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 DEFENDS ATTACKS ON HARRIS AS ALLIES URGE FOCUS ON ECONOMY
- TOP CHINESE CHIP GEAR MAKER SUES PENTAGON TO VOID SANCTIONS
- PBOC SEES MORE STEPS TO BOOST GROWTH BUT NOTHING ‘DRASTIC’
- UK RETAIL SALES BROADLY IN LINE WITH EXPECTATIONS
MNI (LONDON) - Figure 1: MSCI APAC Index recovers sharply off recent multi-month low
Source: MNI/Bloomberg
NEWS
US (BBG): Trump Defends Attacks on Harris as Allies Urge Focus on Economy
Donald Trump said he believes his strategy of personal insults against Vice President Kamala Harris is boosting his campaign, despite pleas from his own party to focus on policy as polls show he is losing ground in the race for the White House. “I think I’m entitled to personal attacks,” Trump said at a press conference at his golf club in Bedminster, New Jersey. “I don’t have a lot of respect for her. I don’t have a lot of respect for her intelligence, and I think she’ll be a terrible president.”
US/CHINA (BBG): Top Chinese Chip Gear Maker Sues Pentagon to Void Sanctions
One of China’s most prominent chip gear makers is suing the Pentagon for linking it to the People’s Liberation Army, seeking to get off a blacklist that bars business with American firms. Advanced Micro-Fabrication Equipment Inc. alleged that the defense agency harmed the company’s business and reputation by adding the Shanghainese entity to the so-called Section 1260H list of firms linked to China’s military. Pentagon officials took months to respond to a request for additional information, then justified their decision with evidence of an award from China’s Ministry of Industry and Information Technology, AMEC said in its lawsuit.
US/UKRAINE (MNI): US Reluctant to See Ukraine Use Long-Range Missiles in Kursk - CNN
With Ukraine's military offensive into Russia's Kursk oblast continuing, there is increasing focus on the reaction of the West, and in turn how Moscow could respond to the West's reaction. Late on 15 August, CNN reported that the United States is 'reluctant' to allow Ukraine to use long-range US-provided weaponry, such as its ATACMS ballistic missiles, in Russian territory. This would chime with comments yesterday from the State Dep't. The report claims that according to unnamed US officials, this is, 'not because of the risk of escalation, but because the US only has a limited supply of the long-range missiles...to provide to Ukraine and thinks they would be better used to continue targeting Russian-occupied Crimea.'
NATO/CHINA (BBG): NATO Steps Up Naval Presence in Western Pacific to Counter China
NATO is bolstering its presence in the Western Pacific by sending warships to more places, a move that risks stoking tensions with China, which is worried about the alliance’s growing influence in the region. The latest entrant is the Italian aircraft carrier Cavour, the first time Rome has deployed its lone carrier to the Pacific. The Cavour and an Italian frigate recently held exercises with the US carrier USS Abraham Lincoln near the island of Guam. A day later, F-35 stealth jets and AV-8B Harriers launched from the Cavour practiced shooting down airborne targets.
CHINA (BBG): PBOC Sees More Steps to Boost Growth But Nothing ‘Drastic’
China’s central bank chief pledged further steps to support his nation’s economic recovery, while cautioning that it won’t be adopting “drastic” measures. Chinese state media published a pair of interviews with People’s Bank of China Governor Pan Gongsheng on Thursday after key indicators for July suggested the country’s economic growth remains lackluster. Retail sales gains remained subdued, while investment growth weakened - underscoring a faltering in domestic demand amid a prolonged downturn in the housing market.
CHINA (BBG): China’s Bid to Spur Marriage, Hamper Divorce Stirs Online Outcry
China’s proposed measures to ease marriage registration while making divorces harder to get have provoked a wave of public backlash, a reflection of the challenges facing the world’s No. 2 economy in arresting a sharp drop in births. Chinese authorities will no longer require couples filing for marriage to provide their hukou, or household registration, as part of draft changes to existing regulations. The proposed amendment also added a 30-day cooling-off period for those seeking a divorce, a rule already enacted in 2021 that made it more difficult to exit a marriage.
JAPAN (BBG): Japan Government Tightens Grip on Chip Supply-Chain Network
Japan has decided to apply foreign trade regulations to chipmaking equipment as part of its efforts to secure stable supply chains, the Ministry of Finance said Friday. Foreign investors are now required to give prior notice when conducting direct investment in equipment tied to chipmaking, including when acquiring a 1% or bigger stake in a listed company or buying shares in an unlisted company, the ministry said in a statement. The move also aims to address the risk of technology leakage and keep commercial technologies from being used for military purposes, it said.
