MNI US OPEN - Logan Says More Work Might Be Needed on Rates

NEWS

FED (MNI): MNI: Fed’s Logan Says ‘More Work’ Might Be Needed On Rates
The Federal Reserve could well need to tighten monetary policy further in order to bring U.S. inflation sustainably back to the central bank’s 2% target, although policymakers can now afford to proceed more cautiously, Dallas Fed President Lorie Logan said Thursday.

EU (MNI): Moderate EU Growth, Inflation Slowing - Brussels
EU Executive Vice President Valdis Dombrovskis gave an upbeat assessment of the outlook for the EU economy ahead of the release of the Commission’s economic forecasts on September 11, saying that the outlook was one of moderate growth and a gradual decline in inflation.

CHINA (MNI): China To Internationalise Yuan At Steady Pace
China will pursue steady internationalisation of the yuan due to concerns over FX stability and the limited value in holding trading partner currencies should expansion occur too rapidly, a policy advisor told MNI. Zhang Ming, senior fellow and deputy director at the Institute of Finance and Banking at the Chinese Academy of Social Science, suggested CNY would experience a more moderate pace of internationalisation to limit trading partners exchanging it for U.S. dollars, which could add instability to offshore forex markets.

CHINA (MNI): China Eyes More Property Rule Relaxations If Sales Soft
Local governments are weighing whether to scrap rules limiting the purchase of multiple houses by homeowners should the latest mortgage rule relaxations fail to stimulate sales during the Sept-Oct peak season, however, any change will likely occur in Q4, policy advisors and market analysts told MNI.

JAPAN (MNI): Japan Aug Sentiment Index Falls
The Japanese sentiment index fell a seasonally adjusted 0.8 points to 53.6 in Aug from 54.4 in July, its first drop in two months, while the outlook index for two-three months ahead also posted its first decline in two months, falling 2.7 points to 51.4 from 54.1 the prior month, according to the Economy Watchers report released by the Cabinet Office on Friday.

G20 (BBG): G-20 Haggles Over Russia’s War as Block on Climate Action Eases
The Group of 20 nations are nearing an agreement on a joint statement after resistance to concrete action on climate change faded, leaving Russia’s war on Ukraine as the sole topic still to be resolved. Negotiations were ongoing Friday on the eve of the summit in New Delhi, with officials still haggling over the text’s reference to the war, according to multiple people familiar with the deliberations. Germany is among the countries that are pressing for clear language condemning Russia’s actions.

US-CHINA (BBG): US Probes Made-in-China Chip as Alarm Over Huawei Grows
The US government has begun an official probe into an advanced made-in-China chip housed within Huawei Technologies Co.’s latest smartphone, a revelation that’s set off a debate in Washington about the efficacy of sanctions intended to contain a geopolitical rival.

NATURAL GAS (BBG): Gas Prices Jump as LNG Workers Begin Long-Awaited Strikes
Liquefied natural gas workers at key Chevron Corp. sites in Australia began partial strikes Friday after talks failed to reach an agreement in a dispute that’s roiled global gas markets.

DATA

JAPAN (MNI): Japan Q2 GDP Revised Lower On Weaker Capex
Japan's economy grew at 1.2% q/q, or an annualised 4.8%, a slower pace than the initial 1.5% q/q, or 6.0% annualised, Q2 estimate, second preliminary data released by the Cabinet Office Friday showed. Lower capital investment, which fell 1.0% q/q - revised down from 0.0% - drove the revision. The negative contribution from capital investments was revised to -0.2 pp from 0.0.

JAPAN (MNI): Japan July Real Wage Drop Widens to -2.5%
The y/y drop of inflation-adjusted real wages, a barometer of household purchasing power, widened to 2.5% in July from a 1.6% fall in June as the consumer price index rise remained high, data released by the Ministry of Internal Affairs and Communications on Friday showed.

MNI: FRANCE JUL INDUSTRIAL PRODUCTION +0.8% M/M, +2.7% Y/Y
FRANCE JUL MANUFACTURING OUTPUT +0.7% M/M, +2.7% Y/Y

GERMAN DATA: Final Data Confirms Core Inflation Strength In August

• Germany final inflation prints for August printed in line with flash readings. Headline CPI was +6.1% Y/Y and +0.3% M/M, while HICP was +6.4% Y/Y and +0.4% M/M.
• Core CPI printed 5.5% Y/Y for the second consecutive month (decelerating to 0.3% M/M from 0.4% in July, not seasonally adjusted).
• Final readings for core HICP series and special aggregates (energy, non-energy industrial goods, services) have not yet been released but likely also fell in line. The basically unrevised release would imply core HICP (ex-energy, food, alcohol and tobacco) confirmed at +6.3% Y/Y and +0.3% M/M - a 0.4pp sequential disinflation from the July print of +0.7% M/M but 0.1pp higher from 6.2% Y/Y.

