EXECUTIVE SUMMARY
- HARRIS, TRUMP FACE OFF IN KEY PRESIDENTIAL DEBATE
- CHINESE, US MILITARY CHIEFS FOR SOUTH CHINA SEA HOLD CALL
- UK WAGE GROWTH AT 3-1/2 YEAR LOW
- CHINA EXPORTS UP 8.7% Y/Y IN AUGUST, SURPLUS REACHES $91BN
Figure 1: UK average weekly earnings annual growth rates
Source: ONS
NEWS
US (BBG): Harris, Trump Face Off in Key Presidential Debate
Kamala Harris and Donald Trump will face off Tuesday night in Philadelphia for their first and potentially only debate before the November election, a high-stakes opportunity with the potential to further upend an already tumultuous race. The debate, set in the key battleground state of Pennsylvania, is a crucial test for the vice president and former president. Harris, a former prosecutor who hasn’t debated in years, has yet to fully detail her agenda and vision. Trump, a convicted felon, has struggled to define his new opponent after President Joe Biden dropped out – and faces the reality that his age, 78, is a big liability.
US/CHINA (BBG): Chinese, US Military Chiefs for South China Sea Hold Call
Chinese and American military commanders overseeing operations in the South China Sea had their first conversation since such talks were suspended following then-House Speaker Nancy Pelosi’s visit to Taiwan in 2022. Admiral Samuel Paparo, commander of US Indo-Pacific Command, held a video call with Wu Yanan, commander of the Southern Theater Command of the Chinese People’s Liberation Army, according to statements from both sides.
US/CHINA (BBG): House Passes Biosecure Bill, Targeting China Biotech Firms
China hawks in the US House overcame a last-ditch lobbying effort and passed legislation Monday night that would blacklist Chinese biotech companies and their US subsidiaries. The bill, approved by a vote of 306 to 81, now goes to the Senate. At stake, the bill’s backers argued, is whether a rival will dominate another field the US pioneered, amid fears China could engineer bioweapons or otherwise capitalize on biological data vacuumed up from the rest of the world.
ISRAEL (MNI): IDF Claims Hamas Commanders Targeted in Khan Younis Strike
An overnight strike on a humanitarian area in Khan Younis, Gaza, by the Israeli military has garnered significant attention amid a lengthy stall in efforts to reach a ceasefire agreement between Israel and Hamas. Earlier reports claimed that up to 40 civilians were killed in the designated safe zone in the southern Gazan city. The Israeli Defence Forces (IDF) claim that it hit 'a number of senior Hamas terrorists' that were operating out of a command centre located inside the humanitarian zone. According to the IDF the commanders targeted were directly involved in the 7 October attacks. The IDF also claims that the casualty figures published by the Hamas-run health ministry in Gaza 'do not align' with their own info.
UK (BBG): UK Can Tax Wealthy to Close £20 Billion Fiscal Gap, Report Says
UK Chancellor of the Exchequer Rachel Reeves could push through over £20 billion ($26 billion) of tax hikes at the upcoming budget without breaking any election pledges by targeting inheritances and capital gains, according to the Resolution Foundation. Reeves is under pressure to plug what she claims is a £22 billion fiscal hole left by the previous Conservative government. However, her hands are tied by Labour manifesto promises not to raise a number of big revenue-raising taxes, including income tax and VAT.
EU COMMISSION (MNI): VdL Delays Naming of New Commission to Next Week - Politico
European Commission President Ursula von der Leyen has been forced to delay naming her new College of Commissioners until next week reports Politico. She had initially planned to unveil the group on 11 September following meetings with presidents of the political groups in the European Parliament. However, with the withdrawal of Slovenia's initial commissioner candidate Tomaž Vesel last week and his replacement with former ambassador to Germany then Switzerland Marta Kos, the process has been stalled as the Slovenian parliament needs to approve the change in personnel.
EU (BBG): Draghi’s Call for Joint EU Bonds Hits Wall of German Opposition
Joint debt just isn’t on Germany’s agenda - irrespective of Mario Draghi’s warning that it’s the only way to make the European Union more competitive with China and the US. The former Italian premier had barely finished presenting his long-awaited report on Monday about how to fix Europe’s ailing economy - with its centerpiece of common bond issuance - when Finance Minister Christian Lindner retorted that such an approach won’t solve the region’s structural problems.
