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Breakfast Bites - Fri Aug 11, 2023

Rise and shine everyone and Happy Friday!

We have the PPI numbers coming out today will likely be softer. Yesterday’s CPI numbers came in largely in-line and saw the market rally at first but, later give up gains. It would seem that the negative comments from the US is hitting the market this morning - China is down -2.7% and Hong Kong is down -1.7%.

We also have the preliminary sentiment number from University of Michigan coming out today at 10am ET.

We also received UK GDP numbers showing a growth of 0.2% vs. 0.1% for the previous quarter. The stronger number may mean further hikes from the Bank of England.

US Equity Futures are trading marginally lower this morning. Gold is marginally higher. Energy is higher. Bitcoin is lower. The long end of the curve is higher this morning with the Yield Curve is at -0.73%.

Asia and Australia

  • Asian equities ended mostly lower Friday. Australia closed the day down, Seoul reversed early gains to trade lower, Taiex was also down.

  • Chia July M2 money supply +10.7% vs +11.0% y/y expected

  • China property stocks remain under pressure with Hang Seng Mainland Properties Index down more than 10% this week and nearing its lowest since Nov-2022. Late Thursday Moody's downgraded Country Garden (2007-HK ) to Caa1 from B1, reflecting elevated refinancing risks.

  • China will allow provinces to raise about CNY1T ($139B) via bond sales to repay LGFV debt and other off-balance sheet issuers. - This is a good step in mitigating some of the debt burden of the local governments who are under massive pressure.

  • RBA Governor Lowe doesn't rule out further tightening, depending on data

  • Strike threat at Australian LNG facilities remains causing Natural Gas prices to remain elevated.

Europe, Middle East, Africa

  • European equity markets lower, near worst levels, following the second strong positive close in a row on Thursday.

  • UBS voluntarily terminated the 9 billion franc ($10.3 billion) Loss Protection Agreement with the Swiss government after stress-testing a portfolio of Credit Suisse non-core assets. So the estimated losses from Credit Suisse are likely better than perceived.

  • France labour market showing first signs of cooling. France unemployment rate for Q2 rose to 7.2% vs 7.1% expected. Mainland unemployment was also higher at 6.9% v 6.8% expected.

  • Economists see scope for ECB pause in September citing President Lagarde's admission that bank currently doesn't have more ground to cover, and Europe's economic woes, especially in Germany

The Americas

  • US jobless claims rise to 5-week high but not enough to raise concern. U.S. applications for unemployment benefits rose by 21,000 to 248,000 for the week ending August 5, from 227,000 the week before

  • Biden concerned China's problems are "ticking time bomb" for the world

  • Investors worry about Beijing retaliating to Biden's move to prohibit some US technology investments in China

  • Fed seen on hold after CPI data but some policymakers worry pausing too soon could risk inflation reacceleration

  • White House submits to congress request for an additional $24B to fund Ukraine war

  • IEA flags risk of higher oil prices, cuts 2024 demand view by 150,000 barrels per day.

  • PayPal’s Stablecoin Unlikely to See Significant Adoption in the Near Term: Bank of America


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)


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