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
- RFK JR. EXPECTED TO DROP OUT OF RACE, ENDORSE TRUMP
- BLINKEN SAYS ‘TIME IS OF THE ESSENCE’ FOR GAZA TRUCE DEAL
- FRANCE SERVICES SKEWS EZ-WIDE AUG FLASH PMI HIGHER
- UK SERVICES, MANUFACTURING PMIS TOP FORECASTS
MNI (LONDON) - Figure 1: Betting market implied probability of winning President candidate (%)
Source: electionbettingodds.com
NEWS
US (MNI): RFK Jr. Expected to Drop Out of Race, Endorse Trump
In a press release sent to media on 21 Aug, the campaign of independent presidential candidate Robert F. Kennedy Jr. announced that he is set to deliver an address to the nation at 1400ET (1900BST, 2000CET) on Friday 23 Aug. It is widely expected that Kennedy will announce his withdrawal from the race and endorse Republican candidate, former President Donald Trump. This follows comments on 20 Aug from his running mate, Nicole Shanahan, saying that the ticket is contemplating offering their backing to Trump. Hours later, Trump said that he would welcome their support.
US/ISRAEL/MIDEAST (MNI): US Official Believe Hamas Leader Backs Deal, But Waiting for Iran Response - WaPo
In a Washington Post opinion column, David Ignatius writes that, according to unnamed US officials, "U.S. officials think Hamas leader Yehiya Sinwar, [...] favors the deal.[...] But Hamas seems to be playing a waiting game, probably in the hope that Iran or Hezbollah will attack Israel - and thereby transform the battlefield." Following the killing of Hamas' political bureau chief Ismail Haniyeh in Tehran last month, tensions have been elevated surrounding the prospect of an escalatory Iranian retaliation. This has so far not materialised, with Tehran potentially put off by the US moving a substantial naval flotilla, including two aircraft carriers, into the region.
US/ISRAEL/MIDEAST (BBG): Blinken Says ‘Time Is of the Essence’ for Gaza Truce Deal
US Secretary of State Antony Blinken left the Middle East late Tuesday with Hamas and Israel still divided over an American proposal to pause, if not permanently end, the war in Gaza. After a day spent meeting with Egyptian and Qatari officials, Blinken reiterated that Israel had agreed to what the top US diplomat called a “bridging” agreement that would create space for the two sides to hammer out the details of a cease-fire introduced by President Joe Biden in May. Now it’s Hamas’s turn, he said.
US (BBG): Banks Obtained Crucial Jobs Data While Report Was Delayed
At least three banks managed to obtain key payroll numbers Wednesday while the rest of Wall Street was kept waiting for a half-hour by a government delay that whipsawed markets and sowed confusion on trading desks. After the Bureau of Labor Statistics failed to post its revisions to the monthly payroll figures at 10 a.m. New York time, Mizuho Financial Group Inc. and BNP Paribas SA both called the department and got the number directly. So did Nomura Holdings Inc.’s economic research team, according to a person familiar with the situation.
CANADA (BBG): Canada Railways Lock Out Workers as Talks Fail, Snarling Trade
Canada’s two biggest railways, accounting for almost 80% of the national network, shut down early Thursday after talks with a union failed, immediately blocking arteries of North American supply chains that carry about C$1 billion ($740 million) per day in trade. More than 9,000 employees at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. were locked out after a deadline elapsed early Thursday. The two companies were unable to reach a deal with the Teamsters Canada Rail Conference after the union voted in favor of a strike over scheduling and ways to mitigate worker fatigue.
EU (MNI EXCLUSIVE): Draghi EU Funds Call to Prompt Pushback
A leading advisor to EU institutions sees resistance to Mario Draghi's likely call for more joint EU funding - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
UK (The Times): Union Bosses to Demand ‘Pay Restoration’ for the Public Sector
The government is facing a push for “pay restoration” from the Trades Union Congress to account for real-terms public sector salary cuts. Matt Wrack, the head of the Fire Brigades Union, who holds the revolving presidency of the Trades Union Congress (TUC), told the Financial Times he expected delegates at next month’s annual meeting to back a demand for broader above-inflation pay rises.
