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
- TRUMP, HARRIS PREPARE FOR TURBOCHARGED WEEK OF PRESIDENTIAL RACE
- ISRAEL-HAMAS TRUCE TALKS STALL AS BLINKEN TRIES TO CLINCH DEAL
- ZELENSKIY SAYS UKRAINE SEEKS RUSSIA BUFFER ZONE WITH INCURSION
- SEVEN & I GOT TAKEOVER OFFER FROM COUCHE-TARD, NIKKEI SAYS
MNI (LONDON) - Figure 1: Seven and i Holdings shares rally amid takeover offer
Source: MNI/Bloomberg
NEWS
US (BBG): Trump, Harris Prepare for Turbocharged Week of Presidential Race
The race for the White House will reach a fever pitch this week, with Vice President Kamala Harris and Republican nominee Donald Trump battling for momentum - and attention - around the Democratic National Convention in Chicago. Harris spent Sunday on a bus tour through the battleground state of Pennsylvania, looking to grow the coalition that rallied around her candidacy after President Joe Biden upended the race a month ago by stepping aside. Trump, for his part, is planning an aggressive schedule that will see him visit the US-Mexico border, hold rallies in four key swing states, and sit for a series of interviews and press engagements.
US/CHINA (BBG): China, US Team Up on Contact Group to Handle ‘Financial Stress’
China’s central bank said a meeting in Shanghai produced an agreement with the US Treasury to appoint contact people to deal with any future “financial stress events,” a rare example of the world’s two biggest economies seeking common ground. The two sides also “exchanged lists of financial stability contacts” during the fifth meeting of the so-called Financial Working Group that was set up following Treasury Secretary Janet Yellen’s visit to China last year.
ISRAEL/MIDEAST (MNI): Blinken Seeks Gaza Ceasefire, But Still Notable Obstacles to Deal
US Secretary of State Antony Blinken has claimed that the current round of negotiations is "probably the best, maybe the last opportunity" for a ceasefire in Gaza. Late last week, indirect talks in Doha involving Israel, the US, Qatar and Egypt saw what a joint statement from the mediators talked of 'progress' being made towards an agreement. So far, Hamas - which is not directly involved in this round of talks - has said that any suggestions of progress are an "illusion".
RUSSIA/UKRAINE (BBG): Zelenskiy Says Ukraine Seeks Russia Buffer Zone With Incursion
Ukraine is seeking to degrade Russia’s ability to launch attacks including by establishing a buffer zone on Russian territory as Kyiv’s forces continue their cross-border incursion into the Kursk region, President Volodymyr Zelenskiy said. “Everything that inflicts losses on the Russian army, Russian state, their military-industrial complex, and their economy helps prevent the war from expanding and brings us closer to a just end to this aggression,” Zelenskiy said on Sunday during his nightly address. “This includes creating a buffer zone on Russian territory – our operation in the Kursk region.”
UK (BBG): Starmer Faces Growing UK Strike Action in Next Test for Premier
UK trade unions representing doctors, train drivers, local government workers and border staff are among those demanding pay rises as Prime Minister Keir Starmer contends with a fresh wave of strikes, despite making efforts to end industrial action an early priority for his government. Since taking office six weeks ago, Starmer’s administration has made a series of pay offers to unions in an attempt to resolve the walkouts that dominated much of his Conservative predecessor Rishi Sunak’s premiership. Yet by accepting better pay deals for some unions, the Labour government is now facing the prospect of other workers threatening strikes unless their terms are improved too.
GERMANY (BBG): Germany to Reject New Aid Requests for Ukraine on Spending Cuts
Germany will no longer grant new requests for aid to Ukraine as the government seeks to rein in spending, the Frankfurter Allgemeine Zeitung reported. Although existing programs will generally continue, additional applications for military support won’t be approved, the newspaper reported on Saturday citing government documents and emails as well as unidentified officials. The move follows a request from Chancellor Olaf Scholz, with Finance Minister Christian Lindner informing the defense ministry in an Aug. 5 letter, according to the newspaper.
CHINA (BBG): China Slashes Diesel Exports in July as Refiners Cut Back Output
Diesel shipments from China fell to the lowest level in more than a year as refiners trimmed output amid weak domestic demand. Shipments dropped to 540,000 tons in July, down 41% on-year, according to customs data. That’s the smallest volume since June 2023, and equals about 130,000 barrels a day. Gasoline exports were 36% lower than a year earlier. The slump in flows adds to signs of softer conditions in Asia’s largest economy - with earlier data showing a plunge in apparent crude demand - as well as the challenge posed by the spread of new-energy vehicles.
