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
- GOOLSBEE WARNS FED STAYING TOO TIGHT, TOO LONG
- TRUMP, HARRIS AGREE TO DEBATE AS REPUBLICAN LOOKS TO SHIFT RACE
- JAPAN ISSUES FIRST-EVER MEGAQUAKE ALERT AFTER KYUSHU TREMOR
- CHINA JULY CPI HITS FIVE MONTH HIGH AT 0.5% Y/Y
MNI (LONDON) - Figure 1: $-bloc STIR markets soften
Source: MNI/Bloomberg
NEWS
US (The Times): I Could Run the Federal Reserve Better, Claims Donald Trump
Donald Trump has made a surprise attack on the independence of the US Federal Reserve, saying that the president should have a say over the central bank’s decisions. Speaking at his Mar-a-Lago residence in Florida, the Republican presidential candidate said: “I feel the president should have at least [a] say in there.
Iran and its allies are weighing how to retaliate forcefully for a pair of killings attributed to Israel in Beirut and Tehran without igniting an all-out war none of them want.
JAPAN (BBG): Japan Issues First-Ever Megaquake Alert After Kyushu Tremor
An earthquake off the coast of Japan’s southern island of Kyushu prompted the government to issue its first-ever warning for a megaquake from an undersea trough running along a swath of the country’s coast. Prime Minister Fumio Kishida called off a planned trip to Central Asia out of an abundance of caution following the warning. Bullet trains were running at reduced speeds, national broadcaster NHK is running cautionary graphics and some semiconductor-related factories temporarily halted production. Some beaches in the affected regions have been closed off for the time being, according to local reports.
The governor of Russia’s Lipetsk region ordered the evacuation of several towns after an attack by Ukrainian drones on a military airfield that sparked a fire. Nine people were injured and public transport was halted in Lipetsk, a city of almost 500,000 people located between Moscow and Russia’s border with Ukraine, Governor Igor Artamonov said in his Telegram channel. He ordered the cancellation of all entertainment events in the region on safety grounds.
MEXICO (MNI): Banxico Hints at More Rate Cuts After Split Vote
Mexico's central bank signaled the possibility of another rate cut in September after reducing its overnight interbank interest rate by 25 basis points to 10.75% Thursday, saying in its policy statement that the current inflationary environment might allow for additional easing moves in the future. Thursday's decision was split, with governor Victoria Rodríguez and deputy governors Galia Borja and Omar Mejia in favor of the rate cut, and deputy governors Irene Espinosa and Jonathan Heath voting to hold borrowing costs at 11%.
PERU (BBG): Peru Surprisingly Cuts Rate, Shrugging Off Core Inflation Worry
Peru unexpectedly cut its benchmark interest rate Thursday, shrugging off concern that core inflation remains stubbornly high and that the economy is already growing faster than expected without the need of monetary policy support. The central bank lowered its benchmark rate by a quarter-point to 5.5%, as forecast by four of 10 analysts surveyed by Bloomberg. The other 10 had expected the bank to hold rates at 5.75%.
DATA
- NORWAY JUL CPI +0.5% M/M, +2.8% Y/Y
- NORWAY JUL CORE CPI +0.8% M/M, +3.3% Y/Y
- CHINA JULY CPI +0.5% Y/Y VS MEDIAN +0.3%; JUNE +0.2% Y/Y
- CHINA JULY CPI +0.5% M/M VS -0.2% M/M JUNE
- CHINA JULY PPI -0.8% Y/Y VS MEDIAN -0.9% Y/Y; JUNE -0.8% Y/Y
- CHINA JULY PPI -0.2% M/M VS -0.2% M/M JUNE
MNI (Beijing) China’s SME development index reached 88.9 in July, unchanged from June and reversing the downward trend since April’s yearly high of 89.4, data from the China Association of Small and Medium-sized Enterprises showed on Friday. The macroeconomic perception, construction and real estate sub-indexes increased by 0.1 points, offset by a 0.1 point fall from the retail sector.
FOREX: Sanguine Friday Trade So Far, But S/T Outlook More Constructive for USD
- Friday trade has been sanguine so far, with currency markets broadly respecting their recent ranges and showing little signs of a convincing breakout in either direction. GBP trades to the better, with GBP/USD continuing to reverse a very small part of the sharp pull lower off 1.30. The pair is now within range of the 50-dma resistance, today crossing at 1.2787.
- The USD Index trades inside the Thursday range so far, but is firming very slightly off the pullback low. The daily chart shows four consecutive sessions of higher lows, making for a more constructive short-term outlook relative to the post-NFP pull lower in prices.
- Stocks sit slightly firmer, with US equity futures in minor positive territory and indicating a higher open on Wall Street later today. The somewhat firmer risk backdrop is supporting growth proxies and keeping NZD toward the top of the G10 pile.
- The Canadian jobs report is the focus for the duration of the Friday session, with markets expecting Canada to have added 25k jobs over the month, while the unemployment rate ticks higher to 6.5% - marking a fresh post-pandemic high.
