MNI US OPEN - Regions Point to Above Consensus German CPI

NEWS

US/CHINA (MNI): Com Sec - Hope to See Some Results in Coming Months from China Meetings

States that 'US businesses want to do business in China.' Raimondo hopes in next few months to 'see some results' after China meetings. Raimondo: US told China in export control meeting this week we are not targeting China....Expects constant informal information sharing with China on export controls.... Had no expectation in first meetings US would suddenly resolve specific issues involving companies like Intel, Micron or Boeing.

US/CHINA (RTRS): China Says Easing Market Access in Response to 'Uninvestible' Comment from US

China has defended its business practices after U.S. Commerce Secretary Gina Raimondo said American firms had told her that China had become "uninvestible" and "too risky." Asked to respond to the comments Raimondo made in China, the spokesperson for the Chinese embassy in Washington, Liu Pengyu said that most of the 70,000 U.S. firms doing business in China wanted to stay, that nearly 90% were profitable, and that Beijing was working to further ease market access for foreign companies.

US (BBG): Brainard to Get New Deputy With Portfolio on Housing, Markets

President Joe Biden is promoting administration veteran Daniel Hornung to a role as deputy director at the National Economic Council, according to the White House. Hornung will report to NEC Director Lael Brainard, with a portfolio focused on housing policy, economic data and strategy, as well as monitoring markets, the White House said Tuesday in announcing the move.

UK (BBG): UK Home Sales Set to Plunge to Lowest in Over a Decade This Year

UK home sales are on track to drop to the lowest since 2012 this year as stubbornly high mortgage rates grip the housing market. Residential transactions are set to fall over 20% from 2022, according to an estimate from property portal Zoopla based on the number of homes being sold “subject to contract” so far this year. That’s on the back of a plunge in deals funded by home loans, with mortgaged sales projected to drop 28% this year.

UK/CHINA (MNI): Foreign Sec-China Visit About Re-Establishing Lines of Communication

MNI (London) Speaking in Beijing, UK Foreign Secretary James Cleverly states that his trip, "Is about re-establishing lines of communication." The visit is the first to China by a British foreign secretary since Jeremy Hunt in 2018. Cleverly: "We are clear-eyed about the areas where we have disagreements with China and I raise those. [...] We have to have a pragmatic relationship with China."

SECURITY (MNI): Gabonese Coup ‘Is Big Issue for Europe' - EU Foreign Pol Chief

European Commission High Representative for Foreign Affairs and Security Policy Josep Borrell, speaking at a meeting of EU defence ministers in Toledo, Spain has stated that the emerging coup in the central African nation of Gabon "Is a big issue for Europe." A military coup appears to be underway in the OPEC member state after figures in military fatigues appeared on television in the early house of 30 August claiming that they had seized power and that the results of the 27 August presidential election had been annulled.

CHINA (MNI): China FDI Outlook Down as Economy Weakens - Chambers

MNI (Beijing) Recent government measures that address intellectual property and market access concerns may prove ineffective at boosting foreign direct investment (FDI), as international corporations operating in Mainland China grow increasingly worried over the country's economy and lack of policy response, international business leaders in China have told MNI.

CHINA (MNI): China Must Address Investor Concerns to Boost A-shares

MNI (Beijing) Chinese authorities should prioritise legal investor protections and increase information access to retail investors among other reforms to improve the A-share market and stabalise economic growth, advisors and analysts told MNI, following recent moves to stimulate China's equity market.

CHINA (MNI): China Will Resolve Foreign Firm Concerns - CCPIT

MNI (Beijing) China will resolve the demands of foreign-funded enterprises following the State Council’s recent 24 point plan to attract more FDI, according to Sun Xiao, spokesperson of the China Council for the Promotion of International Trade. Speaking at a press conference on Wednesday, Sun said the council will enhance foreign firms' ease of access to various business platforms to improve their enjoyment of tariff reduction and exemption policies.

