Original insights into market moving news

[PODCAST] US Open Rundown 9th August 2021

  • European bourses lack direction amid quiet newsflow following a Japanese market holiday while US futures are mixed and the RTY lags, -0.6%
  • Spot gold and silver saw mini flash crashes in early and thin APAC trade, while crude futures continue to crumble
  • In FX, the DXY remains pressured though relatively rangebound with peers similarly mixed and contained
  • Beijing has imposed domestic travel restrictions and Israel warned of fresh lockdowns amid rising COVID cases
  • Chinese July CPI and PPI topped expectations, whilst Trade Balance beat but imports and exports momentum slowed
  • US infrastructure deal cleared its final serious Senate hurdle, putting the legislation on a path to passage as soon as late Monday
  • Looking ahead, highlights include Fed’s Barkin & Bostic


Israel is reinstating restrictions and also warned of a fresh lockdown as serious cases hit a four-month high. (Telegraph) Note, Israel was a front-runner in vaccinations

Beijing has imposed domestic travel restrictions whereby people from medium- or high-risk regions will be prevented from buying tickets for air and railway services. (Global Times)

Australia's New South Wales reported 283 (vs 291 on Friday) new locally-acquired COVID-19 cases. (Newswires)

Norwegian Cruise Line (NHC) is granted preliminary injunction allowing it to sail from Florida with 100% vaccinated crew and guests; first sailing on August 15th. (Newswires)

NIH's Dr. Fauci said there will be more "breakthrough" cases with the Delta variant. (Newswires)


APAC stocks kicked off the week with mild losses before eventually trading mostly higher, but the tone across the markets remained cautious and volumes light in the absence of Japan. This followed a mixed Wall Street performance on Friday in which the tech-burdened indices - the SPX and particularly the NDX - suffered on the back of pronounced Treasury curve steepening after the solid US jobs report. Meanwhile, the Russell 2000 was bid amid strength in cyclical stocks, benefitting from the improved economic outlook. US futures resumed trade relatively flat but drifted lower in the first half of the session, alongside losses in oil futures and a mini flash-crash in spot gold and silver (see the commodities section below), as APAC players had the first chance to react to the US jobs report in the thin early markets. US equity futures thereafter trimmed some losses, but the RTY (-0.6%) sees marginally more pronounced losses vs its YM (-0.1%), ES (-0.2%) and NQ (-0.1%) counterparts heading into the European open. European futures followed overnight sentiment with the DAX (-0.2%) and FTSE 100 (-0.2%) futures subdued since their opens. Back to APAC, Japanese markets are away observing Mountain Day whilst over in Australia, ASX 200 (U/C) gradually trimmed gains throughout the session but held its head above 7,500, with Suncorp (+6.5%) the top performer on strong earnings alongside press speculation that it may be a takeover target by ANZ Bank. The KOSPI (-0.3%) traded lacklustre throughout the session as COVID cases remain elevated, whilst Yonhap sources suggested the US and South Korea will conduct military exercises during the next two weeks in a move likely to rock relations with North Korea. The Hang Seng (+0.4%) and Shanghai Comp (+1.1%) were initially choppy as the region balanced above-forecast inflation, slowing imports and exports, and a rise in COVID cases, but later solidified an upside bias and outperformed the region with no real fundamental drivers at the time.

  • Chinese CPI YY (Jul) 1.0% vs. Exp. 0.8% (Prev. 1.1%)
  • Chinese CPI MM (Jul) 0.3% vs. Exp. 0.2% (Prev. -0.4%)
  • Chinese PPI YY (Jul) 9.0% vs. Exp. 8.8% (Prev. 8.8%)
  • Chinese Trade Balance USD (Jul) 56.58B vs. Exp. 51.54B (Prev. 51.53B)
  • Chinese Exports YY (Jul) 19.3% vs. Exp. 20.8% (Prev. 32.2%)
  • Chinese Imports YY (Jul) 28.1% vs. Exp. 33.0% (Prev. 36.7%)

