Tin tức thì trường

Krishen Rangasamy, an analyst at National Bank Financial (NBF), notes that China’s annual inflation rate jumped to 2.8% in July, the highest in a year and a half.

• “Does that mean the People’s Bank of China will backtrack from its accommodative policy stance? Don’t bet on it. That’s because China’s rising inflation these days has little to do with mounting capacity pressures and more to do with idiosyncratic factors.
• Retaliatory tariffs by Beijing on U.S. agriculture have meant more food imports from other countries, often at higher prices than would otherwise be the case. Shortages due to the swine fever epidemic have also driven up pork prices sharply. And since food accounts for a significant weight of China’s CPI, the inflation uptick should not be really surprising.
• In those circumstances, it’s best to look at non-food inflation to get a better idea of underlying price pressures in the world’s second largest economy. As today’s Hot Chart shows, the annual non-food inflation rate fell in July to just 1.3%, the lowest in three years. That, coupled with reports of declining producer prices, arguably better reflect an economy that is losing steam.”

• Says U.S. has the safest currency in the world but it is so strong that it hurts manufacturers
• U.S. is not going to do business with Huawei, but that could change if there is the U.S.-China trade deal
• China wants to do something on trade, but he is not ready to do anything yet

Josh Nye, the senior economist at Royal Bank of Canada (RBC), noted that Canada's housing starts remained robust at 222,000 in July.

• “With robust housing starts and higher home sales in Q2, it looks like the residential sector made a positive contribution to quarterly growth for the first time since 2017.
• Today’s data suggest housing will remain an add in Q3. Starts moderated in July but the 222,000 pace is still solid and just shy of last quarter’s 224,000 average. And some of those Q2 starts will spill over into construction activity this quarter. Board-level releases suggest decent existing home sales in July (national data to be released next week) which will also support residential investment.
• We still don’t see Canada’s housing sector getting back to its old ways of very strong growth. But a return to the positive column, supported by lower interest rates, is a welcome relief after the sector acted as a drag on growth throughout last year.”

Danske Bank' analysts note that the already-strained relationship between the US and China hit a new low point this week.

• “A push higher in USD/CNY through the psychological level of 7 was a red flag for US President Donald Trump, who quickly turned to Twitter, naming China a 'currency manipulator'. Shortly after, the US Treasury Department issued an official statement designating China a 'currency manipulator ', although China does not fulfill the three criteria the Treasury normally uses to determine whether a country is a 'currency manipulator'. The People's Bank of China (PBoC) was quick to deny the accusations, saying the CNY weakening was a market response to Trump's tariff announcement last week.
• China found backing from former US Treasury Secretary Lawrence Summers, who in an op-ed in The Washington Post wrote that China did not 'come close to fitting this template [of currency manipulation]' and highlighted that China's 'interventions in the past couple of years have been to prop up its currency rather than to drive it down'. In July, the IMF said the Chinese currency was in 'line with fundamentals'.
• Trump's big headache in the trade war is the pain inflicted on US farmers, as they are key voters in swing states such as Iowa, Ohio and Wisconsin. Following confirmation from China that it would again stop buying US agricultural products, Trump tweeted that China would not be able to hurt farmers and hinted at more financial support. The President of the American Farm Bureau Federation said that 'we know aid can't last forever' and China's import cut-off was 'a body blow to thousands of farmers and ranchers who are already struggling to get by'.
• China this week waved the 'rare earths' card again, as China's rare earth association said it would support Chinese countermeasures. The statement came after a meeting to discuss the 'guidance' of Chinese President Xi Jinping during a visit to a rare earth plant in May.”

Statistics Canada announced on Friday that the value of building permits issued by the Canadian municipalities dropped 3.7 percent m-o-m in June, following a revised 12.2 percent m-o-m tumble in May (originally a 13.0 percent m-o-m decline).

Economists had forecast a 1.5 percent advance in June from the previous month.

According to the report, the value of residential permits fell 3.1 percent m-o-m in June, as permits for multi-family dwellings plunged by 6.7 percent m-o-m, while single-family permits rose by 1.3 percent m-o-m.