JAPAN (MNI): 2% Target in View, More Time Needed - BOJ's Tamura

Bank of Japan Board Member Naoki Tamura said on Wednesday the achievement of the bank's 2% price target was clearly in view, however, the continuation of easy policy was appropriate as more time is needed. He told business leaders in Kushiro City the 2% target should become clearer between Jan-March 2024 when wage hike momentum, including actual price moves in 2H 2023, become clearer. Corporate price-setting behavior has changed from the deflationary period, he added.

AUSTRALIA (MNI): Macro Chart Pack - RBA Close to Peak, A$ Waiting for Softer Fed/Improved China

The RBA appears on hold for now unless the economy moves in a way it is not expecting. But our model indicates that rate cuts are still some way off. Rate differentials within the $-bloc are expected to narrow over the coming year. Headline inflation is moderating towards the target band with July printing at 4.9% but core and domestically-driven measures are proving stickier, which is likely to continue to concern the RBA.

COMMODITIES (BBG): Looming Australian Strikes Still Not Fazing Asian LNG Buyers

North Asian liquefied natural gas buyers aren’t yet moving to prepare for potential supply disruptions caused by expected strikes in Australia. China and Japan, who are major buyers of Australian gas, are sitting on sufficient inventories as they enter the period between summer and winter when demand is weaker, according to traders. There are also expectations that a deal with the unions will be reached before strikes significantly curb output. Unions at two of Chevron Corp.’s LNG export plants in Australia threatened to stop work from Sept. 7 if a deal on pay and conditions isn’t agreed.

DATA

GERMAN DATA (MNI): MNI Projects National CPI at 6.1-6.2% Y/Y

• BAVARIA AUG CPI +0.3% M/M, +5.9% Y/Y
• BADEN WUERT AUG CPI +0.3% M/M, +7% Y/Y
• SAXONY AUG CPI +0.3% M/M, +6.8% Y/Y

We have now received state data that equates to 86.7% weighting of the national German CPI print (due at 1300BST/1400CET). MNI calculations estimate that national CPI rose by 0.34% m/m and 6.14% y/y. This is based on the published index values for available state data. The data implies readings above expectations for the y/y print of 6.0%, rounded to 0.3% m/m and 6.1% y/y. This would mark a slight deceleration from 6.2% Y/Y in July, though the final rounded figure could yet end up at 6.2% depending on how the final state readings come out.

SPAIN DATA (MNI): Headline Moving Up As Expected, But Core Remains Stubborn

• SPAIN AUG FLASH HICP +0.5% M/M, +2.4% Y/Y
• SPAIN AUG FLASH CPI +0.5% M/M, +2.6% Y/Y
• SPAIN AUG FLASH CORE CPI +6.1% Y/Y

Spain flash August HICP and CPI printed at 2.4% Y/Y and 2.6% Y/Y respectively(each one-tenth of a percentage point above expectations), while both monthly prints were 0.5% M/M (in line with expectations). Core CPI remained sticky at 6.1% Y/Y, a touch below the 6.2% figure for July (M/M at +0.3%). In contrast, this was the second consecutive acceleration (0.3pp vs July) in Y/Y headline prices after having fallen to a low of 1.9% in June. The headline print was driven by a rise in fuel prices and liquid fuels relative to August 2022, (in which prices fell).

UK BOE JUL MORTGAGE APPROVALS 49,444 (MNI)
UK JUL M4 MONEY SUPPLY -0.5% M/M, -0.9% Y/Y (MNI)

ITALY AUG CONSUMER CONFIDENCE 106.5 (MNI)
ITALY AUG BUSINESS CONFIDENCE 106.8 (MNI)

SWISS KOF AUG ECONOMIC BAROMETER 91.1 (MNI)

AUSTRALIA DATA (MNI): Aussie Monthly CPI Falls to 4.9%

Australia’s monthly Consumer Price Index (CPI) indicator rose 4.9% y/y to July 2023, lower than the expected 5.2% and down from June’s 5.4% print, according to Australian Bureau of Statistics (ABS) data released today. CPI excluding volatile items rose 5.8%, compared to 6.1%. Housing at 7.3% accounted for the most significant increase, followed by food and non-alcoholic beverages at 5.6%. Automotive fuel fell 7.6%, while fruit and vegetables declined 5.4%.

