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Breakfast Bites - Fri Jul 28, 2023

Rise and shine everyone. Happy Friday.

The big news for today is the US PCE Inflation numbers being released at 8:30am ET. We also have the quarterly Employment Cost Index (ECI) being released at the same time. This is an important measure that the Fed watches and is looking for a decline.

Yesterday, we got quite a sell off in the market despite stronger Q2 GDP numbers coming in at +2.4% QoQ. The sell off was partly driven by Japan’s announcement of a proposed tweak in the YCC. They released the tweak late last night / early this morning. They've let the YCC limits remain at 0.5% but kept the limits flexible meaning the 10-year JGB yield can float above this rate. They declared offering to buy JGBs at 1%.

We also have important earnings this morning from ExxonMobil, Chevron, Procter & Gamble, and Colgate-Palmolive. Exxon and Chevron both missed EPS numbers but beat on Revenues. P&G and C-P delivered double beats.

US Equity Futures are trading higher this morning after yesterday’s steep sell off. Bitcoin and Oil are lower while Gold is higher. The USD Index has given up some of its gains from yesterday. Rates have also given up some of its gains with the Yield Curve now at -0.91%.

Asia and Australia

  • Asian equities ending mixed Friday in a strong catalyst-based trading day. Nikkei and Topix closed lower on BOJ YCC news but rallied sharply in the final hour of trading and came close to erasing losses at one point.

  • Greater China indices regained strong upward momentum on signals Beijing is following through with pledges to help the property sector.

  • Tokyo core CPI rose 3.0% y/y in July, compared with consensus 2.9% and follows 3.2% in the previous month.

  • China asks internet giants to showcase investments in consumer, telecom and media companies

  • Australia June retail sales shrank 0.8% m/m in June compared to consensus for a flat result and May's upwardly revised 0.8% increase - adds to case for RBA pause.

Europe, Middle East, Africa

  • European equity markets mostly lower. UK’s FTSE 100 bucks trend on positive earnings to hit nine-week high. Banks leading in EU trade as earnings supersede ECB's move to eliminate remuneration on minimum reserves, as impact seen limited. Chemicals outperform; Technology, Retail and Real Estate lag.

  • Mixed takeaways from yesterday's ECB policy decision, which saw 25-bp rate increase to take deposit rate to 3.75% and tweak in rate guidance. Statement said rates to be set at sufficiently restrictive levels, rather than brought to sufficiently restrictive levels, which opens possibility of a pause.

  • The publication of preliminary Q2 GDP update from leading Eurozone economies showed growth remains underpinned despite weakness in leading indicators

  • German GDP stagnated in Q2 with 0.0% reading versus consensus for 0.1% expansion and prior 0.1% contraction revised from 0.3% fall initially reported.

  • French Q2 GDP expanded 0.5% versus consensus for 0.1% expansion and prior 0.1% increase, with foreign trade contributing positively and a bounce back in exports

  • Spanish GDP expanded 0.4% in Q2, in line with consensus and compared with prior 0.5% increase revised from 0.6%. Spanish economy also benefited from stronger exports and tourism.

  • Austrian, one of the smallest euro area economies, saw growth contract 0.4% due to slowdown in construction and industry

The Americas

  • A sweeping overhaul of bank capital rules proposed by regulators includes changes to requirements for residential mortgages, making them more stringent. Banks will need to set aside higher levels of capital for riskier mortgages and first time buyers. The adjustments go beyond international standards — the Basel III framework — by about 20 percentage points.

  • Intel reports Q2 EPS $0.13 ex-items vs FactSet ($0.04); Revenue $12.95B vs FactSet $12.12B

  • T-Mobile US exceeds Q2 profit estimates and raises its subscriber forecast for the year

  • Ford delivers Q2 beat and boosts guidance, but sees more losses in EV unit

  • Cash parked at money market funds hit fresh all-time high after latest Fed rate hike reaching $5.49 trillion


(news taken from Reuters, FT, Bloomberg; Calendar from Benzinga Pro)


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