The rise in Chinese CPI was mainly due to the impact of extreme weather and rising travel needs during summer holidays. Analysts project China's PPI growth will slightly slow down to 8% in Q3, calling for more measures to curb impact of soaring international commodity prices on supply chains while spurring domestic consumption to maintain 5-6% GDP growth in H2. (Global Times)

There have been reports citing Chinese State media that Beijing warned of speculation in the chip market. (Newswires) China People's Daily published an article reminding citizens the adverse consequences of aesthetic medicines. (People's Daily)

Chinese cotton industry is moving ahead with plans to replace the Better Cotton Initiative (BCI), leader in the global cotton industry, according to Global Times - article cites Xinjiang cotton claims. (Global Times)

China’s ByteDance reportedly aims for a Hong Kong IPO despite the tech crackdown, according to the FT. However, these sources were later refuted. (FT/Newswires) NetEase's (9999 HK) Music Services is reportedly to delay its Hong Kong IPO launch. (Newswires)

Goldman Sachs has revised down its Chinese Q3 real GDP growth forecast to 2.3% QQ from 5.8%, with the FY forecast now at 8.3% vs prev. 8.6%. (Newswires)

  • PBoC injected CNY 10bln via 7-day reverse repos at a maintained rate of 2.20% for a net neutral daily position. (Newswires)
  • PBoC set USD/CNY mid-point at 6.4840 vs exp. 6.4813 (prev. 6.4625)

Japanese PM Suga's administration's support has fallen below 30% for the first time since Suga became PM, according to Asahi paper. (Newswires) This comes ahead of the Japanese elections towards the end of September.


US infrastructure deal cleared its final serious Senate hurdle Sunday night, putting the legislation on a path to passage as soon as late Monday, Politico reported. In a 68-29 vote, the Senate closed down debate on a bill that spends USD 550bln in new money on the nation’s physical infrastructure. (Politico)

US Democrats will be releasing their budget resolution on Monday, according to US Senator Sanders cited by Punchbowl's Sherman. (Twitter)

US President Biden has appointed Amos Hochstein as the State Department energy envoy, charged with implementing the Nord Stream 2 pipeline's US-Germany deal, Axios; Hochstein has previously been heavily opposed to Nord Stream 2. (Axios)

Fed's Kaplan (2023 voter) reiterated calls for gradual and balanced tapering starting soon. (Newswires)

UN Climate Panel says global average temperature could reach/exceed 1.5 degrees Celsius in the next 20-years; unequivocal that human activities are responsible for global warming and some impacts are irreversible


Senior UK Tory MPs have warned PM Johnson not to move against Chancellor Sunak, following reports of tensions which led the PM to threaten demoting Sunak. (FT)

Professional services group BDO’s latest business trends report found that the UK jobs market strengthened in July, but many firms reported labour shortages, partly due to the pandemic and Brexit. (The Guardian)

ECB's Weidmann has urged the ECB not to drag out its PEPP programme, and noted that EZ inflation might pick up more rapidly. Should the inflation outlook rise sustainably, the ECB would have to act in line with its price stability objective, Weidmann said. (Welt am Sonntag)

Poland has backed down in a Rule-of-Law spat with the EU. (Newswires)


South Korea and the US will conduct a preliminary training this week in the run-up to next week's main summertime military exercise that North Korea has warned against staging, sources said. (Yonhap) As a reminder, North Korean leader Kim Jung Un’s influential sister warned recently that the annual military drills between South Korea and the US this month will undermine prospects for better ties between the Koreas.