AUSTRALIA DATA (MNI): Approvals Remain Depressed Despite Growing Population

Building approvals fell a sharper-than-expected 8.1% m/m in July after falling 7.9% in June. The weakness was due to the volatile multi-dwelling component which fell 15.8% m/m after -21.9% whereas private homes rose 0.1% after -1% to be down 16.9% y/y. The weakness in home building is a concern given working age population is growing at a series high and the impact it has on economic growth, which the RBA cited in its last meeting statement. Approvals in July were 21.2% below the February 2020 level.

MNI CHINA LIQUIDITY INDEX: Liquidity Tighter, Economy Down

MNI (Beijing) China’s interbank market liquidity tightened modestly in August but remained ample as the People’s Bank of China (PBOC) ensured funds were available to support the economic recovery. However, traders' outlook on the economy fell to the lowest level since May 2022, as authorities have struggled to inspire market confidence with recent policy announcements, the latest MNI Liquidity Conditions Index showed.

JAPAN DATA (MNI): Japan Aug Consumer Index Fall First in Nine Months

Japan's consumer confidence index fell to 36.2 in Aug from 37.1 in July, its first fall in nine months as all components worsened from the previous month, however, the Cabinet Office left its assessment unchanged, data released Wednesday showed. The fall aligns with Bank of Japan concern that high prices will impact private consumption and cloud the outlook for a continuous moderate rise.

FOREX: AUD Dips as CPI Slips to Slowest in 18 Months

• The greenback posts early gains across G10, rising against all others, albeit within a tight range. The late USD sell-off Tuesday triggered by the soft JOLTs print has largely held, with EUR/USD remaining above 1.0860 and USD/JPY at 146.50. Trajectory later today will likely continue to be swung by market-implied Fed rate expectations, with a further 25bps hike by the November meeting now just 50% priced.
• Antipodean currencies are the underperformers so far Wednesday, with July CPI from Australia falling well short of expectations: 4.9% vs. Exp. 5.2% - the lowest inflation print since February last year. AUD/USD looks to 0.6401 for direction, a break below which opens the cycle low and bear trigger of 0.6365.
• Focus for the Wednesday session ahead turns to the national print for German inflation later today. Regional measures have been mixed, with North-Rhine Westphalia, Brandenburg and Baden Wuerttemberg reading accelerating from July, while Hesse and Bavaria slowed. The national print is expected at 6.3%, from 6.5% prior for the harmonized figure.
• US ADP employment change crosses later today, with markets expecting 195k jobs added. The secondary reading for US Q2 GDP also crosses, expected unrevised at 2.4%. Pending home sales are also set for release. There are no notable central bank speakers.

EGBS: Generally Flatter on German Regional CPIs, BTPS Wider

Bund futures continue to operate above their NRW CPI-inspired lows, with the rest of the German state data released to date a little more mixed.

• German paper remains cheaper, with the data to hand pointing to a light upside surprise vs. consensus re: the headline German national CPI release. Core looks set to be in line to a touch softer vs. a loose consensus estimate.
• Upticks in preliminary Spanish CPI data generally met wider expectations.
• Bund futures -50 or so, while the major German cash benchmarks sit 3.5-5.5bp cheaper as the curve flattens.
• The bulk of the remaining EGB curves see similar flattening moves.
• Core/semi-core spreads vs. Bunds are little changed on the day.
• BTPs saw some widening pressure ahead of this morning’s sizeable supply, facilitating decent enough demand at the BTP & CCTeu auctions, although a bid has not been seen post-supply.
• ECB-dated OIS has firmed in the wake of the already released inflation data, with 14bp of tightening now showing for next month, while terminal deposit rate pricing prints just below 4.00%.