EU/CHINA (BBG): EU to Lower Proposed Tariffs on Teslas and Other EVs From China
The European Union is poised to make small downward adjustments to the additional tariff rates proposed for electric vehicles that Tesla Inc. and other carmakers import from China, according to people familiar with the matter. Tesla’s proposed rate will be revised to just below 8%, from 9%, said the people, who spoke on condition of anonymity because the changes have not yet been announced. The EU is making the revisions due to new information that companies have provided, the people said.
CHINA (BBG): PBOC-Owned China Bonds See Trading Surge in Sign of Intervention
Traders are seeing a surge in trading of some Chinese special government bonds mostly owned by the central bank, a sign that the authorities may have become more active in selling their debt holdings to cool a sizzling rally. More than 250 batches of the 10-year special sovereign notes changed hands by mid Tuesday afternoon, more than tripling the number of deals in the previous session and eight times the sum recorded for Friday, according to traders. The offering mostly came from big state lenders, three of them added. They asked not to be identified as the matter was private.
CHINA (BBG): China’s $6.5 Trillion Stock Rout Worsens Economic Peril for Xi
A deepening selloff in Chinese stocks is exacerbating a crisis of confidence in the world’s second-largest economy, heaping pressure on policymakers to halt the downward spiral. A benchmark index of the nation’s onshore shares is near the lowest levels since January 2019, yet another reflection of the depth of the market gloom. Down almost 7% this year, the CSI 300 Index is staring at an unprecedented fourth annual drop, while an MSCI Inc. gauge of Chinese stocks is heading for its longest stretch of underperformance versus global equities since the turn of the century.
BOJ (BBG): BOJ Is Said to See Little Need to Hike Interest Rate Next Week
Bank of Japan officials see little need to raise the benchmark rate when board members gather next week, as they’re still monitoring lingering volatility in financial markets and the impact of the July hike, according to people familiar with the matter. The BOJ is likely to keep borrowing costs unchanged at 0.25% at the Sept. 20 conclusion of its two-day gathering, according to the people. The bank needs to carefully monitor financial markets given recent ructions that include the Nikkei 225’s biggest plunge in history on Aug. 5, just days after the central bank raised its rate, the people said.
N. KOREA (BBG): Kim Jong Un Vows to Increase Nuclear Weapons Exponentially
North Korea’s leader vowed to bolster his nuclear weapons capabilities exponentially and prepare his troops for combat as he accused the US and its allies of expanding a “nuclear-based military bloc” in the region. In a speech marking the 76th founding anniversary of his country, Kim Jong Un said he’ll get his nuclear force “fully ready for combat” and there’s no limit to how much he’ll expand his military muscle, official Korean Central News Agency reported on Tuesday.
COMMODITIES (BBG): Aluminum Extends Gains on Lower China Stockpiles, Strong Exports
Aluminum extended its rebound on a decline in Chinese inventories and an unexpected pickup in overall exports from the top metal consumer. Inventories of aluminum ingot in the Asian nation dropped to 768,000 tons, the lowest level since June, according to Shanghai Metals Market. Discounts have also narrowed for spot cargo purchases in eastern China, a sign that demand is rising as the autumn peak season starts after prices pulled back from a high in May.
CORPORATE (BBG): Apple Loses EU Top Court Case Over €13 Billion Tax Bill
Apple Inc. lost its court fight over a €13 billion ($14.4 billion) Irish tax bill, in a boost to the European Union’s crackdown on special deals doled out by nations to big companies. The EU’s Court of Justice in Luxembourg backed a landmark 2016 decision that Ireland broke state-aid law by giving the iPhone maker an unfair advantage. The court ruled on Tuesday that a lower court win for Apple should be overturned, because judges incorrectly decided that the commission’s regulators had made mistakes in their assessment.