Senior EU officials said negotiators are optimistic about the chances of reviving the nuclear deal with Iran. (Politico)

Iranian Foreign Ministry spokesman says Iran will not leave the Vienna negotiations and confirms they will accept nothing less than the full implementation of the nuclear agreement. (Twitter)


European equities (Eurostoxx 50 +0.1%) trade with little in the way of firm direction following on from a mostly firmer APAC lead and mixed performance on Wall St. on Friday. In the absence of Japanese participants, the overnight session saw focus fall on data points out of China whereby inflation metrics printed firmer than expected whilst trade data saw a slowing of import and export growth. Furthermore, investors are increasingly mindful of rising COVID cases which have subsequently restricted mobility across the nation and comes in the wake of other travel fears after reports last week suggested that the EU could reimpose travel restrictions on US visitors as soon as this week. US futures trade on a softer footing (ES -0.2%, NQ -0.1%) with underperformance in the RTY (-0.6%). Over the weekend, the US infrastructure deal cleared its final serious Senate hurdle, putting the legislation on a path to passage as soon as late Monday. From a European perspective, macro developments are relatively light with this morning’s EZ Sentix release passing with little in the way of fanfare after falling short of expectations and cautioning that global growth momentum is weakening. Sectoral performance in Europe has seen outperformance in Tech and Health care with the latter partially guided by drugs updates from the likes of AstraZeneca, Roche and Sanofi. To the downside, Oil & Gas names lag amid price action in the crude complex (see below for further details), whilst Autos are a touch softer amid losses in Daimler (-1.8%) following a broker downgrade at Jefferies. Basic Resource names have scaled back some opening losses in what was an eventful overnight session for the metals complex amid the flash crash in spot gold and silver. Elsewhere, Deliveroo (+8.9%) sit at the top of the Stoxx 600 following news that Delivery Hero has built a 5.1% stake in the Co. SSE (+3.4%) is another notable gainer after the Times has suggested that Elliott Management’s recently acquired stake in the Co. could prompt speculation over a potential takeover or break up. Hargreaves Lansdown (-11.2%) is the standout laggard in the Stoxx 600 after the Co. cautioned that current trading volumes are unlikely to persist alongside its FY results.

American National Group (ANAT) is to be acquired by Brookfield Asset Management (BAM) for USD 190/shr, according to WSJ citing sources. (WSJ)

Cisco (CSCO) is developing a subscription service to help companies move or repatriate computing tasks from AWS (AMZN) to private data centres . (The Information)


USD - The Dollar remains firm, but off new highs forged in wake of last Friday’s strong jobs data as volumes pick up from depressed overnight levels due to the absence of Japanese markets on Mountain Day. Looking at the DXY, some profit taking and technical selling may also be weighing after the index stopped just short of the 93.000 level, at 92.922 and drifted down to 92.733 amidst similar consolidative trade in US Treasuries and other global bonds that tumbled on the back of the all round strength in the BLS report. Ahead, employment trends and JOLTS data look somewhat redundant given the NFP release, but comments from Fed’s Bostic and Barkin will be monitored closely for reactions to payrolls in the context of ‘substantial’ progress.

NZD/CHF/AUD - It’s marginal, but the Kiwi and Franc are flanking the major ranks and a bit more divergent vs the Buck than others, as Nzd/Usd keeps its head above 0.7000 and Usd/Chf trades mostly firmer around 0.9150. The former continues to glean traction from near term RBNZ rate hike expectations, and this is also evident via the Aud/Nzd cross hitting offers on approaches to 1.0500, while the Aussie is also being hampered by the worsening COVID-19 situation and repercussions for the economy plus RBA policy as a consequence. Hence, Aud/Usd remains depressed under 0.7350 and also taking heed of the latest Chinese trade update that showed imports missing consensus by a greater margin than exports.

JPY/EUR/CAD/GBP - All narrowly mixed and tightly bound against their US counterpart, as the Yen meanders from 110.11-34 in holiday-thinned turnover, while the Euro straddles 1.1750 within a 1.1767-42 range, eyeing 1 bn option expiries at the half round number. For the record, little reaction to an encouraging German trade balance and especially strong exports, or a disappointing Eurozone Sentix index for that matter. Elsewhere, the Loonie is still licking wounds between 1.2584-41 parameters after disappointing Canadian jobs data and amidst another collapse in crude prices, while Sterling is hovering nearer the top of 1.3850-94 extremes and a minor new 2021 apex vs the Euro circa 0.8465.