GILTS: Off Cheaps, Light Bear Flattening Seen

Gilts operate off session cheaps, with CPI prints from Europe and U.S. Tsy futures flow dominating headline during the early rounds of Wednesday dealing.

• Gilt futures now sit 10 ticks or so higher on the day, sticking within yesterday’s range.
• The major cash benchmarks are 1.0-2.5bp cheaper, with the bear flattening on the German curve applying some spill over pressure.
• The latest DMO consultation with GEMMs and investors pointed to the likelihood of the syndication of a new 20-Year line in the final quarter of calendar ’23, while views re: an I/L syndication in the same quarter were a little more mixed. That, along with the wider details of the release, were broadly in line with expectations.
• Local mortgage and credit data had no impact on the space.
• SONIA futures are -1.0 to +1.0 through the blues, with that zone of the strip seeing marginal twist flattening.

EQUITIES: E-Mini S&P Gains Tuesday to Mark Extension of Bull Cycle

Eurostoxx 50 futures traded higher yesterday as the contract extends the corrective recovery from 4187.00, the Aug 18 low. The contract has breached resistance at the 50-day EMA at 4330.7. A continuation higher would signal scope for a climb towards resistance at 4420.00. On the downside, a breach of 4187.00 would be a bearish development and confirm a resumption of bearish activity. The E-mini S&P contract remains in a downtrend, however, yesterday’s gains highlights an extension of the current bull cycle. The contract is testing a key resistance at 4515.52 - the base of a bull channel, drawn from the Mar 13 low that was breached on Aug 16. A clear break of this level would strengthen the upleg and open 4560.75, Aug 4 high. On the downside, the bear trigger lies at 4350.00, the Aug 18 low. A break would resume the downtrend.

• Japan's NIKKEI closed higher by 106.49 pts or +0.33% at 32333.46 and the TOPIX ended 9.97 pts higher or +0.43% at 2313.38.
• Elsewhere, in China the SHANGHAI closed higher by 1.25 pts or +0.04% at 3137.137 and the HANG SENG ended 1.17 pts lower or -0.01% at 18482.86.
• Across Europe, Germany's DAX trades lower by 37.33 pts or -0.23% at 15893.05, FTSE 100 higher by 15.46 pts or +0.21% at 7479.99, CAC 40 down 10.95 pts or -0.15% at 7362.22 and Euro Stoxx 50 down 10.63 pts or -0.25% at 4315.24.
• Dow Jones mini down 9 pts or -0.03% at 34875, S&P 500 mini down 5.75 pts or -0.13% at 4500.5, NASDAQ mini down 29.75 pts or -0.19% at 15383.25.

COMMODITIES: Outlook in Gold Still Technically Bearish Despite Recent Gains

The uptrend in WTI futures remains intact and recent weakness is considered corrective. Last week’s move lower resulted in a print below support at $78.33, the Aug 3 low, however price action has since recovered. Note that a key support also lies at the 50-day EMA, which intersects at $77.81. A clear break of this level would highlight a stronger bear cycle. Price is approaching resistance at $81.75, a break would be a bullish development. The outlook in Gold remains bearish, however, a short-term correction remains in play and the yellow metal has breached resistance at the 50-day EMA - at $1930.6. This strengthens the short-term bull cycle and signals scope for a stronger recovery. Attention turns to $1948.3, a Fibonacci retracement. On the downside, initial firm support lies at $1903.9, the Aug 25 low. A break of this level would signal a resumption of bearish activity.

• WTI Crude up $0.41 or +0.51% at $81.54
• Natural Gas up $0.01 or +0.3% at $2.668
• Gold spot down $0.88 or -0.05% at $1936.19
• Copper down $1.95 or -0.51% at $382
• Silver down $0.13 or -0.52% at $24.5886
• Platinum up $0.43 or +0.04% at $982.96