UK/EU (The Times): Free Movement Curbs Could be Relaxed Under EU Reset
Ministers are prepared to allow young Europeans to come and live and work in Britain as part of a wider reset of relations with Brussels after Brexit. Labour has repeatedly insisted that it has “no plans” to agree a youth mobility scheme that could give young citizens of EU members states the right to work in the UK for the first time since Brexit. But government sources have told The Times that ministers privately recognised that they would have to “give ground” on the issue as their opposition would be a stumbling block to a broader reset of relations.
BOJ (MNI EXCLUSIVE): No BOJ Rate Rise Before Q1 2025 - Sakurai
Former BOJ board member Makoto Sakurai anticipates the next steps in Japanese monetary policy - On MNI Policy MainWire now, for more details please contact sales@marketnews.com
BOK (MNI): On Hold, Board Mulls Cautious Rate Cuts
The Bank of Korea will consider rate cuts cautiously amid concerns over financial stability and global risk factors, noted Governor Rhee Chang-yong on Thursday, following the board's unanimous decision to hold the Base Rate unchanged at 3.50%. The Board has now held the rate steady since January 2023, or 13 straight meetings, its longest period without change. Its decision was largely anticipated.
INDONESIA (BBG): Protests Hit Indonesia, Stalling Moves to Rejig Election Law
Indonesian lawmakers adjourned parliament as thousands protested proposed electoral changes seen as favoring the alliance of President Joko Widodo and his successor, Prabowo Subianto. Stocks and the rupiah fell, while the central Jakarta police chief said at least 3,200 police personnel have been deployed across the city along with military vehicles and water cannons. In front of the parliament’s main entrance in the capital, protesters burned tires while in the central Java city of Semarang, police fired water cannon at growing number of demonstrators.
MEXICO (BBG): Mexico Raises $1.05 Billion in Return to Samurai Bond Market
Mexico priced Samurai bonds on Thursday, showing that there’s investor demand in Japan for riskier debt, particularly for shorter-dated tenors. The sovereign issuer sold ¥152.2 billion ($1.05 billion) of notes in five tranches, with the three-year part of the deal accounting for almost two thirds of the total size, according to Daiwa Securities Co., one of the underwriters.
CORPORATE (BBG): Seven & I Buyout Would Need Japan Government Approval to Proceed
Japanese government approval could be a major roadblock in Alimentation Couche-Tard Inc.’s attempts to acquire Seven & i Holdings Co., if it proceeds. Regardless of whether the buyout offer is friendly or hostile, the deal could be blocked or the terms of agreement changed, should authorities deem it a national security risk. Acquisitions of and investments in Japanese companies by foreign entities are regulated under the Foreign Exchange and Foreign Trade Act, designed in principle to protect the country from security risks, such as the outflow of military technology.
COMMODITIES (BBG): Iron Ore Futures Retreat After Advancing Toward $100 Per Ton
Iron ore briefly surged to within a whisker of $100 a ton before surrendering gains, as investors remain cautious about the outlook for the steel-making commodity. Futures in Singapore have staged a recovery this week after their slump to the lowest since 2022 last week. Prices gained as much as 1.5% to $99.90 a ton Thursday, before falling 1.2% to trade at $97.25 by 2:21 p.m. local time. The commodity has suffered amid growing worries about the state of China’s steel sector, where mills are struggling with weak demand and dimming long-term prospects.
DATA
EUROZONE DATA (MNI): France Services Unsurprisingly Skews EZ-wide Aug Flash PMI Higher
- EUROZONE AUG FLASH MANUF PMI 45.6 (FCST 45.8); JUL 45.8
- EUROZONE AUG FLASH SERVICES PMI 53.3 (FCST 51.7); JUL 51.9
The much stronger than expected French services PMI (possibly inflated by Olympic-related effects) drove the Eurozone August flash services PMI to 53.3 (vs 51.7 cons, 51.9 prior). Meanwhile, the manufacturing PMI remained firmly in contraction at 45.6 (vs 45.8 cons and prior). "Output growth actually picked up to a three-month high in August, hinting at stronger growth momentum. Other signals from the latest set of surveys were less positive, however".