JAPAN (BBG): Severe Typhoon Approaching Japan Disrupts Flights, Trains
Typhoon Ampil edged closer to Japan’s main island of Honshu on Friday, forcing airlines to cancel flights and the government to issue warnings against possible landslides and flooding. Japan Airlines Co. and All Nippon Airways Co. canceled some 90 international flights, impacting more than 15,000 passengers. The two carriers also scrapped about 560 domestic routes, disrupting roughly 104,000 travelers who were looking to fly to destinations such as Okinawa, Osaka and Fukuoka. Flights will continue to be impacted through Saturday, they added.
RBA (MNI): RBA Watching China Growth Closely
The Reserve Bank of Australia sees Chinese growth as a key risk to the economy and is watching developments closely, Governor Michele Bullock told the House of Representatives Standing Committee on Economics Friday. “The Chinese economy is still performing okay, it's meeting [Beijing]'s target of around about 5% growth, but they still have a very big drag from the problems in the real-estate sector there,” she noted, stressing the importance of China on Australia's economy via the commodities market, particularly iron ore.
RBA (MNI): Aussie Goods Prices Strong - RBA's Hauser
Australian goods prices have not deflated as fast as other peer economies, Reserve Bank of Australia Deputy Governor Andrew Hauser told the House of Representatives Standing Committee on Economics Friday. While services inflation had largely tracked the international experience, the composition of Australia’s goods prices had kept it higher than global comparisons, he noted. “We've roughly had goods inflation at around zero, and we do include elements of housing costs in the goods-price index here that aren't necessarily included elsewhere,” he said.
RBNZ (BBG): RBNZ Says Rate-Cut Path Could Change on Price, Wage Setting
New Zealand’s central bank wants to see wage and price setting continue to decline as it decides the appropriate pace of future interest rate cuts, Assistant Governor Karen Silk said. “We continue to see that decline in price setting and wage setting behavior,” Silk said in an interview Friday in Wellington. “That’s really important. If that corrects itself more quickly, then obviously there’s an opportunity for us to think about cutting rates on a path that’s different. Likewise, it could do the reverse as well.”
RBNZ (MNI INTERVIEW): RBNZ to Accelerate Cuts if Needed - Conway
RBNZ Chief Economist Paul Conway discusses the rate outlook and forecasting -- on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
COMMODITIES (BBG): Iron Ore Battered to 2022 Low as China’s Steel Crisis Hits Home
Iron ore headed for a deep weekly loss after hitting the lowest level since 2022 on concern that a steel-industry crisis rippling across China will sap demand, while supplies from miners remain robust. Futures traded near $93 a ton in Singapore after hitting $92.65, matching the previous session’s low. The steel-making staple - one of this year’s worst performing commodities - has shed about 8% this week, the most since March.
DATA
UK DATA (MNI): Retail Sales Broadly In Line with Expectations
- UK JUL RETAIL SALES +0.5% M/M, +1.4% Y/Y
- UK JUL RETAIL SALES EX-FUEL +0.7% M/M, +1.4% Y/Y
Retail sales broadly in line with expectations - particularly given the volatility of the series. Inc fuel a tenth lower M/M than consensus, ex fuel a tenth higher, both with positive revisions to June data. Y/Y for both inc/ex fuel 1.4% - in line with consensus. The ONS notes that "Department stores and sports equipment stores reported a
boost following summer discounts and sporting events." Nothing surprising in this data at first glance for the MPC.
CHINA DATA (MNI): China July Unemployment Rates Rises on Weak Economy
MNI (Beijing) China’s urban unemployment rates rose broadly in July, indicating the labour market has remained weak as the world second-largest economy struggles to recover. Labour market weakness is sapping domestic demand, and is expected to hinder China’s new growth-orientated urbanisation plan, as MNI has reported. National urban surveyed unemployment rose to 5.2%, the highest since March, from the previous 5.0%, while urban unemployment for those aged 16-24, excluding students, surged to 17.1% compared with 13.2% in June, the highest since National Bureau of Statistics resumed releasing the data last December.
CHINA DATA (MNI): Beijing Property Sales Steepen Decline in July
MNI (Beijing) Beijing’s real-estate sector sold 5.8 million square meters of property during the first seven months, down 4.1% y/y and accelerating from the 2.5% drop reported for the first six months, Beijing Municipality data showed on Friday. The city completed 5.1 million square meters of housing from Jan to July, down 15.0% y/y, while construction area reached 7.9 million square meters, up 9.7% y/y. Local governments will struggle to implement China’s new growth-orientated urbanisation policy due to tight fiscal resources and a weak labour market, advisors recently told MNI.
FOREX: NZD/USD Back Above $0.60, But 200-DMA Still a Cap
- NZD is extending an early recovery rally into the NY crossover, and is outperforming broader G10 FX. An appearance from RBNZ's Silk detailed the cautious approach on rates from the central bank and underlined the remaining uncertainty over NZ price pressures ahead.
- NZD/USD is back above the $0.60 level, but the intraday bounce still faces the short-term bearish momentum pressures, evident in the 50-dma crossing below the 200-dma in early August.