CHINA (MNI): FM Spox Speaks on Philippine Naval Incident & Li Trip to Russia
MNI (London) Wires carrying comments from a Chinese foreign ministry spox on several topics. Following a collision between vessels from the Chinese and Philippine coast guards earlier on 19 Aug in the contested Sabina Shoal, the spox says that China "resolutely opposes action by the Philippines" with regards to the collision, adding that "China hopes the Philippines can abide by its promises and agreements reached with China."
JAPAN (BBG): Japan Foreign Minister Kamikawa to Run in Party Leadership Race
Japanese Foreign Minister Yoko Kamikawa says she’s making preparations to stand in the ruling Liberal Democratic Party’s leadership race next month. Kamikawa made the comments to reporters at Tokyo’s Haneda airport, which were carried by broadcaster NTV.
CHILE/COMMODITIES (BBG): BHP Settles Union Spat That Threatened Wage Deal at Copper Mine
BHP Group Ltd. and workers in Chile resolved a last-minute disagreement over benefits that had threatened to upend a wage deal and reignite a strike at the world’s biggest copper mine. Management and union leaders signed a new three-year contract for about 2,400 workers at the Escondida mine after ending a dispute over benefits, the world’s biggest miner said in a statement.
CORPORATE (BBG): Seven & I Got Takeover Offer From Couche-Tard, Nikkei Says
Seven & i Holdings received a takeover offer from Canada’s Alimentation Couche-Tard, Nikkei reports, citing unidentified sources familiar with the matter. Seven & i set up a committee to examine the proposal, including valuation. Proposal isn’t legally binding. Would cost at least 5t yen to acquire all of Seven & i; would be largest foreign acquisition of a Japanese company. Seven & i shares were bid to daily upper limit on glut of buy orders after the report.
DATA
UK DATA (BBG): UK Property Buyers Return to Market After BOE Interest Rate Cut
Britain’s prospective home buyers stepped up their search for property after the Bank of England’s first reduction in interest rates since the start of the pandemic, Rightmove Plc said. The online property portal said the number of buyers contacting estate agents to view houses for sale jumped 19% from a year ago since the BOE decision on Aug. 1, an acceleration from the 11% increase across the month of July. The number of sellers coming to market also rose by 5% compared to a year ago.
FOREX: JPY Re-Engages Rally, Keeping Greenback Subdued
- Pervasive JPY strength has taken focus early Monday, with a confluence of light volumes, short-covering, pre-Jackson Hole positioning building on a JPY rally that was potentially initially triggered by news of a takeover offer from Japan's Seven & I from Canada's Couche-Tard. The move lower has raised focus on intraday support and levels seen lower at 145.52 (the 50% retracement of the corrective bounce off 141.70) while 15 min candles identify ~146.55-60 as a key pivot point.
- USD/JPY losses have worked against the USD Index and kept the greenback subdued across the board. Resultantly, GBP/USD has broken higher and is extending the bounce off medium-term support at the 200-dma, which successfully contained the sell-off into the early August low. Resistance at 1.2955 has been cleared on Monday's strength, but the bull trigger and mid-July high at 1.3044 is out of reach for now. Prelim UK PMI numbers due later this week should provide the latest look at services prices and overall economic performance ahead of September's BoE decision on the 19th.
- Elsewhere, antipodean currencies trade well, with NZD and AUD firmer against most others. AUD/USD has struggled to make headway toward $0.67 so far, but a solid start for equities at the Wall Street open could lend support toward resistance at 0.6693.
- Focus for the duration of the Monday session turns to July's Leading Index from the US as well as opening remarks from Fed's Waller at a policy workshop, and a late appearance from ECB's Rehn.
EGBS: Friday’s High in Bunds Remains Intact as Wider FI Rallies
Core/semi-core EGBs have been supported alongside broader FI markets this morning, though last Friday’s high in both Bund and OAT futures remain intact for now. Thursday headlines this week’s regional macro calendar, with August flash PMIs due alongside the ECB’s Q2 negotiated wage tracker.
- Bund futures are +33 at 134.59, with first resistance seen at 135.17 (Aug 14 high) before the bull trigger at 136.28 (Aug 5 high).
- German cash yields are 2.5 to 3.5bps lower today, with the curve flattening a touch. The 2s10s curve sits at -19.4bps, off the multi-year steep at -13.4bps on August 8.
- 10-year peripheral spreads to Bunds are generally tighter. IRISH bonds have not registered meaningful outperformance following Moody’s Irish sovereign rating outlook tweak (to positive) after hours on Friday.
- Finland have issued a mandate for a new long 5-year benchmark. We pencil in a transaction tomorrow for E3bln WNG.
GILTS: Holding Firmer, Macro Still Dominates
Gilts hold their early rally, sticking comfortably within Friday’s ranges across the curve.
- Macro cues continue to drive gilts, with the uptick in wider bond markets dominating thus far.