EUROZONE DATA (MNI): Notable Fall in ECB Q2 Negotiated Wages
ECB Q2 negotiated wages fell notably to 3.55% (vs 4.74% prior). MNI had seen estimates ranging from 3.5-4.5% Y/Y coming into the release. However, with ECB-dated OIS already pricing 68bps of easing through the remainder of this year, and the Governing Council still trying to guide for quarterly 25bp cuts, the data has not provided a sufficiently dovish impulse to have much market
reaction. The fact negotiated wage growth eased from Q1 levels is not so surprising, with analysts noting that the Q2 figure would be pulled lower by fewer one-off German wage settlements and an easing of French pay growth. However, the reading still lies on the low side of consensus (and likely ECB) expectations.
GERMANY DATA (MNI): Demand Weakness Persists, Output Charges Accelerate
- GERMANY AUG FLASH MANUF PMI 42.1 (FCST 43.3); JUL 43.2
- GERMANY AUG FLASH SERVICES PMI 51.4 (FCST 52.3); JUL 52.5
Both manufacturing and services components were weaker than expected in the German August flash PMI, both at the lowest levels since March this year. Services was 51.4 (vs 52.3 cons, 52.5 prior) while manufacturing was contractionary for the 26th consecutive month at 42.1 (vs 43.3 cons, 43.2 prior). Demand weakness was cited in both sectors, though more worryingly the PMI noted an acceleration in output prices, despite a moderation in input cost pressures.
FRANCE DATA (MNI): Aug Services Flash PMI Much Stronger Than Expected, Price Pressures Cool
- FRANCE AUG FLASH MANUF PMI 42.1 (FCST 44.5); JUL 44.0
- FRANCE AUG FLASH SRVCS PMI 55.0 (FCST 50.3); JUL 50.1
The French services PMI was much stronger than expected at 55.0 (vs 50.3 cons, 50.1 prior), while manufacturing fell further into contractionary territory at 42.1 (44.5 cons, 44.0 prior). This was the highest services reading since May 2022, but we caution reading too much into the data at this stage, with improved sentiment during the Olympics possibly a factor amongst services respondents. Although input cost pressures cooled in August, output charge inflation accelerated overall, though the Olympics may have also had a temporary upward impact on this component.
UK DATA (MNI): Progress on Services Prices But Core Goods Price Pressures
- UK AUG FLASH MANUF PMI 52.5 (FCST 52.2); JUL 52.1
- UK AUG FLASH SERVICES PMI 53.3 (FCST 52.8); JUL 52.5
A little higher-than-expected across manufacturing, services and composite measures; there's something for everyone in the details. On the growth side the UK appears to be continuing its relatively strong performance seen in H1 (a number of analysts look for a slowdown in H2). On the costs side things are more mixed but still moving in the right direction for services: input prices slowed overall to the slowest pace since Jan 2021 - largely due to services.
NORWAY DATA (MNI): Slightly Softer Than Projection Growth, But Unlikely to Sway NB Yet
- NORWAY JUN MAINLAND GDP +0% M/M, AGG GDP +2.3% M/M
Norwegian Q2 mainland GDP was 0.1% Q/Q, below analyst consensus, the Norges Bank's June MPR projection and the Q2 Regional Network Survey indication of 0.2%. The Q1 reading was also revised a tenth lower to 0.1% Q/Q. At first glance, this doesn't represent enough of a "pronounced slowdown" in the Norwegian economy to sway the Norges Bank from its current hawkish guidance. We think the Q3 Regional Network Survey (due in September) will be of more consequence in this regard, as it provides a forward-looking view into Q3 and Q4 growth.
JAPAN DATA (MNI): Preliminary August PMIs Improve, But Manufacturing Still Sub 50.0
The preliminary Japan PMIs for August improved, per the Jibun Bank survey measures. Manufacturing rose to 49.5, from 49.1 in July. We are still below recent highs, with the index unable to sustain +50 readings in recent years. The services PMI rose to 54.0 from 53.7 prior. This is close to 2024 highs (although in 2023 the index peaked near 56.0). The composite index is back to 53.0, fresh highs since the first half of 2023. The detail showed manufacturing output up to 50.9 from 49.7 prior. New orders for manufacturing also rose. On the services side, the detail was less positive, with the employment sub index slipping, while the prices metric also moderated.
