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Turkish Lira Currency Rebounds For A 2nd Straight Session, UK CPI Data In-Line

Notes/Observations

  • Turkey Lira currency continues its retracement from recent record lows; risk of the Turkish crisis spreading to other emerging markets appears limited for now
  • Indonesia Central Bank hikes its key rate for the 4th straight time and maintains its hawkish tone
  • UK July CPI in-line with expectations but remained above BOE target for the 20th straight month; data did little to change the outlook of the path for BOE rate hikes of one hike per year
  • Assumption day holiday keeps participation at a minimum in Europe

Asia:

  • China PBoC set the Yuan Reference Rate at 6.8856 v 6.8695 prior for its weakest CNY currency fix since May 12th 2017
  • China State Planner (NDRC) Spokesman reiterates there was no winner from trade war; Jan-July data showed limited impact on China’s economy from trade frictions; Trade frictions would have negative impact on domestic economy. Reiterated that China would ensure the achievement of annual economic growth target, despite trade war. And to keep economic growth within a reasonable range in H2

Europe:

  • Turkey has raised tariffs on some US imports including raising passenger cars tariffs by 120%, alcohol tariffs by 140% & tobacco tariffs by 60%
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Americas:

  • White House official: more economic pressure could be in store for Turkey if it does not release Pastor Brunson
  • State Dept spokesperson: conversations are continuing with Turkey about Brunson

Energy:

  • Weekly API Oil Inventories: Crude: +3.7M v -6.0M prior

Economic Data:

  • (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: 2.0% v 6.4% prior
  • (DK) Denmark July PPI M/M: 0.2% v 1.5% prior; Y/Y: 6.7% v 6.8% prior
  • (FI) Finland Jun Current Account Balance: -€0.4B v -€0.5B prior
  • (NO) Norway July Trade Balance (NOK): 25.3B v 22.0B prior
  • (TR) Turkey May Unemployment Rate: 9.7% v 9.6% prior
  • (ID) Indonesia Central Bank (BI) raised the 7-day Reverse Repoby 25bps to 5.50% (not expected) for its 4th straight hike in the current tightening cycle.
  • (TR) Turkey July Central Gov’t Budget Balance (TRY): +1.1B v -25.6B prior
  • (UK) July CPI M/M: 0.0% v 0.0%e; Y/Y: 2.5% v 2.5%e; CPI Core Y/Y: 1.9% v 1.9%e; CPIH Y/Y: 2.3% v 2.3%e
  • (UK) July RPI M/M: 0.1% v 0.2%e; Y/Y: 3.2% v 3.4%e, RPI-X (ex-mortgage interest payment) Y/Y: 3.3% v 3.5%e, Retail Price Index: 281.7 v 282.1e
  • (UK) July PPI Input M/M: 0.5% v 0.1%e; Y/Y: 10.9% v 10.3%e
  • (UK) July PPI Output M/M: 0.0% v 0.2%e; Y/Y: 3.1% v 3.0%e
  • (UK) July PPI Output Core M/M: 0.0% v 0.2%e; Y/Y: 2.2% v 2.1%e
  • (UK) Jun ONS House Price Index Y/Y: 3.0% v 2.6%e

Fixed Income Issuance:

  • (DK) Denmark sold total DKK2.83B in 2020 and 2027 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx50 +0.1% at 3,413, FTSE -0.1% at 7,604, DAX +0.2% at 12,386, CAC-40 flat at 5,405; IBEX-35 -0.3% at 9,481, FTSE MIB -0.3% at 20,906, SMI -0.4% at 9,004 , S&P 500 Futures -0.1%]
  • Market Focal Points/Key Themes: European stocks open slightly higher but later moved towards mixed as the session progressed; trading somewhat muted with bank holidays in several European countries; materials stocks impacted following disappointing economic news from China; focus on UK economic data; markets closed for holiday include Italy, Austria, Greece, Cyprus and Slovenia; Chile and Costa Rica closed for holiday; upcoming earnings expected in the US session include Super Micro Computer, Macy’s and Ability

Equities

  • Consumer discretionary: Aeroflot AFLT.RU +2.2% (share buyback)
  • Energy: Vestas Wind VWS.DK +4.6% (results)
  • Healthcare: ALK-Abello ALKB.DK +9.8% (results), GlaxoSmithKline GSK.UK +1.6% (study results), Hikma Pharmaceuticals HIK.UK +8.6% (results), Stratec Biomedical SBS.DE -13.4% (results)
  • Industrials: Balfour Beaty BBY.UK +2.9% (results), Heijmans HEIJM.NL +3.9% (results), Leoni LEO.DE -5.0%(results), William Demant