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
- PRELIMINARY US PAYROLLS REVISION TO BE TAKEN WITH CAUTION
- OBAMAS ENERGIZE DNC BY RIPPING TRUMP AND PRAISING HARRIS
- CHINA PROBE TARGETS EU DAIRY SECTOR AS TRADE TENSIONS INTENSIFY
- UK MEDIAN PAY DEALS FALL BACK TO LOWEST LEVEL SEEN THIS YEAR
MNI (LONDON) - Figure 1: UK median pay deals fall back to lowest level seen this year
Source: Brightmine
NEWS
US OUTLOOK (MNI): Preliminary Payrolls Revision to Be Taken With Caution
Released today at 1000ET, there are broad expectations for the preliminary annual payrolls benchmark revision to imply large downward revisions to nonfarm payrolls growth through the 4 quarters to March 2024. We've seen estimates of at least 500k with a central guess perhaps at 600k, but historical upward revisions to the underlying QCEW data and their potential to undercount undocumented labor could see larger downward revisions faded unless there is a particularly large surprise. Instead, we feel risk to market pricing is on a smaller preliminary downward revision.
MNI JACKSON HOLE PREVIEW: August 2024
At Jackson Hole, Fed Chair Powell is expected to reiterate his July press conference message that a rate cut "could be on the table as soon as September", thus aligning with market pricing for easing at least 25bp at the next meeting. Expect him to emphasize that the progress made on inflation and rising risks to the employment side of the Fed's dual mandate warrant dialling back the restrictiveness of monetary policy. He may tie this into the theme of the Symposium by arguing that the lagged impact of earlier tightening is finally being seen more convincingly. While he's unlikely to deviate from the script too much - emphasizing data dependence and a meeting-by-meeting approach - any reference to the envisaged tempo of cuts or the eventual destination for rates would be market-moving.
US (BBG): Obamas Energize DNC by Ripping Trump and Praising Harris
Barack and Michelle Obama delivered blistering critiques of Republican nominee Donald Trump while painting Vice President Kamala Harris as the heir of their historic political legacy in addresses that capped the second night of the Democratic National Convention. They said the groundbreaking candidacy of the first woman of color to lead a major party presidential ticket had returned joy and hope to national politics. But in an election sprint both warned would go down to the wire they offered rebukes of the Republican standard-bearer.
US (BBG): Trump Auditions ‘Common Sense’ as Rivals Lean Into ‘Weird’
Donald Trump cast himself as a purveyor of “common sense” during a trip to Michigan, as he looked to counter a central theme of Democrats’ convention in Chicago: that he and running mate JD Vance are “weird” extremists. For Trump, the argument underscores a crucial concern facing his campaign - how to win back voters turned off by frequent forays into culture wars and a proclivity for embracing divisive figures and movements. The critique from Democrats has also complicated the Republican candidate’s own efforts to paint his opponent, Vice President Kamala Harris, as herself outside the mainstream.
US/CHINA (MNI): MoFA Criticises US Nuclear Strategy Shift Reported in NYT
(MNI) London A spox for the Chinese Ministry of Foreign Affairs (MoFA) has said that China is 'seriously concerned' about a report regarding the US' nuclear deterrent strategy. This comes in response to a NYT article claiming that US President Joe Biden, "...approved in March a highly classified nuclear strategic plan for the United States that, for the first time, reorients America's deterrent strategy to focus on China's rapid expansion in its nuclear arsenal." Spox claims that the 'US is peddling the China nuclear threat narrative, finding an excuse to seek a strategic advantage.' Says that 'China is not in an arms race with any country', and that China 'urges the US to earnestly fulfill its responsibility for nuclear disarmament, and further substantially reduce its nuclear arsenal'.
CHINA/EU (BBG): China Probe Targets EU Dairy Sector as Trade Tensions Intensify
China has launched an anti-subsidy probe on dairy imports from the European Union, adding to its targets in the bloc’s agriculture industry as trade tensions between the two sides percolate. The investigation into certain dairy products from the region is expected to end within a year, according to a statement from China’s Ministry of Commerce. The move follows an anti-dumping probe on the EU pork industry announced in mid-June, a sector that counts China as its top export market.