AUSTRALIA DATA (MNI): PMI Signals Moderate Growth Improvement
The preliminary Judo Bank composite PMI recovered somewhat in August to 51.4 from 49.9, signalling a pickup in growth. Services rose to 52.2 from 50.4 and in line with the H1 average signalling that we should see some improvement in the quarterly GDP growth rate, as the sector accounts for over 80% of activity. Manufacturing remains lacklustre but the pace of contraction eased. There was
good news on inflation with selling price increases moderating. Judo Bank reports a positive economic position in August with higher new orders, rising business confidence and an increase in employment growth. If this continues then the RBA's hold is likely to be extended further.
FOREX: PMIs Tip GBP to Top of G10
- European PMI numbers from across France, Germany as well as the UK painted a picture of a solid services sector, and slightly lagging - but resilient - manufacturing. The UK numbers were a particular highlight, as both services and manufacturing topped forecasts, helping GBP/USD extend recent outperformance to hit a recovery high of 1.3129 ahead of the NY crossover. 1.3142 provides the next key level, the bull trigger located at the mid-July'23 high.
- CHF also trades well, and is the firmest performer in G10 FX. EUR/CHF has printed a fourth consecutive session of lower lows as funding currencies more broadly gain a tailwind from the dovish repricing of the Fed policy outlook. This contrasts, however, with the JPY - which is more rangebound alongside an MNI interview with former BoJ board member Sakurai, who sees no space for the BoJ to raise rates further until Q1 next year.
- Weekly jobless claims data from the US takes focus going forward, as well as the flash reading for US PMI. The sensitivity of markets toward US labour market data has increased in recent weeks, and today's release will also be gauged in the wake of yesterday's CES revisions - which saw a benchmark revision of -818k jobs.
- The Jackson Hole Policy Symposium officially kicks off today, with welcoming remarks and opening events scheduled - nonetheless, the key speeches are set for tomorrow, as both the Fed Chair Powell and BoE Governor Bailey make appearances.
EGBS: August Flash PMIs Weigh on EGB Futures Despite Easing Wages
The stronger-than-expected August flash PMIs have weighed on major EGB futures, despite being driven by potentially temporary effects in the French services release. Bunds are -26 ticks at 134.53 versus yesterday’s settlement, after reaching a high of 135.08 following the German PMI release.
- Meanwhile, ECB Q2 negotiated wages fell notably to 3.55% (vs 4.74% prior, and at the bottom end of the 3.5-4.5% forecast range MNI had seen coming into the release) but did not provide a sufficiently dovish impulse to have much market reaction, with ECB-dated OIS already pricing 68bps of cuts through year-end.
- The German cash curve has bear steepened this morning, with 2s10s +1.5bps at -15.5bps.
- The rally in European equity futures, alongside indications that the Eurozone ex-Germany and France continued to outperform in the August flash PMI, has helped 10-year peripheral spreads to tighten. The 10-year BTP/Bund spread is 1.5bps tighter at 135bps.
- The ECB releases its account of the July decision at 1230BST/1330CET today, but US jobless claims data and flash PMIs are likely to be more market moving.
GILTS: Lower on PMIs, STR Usage Now Eyed
Gilts are lower, firmer-than-expected domestic PMIs and Eurozone services PMI weighs.
- Futures trade as low as 99.81, support at the 20-day EMA (99.59) remains untested.
- Yields 2-3bp higher across the curve, light bear steepening.
- SONIA futures flat to -2.5.
- BoE-dated OIS shows ~41bp of cuts through year end vs. 42bp pre-data.
- PMI inflation components were mixed, limiting the hawkish reaction.
- BoE short-term repo usage eyed (due ~10:40), with more frequent discussions questioning the ‘ampleness’ of bank reserves noted, despite levels being comfortably above the BoE’s PMRR.
- Further out, U.S. matters are set to dictate through the afternoon, while BoE Governor Bailey will speak from Jackson Hole on Friday.