At the same time, the value of non-residential building permits decreased by 4.6 percent m-o-m in June, due to declines in institutional (-17.4 percent m-o-m) and commercial (-1.1 percent m-o-m) permits, which however were somewhat offset by a gain in industrial permits (+1.7 percent m-o-m).

In y-o-y terms, building permits dropped 5.7 percent in June.

U.S. stock-index futures fell on Friday, a day after Wall Street recorded its biggest one-day rise in two months, as worries about global economic slowdown returned.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Statistics Canada reported on Friday that the number of employed people fell by 24,200 m-o-m in July, while economists had forecast a gain of 12,500 and after an unrevised drop of 2,200 in the previous month.

Meanwhile, Canada's unemployment rose to 5.7 percent from 5.5 percent in July, missing economists’ forecast for 5.5 percent.

According to the report, full-time employment decreased by 11,600 (or -0.1 percent m-o-m) in July, while part-time jobs declined by 12,600 (or -0.4 percent m-o-m).

In July, the number of private sector employees decreased by 69,300 (-0.6 percent m-o-m), while the number of public sector employees grew by 17,500 (+0.5 percent m-o-m). At the same time, the number of self-employed rose by 27,700 (+1.0 percent m-o-m) last month.

Sector-wise, there were fewer people working in wholesale and retail trade (-20,600), transportation and warehousing (-14,800), "other services" (-10,600), and natural resources (-8,700). In contrast, employment rose in construction (+25,000) and public administration (+9,200).

On a year-over-year basis, employment grew by 353,000 (or +1.9 percent), driven by gains in full-time work (+326,000 or +2.2 percent).

The Labor Department reported on Friday the U.S. producer-price index (PPI) edged up 0.2 percent m-o-m in June, following gains of 0.1 percent m-o-m in both June and May.

For the 12 months through July, the PPI rose 1.7 percent, the same pace as in the previous month.

Economists had forecast the headline PPI would increase 0.2 percent m-o-m and 1.7 percent over the past 12 months.

According to the report, the July rise in final demand prices was led by a 0.4-percent m-o-m advance in the index for final demand goods. Meanwhile, prices for final demand construction rose 0.6 percent m-o-m. In contrast, the index for final demand services edged down 0.1 percent m-o-m.

Excluding volatile prices for food and energy, the PPI fell 0.1 percent m-o-m and 2.1 percent over 12 months. Economists had forecast gains of 0.2 percent m-o-m and 2.4 percent y-o-y, respectively.

The Canada Mortgage and Housing Corp. (CMHC) reported on Friday the seasonally adjusted annual rate of housing starts was at 222,013 units in July, down 9.6 percent from a downwardly revised 245,455 units in May (originally 245,657 units).

Economists had forecast an annual pace of 203,500 for July.

According to the report, urban starts tumbled by 10.4 percent m-o-m last month to 209,122 units, as multiple urban starts plunged by 12 percent m-o-m to 162,722 units, while single-detached urban starts fell by 4.6 percent m-o-m, to 46,400 units. At the same time, rural starts were estimated at a seasonally adjusted annual rate of 12,891 units, up 7.9 percent m-o-m.

Uber (UBER) reported Q2 FY 2019 loss of $4.72 per share (versus -$2.01 in Q2 FY 2018), worse than analysts’ consensus estimate of -$3.19.

The company’s quarterly revenues amounted to $3.166 bln (+14.4% y/y), missing analysts’ consensus estimate of $3.389 bln.

UBER fell to $39.52 (-8.03%) in pre-market trading.

Analysts at TD Securities are expecting the U.S. PPI inflation to come in at 0.2% m/m for July, up from 0.1% in the month before.

• “On an annual basis, however, the measure should remain unchanged at 1.7%. Core price inflation should also stay untouched at 2.3% y/y in July, on the back of a modest 0.1% m/m gain.”

Analysts at TD Securities say the UK’s Q2 GDP was disappointing, with the -0.2% q/q result softer than consensus of flat and TD’s -0.1% forecast.