CHINA (MNI): China Aluminium Imports to Increase in 2024
MNI (Beijing) China is expected to import 2 million metric tonnes of primary aluminium in 2024, up 45% y/y, driven by growth in Indonesian exports and long-term contracts, Shanghai Metals Market said in a note on Wednesday. The commodities research firm expects net import volumes of primary aluminium in August to reach 130,000-140,000 mt, up from 111,000 mt seen in July. During the first half, imports from Russia reached 673,000 mt, up 28.9% y/y, accounting for 49.9% of total imports, SMM noted.
CHINA (BBG): China’s PBOC Dials Back Support for Yuan as Currency Steadies
China set its daily reference rate for the yuan broadly in line with expectations for the first time in more than a year, signaling its comfort with current currency levels following a rebound. The People’s Bank of China set the so-called fixing just seven pips away from the estimates in a Bloomberg survey of analysts and traders. The gap was the smallest since June 2023.
JAPAN (BBG): Japan Should Keep Rates and Prices ‘Moving,’ PM Hopeful Says
Japan should aim for interest rates and prices to “keep moving,” according to Katsunobu Kato, a potential candidate for the country’s next prime minister. “It’s clear that we have to head in this direction” where prices and rates aren’t stagnant, Kato told Bloomberg in an interview Tuesday, when asked whether Japan’s at a stage of raising rates further. Although caution is still needed for the immediate future given the market turmoil this month, Kato also said years of unmoving prices and rates had been damaging. “That lack of movement created structural distortions,” said Kato. “We’re finally getting to a stage where rates can keep moving.”
RUSSIA/UKRAINE (BBG): Moscow Says 10 Drones Downed in One of Capital’s Largest Attacks
Russian air defenses shot down 10 drones approaching Moscow in what Mayor Sergei Sobyanin called one of the largest attacks on the capital since the beginning of the war on Ukraine. “The layered defense of Moscow against enemy UAVs made it possible to successfully repel all attacks,” Sobyanin said in a Telegram post early Wednesday. Moscow was regularly the target of drone attacks last summer. Strikes against Russia’s largest city with the unmanned aerial vehicles have been far less frequent this year as Ukrainian forces have focused on hitting military airfields and energy sector installations in border regions.
THAILAND (BBG): Thailand Keeps Key Rate Steady as New Government Takes Shape
Thailand’s central bank left its benchmark interest rate unchanged for a fifth straight meeting, as policymakers await clarity around the new government’s agenda and gauge risks to the economy from deteriorating credit quality. The Bank of Thailand voted 6-1 to maintain the one day repurchase rate steady at about a decade-high 2.50% at Wednesday’s meeting, as predicted by all but one of the 24 economists surveyed by Bloomberg. One member of the Monetary Policy Committee called for a quarter-point cut, in a repeat of the June vote.
INDONESIA (BBG): Indonesia Sees Rate Cuts in Fourth Quarter Despite Rupiah Rally
Indonesia’s central bank held its benchmark interest rate steady as expected, signaling that it will wait until the fourth quarter before pivoting when the Federal Reserve has gotten its easing well under way. Bank Indonesia left the BI-Rate unchanged for a fourth straight month at 6.25% Wednesday, the highest level since the benchmark was introduced in 2016. “In the third quarter, our focus is to further strengthen the stability of the rupiah,” Governor Perry Warjiyo told reporters in a briefing in Jakarta. He reiterated that the room for rate cuts will likely open up towards the end of the year.
COMMODITIES (BBG): Iron Ore Rises for Third Day on China Policy Support Optimism
Iron ore rose for a third day - recovering more of its 9% plunge last week - on signs Chinese authorities will take more steps to try and revive the country’s moribund property market. The steelmaking staple climbed as much as 3.5% in Singapore following a report late on Tuesday that Beijing is considering allowing local governments to buy unsold homes by issuing so-called special bonds. The potential move comes after a series of rescue packages failed to prop up the real estate market, which is a major source of demand for iron ore.
