EUROPEAN MIDDAY/US MORNING REPORT: MONDAY – 17TH – SEPTEMBER – 2018
EUROPEAN MIDDAY/US MORNING REPORT
MONDAY – 17TH – SEPTEMBER – 2018
European cash equity markets are broadly lower ahead of the midway stage (FTSE -0.3%, DAX -0.4%, CAC -0.2%). Technology stocks are among the worst performers while the ongoing US-China trade spat has also weighed
this morning – reports over the weekend suggested US President Trump is keen to advance the $200 Bln Chinese tariff list. Moves in the bond markets have been muted meanwhile with little change in US and UK yields while the German 10-year has inched up to its
best level in over six-weeks. Euro Zone CPI was unrevised from the flash prints at +2.0% YoY headline and +1.0% YoY for core. Turning to currencies, the Dollar Index has nudged lower with Eur/Usd and Gbp/Usd supported by weekend press reports related to Italy
and Brexit. The Swiss Franc has shown minor outperformance over its G10 peers but has been eclipsed by the Swedish Krona which rallied after the Riskbank minutes. We also heard from the ECB’s Coeure who said there might be a case for the Governing Council
to extend its current forward guidance beyond the timing to lift-off. Elsewhere, oil prices are ahead with US crude futures adding +0.9% while spot gold has advanced 0.2%. Looking ahead, futures are pointing to a slightly lower open on Wall Street with US
Empire manufacturing and Canadian international security transactions both due for release.
* European Corporate News:
- Linde (-0.4%): Mlex warned of additional hurdles to Praxair merger
- Credit Suisse (%-0.5): Swiss watchdog criticises bank for anti-corruption failings
- H&M (+13.1%): Jun-Aug sales +4.0% versus +2.0% expected
* Norwegian Trade Balance (Aug) 31.8 Bln, previous 25.3 Bln
* Italian League party are said to be considering a proposal to give tax breaks to citizens who purchase government bonds.
* Chinese Foreign Ministry said they would retaliate if the US imposes fresh tariffs.
* Riksbank Minutes:
- Majority of the Executive Board considered it appropriate to leave the repo rate unchanged now
- Martin Flodén entered a reservation against the repo rate path. He advocated a repo rate path indicating the likelihood that the repo rate will be raised by 0.25 percentage points at the monetary policy meeting in October
- Henry Ohlsson entered a reservation against the decision to hold the repo rate unchanged and against the repo rate path in the draft Monetary Policy Report. He advocated raising the repo rate to −0.25 per cent with reference to the strong economic growth
in Sweden and abroad.
* Euro Zone CPI Data (Aug F):
- CPI Y/Y +2.0% versus +2.0% expected, previous +0%
- Core CPI Y/Y +1.0% versus +1.0% expected, previous +1.0%
* United Kingdom: IMF Staff Concluding Statement of the 2018 Article IV Mission:
- The UK is set to exit the EU in March 2019 and aims to reach a broad agreement with the EU on their future relations by the end of 2018. Our projections assume timely agreement on a broad trade pact covering goods and some services, and a relatively smooth
Brexit process thereafter. Growth is expected to remain moderate in the near term under this baseline, averaging about 1½ percent this year and next.
* UK Finance Minister Hammond said he is confident they will reach a Brexit deal this Autumn but they must be prepared for all scenarios
* ECB’s Coeure speaks:
- Although uncertainty around the inflation outlook is receding and a sustained convergence of inflation to levels closer to our aim is in sight, underlying inflationary pressures have long proven stubbornly weak
- In the future, there might be a case for the Governing Council to extend its current forward guidance beyond the timing to lift-off.
* Bundesbank Monthly Report said German economic growth is to improve markedly while the upswing remains intact.
* @realDonaldTrump – More Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable.
If countries will not make fair deals with us, they will be “Tariffed!”
* ECB’s Vasiliauskas said there is no reason to talk about an extension of stimulus.