• “The June GDP print was flat m/m, so not leaving any real momentum into Q3. Details show that there was a pretty chunky drag from inventories (-2.15ppts), which was something that we highlighted as an especially difficult component to forecast after the Q1 pre-Brexit inventory build.
• We can probably expect that to bounce back substantially toward the end of Q3, as businesses begin to prepare once again for the next Brexit deadline.”

James Smith, developed markets economist at ING, notes the UK economy shrank by 0.2% during the second quarter, recording the first negative GDP growth figure since the end of 2012.

• "Inventory levels increased dramatically during the first quarter as firms attempted to insulate themselves against possible ‘no deal’ supply disruption.
• The underlying picture doesn’t look much prettier. In particular, business investment has resumed its downward trend having fallen in every quarter of 2018 (and may only have bucked the trend in Q1 because of IFRS accounting changes).
• Brexit uncertainty, and to a lesser extent, weaker global demand, has reduced firms’ appetite to expand. Meanwhile, contingency planning activities for a ‘no deal’ Brexit are costly and often resource-intensive, reducing scope to lift capital spending. We expect this trend to continue for the rest of the year.
• The fact that inventories declined during the second quarter could perhaps preempt a renewed increase during the third quarter as firms resume preparations for a possible ‘no deal’ Brexit in October. This, combined with more resilient performance of consumer spending, implies that the economy should avoid a technical recession (two-quarters of consecutive negative growth).
• The strong wage growth backdrop, argues that it’s probably too early to be talking about UK rate cuts. However, given the fact that business investment is set to fall further implies that the Bank of England is equally a long way off from considering resuming its tightening
• cycle."

Analysts at TD Securities are expecting the Labour Force Survey of Canada to reveal job growth of 10k for July (market consensus 15k) in a further moderation from the robust performance over the first half of the year.

• “The goods-producing sector should provide the main driver for monthly job creation and we look for the unemployment rate to hold at 5.5% (mkt 5.5%). Wage growth will be a bright spot to the report, with average hourly earnings for permanent employees forecast to rise to 3.8% y/y (mkt 3.6%) on base effects.
• Housing starts and building permits will round out the data calendar; we look for housing starts to slip to 220k in July (mkt 201k) on a pullback in multi-unit construction, while the market looks for a 3.0% rebound in June building permits after a 13.0% m/m decline the prior month.”

• It is a challenging period across the global economy
• Economic fundamentals are strong
• Wages are growing and employment is at a record high
• "We're still expected to grow faster than Germany, Italy and Japan this year"

The Bank of Japan may seek to prevent unwelcome yen rises by tolerating temporary, market-driven falls in long-term interest rates, former BOJ board member Sayuri Shirai said.

Japanese government bond (JGB) yields hit three-year lows on Friday on concerns about the U.S.-China trade war, even as the BOJ cut its purchase of long-dated bonds to prevent 10-year yields from deviating too much from its 0% target.

"The BOJ will probably maintain its current framework and the target range, but tolerate market-driven falls in yields," Shirai said.

"That way, it can head off excessive rises in the yen, without hurting financial institutions," she told .

If yen rises become too sharp, the BOJ may be forced to widen the range at which it allows yields to move, said Shirai.

"The BOJ probably wants to avoid expanding stimulus for as long as possible," Shirai said. "It has already done so much and there's few policy tools left at its disposal."

According to the report from Istat, in July 2019 the rate of change of Italian consumer price index for the whole nation (NIC) was stable on monthly basis and increased by 0.4% with respect to July 2018, down from +0.7% in the previous month. The flash estimate was +0.5%.

The core inflation excluding energy and unprocessed food was +0.5% (up from +0.4% in June 2019) and inflation excluding energy was +0.6% (up from +0.5%).

The annual rate of change of prices of Goods was -0.1% (down from +0.5% in the previous month) and that one of prices of Services was +1.0% (the same as in June 2019). As a consequence, the inflationary gap between Services and Goods was +1.1 percentage points (+0.5 in the previous month).

Prices of Grocery and unprocessed food decreased by 0.2 on monthly basis and increased by 0.6% on annual basis (up from +0.2% in the previous month).