EQUITIES: E-Mini S&P Trading at Recent Highs, Bullish Theme Intact
Eurostoxx 50 futures have traded higher this week and the pair is holding on to its latest gains. The contract pierced the 50-day EMA, at 4868.98. An extension higher would undermine the recent bearish theme and highlight a stronger reversal. This would open 4951.00 next, 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 are trading at their recent highs and a bullish theme remains intact. Price has cleared resistance at 5600.75, the Aug 1 high and this signals scope for an extension towards key resistance and the bull trigger at 5721.25, the Jul 16 high. A break would resume the primary uptrend. On the downside, support to watch lies at 5482.67, the 50-day EMA. A clear break of it is required to instead highlight a potential bearish threat.
- Japan's NIKKEI closed higher by 259.21 pts or +0.68% at 38211.01 and the TOPIX ended 6.54 pts higher or +0.25% at 2671.4.
- Elsewhere, in China the SHANGHAI closed lower by 7.812 pts or -0.27% at 2848.772 and the HANG SENG ended 249.99 pts higher or +1.44% at 17641.
- Across Europe, Germany's DAX trades higher by 39.75 pts or +0.22% at 18488.76, FTSE 100 higher by 22.13 pts or +0.27% at 8305.51, CAC 40 up 21.45 pts or +0.29% at 7546.4 and Euro Stoxx 50 up 11.77 pts or +0.24% at 4897.47.
- Dow Jones mini up 50 pts or +0.12% at 41056, S&P 500 mini up 5 pts or +0.09% at 5646.25, NASDAQ mini up 11.5 pts or +0.06% at 19920.75.
Time: 09:50 BST
COMMODITIES: WTI Futures Extend Bearish Reversal
WTI futures have been unable to hold on to recent gains and the contract has traded lower this week, extending the bearish reversal. The latest move down exposes key support at $70.88, the Aug 5 low and the bear trigger. A break would resume the downtrend that started Apr 12. On the upside, initial resistance to watch is $75.25, the 20-day EMA. Key short-term resistance has been defined at $78.54, the Aug 12 high. Gold remains in a bull-mode condition and this week's fresh cycle high reinforces current conditions. The recent 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 $2536.4 next, a Fibonacci projection. Initial support to watch lies at $2452.8, the 20-day EMA.
- WTI Crude down $0.09 or -0.13% at $71.89
- Natural Gas up $0.01 or +0.32% at $2.184
- Gold spot down $9.21 or -0.37% at $2503.29
- Copper up $0.5 or +0.12% at $423
- Silver down $0.11 or -0.37% at $29.5026
- Platinum down $7.63 or -0.79% at $962.07
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 22/08/2024 | 1130/1330 |  EU | Account of ECB MonPol meeting in July | |
| 22/08/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 22/08/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 22/08/2024 | 1345/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 22/08/2024 | 1345/0945 | *** | US | S&P Global Services Index (flash) |
| 22/08/2024 | 1400/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 22/08/2024 | 1400/1000 | *** | US | NAR existing home sales |
| 22/08/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 22/08/2024 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 22/08/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 22/08/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 22/08/2024 | 1700/1300 | ** | US | US Treasury Auction Result for TIPS 30 Year Bond |
| 23/08/2024 | 2301/0001 | ** |  GB | Gfk Monthly Consumer Confidence |
| 23/08/2024 | 2330/0830 | *** |  JP | CPI |
| 23/08/2024 | 0600/0800 | ** |  SE | Unemployment |
| 23/08/2024 | 0645/0845 | ** |  FR | Manufacturing Sentiment |
| 23/08/2024 | 0800/1000 | ** | EU | ECB Consumer Expectations Survey |
| 23/08/2024 | 1230/0830 | * |  CA | Quarterly financial statistics for enterprises |
| 23/08/2024 | 1230/0830 | ** | CA | Retail Trade |
| 23/08/2024 | 1230/0830 | ** | CA | Retail Trade |
| 23/08/2024 | 1400/1000 | *** | US | New Home Sales |
| 23/08/2024 | 1400/1000 | US | Fed Chair Jerome Powell | |
| 23/08/2024 | 1400/1000 | *** | US | US Fed Chair Speech |
| 23/08/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 23/08/2024 | 1900/2000 | GB | BOE's Bailey Speech at Jackson Hole |
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.