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Breakfast Bites - Wed Aug 02, 2023

Rise and shine everyone.

US Equity Futures are trading lower on the Fitch’s downgrade of the country rating of the US. The markets are off their worst levels from overnight trading. The US Dollar and Gold are trading marginally higher while Oil and Bitcoin are lower. Treasury yields are lower with the curve steeper. The Yield Curve is at -0.85%.

We have the US ADP Payroll numbers coming out today. We have the US ADP Payroll numbers coming out today. ADP just came in much higher than expected: +324K vs. consensus +183K.

The earnings roster includes CVS Health, Humana, Yum Brands and Kraft Heinz before the open; Paypal, DoorDash, Shopify and Etsy after the close.

Later today, we’re watching Brazil’s Central Bank - they are set to cut rates for the first time in this hiking cycle and the second LatAm country after Chile last week.

Asia and Australia

  • Asian equities lower Wednesday. Major benchmarks all in negative territory with Hang Seng registering the biggest losses. Mainland stocks also down. Nikkei (biggest one-day percentage drop in 2023), Kospi, Taiex and ASX all sharply lower.

  • PBOC pledged that it would support a "stable and healthy development" of China's real estate market in its H2 work conference chaired by newly appointed governor Pan Gongsheng.

  • China FX regulators issued window guidance to some commercial banks to reduce or postpone their purchases of US dollars in order to slow the yuan's depreciation.

  • Ongoing attention on JGB yields following the YCC tweaks as 10y hit 0.625%, its highest since April 2014

  • In the first individual speech since Friday's YCC tweak, Deputy Governor Uchida explained the move was aimed at mitigating potential side effects of capping 10y yield at 0.5%

  • Bank of Thailand raised its key policy rate by 25 bps to 2.25% as expected to highest level in nine years.

  • South Korea's consumer prices rose 2.3% y/y in July, versus consensus 2.4% and 2.7% in prior month, marking the lowest advance since June 2021.

  • New Zealand Q2 employment growth unexpectedly increased to 1.0% q/q from Q1's 0.8% gain, contrasting with expectations for a fall to 0.6%.

Europe, Middle East, Africa

  • European equity markets broadly lower, yet off the worst levels. Energy, Food/Beverage, Autos/Parts outperform; Travel/Leisure, Basic Resources and Retail lag

  • UK PM Sunak told LBC he believes there is "light at the end of the tunnel on inflation" but was unsure whether the government would meet its target to halve inflation by year-end

  • Eurozone disinflation may turn into headwind for corporate profits

  • Trough in UK housing market seen by winter 2023/24

  • Wheat prices jump after further Russian attacks on Ukraine's Odesa port and gain silos.

The Americas

  • JOLTS numbers came in lower yesterday at 9.58M lower than expectations and previous month’s numbers. There are still 1.6 job openings for every unemployed worker - no change. Quits rates came down signifying people are trying to hold on to their jobs.

  • ISM Manufacturing numbers improved slightly to 49.4 but still in contractionary territory. The positive driver was an improvement in Backlog orders. Manufacturing employment however dropped quite a bit.

  • AMD revenue tops forecasts, gives upbeat outlook as production of AI accelerator chips ramps up

  • Electronic Arts misses quarterly bookings expectations, forecast weak

  • Pinterest sees stronger margins as ad rebound boosts quarterly results

  • Fed's Bostic doesn't see need for September hike, sees orderly slowdown in inflation; Chicago Fed's Goolsbee repeats September decision to depend on data

  • US pulls back offer to buy 6M barrels of oil for emergency reserve citing market conditions


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


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