- Futures last +24 at 100.09 vs. session highs of 100.12.
- Technical trend structure in the contract remains bullish, initial resistance at last week’s high (100.80).
- Yields ~3bp lower across the curve.
- SONIA futures flat to +2.5.
- BoE-dated OIS sits little changed to ~3bp more dovish on the day, showing ~7bp of cuts for Sep & ~41.5bp of cuts through Dec.
- Looking ahead, the BoE will sell GBP725mn of medium-term gilts from its APF later today.
- Thursday’s flash PMI data headlines this week’s local data calendar.
- Finally, BoE Governor Bailey will speak from Jackson Hole on Friday.
EQUITIES: E-Mini S&P Holds Onto Last Week's Gains
Eurostoxx 50 futures traded sharply higher last week, extending the recovery that started Aug 5. The contract has traded through the 20-day EMA and attention is on resistance at the 50-day EMA, at 4866.49. A clear break of this average would undermine the recent bearish theme and highlight a stronger reversal. This would open 4951.00, the Jul 31 high. For bears, a reversal lower would refocus attention on the bear trigger at 4494.00, the Aug 5 low. S&P E-Minis traded higher last week and the contract is holding on to its gains. The rally last week resulted in a break of the 50-day EMA. This highlights a stronger reversal and signals the end of the corrective cycle between Jul 16 - Aug 5. Sights are on 5600.75, Aug 1 high. A break would set the scene for an extension towards key resistance and the bull trigger at 5721.25, the Jul 16 high. Initial support lies at 5363.8, the 50-day EMA.
- Japan's NIKKEI closed lower by 674.05 pts or -1.77% at 37388.62 and the TOPIX ended 37.46 pts lower or -1.4% at 2641.14.
- Elsewhere, in China the SHANGHAI closed higher by 14.244 pts or +0.49% at 2893.674 and the HANG SENG ended 139.41 pts higher or +0.8% at 17569.57.
- Across Europe, Germany's DAX trades higher by 1.02 pts or +0.01% at 18322.41, FTSE 100 lower by 11.02 pts or -0.13% at 8300.81, CAC 40 up 8.71 pts or +0.12% at 7458.76 and Euro Stoxx 50 up 6.04 pts or +0.12% at 4846.68.
- Dow Jones mini up 14 pts or +0.03% at 40808, S&P 500 mini down 3.75 pts or -0.07% at 5574.5, NASDAQ mini down 46.25 pts or -0.24% at 19559.25.
Time: 09:50 BST
COMMODITIES: Gold Close to Friday Highs, Targets Resistance at $2528
WTI futures rallied sharply higher on Aug 12 . The move undermines a recent bearish theme and price traded through both the 20- and 50-day EMAs. A resumption of gains would signal scope for a climb towards $80.77, a Fibonacci retracement. Clearance of this level would open $83.58, the Jul 5 high. On the downside, the contract has pulled back from its recent high. A stronger sell-off would refocus attention on key support at $71.67, Aug 5 low. Gold is holding on to its latest gains. Friday’s rally delivered a fresh all-time high and the breach of resistance at $2483.7, the Jul 17 high, confirmed a resumption of the primary uptrend. Note that moving average studies remain in a bull-mode set-up and this continues to highlight a dominant uptrend. The focus is on a climb towards $2528.4, a Fibonacci projection. Initial support to watch lies at $2432.6, the 20-day EMA.
- WTI Crude down $0.52 or -0.68% at $76.12
- Natural Gas down $0 or -0.14% at $2.117
- Gold spot down $5.3 or -0.21% at $2503.3
- Copper up $2.7 or +0.65% at $420.9
- Silver down $0.05 or -0.18% at $28.941
- Platinum down $6.35 or -0.66% at $951.01
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 19/08/2024 | - |  GB | DMO to hold quarterly consultation investors / GEMM consultation | |
| 19/08/2024 | 1315/0915 |  US | Fed Governor Christopher Waller | |
| 19/08/2024 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 19/08/2024 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 20/08/2024 | 0600/0800 | ** |  DE | PPI |
| 20/08/2024 | 0730/0930 | *** |  SE | Riksbank Interest Rate Decison |
| 20/08/2024 | 0800/1000 | ** |  EU | EZ Current Account |
| 20/08/2024 | 0900/1100 | *** | EU | HICP (f) |
| 20/08/2024 | 0900/1100 | ** | EU | Construction Production |
| 20/08/2024 | 1100/0700 | *** |  TR | Turkey Benchmark Rate |
| 20/08/2024 | 1230/0830 | *** |  CA | CPI |
| 20/08/2024 | 1230/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 20/08/2024 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 20/08/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 20/08/2024 | 1845/1445 | US | Fed Governor Michael Barr |
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.