SCANDI/EM - No shock that the aforementioned weakness in oil is undermining the likes of the Nok, Rub and Mxn, as Brent slides towards Usd 68/brl and WTI skirts Usd 65.60, but the Try is not deriving benefit ahead of what is probably likely to be another CBRT non-event and the Zar is reeling after further steep declines in Gold that suffered a flash crash to sub-Usd 1700/oz proportions at one stage. Conversely, the Cnh and Cny are on an even keel with assistance from above forecast Chinese CPI and PPI metrics, not to mention a wider July trade surplus.

Notable FX Expiries, NY Cut:

  • EUR/USD: 1.1750 (1BLN), 1.1800 (1.6BLN), 1.1810-20 (1BLN)


Debt futures continue to stabilise and claw back post-NFP losses in relatively quiet trading conditions and measured moves rather than a short squeeze or stop-driven rebound. Bunds have now been up to 176.78 (+28 ticks vs -11 ticks at the Eurex low), Gilts are just off a 129.62 Liffe high (+36 ticks compared to +2 ticks at worst) and the 10 year T-note is hovering just above 134-00 within a 133-27/134-03 range awaiting ECB weekly QE stats, US employment trends and JOLTS, Fed’s Bostic and Barkin for further reaction to Friday’s upbeat BLS jobs data after Kaplan (2023 voter) repeated his call for gradual and balanced tapering to start soon.


WTI and Brent were pressured overnight with COVDI-19/Delta concerns in focus alongside renewed travel restrictions for various areas; pressure which has continued into and exacerbated during the European session. Currently, WTI and Brent are posting losses of around USD 3.0/bbl. Returning to COVID, the demand-side of the equation is weighed on as the likes of Israel and Beijing are reinstating restrictions, with the latter on travel to/from high-risk areas. On the demand-side, this week sees the release of all three key monthly oil reports, beginning with the EIA STEO tomorrow after they cut their world oil demand forecast for 2021 by 80k BPD in July, though upgraded the 2022 view. Elsewhere, Saudi Aramco report strong results over the week in which the CEO was confident on their outlook and is taking the opportunity of a general under-investment in oil supply to continue to increase their own supply and are around two-years from concluding the planning/design stages to increase capacity to 13mln BPD vs current 12mln BPD. However, attention is on their dividend which was maintained at its normal level and as such provides a dividend yield that is around 1% lower than main rivals. Moving to metals, spot gold and silver are pressured to the tune of circa 1% and 2% respectively, though have recovered the vast majority of a mini flash crash which took place in APAC hours that occurred without any fresh news flow. The move was attributed to thin markets, a technical death cross in gold and talk around USD 4bln in notional gold contracts for sale on Sunday night.

Saudi Aramco (2222 SR) reported Q2 net profit USD 25.46bln vs exp. USD 23.2bln. Co. declared total Q2 dividends of USD 18.8bln. The results “reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum,” Aramco CEO said, adding that the group remains extremely positive above H2 2021. CEO said the firm is in talks with China and other places for downstream investment opportunities. (Newswires)

Qatar sets September Marine and land crude OSPs at Oman/Dubai +USD 2.25/bbls, according to a pricing document. (Newswires)

NHC said there is a 40% chance of a cyclone formation alongside a 30% chance of another, both in the next 48 hours in an area in the Caribbean Sea. (Newswires) The five-day weather outlook show trajectories towards the Gulf of Mexico

Peru's PM Bellido said mining companies have abandoned environmental responsibilities in search of profit. (Newswires) Peru was the second largest copper producer in 2020