DATA
UK DATA (MNI): Median Pay Deals Fall Back to Lowest Level Seen This Year - Brightmine
- UK MAY-JUL MEDIAN PAY AWARDS +4.5%: Brightmine
Brightmine (previously XpertHR) median basic pay awards in the 3 months to the end of July fell to +4.5% - returning to the lowest level seen this year in March (vs a revised +5.0% in the prior rolling quarter - originally +4.9% Y/Y 3 month average). In particular, the interquartile range for pay deals has narrowed falling between 3.7% and 5.0% - compared to a range between 4% and 6% in the previous three consecutive rolling quarters.
UK JUL PSNCR GBP19.23 BN (MNI)
UK JUL CGNCR GBP29.64 BN (MNI)
UK JUL PSNB GBP+2.18 BN (MNI)
UK JUL PSNB-X GBP+3.1 BN (MNI)
JAPAN DATA (MNI): Autos Push Japan July Exports Higher
- JAPAN POSTS JPY621.8 BLN TRADE DEFICIT IN JULY
- JAPAN JULY EXPORTS +10.3% Y/Y; JUNE +5.4%
Japan’s exports posted their eighth straight year-on-year rise in July, up 5.4%, driven by higher automobile and semiconductor manufacturing equipment shipments, data released by the Ministry of Finance showed on Wednesday. Exports of automobiles rose 6.2% in July following 2.3% in June, while semiconductors manufacturing equipment consignments rose 25.2% from 37.9% last month. Imports rose for the forth straight month, up 16.6% y/y, following June's 3.2% increase. Japan posted its first trade deficit in two months of JPY621.8 billion in July following June's JPY224.0 billion surplus.
AUSTRALIA DATA (MNI): Westpac Leading Index Signals Weak But Improving Growth
The Westpac leading fell 0.04% m/m in July after rising 0.01% in June, which left the 6-month annualised rate slightly positive at 0.06% up from -0.3% in January and -0.7% a year ago. The series signals that while growth should improve, it is likely to remain weak going into 2025. Also, the move lower in commodity prices is likely to be a headwind going forward. Westpac expects H2 2024 annualised growth of 2.2% up from 0.8% in H1. The 6-month rate was boosted by hours worked and US IP but commodity prices and consumer confidence detracted in July.
FOREX: US BLS Payrolls Revision in focus
- The Dollar has been in positive territory during the early European session, a continuation from what was seen during the overnight session.Nonetheless, overall the Dollar is down for the past half of the Year, with the super Volatile Yen on top for that period, up 10.17%.
- On the EU Cash Govie open, the Yen was the worst performer, down 0.42%, now at -0.55%, but USDJPY sits some 20 pips off the printed high of 146.22 at the time of typing.
- EURUSD and the December high of 1.1139 continues to provide some good resistance, printed a 1.1130 Yesterday and 1.1133 so far today.
- Cable has again found some resistance at 1.3044/52 High Jul 17 and the bull trigger / High Aug 20 today, and has drifted back towards the 1.3000 figure, so far only managed a 1.3011 low.
- Looking ahead, focus is squarely on the US BLS Payrolls revisions, while the FOMC minutes is unlikely to move the needle especially ahead of Powell Friday.
EGBS: Little Changed as Markets Await Fresh Macro Cues
Major EGB futures are little changed today, with impending 10-year Bund supply likely capping rallies in the run-up to the 1030BST bidding deadline. The broader macro calendar is very light until the US BLS payrolls revisions at 1500BST/1600CET, with FOMC minutes due at 1900BST.
- The technical set-up in Bunds remains bullish, though initial resistances at the Aug 14 (135.17) and Aug 6 (135.59) remain intact. The 20-day EMA at 134.02 provides the first support.
- The German cash curve has lightly twist steepened, but 2s10s remains well off the steepest levels of early August (currently -18.0bps vs the YTD closing steep of -13.4bps).
- 10-year peripheral spreads to Bunds are little changed today, with the 10-year BTP/Bund spread at 138bps. The stabilisation of global equity markets following the late-July/early-August volatility has helped spreads narrow from almost 150bps earlier this month.
- Bank of Italy Governor Panetta speaks on Italian debt sustainability and economic development at 1200BST.
- Regional focus remains on tomorrow’s August flash PMIs and Q2 negotiated wages.
GILTS: Little Changed, Higher Borrowing Risks Noted, PMIs Due Thurs
Futures little changed at 99.93, higher-than-expected public borrowing figures help limit rallies. Bullish technicals intact, resistance 100.80, support 99.54.
