• European bourses trade mixed after opening after shrugging off mild broad-based opening losses with no obvious catalyst behind the move at the time.
• DXY is softer and trades on either side of 103.00, T-note futures hold near overnight peaks, US equity futures are trading flat with a positive bias ahead of FOMC minutes.
• GBP and NZD outperform, the former following hotter-than-expected UK inflation and the latter after RBNZ left rates unchanged but upped the OCR path.
• China reportedly asked some funds to avoid net equity sales as the market sinks, according to Bloomberg sources; Chinese state banks were seen selling dollars vs yuan at the 7.2800 level.
• Looking ahead, highlights include: Highlights include US Building Permits & Industrial Production, FOMC Minutes, Earnings from Cisco.

16th August 2023

SNAPSHOT

• Click here for the Newsquawk Week Ahead preview.

EUROPEAN TRADE

EQUITIES

• European bourses trade mixed after opening after shrugging off mild broad-based opening losses with no obvious catalyst behind the move at the time.
• Sectors are mixed with Retail, Utilities, Consumer Produce & Services at the top of the bunch while Travel & Leisure, Media, Energy and Telecoms reside as the laggards.
• Stateside, equity futures are trading slightly firmer as some positive sentiment attempts to return following yesterday’s closes, with traders looking ahead to FOMC minutes.
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• Click here and here for a recap of the main European equity updates.

FX

• DXY faded again on a combination of factors; the index narrowly failed to match the prior session high before retreating from 103.270 to 102.940 and back down through the 200 DMA in the process.
• GBP received a boost from slightly above consensus core UK inflation hot on the heels of the even stronger average earnings relative to expectations.
• NZD is the top G10 performer after the RBNZ held rates but tweaked its OCR path upwards to omit a rate cut by Dec 2024.
• PBoC set USD/CNY mid-point at 7.1986 vs exp. 7.2878 (prev. 7.1768)
• Chinese state banks were seen selling dollars vs yuan at the 7.2800 level.
• Russian Authorities may bring back the compulsory sale of FX revenues "at any moment" even though part of export revenues are now in Roubles and Rupees, according to Reuters citing a high-level source who said the move could be imminent.
• South Korean Finance Minister said tax breaks on oil products are to be extended until the end of October, adding they are closely watching the FX market, according to Reuters.
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Debt futures remain broadly firmer after recouping more losses from fresh cycle lows, with the exception of Gilts that have been hampered by core UK CPI bucking the disinflationary dynamic.
• Bunds are hovering just over 131.00 within a 131.14-130.65 range, while Gilts sits sub-parity between 93.05-92.53 parameters and the T-note holds nearer 110.04+ overnight peak than 109-24 trough
• Germany sold EUR 0.787bln vs. Exp. EUR 1bln 0.00% 2050 Bund and EUR 1.266bln vs. Exp. EUR 1.5bln 0.00% 2052 Bund
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COMMODITIES

• WTI and Brent futures are flat in tight ranges with little in the way of fresh newsflow for the complex, with the downside from the overnight risk aversion somewhat cushioned by the constructive Private Inventory report yesterday
• Spot gold moves in tandem with the Buck after finding overnight support at the USD 1,900/oz mark and gradually inching higher back towards its 200 DMA (1,905/oz).
• Base metals have tilted firmer since the lacklustre European opened with sentiment in the complex potentially supported (alongside the soft dollar) by Chinese battery maker CATL unveiling its new "superfast charging" long-range battery.
• US Energy Inventory Data (bbls): Crude -6.2mln (exp. -2.3mln), Gasoline +0.7mln (exp. -1.3mln), Distillate -0.8mln (exp. -0.5mln), Cushing -1.0mln.
• Woodside Energy (WDS AT) workers at the North West Shelf LNG plant will likely hold more talks next week after failing to reach an agreement yesterday. The talks are reportedly slated for next Wednesday, according to Bloomberg sources. Chevron (CVX) will reportedly delay plans to sell some spot market cargoes from its Gorgon operation amid the risk of strikes, according to Bloomberg sources.
• Warehouses and grain silos were damaged in Russia's overnight attack at one of the Danube river ports in Ukraine, according to the Odesa governor cited by Reuters.
• Click here for the updated Newsquawk analysis on the Australian LNG labour talks.
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NOTABLE US HEADLINES

• Tesla (TSLA) cut prices for Model S and X in China, according to Reuters.
• Intel (INTC) confirmed the termination of Tower Semiconductor Acquisition (TSEM), and will pay a termination fee of USD 353mln to Tower, according to Reuters.

