1.77% at $926.93
Time: 09:50 BST
MNI (LONDON)
| Date | GMT/Local | Impact | Country | Event |
| 05/09/2024 | 1215/0815 | *** |  US | ADP Employment Report |
| 05/09/2024 | 1230/0830 | *** | US | Jobless Claims |
| 05/09/2024 | 1230/0830 | ** | US | Non-Farm Productivity (f) |
| 05/09/2024 | 1400/1000 | *** | US | ISM Non-Manufacturing Index |
| 05/09/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 05/09/2024 | 1500/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 05/09/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 05/09/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 06/09/2024 | 0130/1130 | ** |  AU | Lending Finance Details |
| 06/09/2024 | 0600/0800 | ** |  DE | Trade Balance |
| 06/09/2024 | 0600/0800 | ** | DE | Industrial Production |
| 06/09/2024 | 0645/0845 | * |  FR | Industrial Production |
| 06/09/2024 | 0645/0845 | * | FR | Foreign Trade |
| 06/09/2024 | 0700/0900 |  EU | ECB's Elderson speech at ESCB Conference | |
| 06/09/2024 | 0900/1100 | *** | EU | GDP (final) |
| 06/09/2024 | 0900/1100 | * | EU | Employment |
| 06/09/2024 | 0900/1100 | * |  IT | Retail Sales |
| 06/09/2024 | 1230/0830 | *** | US | Employment Report |
| 06/09/2024 | 1230/0830 | *** |  CA | Labour Force Survey |
| 06/09/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 06/09/2024 | 1245/0845 | US | New York Fed's John Williams | |
| 06/09/2024 | 1400/1000 | * | CA | Ivey PMI |
| 06/09/2024 | 1500/1100 | US | Fed Governor Christopher Waller | |
| 06/09/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
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.