DATA
UK DATA (MNI): UK Wage Growth at 3-1/2 Year Low
- UK JUL AVE WEEKLY EARNINGS +4% YY
- UK JUL AVE WEEKLY EARNINGS EX-BONUS +5.1% YY
- UK JULY UNEMPLOYMENT RATE 4.1%
- UK AUG CLAIMANT RATE +4.7%
UK labour data looks broadly in line with expectations across all metrics but with payrolls employees softer than expected and the LFS employment change higher than expected. The claimant count was revised down (to a rate of 4.6% last month) with the downward revision offsetting the August increase to leave the rate at 4.7% - note that is still impacted by eligibility changes. The unemployed level didn't really change from last month, but the economically inactive level fell to the lowest level this year (albeit remaining below levels seen 2016 and onwards). Overall, still not a lot to move expectations for the MPC here. Things still moving in the right direction, albeit gradually, so not much to alter anyone's views.
GERMANY DATA (MNI): Inflation Breadth Partially Stalling for Germany in August
- GERMANY AUGUST FINAL HICP -0.2 % M/M, +2.0% Y/Y
German final August HICP was unrevised from the flash readings at +2.0% Y/Y (+2.6% July) and -0.2% M/M (+0.5% July). The final reading of CPI was also unrevised at +1.9% Y/Y (+2.3% July) and -0.1% M/M (+0.3% July). Core CPI printed at +2.9% Y/Y (+2.8% July), the lowest rate since February 2022. Overall, the data confirms the main conclusions from the flash reading - services remain sticky and energy prices were behind the drop in headline (goods contributed 0.46pp less to headline CPI in August than in July, and out of that, 0.33pp came from energy).
SWEDEN DATA (MNI): Monthly GDP Well Below Consensus, But We Caution Over-Interpretation
Only five analysts had submitted a forecast for Swedish July GDP, but the -0.8% M/M outturn was still well-below the 0.1% median (range: -0.5% to 0.3%). Weak production amongst services and construction firms drove the negative print, according to Statistics Sweden. However, we continue to interpret the monthly/flash GDP figures with caution, given the likelihood of future revisions and poor performance in tracking actual GDP growth. Consumption rose 0.7% M/M, but further positive data will be required to signal the start of a household recovery. Indeed, consumption was still -1.1% Y/Y (vs a 3 tenth downwardly revised -1.7% prior).
NORWAY DATA (MNI): SA CPI-ATE Rises M/M Despite One-Off Factors
- NORWAY AUG CPI -0.9% M/M, +2.6% Y/Y
- NORWAY AUG CORE CPI -0.7% M/M, +3.2% Y/Y
Statistics Norway's seasonally adjusted CPI-ATE index rose 0.23% M/M in August, after 0.15% in June and July. This is a little surprising, as the fall in Kindergarten prices in August was a one-off factor, and thus would not have been corrected for in seasonal adjustment procedures (i.e. it should have pulled the M/M rate lower, all else equal). However, CPI-ATE inflation momentum on a 3m/3m SAAR basis still eased to 2.50% (vs 2.92% prior). This should add to confidence that the broader disinflation process remains intact.
SPAIN JUL INDUSTRIAL PRODUCTION -0.4% Y/Y; -0.4% M/M (MNI)
CHINA DATA (MNI): China Aug Exports Up 8.7% Y/Y, Surplus $91.0bln
- CHINA AUG TRADE SURPLUS +$91.02 BLN VS JUL +$84.65 BLN
- CHINA AUG EXPORTS +8.7% Y/Y VS MEDIAN +6.6% Y/Y
- CHINA AUG IMPORTS +0.5% Y/Y VS MEDIAN +2.3% Y/Y
MNI (Beijing) China's exports rose for the fifth consecutive month by 8.7% y/y in August, beating the 6.6% market consensus and accelerating from July’s 7.0%, data released by Customs on Tuesday showed. Imports grew by 0.5% y/y, down from July's 7.2% increase and missing the 2.3% forecast. Imports increased 2.5% y/y over the Jan-Aug period, slowing from 2.8% between January and July. China’s trade surplus in the first eight months hit USD608.5 billion, with August contributing USD91.02 billion.