In July the Italian harmonized index of consumer prices (HICP) decreased by 1.8% compared with the previous month and increased by 0.3% with respect to July 2018 (down from +0.8% in June).

The International Energy Agency (IEA) cut its global oil demand growth forecasts for this year and next, citing fears of an economic downturn as the U.S.-China trade war casts a shadow over markets.

The energy agency now expects oil demand growth to reach 1.1 million barrels per day (b/d) in 2019 and 1.3 million b/d in 2020. That constitutes a downward revision of 100,000 b/d for this year and 50,000 b/d for next year.

In its monthly oil report, the IEA said there was “growing evidence of an economic slowdown” with many large economies reporting weak gross domestic product (GDP) growth in the first half of the year.

From January to May, oil demand rose by 520,000 b/d, marking the lowest rise in that period since the financial crisis in 2008.

“The situation is becoming even more uncertain,” the IEA said, before describing global oil demand growth in the first half of the year as “very sluggish.”

Office for National Statistics said, production output fell by 1.4% for Quarter 2 (Apr to Jun) 2019, compared with Quarter 1 (Jan to Mar) 2019 reversing the 1.1% increase in Quarter 1 2019.

The quarterly fall in manufacturing of 1.4% is the strongest fall since Quarter 1 2009, due mainly to widespread weakness with 10 of the 13 subsectors decreasing; led by strong decreases from transport equipment (5.2%), chemicals and chemical products (6.2%) and basic metals (2.4%).

Production output fell by 0.1% between May 2019 and June 2019 despite rises from three of the four main sectors; the manufacturing sector provided the only downward contribution, falling by 0.2%.

Monthly manufacturing output highlights a mixed picture with only 7 of the 13 subsectors falling, so overall growth is due mainly to falls in basic metals (2.8%) and computer, electronic and optical products (3.5%).

For Quarter 2 (Apr to Jun) 2019 compared with Quarter 2 2018, production output decreased by 0.5%, with falls in manufacturing (0.9%) and electricity and gas (0.3%); partially offset by rises in mining and quarrying (1.9%) and water and waste of (0.9%).

According to the report from Office for National Statistics, UK gross domestic product (GDP) in volume terms was estimated to have fallen by 0.2% in Quarter 2 (Apr to June) 2019, having grown by 0.5% in the first quarter of the year.

When compared with the same quarter a year ago, UK GDP increased by 1.2% in Quarter 2 2019; a slowing from 1.8% in Quarter 1 (Jan to Mar) 2019.

Services sector output provided the only positive contribution to GDP growth, although growth in this sector slowed to 0.1% in Quarter 2 2019.

The production sector contracted by 1.4% in Quarter 2 2019, providing the largest downward contribution to GDP growth; the fall was driven by a sharp decline in manufacturing output, reflective of increased volatility in the first half of 2019.

Nominal GDP increased by 0.4% in Quarter 2 2019, down from 0.9% in Quarter 1 2019.

Commenting on today’s GDP figures, Head of GDP Rob Kent-Smith said: “GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter. Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure date from the EU. The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all. The trade deficit narrowed markedly, as imports fell following a sharp rise in the first quarter ahead of the UK’s original departure date from the EU.”

TD Securities analysts point out that Fitch is due to review its BBB- (positive) sovereign rating for Russia and will be a key event for today’s markets.

“Moody's has a rating of Baa3 (stable) and S&P BBB- (stable). Fitch moved the outlook to positive from stable back in September 2017. Fitch has continued to point to the strong sovereign balance sheet and robust external finances, but US sanctions risk remains an ongoing concern which, in their view, keeps the rating one notch lower than it should be. It is possible that today Fitch finally decides that the positives outweigh the risks and moves the rating to BBB, although given the length of time that the outlook has been positive it is hard to have a great deal of conviction about this.”

• The Chambers of Industry and Commerce slashes its exports forecast for the German economy this year 

• Association now expects exports to nearly stagnate as a slowing world economy and escalating trade conflicts hurt foreign sales.