EGBS: Tight Range for Bunds, Spreads Tighten Amid Equity Rally
Bunds have traded in a tight 27 tick range this morning, with volumes comfortably below average levels. The subdued conditions come after a volatile week across global markets, with the broader macro calendar light today.
- Bund futures are +22 at 134.34, comfortably within well-defined technical levels at 133.77 (Aug 1 low, first support) and 134.84 (Aug 7 high, first resistance).
- OAT and BTP futures outperform Bunds, with major EGB spreads tightening as Euro-Stoxx 50 futures register fresh highs for the week.
- BTPs lead the tightening (~2.5bp), probing 140bp vs. Bunds after threatening to break above 155bp on Monday.
- German July final HICP confirmed flash estimates this morning, while the Italian print was revised down to a rounded 1.6% (vs 1.7% prior). French Q2 unemployment was also lower than expected at 7.3% (vs 7.5% cons).
- The German cash curve has lightly twist flattened, with 2-year yields 1bp higher and 30-year yields ~2.5bps lower at typing.
- Canadian jobs data headlines the North America session, with the regional calendar light to end the week.
GILTS: Stabilising After Corrective Pullback
Gilts recover from yesterday’s lows alongside U.S. Tsys & Bunds.
- This comes as the broader USD trades lower, while U.S. & European equity futures register the highest levels of the week.
- News flow remains limited after yesterday’s weekly jobless claims print countered some of the negativity provided by recent U.S. data.
- Futures +15 at 98.59.
- The latest pullback in the contract is considered corrective, with key support at the 20-day EMA (99.04) untouched.
- First resistance comes in at the Aug 6 high (100.43).
- Yields 2-3bp lower across the curve. 2s10s ~2bp off yesterday’s cycle high.
- SONIA futures -1.5 to +1.5, recovering from Thursday lows alongside gilts.
- BoE-dated OIS shows ~9bp of cuts for Sep & ~43bp of cuts through Dec, little changed on the day.
- Broader risk sentiment will continue to dominate ahead of the weekend, with the UK calendar limited until next week’s labour market (Tuesday) & CPI (Wednesday) data.
EQUITIES: Short-Term Gains for E-Mini S&P Considered Corrective
A bear threat in Eurostoxx 50 futures remains present and the contract traded lower Monday, reinforcing current conditions. Recent weakness resulted in a breach of 4846.00, the Apr 19 low. This highlights a stronger reversal and signals scope for an extension towards 4478.81 next, a Fibonacci projection. Firm resistance is 4895.81, the 50-day EMA. First resistance is 4720.53, a Fibonacci retracement. S&P E-Minis traded lower Monday and this confirmed an extension of the bear cycle. The move down has resulted in a print below 5185.50, 76.4% of the Apr 19 - Jul 16 bear leg. A clear break of this level would open 5092.00 next, the May 2 low. Short-term gains are - for now - considered corrective and the 50-day EMA marks a firm resistance, at 5460.55. Clearance of this average is required to alter the picture.
- Japan's NIKKEI closed higher by 193.85 pts or +0.56% at 35025 and the TOPIX ended 21.6 pts higher or +0.88% at 2483.3.
- Elsewhere, in China the SHANGHAI closed lower by 7.707 pts or -0.27% at 2862.194 and the HANG SENG ended 198.4 pts higher or +1.17% at 17090.23.
- Across Europe, Germany's DAX trades higher by 83.15 pts or +0.47% at 17764.63, FTSE 100 higher by 42.75 pts or +0.52% at 8187.69, CAC 40 up 60.04 pts or +0.83% at 7307.3 and Euro Stoxx 50 up 28.97 pts or +0.62% at 4697.78.
- Dow Jones mini up 80 pts or +0.2% at 39683, S&P 500 mini up 22.5 pts or +0.42% at 5370.75, NASDAQ mini up 122.5 pts or +0.66% at 18645.5.
Time: 09:55 BST
COMMODITIES: Bear Threat in WTI Futures Remains Present Despite Recent Recovery
A bear threat in WTI futures remains present despite this week’s recovery - a correction. Short-term gains are allowing an oversold condition to unwind. A resumption of weakness would again expose the next key support at $72.23, the Jun 4 low. It has been pierced, a clear break would reinforce bearish conditions and pave the way for an extension towards $70.73, the Feb 5 low. Key resistance is seen at $78.88, the Aug 1 high. Recent weakness in Gold appears to be a correction. Note that the yellow metal has managed to pierce support at the 50-day EMA - currently at $2377.6. A clear break of this EMA would signal scope for a deeper retracement towards $2277.4, the May 3 low and a key support. For bulls, a resumption of gains would open $2483.7, the Jul 17 high and a bull trigger. Clearance of this hurdle would resume the uptrend.
- WTI Crude up $0.1 or +0.13% at $76.29
- Natural Gas up $0.04 or +2.02% at $2.17
- Gold spot down $2.97 or -0.12% at $2424.37
- Copper up $7.75 or +1.96% at $403.6
- Silver down $0 or -0.02% at $27.5538
- Platinum down $3.94 or -0.42% at $932.89
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 09/08/2024 | 1230/0830 | *** |  CA | Labour Force Survey |
| 09/08/2024 | 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.