- The greenback is the poorest performer so far Friday as the dollar retraces a small part of the post-data strength - however the USD Index remains well clear of the cycle lows and horizontal support layered between 102.160-102.270.
- GBP/USD trades well, and has cleared the weekly highs to touch the best levels of August to narrow the gap with next resistance at 1.2899 - the 61.8% retracement of the downleg posted off the mid-July high at 1.3044. Retail sales data showed an acceleration in consumption over the month of July. However, as was the case with the jobs and inflation numbers earlier in the week, leaves little definitive signal for the BoE's September meeting, at which a further 25bps cut sits as 9bps priced.
- Focus for the remainder of the Friday session turns to the prelim Uni of Michigan sentiment survey, at which both the 1 year and 5-10 year inflation expectations metrics are expected to moderate by 0.1 ppts. Housing starts and building permits data are also set to cross, as well as appearances from Fed's Goolsbee.
BONDS: Stabilising After Yesterday’s Sell Off
Core global FI markets have recovered from yesterday’s lows/yield highs, but the move remains modest.
- Lower oil prices may be providing some light support.
- Bund futures +26 at 134.39.
- Initial support at the 20-day EMA (133.99 today) was untouched during yesterday’s sell off, leaving the bullish technical theme intact. First resistance at the Aug 14 high (135.17).
- German yields 2-3bp lower across the curve.
- 10-Year EGB spreads to Bunds little changed, consolidating the recent tightening move that has coincided with the easing of recession worry/pricing of Fed cuts moving away from last week’s dovish extremes.
- Gilt futures +17 at 100.00.
- Initial resistance at the Aug 14 high (100.80), while initial support at the 20-day EMA (99.44) remains untouched, leaving the bullish technical backdrop in play.
- Curve twist flattens, yields +2bp to -3bp.
- Modest dovish repricing in ECB-dated OIS on the day, ~66bp of ’24 cuts priced.
- BoE-dated OIS pricing broadly unchanged, showing ~40bp of ’24 cuts.
- Both markets comfortably off last week’s risk-off dovish extremes (~95bp & near 70bp, respectively).
- Pre-weekend focus set to fall on the wider risk backdrop, U.S. UoM sentiment survey and Fedspeak.
EQUITIES: E-Mini S&P Extends This Week's Rally
Eurostoxx 50 futures traded sharply higher Thursday, 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 4866.79. 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 yesterday and the contract maintains a firmer tone. The rally this week has 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 5367.50, the Aug 13 low.
- Japan's NIKKEI closed higher by 1336.03 pts or +3.64% at 38062.67 and the TOPIX ended 77.85 pts higher or +2.99% at 2678.6.
- Elsewhere, in China the SHANGHAI closed higher by 2.072 pts or +0.07% at 2879.43 and the HANG SENG ended 321.02 pts higher or +1.88% at 17430.16.
- Across Europe, Germany's DAX trades higher by 92.17 pts or +0.51% at 18275.02, FTSE 100 lower by 14.69 pts or -0.18% at 8332.12, CAC 40 up 14.46 pts or +0.19% at 7437.83 and Euro Stoxx 50 up 24.24 pts or +0.5% at 4832.01.
- Dow Jones mini up 42 pts or +0.1% at 40729, S&P 500 mini up 3.75 pts or +0.07% at 5572, NASDAQ mini up 28 pts or +0.14% at 19614.75.
Time: 09:55 BST
COMMODITIES: WTI Future Trend Conditions Bullish Despite Recent Pullback
WTI futures rallied sharply higher Monday. The move undermines a recent bearish theme and price has 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 the recent high. A stronger sell-off would refocus attention on key support at $71.67, Aug 5 low. Gold is unchanged and the metal is holding on to its latest gains. Recent weakness appears to be corrective and the trend structure remains bullish. Note that price recently pierced support at the 50-day EMA - currently at $2391.6. A clear break of it would signal scope for a deeper retracement towards $2277.4, the May 3 low and a key support. Attention is on $2483.7, the Jul 17 high and a bull trigger. A break of this hurdle resumes the uptrend.
- WTI Crude down $0.73 or -0.93% at $77.43
- Natural Gas up $0.02 or +0.68% at $2.212
- Gold spot up $5.44 or +0.22% at $2462.09
- Copper down $2.45 or -0.59% at $415.2
- Silver down $0.12 or -0.42% at $28.2341
- Platinum down $3.35 or -0.35% at $953.01
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 16/08/2024 | 1215/0815 | ** |  CA | CMHC Housing Starts |
| 16/08/2024 | 1230/0830 | * | CA | International Canadian Transaction in Securities |
| 16/08/2024 | 1230/0830 | ** | CA | Monthly Survey of Manufacturing |
| 16/08/2024 | 1230/0830 | *** |  US | Housing Starts |
| 16/08/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 16/08/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
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.