• Association had forecast export growth in 2019 for 1.2% back in May.

• Rising protectionism and a noticeably weakening global economy are burdening Germany's export-reliant economy. 

• The US-China trade dispute and tenacious struggle for Brexit are unsettling investors worldwide and clouding the prospects for German producers of capital goods in particular.

Societe Generale's Greater China economist, Michelle Lam, spoke to Bloomberg TV:

• PBOC will watch carefully on capital outflow dynamics in the near-term

• Doesn't want to upset traders too much on the matter

• If trade tensions continue to escalate, can expect USD/CNY to rise to 7.50

• PBOC may tighten capital controls if outflows start to pick up

• However, doesn't expect pace of capital outflows to be as dramatic as in the past

• Markets are more prepared to deal with a weaker yuan now

Danske Bank analysts suggest that in terms of economic data releases, it is another quiet day today and the UK Q2 GDP will be the only key economic release for the day.

“In the UK, the monthly GPD indicator for June (and hence the full estimate of Q2 GDP) is released at 10.30 CEST, which is expected to show that GDP growth has slowed in Q2 compared to Q1, as the original Brexit stockpiling effect is no longer artificially boosting GDP growth. In the Scandies, we have a couple of interesting releases. In Sweden, we could see a rebound in the household consumption indicator for June, given the fact that retail sales rebounded sharply. In Norway, we expect a further slowdown in core inflation to 2.2% in July.”

The Bank of Japan likely heaved a sigh of relief following Friday’s strong economic numbers, but the central bank will have to remain “on guard and prepared to do more” amid the present global uncertainty, said the chief Japan strategist at Goldman Sachs, Kathy Matsui.

However, the BOJ has “pretty limited” options if the trade friction between China and the U.S. becomes worse, according to Matsui.

Japan reported Friday that GDP grew at an annualized rate of 1.8% in the second quarter which ended in June. It was much better than a median forecast for a 0.4% growth.

It comes at a time when short-term interest rates in Japan has been unchanged at -0.1% since the BOJ adopted negative interest rates in January 2016. The country’s central bank has been struggling to meet an elusive inflation target of 2%.

“If the yen were to appreciate much further, let’s say (it) breaks the 100 barrier (against the dollar), I think that could force the BOJ’s hand to do something more,” Matsui told.

“They (Japan) obviously can take negative rates even further to negative territory but that is not without any cost,” Matsui said.

That cost would be borne by the country’s banking system, whose net interest margins are “already suffering” as a result of negative interest rates being set for a prolonged period of time, she added.

National Institute of Statistics and Economic Studies (Insee) said, in June 2019, output slipped back sharply in the manufacturing industry (−2.2%, after +1.6%), as well as in the whole industry (−2.3%, after +2.0%).

Over the second quarter of 2019, manufacturing output declined (−0.3%). Output increased slightly in the whole industry (+0.3%).

Compared with the first quarter of 2019, output grew strongly in mining and quarrying, energy, water supply (+3.8%) and it was virtually stable in “other manufacturing”. Conversely, it decreased markedly in the manufacture of transport equipment (−2.1%) and in the manufacture of coke and refined petroleum products (−6.4%). It was virtually stable in the manufacture of food products and beverages (−0.1%) and stable in that of machinery and equipment goods.

Manufacturing output of the second quarter of 2019 increased compared to the same quarter of 2018 (+1.0%), as well as in the whole industry (+1.6%).

Over a year, output of the second quarter increased in mining and quarrying, energy, water supply (+5.0%), in “other manufacturing” (+1.1%), in the manufacture of machinery and equipment goods (+3.8%) and in the manufacture of coke and refined petroleum products (+4.4%). However, it decreased in the manufacture of transport equipment (−0.5%) and in the manufacture of food products and beverages (−0.2%).

According to the report from Insee, in Q2 2019, private payroll employment increased by 0.3%. It slowed down slightly compared to the previous quarter: +62,100 net jobs after +95,600 jobs in Q1 2019. Year on year, private payroll employment rose by +1.3% (that is +259,400 jobs). Excluding temporary employment, its growth was similar: +0.3% over the quarter (that is +61,100 jobs) and by +1.4% over the year (that is +266,300 jobs).