- Yields near unchanged. 2s10s 10bp off ’24 highs, 5s30s 15bp off Aug highs.
- Local press reports continue to point to a difficult (higher tax, lower spending) October budget.
- Risk of additional gilt issuance over the medium-term noted as a result.
- Still 3-year supply saw solid demand, aided by exp. for further BoE rate cuts.
- SONIA futures & BoE-dated OIS flat, ~40bp of cuts priced through year end.
- Flash PMIs due tomorrow, post-election bounce in sentiment to be reassessed. Firmer labour market & inflation components would present risk to pricing of further BoE easing.
EQUITIES: E-Mini S&P Holding Onto Recent Gains
Eurostoxx 50 futures have traded higher this week and the pair is holding on to its latest gains. The contract has traded through the 50-day EMA, at 4867.59. 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 traded higher Tuesday, reinforcing the current bull cycle and confirms once again an extension of the reversal that started Aug 5. Price has cleared resistance at 2600.75, 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 5476.18, the 50-day EMA.
- Japan's NIKKEI closed lower by 111.12 pts or -0.29% at 37951.8 and the TOPIX ended 5.68 pts lower or -0.21% at 2664.86.
- Elsewhere, in China the SHANGHAI closed lower by 10.077 pts or -0.35% at 2856.584 and the HANG SENG ended 120.07 pts lower or -0.69% at 17391.01.
- Across Europe, Germany's DAX trades higher by 45.04 pts or +0.25% at 18402.79, FTSE 100 higher by 6.95 pts or +0.08% at 8280.48, CAC 40 up 14.57 pts or +0.19% at 7499.91 and Euro Stoxx 50 up 11.33 pts or +0.23% at 4868.75.
- Dow Jones mini up 47 pts or +0.11% at 40993, S&P 500 mini up 3 pts or +0.05% at 5622.5, NASDAQ mini up 3.75 pts or +0.02% at 19812.25.
Time: 09:55 BST
COMMODITIES: WTI Futures Trade Lower Tuesday, Key Support Marked at $71.67
WTI futures have been unable to hold on to recent gains and the contract traded lower again Tuesday. The latest move down undermines a recent bullish theme and this has exposed key support at $71.67, 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 $75.60, the 20-day EMA. Key short-term resistance has been defined at $80.16, the Aug 12 high. Gold remains bullish and the yellow metal traded higher Tuesday, delivering another all-time cycle high. 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 $2446.5, the 20-day EMA.
- WTI Crude down $0.09 or -0.12% at $73.12
- Natural Gas down $0 or -0.14% at $2.195
- Gold spot down $5.38 or -0.21% at $2508.71
- Copper up $1.15 or +0.27% at $421.25
- Silver up $0.1 or +0.33% at $29.5245
- Platinum up $2.89 or +0.3% at $955.07
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 21/08/2024 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 21/08/2024 | 1230/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 21/08/2024 | 1400/1000 | * | US | Services Revenues |
| 21/08/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 21/08/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 21/08/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 21/08/2024 | 1800/1400 | *** | US | FOMC Minutes |
| 22/08/2024 | 2300/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 22/08/2024 | 0030/0930 | ** |  JP | Jibun Bank Flash Japan PMI |
| 22/08/2024 | 0600/0800 | ** |  NO | Norway GDP |
| 22/08/2024 | 0715/0915 | ** |  FR | S&P Global Services PMI (p) |
| 22/08/2024 | 0715/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 22/08/2024 | 0730/0930 | ** |  DE | S&P Global Services PMI (p) |
| 22/08/2024 | 0730/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 22/08/2024 | 0800/1000 | ** |  EU | S&P Global Services PMI (p) |
| 22/08/2024 | 0800/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 22/08/2024 | 0800/1000 | ** | EU | S&P Global Composite PMI (p) |
| 22/08/2024 | 0830/0930 | *** |  GB | S&P Global Manufacturing PMI flash |
| 22/08/2024 | 0830/0930 | *** | GB | S&P Global Services PMI flash |
| 22/08/2024 | 0830/0930 | *** | GB | S&P Global Composite PMI flash |
| 22/08/2024 | 1000/1100 | ** | GB | CBI Industrial Trends |
| 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 |
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.