NOTABLE EUROPEAN HEADLINES

• Norwegian Sovereign Wealth Fund CEO expects that inflation will be difficult to lower; cites climate change, driving up food prices and lowering worker productivity.

DATA RECAP

• UK CPI YY* (Jul 2023) 6.8% vs. Exp. 6.8% (Prev. 7.9%); All Services CPI: 7.4% (prev. 7.2%)
• UK CPI MM* (Jul 2023) -0.4% vs. Exp. -0.5% (Prev. 0.1%)
• UK Core CPI YY* (Jul 2023) 6.9% vs. Exp. 6.8% (Prev. 6.9%)
• UK Core CPI MM* (Jul 2023) 0.3% vs. Exp. 0.2% (Prev. 0.2%)
• EU GDP Flash Estimate YY (Q2 2023) 0.6% vs. Exp. 0.6% (Prev. 0.6%)
• EU GDP Flash Estimate QQ (Q2 2023) 0.3% vs. Exp. 0.3% (Prev. 0.3%)
• EU Employment Flash YY (Q2) 1.5% vs. Exp. 1.4% (Prev. 1.6%)
• EU Industrial Production YY (Jun 2023) -1.2% vs. Exp. -4.2% (Prev. -2.2%)
• EU Industrial Production MM (Jun 2023) 0.5% vs. Exp. -0.1% (Prev. 0.2%, Rev. 0.0%)

GEOPOLITICS

• Ukraine said Russian drones were over the Danube and headed towards river port Izmail. It was also reported that Russia's Defence Ministry said it destroyed three Ukrainian drones over Russia's Kaluga region, according to Reuters.
• North Korea said US soldier Travis King confessed he decided to come over to North Korea as he harboured ill feelings against the US Army and expressed a willingness to seek refuge in North Korea or a third country, according to KCNA.

CRYPTO

• Bitcoin is flat just above the USD 29k mark within recent ranges.
• Crypto exchange Bittrex Global reaches successful settlement with SEC; includes a USD 24mln payment which will be paid by the Co, according to Reuters.

APAC TRADE

• APAC stocks were pressured following the declines on Wall St amid the broad risk-off mood, which was triggered by global macro headwinds, in particular, the recent slew of weak data from China.
• ASX 200 was led lower by the large industries, while participants also digested earnings and a softer leading index.
• Nikkei 225 dipped beneath the 32,000 level as all major bourses suffered from the falling tide across stocks.
• Hang Seng and Shanghai Comp remained pressured amid China growth concerns as recent poor data releases have prompted several banks to cut their growth forecasts for the world’s second-largest economy including JPMorgan which now anticipates 4.8% GDP growth for China this year, while the latest House Price data also showed a contraction Y/Y to add to the ongoing developer woes.

NOTABLE ASIA-PAC HEADLINES

• China reportedly asked some funds to avoid net equity sales as the market sinks, according to Bloomberg sources.
• RBNZ kept the OCR unchanged at 5.50% as expected, while it noted that the Committee agreed that the OCR will need to remain at a restrictive level for the foreseeable future and the current level of interest rates is constraining spending and hence inflation pressure, as anticipated and required. RBNZ also stated that headline inflation and inflation expectations have declined but measures of core inflation remain too high, as well as noted there is a risk in the near-term that activity and inflation measures do not slow as much as expected. Furthermore, it slightly raised OCR projections which is seen at 5.57% in September 2024 (prev. 5.43%) and at 5.50% in December 2024 (prev. 5.30%).
• RBNZ Governor Orr said during the press conference that the rise in the OCR track is not forward guidance and is not a strong signal of their next move, while they are wary about doing too much on rates. Orr noted that risks in the next few months are that activity could be stronger than projected, while he responded that there will always be the risk of another rate hike as there is always the risk of a rate cut when asked if there are risks of another hike, and stated that they are very comfortable where the OCR is.

DATA RECAP

• Chinese House Prices YY (Jul) -0.1% (Prev. 0.0%)
• Australian Leading Index MM (Jul) -0.03% (Prev. 0.12%)