CHINA DATA (MNI): China August Crude Oil Imports Increase From July
MNI (Beijing) China imported 49.1 million metric tonnes of crude oil in August, up from July’s 42.3 million metric tonnes, according to data released by Chinese customs on Tuesday. Beijing’s inbound shipments of crude now total 366.9 million metric tonnes during the first eight months of the year, down 3.2% y/y, versus the 2.4% decline over the first seven months.
AUSTRALIA DATA (MNI): Private Sector Continues Struggling, Inflation Not Contained Yet
The headline components of the August NAB business survey deteriorated with confidence down to -3.9 from +0.7 and conditions to +3.3 from +6.0, the lowest since January 2022 and below the historical average. Q2 GDP showed that the private sector is currently struggling and these results suggest that continued in Q3. However, cost indicators remain high but some price rises are easing, monitoring still needed. The drop in business conditions was driven by all three components, trading, profitability and employment which fell to 1.1 from 6.8 but still above June.
FOREX: JPY Edges Lower While GBP Looks Through Jobs Numbers
- JPY trades poorly on light volumes mid-European morning, however cross-buying via EUR/JPY and GBP/JPY has so far been capped by yesterday's highs.
- GBP largely shrugged off a set of softer-than-expected jobs and wages numbers, with the details of the data providing little extra detail to change the trajectory of BoE policy, keeping a 25bps rate cut at the September meeting only an outside chance. Overall volumes are below average for this time of day. That will likely remain the case across the morning with a relatively light data schedule and primary focus on tomorrow's US inflation print - which provides the last look at inflation ahead of the FOMC meeting next week.
- BoJ officials are reportedly seeing little need to raise rates further next week, according to Bloomberg sources. The piece writes that they're still "monitoring lingering volatility in financial markets and the impact of the July hike." JPY looked through the report as being largely inline with consensus, keeping higher stock markets and global yields
they key driver. - CAD and AUD are the poorest performers so far Tuesday, however pullbacks remain shallow and conviction light ahead of the raft of risk events later this week, including the ECB rate decision, the US CPI print and the first Presidential debate held between candidates Trump and Harris. CB speakers later today include Fed's Barr and Bowman - however neither are expected to address the US economy or monetary policy.
EGBS: Off Lows as Equities and Oil Move Lower
Major EGB futures have recovered from intraday lows, now little changed versus yesterday’s settlement levels. Bund futures are +3 at 134.59, after troughing at 134.37 earlier.
- Supply-related pressure, largely stemming from today’s EU and Italian syndications, has been countered by a reversal lower in European equities and a downtick in crude oil futures.
- Weak industrial production data from Italy and Spain did not have any tangible market impact.
- German cash yields are little changed across the curve, while 10-year peripheral spreads to Bunds are slightly wider.
- ECB-dated OIS price 63bps of easing through the remainder of this year. The MNI Policy Team’s latest sources piece reaffirmed a quarterly cutting cycle as the base case amongst policymakers. A 25bp cut remains unanimously expected at Thursday’s meeting.
- The remainder of today’s regional calendar is light, with US events (tonight’s presidential debate, tomorrow’s CPI report) set to dominate ahead of the ECB meeting.
GILTS: Recovering as Oil Falls and Equities Stall
Gilt futures test yesterday’s high as equities come under pressure and weakness in crude oil futures feeds in, reversing the early weakness.
- Contract last +4 at 100.16, with the Sep 6 high (100.60) providing the next level of meaningful resistance above yesterday’s peak (100.20).
- Yields little changed to 2bp lower across the curve, bull steepening.
- The latest labour market data was generally in line with expectations. This shouldn’t move the need for BoE policy (which has been non-committal to further cuts at this stage).
- Expect our full write up covering the release in due course.
- SONIA futures -1.5 to +2.0.
- BoE-dated OIS shows ~3bp of cuts for this month, ~28bp of cuts through Nov and ~45bp of easing through year end.
- GBP900mln of 0.625% Mar-45 ~I/L gilt supply was smoothly absorbed after some mild pre-auction concession.
- The pre-release of comments from BoE’s Breeden will cross at midday, see our Gilt Week Ahead for further details.