FOREX: USD/CNH Touches New Cycle High as Fix Comes in Notably Higher

• USD/CNH printed a new cycle high at 7.3623 early Friday, narrowing the gap with key resistance and the bull trigger at 7.3749. Clearance here would put the pair at the highest levels since 2007, however a sell-on-rallies theme has emerged, with the pair off the best levels headed into the NY crossover. Chinese inflation data will cross over the weekend, with CPI expected to exit a deflationary state and the degree of PPI deflation expected to ease again.
• The greenback sits modestly softer, however the USD Index remains comfortably inside the broader up-trend posted off the mid-July lows. The JPY underperforms, shaking off any strength built earlier in the week via verbal intervention from cabinet ministers Matsuno and Kanda.
• USD/JPY slipped to overnight lows of 146.60 alongside the notably higher USD/CNY fix, but has recovered all losses headed through to NY hours, keeping the underlying uptrend intact to finish the week.
• NZD, AUD are among the session's best performers, however the overnight high for AUD/USD at 0.6415 remain well inside the week's early ranges.
• Focus for the session ahead turns to the Canadian jobs release for August, and final US wholesale inventories and trade sales data for July. Fed's Barr is the sole central bank speaker,

BONDS: Unwinding Some Of Asia/Early London Bid

Core global FI markets reverse some of their Asia/early London gains, with no real headline flow to drive the move off bests.

• Weakness in U.S. & European equity futures may have helped the space base in recent trade.
• The Asia-Pac bid was seemingly linked to a combination of Nikkei 225 & USD weakness. The latter came on latest thinly veiled FX intervention threats out of Japan, although that isn’t a U.S. Tsy positive from a flow perspective. Cash Tsys flat to 2.5bp richer, intermediates outperform. TYZ3 +0-05, mid-range after a push above pre-ISM services levels.
• Bund futures last +25, with German cash benchmarks 1-2bp richer.
• Gilt futures haven’t closed the opening gap higher, last +45, while UK cash benchmarks are 2bp richer to 0.5bp cheaper as the curve twist steepens.
• Early support for Gilts came from another downtick in BoE-dated OIS, as the recent dovish repricing extended. That move is now off extremes. Underperformance was noted in the long end from the off, with news the DMO is considering holding a tender for a 40+-Year gilt on 27 September a potential driver (that wasn’t a complete surprise given DMO guidance alongside the latest quarterly issuance calendar release).

EQUITIES: Bear Cycle Remains at Play in E-mini S&P

The E-mini S&P contract traded lower yesterday and a bear cycle remains in play. Key resistance has been defined at 4547.75, Sep 1 high. A break is required to reinstate the recent bullish theme. Note that recent gains stalled at the area of resistance around the former bull channel base. A bear cycle in Eurostoxx 50 futures remains in play. The contract has cleared support at 4225.00, the Aug 24 low. The break signals scope for a test of the key support at 4187.00, the Aug 18 low and bear trigger.

• Japan's NIKKEI 225 closed lower by 384.24 pts or -1.16% at 32606.84 and the TOPIX ended 24.36 pts lower or -1.02% at 2359.02.
• Across Europe, Germany's DAX trades higher by 20.02 pts or +0.13% at 15721.93, FTSE 100 higher by 9.71 pts or +0.13% at 7446.89, CAC 40 up 12.83 pts or +0.18% at 7201.59 and Euro Stoxx 50 up 9.68 pts or +0.23% at 4225.72.
• Dow Jones mini up 41 pts or +0.12% at 34569, S&P 500 mini up 7 pts or +0.16% at 4462.25, NASDAQ mini up 35 pts or +0.23% at 15316.

WTI Uptrend Remains Intact

• WTI Crude down $0.28 or -0.32% at $86.56
• Natural Gas up $0.03 or +1.2% at $2.609
• Gold spot up $4.75 or +0.25% at $1924.47
• Copper down $2.65 or -0.7% at $373.65
• Silver up $0.07 or +0.31% at $23.043
• Platinum down $2.58 or -0.28% at $907.2