Private payroll employment increased steadily again in construction: +0.7% in Q2 2019 (thas is +9,800 jobs),after +1.2%. It barely slowed down in industry: +0.1% (that is +3,000 jobs), after +0.2% Year on year, private employment increased by 41,400 in construction and by 20,000 in industry.

In Q2 2019, private employment continued to increase sharply in market services: +0.4% (that is +47,500 jobs), after +0.6% in Q1 2019, bringing its rise to 1,5% over a year (that is +186,300). Excluding temporary employment, the increase was comparable: +0.4% (that is +46,500 jobs), after +0.5% in the previous quarter, and +1.7% over a year. Private employment in non-market services remained stable over the quarter, at a slightly higher level than a year ago (+0.3%).

Barclays Research discusses the outlook for the PBoC policy expectations.

"We think domestic considerations will continue to dominate China’s monetary policy decision making. We do not think the PBoC will automatically follow Fed cuts. A review of the 2015-19 Fed-PBoC movements shows that the PBoC followed the Fed in four of the five US hikes that occurred during China’s 2016-2018 deleveraging campaign. However, it has been easing since April 2018, when the US and Chinese economies diverged before fine-tuning policies to address emerging risks this March. Overall, our base case for gauging the monetary policy outlook expects visible downward pressures on growth, elevated food inflation in the short term (but less of an issue in Q4), a more flexible CNY exchange rate, moderate increase in leverage (debt/GDP) and a cooling housing market. We think the PBoC could lower policy rates in September," Barclays notes.

According to the provisional data from Federal Statistical Office (Destatis), Germany exported goods to the value of 106.1 billion euros and imported goods to the value of 89.3 billion euros in June 2019. German exports decreased by 8.0% and imports by 4.4% in June 2019 year on year. After calendar and seasonal adjustment, exports were down 0.1% on May 2019, while imports rose 0.5%.

The foreign trade balance showed a surplus of 16.8 billion euros in June 2019. In June 2018, the surplus amounted to +22.0 billion euros. In calendar and seasonally adjusted terms, the foreign trade balance recorded a surplus of 18.1 billion euros in June 2019.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of 20.6 billion euros in June 2019, which takes into account the balances of trade in goods including supplementary trade items (+18.1 billion euros), services (-2.9 billion euros), primary income (+8.8 billion euros) and secondary income (-3.3 billion euros). In June 2018, the German current account showed a surplus of 24.8 billion euros.

In June 2019, Germany exported goods to the value of 63.5 billion euros to the Member States of the European Union (EU), while it imported goods to the value of 53.3 billion euros from those countries. Compared with June 2018, exports to the EU countries decreased by 6.2%, and imports from those countries by 1.1%.

Exports of goods to countries outside the European Union (third countries) amounted to 42.6 billion euros in June 2019, while imports from those countries totalled 36.0 billion euros. Compared with June 2018, exports to third countries decreased by 10.7% and imports from those countries by 8.9%.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1301 (3470)

$1.1255 (2541)

$1.1226 (1881)

Price at time of writing this review: $1.1197

Support levels (open interest**, contracts):

$1.1148 (2854)

$1.1100 (5332)

$1.1050 (2034)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 9 is 76903 contracts (according to data from August, 8) with the maximum number of contracts with strike price $1,1100 (5332);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2350 (207)

$1.2300 (247)

$1.2251 (458)

Price at time of writing this review: $1.2144

Support levels (open interest**, contracts):

$1.2096 (258)

$1.2067 (384)

$1.2012 (299)

Comments:

- Overall open interest on the CALL options with the expiration date August, 9 is 17023 contracts, with the maximum number of contracts with strike price $1,3000 (2051);

- Overall open interest on the PUT options with the expiration date August, 9 is 20588 contracts, with the maximum number of contracts with strike price $1,2450 (2360);

- The ratio of PUT/CALL was 1.21 versus 1.17 from the previous trading day according to data from August, 8

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.