- Beyond there, U.S. inputs (Wednesday’s CPI and tonight’s election debate) and UK GDP data are set to dominate over the next couple of sessions.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Sep-24 | 4.923 | -2.7 |
Nov-24 | 4.667 | -28.3 |
Dec-24 | 4.501 | -44.9 |
Feb-25 | 4.245 | -70.5 |
Mar-25 | 4.048 | -90.2 |
May-25 | 3.838 | -111.2 |
Jun-25 | 3.717 | -123.3 |
EQUITIES: E-Mini S&P Conditions Still Bearish Despite Monday's Partial Recovery
Eurostoxx 50 futures traded lower last week and a bearish tone - a correction - remains intact for now. The latest 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 4876.96, the 50-day EMA. Recent weakness 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 5538.47, the 20-day EMA.
- Japan's NIKKEI closed lower by 56.59 pts or -0.16% at 36159.16 and the TOPIX ended 3.19 pts lower or -0.12% at 2576.54.
- Elsewhere, in China the SHANGHAI closed higher by 7.704 pts or +0.28% at 2744.192 and the HANG SENG ended 37.13 pts higher or +0.22% at 17234.09.
- Across Europe, Germany's DAX trades lower by 5.56 pts or -0.03% at 18437.44, FTSE 100 lower by 36.65 pts or -0.44% at 8234.53, CAC 40 up 32.77 pts or +0.44% at 7458.03 and Euro Stoxx 50 up 10.63 pts or +0.22% at 4789.29.
- Dow Jones mini up 7 pts or +0.02% at 40889, S&P 500 mini down 2 pts or -0.04% at 5477.5, NASDAQ mini down 45.25 pts or -0.24% at 18647.
Time: 09:50 BST
COMMODITIES: Gold Remains in Consolidation Mode Close to Recent Highs
WTI futures remain in a bearish condition and last week’s impulsive sell-off reinforces this theme. The move down 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 $72.67, the 20-day EMA. Gold is in consolidation mode and remains closer to its recent highs. The trend condition is unchanged and the primary direction remains up. Note too that moving average studies are in a bull-mode set-up, highlighting a dominant uptrend. Sights are on $2536.4 next, a Fibonacci projection. The 20-day EMA has recently been pierced. The next firm support to watch is $2448.3, the 50-day EMA. Short-term weakness is considered corrective.
- WTI Crude down $0.55 or -0.8% at $68.21
- Natural Gas down $0.02 or -0.69% at $2.155
- Gold spot down $3.72 or -0.15% at $2501.73
- Copper down $2.15 or -0.52% at $412.45
- Silver up $0.01 or +0.03% at $28.3455
- Platinum up $0.75 or +0.08% at $943.32
Time: 09:50 BST
MNI (LONDON)
| Date | GMT/Local | Impact | Country | Event |
| 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 | 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 | 1615/1215 | US | Fed Governor Michelle Bowman | |
| 10/09/2024 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 11/09/2024 | 0600/0700 | ** | GB | UK Monthly GDP |
| 11/09/2024 | 0600/0700 | ** | GB | Trade Balance |
| 11/09/2024 | 0600/0700 | ** | GB | Index of Services |
| 11/09/2024 | 0600/0700 | *** | GB | Index of Production |
| 11/09/2024 | 0600/0700 | ** | GB | Output in the Construction Industry |
| 11/09/2024 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 11/09/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 11/09/2024 | - | *** |  CN | Money Supply |
| 11/09/2024 | - | *** | CN | New Loans |
| 11/09/2024 | - | *** | CN | Social Financing |
| 11/09/2024 | 1230/0830 | *** | US | CPI |
| 11/09/2024 | 1230/0830 | * | CA | Intl Investment Position |
| 11/09/2024 | 1400/1000 | * | US | Services Revenues |
| 11/09/2024 | 1400/1000 | US | MNI Connect Video Conference on ‘Fed Balance Sheet – Comparison with Other Central Banks’ | |
| 11/09/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 11/09/2024 | 1700/1300 | ** | US | US Note 10 Year Treasury Auction Result |