Market Commentary and Information Agreement:
The information contained on this page is not to be reproduced, copied or made available to others. This information neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. Any information herein is given in good faith, but is subject to change without notice. No liability is accepted whatsoever by ADM Investor Services International Limited, employees and associated companies for any direct or consequential loss arising from these documents or information.
ADM Investor Services Limited is authorised and regulated by the Financial Conduct Authority (‘FCA’) and is a member of the London Stock Exchange and LIFFE. Under the FCA New Conduct of Business Rules we are required to categorise clients for whom we undertake any designated investment business. Accordingly, the information contained in this page is classified for a Professional client, if you continue to read the information enclosed on this page then you do so knowingly that you are entirely doing so at your own risk.
Cookies on ADMISI
As quarter end looms in markets' headlights, politics (US/China trade, Brexit, Iran/Saudi topping the list) and central banks look likely to dominate the week given a none too overwhelming run of statistics. The latter features flash PMIs, Germany's Ifo, US Consumer Confidence and numerous other surveys accompanied by US Durable Goods Orders, Goods Trade Balance, New & Pending Home Sales, both major House Price indices, Personal Income & PCE and final Q2 GDP; Japan's Tokyo CPI, UK PSNB and preliminary French September CPI are also due, as well as a very busy run of Fed, ECB & BoJ speakers. In the wake of last week's USD Repo market turmoil, finally prompting the Fed to conduct O/N Repo operations, which will be augmented by Term Repos this week to fend off quarter end pressures, and another hefty round of Treasury Bill (ca $162 Bln) and Coupon/FRN ($131 Bln) auctions, a close eye will be kept on USD money markets.
The Eurozone also has a relatively busy week for govt bond auctions with some EUR 16 bln of supply from Belgium, Germany & Italy, as markets continue to mull the tiering moves by both the ECB and SNB, which serve to increase effective average official deposit rates (i.e. net of tiering) to 0.315% from 0.36% (ECB, as of Oct 30) and to -0.07% from -0.20% (SNB), as compared with official rates of -05% and -0.75%, which exercises some upward pressure on short-dated govt bond yields. For those that are interested in a more in-depth look at what has gone wrong with the Fed's money market 'plumbing', I would recommend FT Alphaville editor Izabella Kaminska's article "A story about a liquidity regime shift" https://ftalphaville.ft.com/2019/09/17/1568721798000/A-story-about-a-liquidity-regime-shift/ .
Otherwise, as is typical for this stage of the quarter, the corporate earnings calendar is light, though the reports from Blackberry, Cargill, CarMax, Conagra, KB Home, Micron Technology Nike and Vail Resorts will likely attract some attention.
- The statistical schedule kicks off with flash PMIs, and as ever forecasters look for little change in Eurozone and US readings, with a marginal improvement seen in the Eurozone Manufacturing and a small slip in Services, presumably premised on some contagion from the former to the latter, while US Manufacturing is seen unchanged, but Services eking out a small gain. Germany's Ifo Business Climate is forecast to edge higher on a small improvement in Expectations, though Current Conditions are seen slipping further, while US Consumer Confidence is forecast to edge back to a very robust 133.0 after a stronger than forecast 135.1 in August, which was paced above all by a very strong (new high) Labour Differential (Jobs plentiful minus hard to get).
In terms of hard data releases, the US dominates and looks initially to both FHFA (exp. 0.3% m/m) and CaseShiller (exp. 0.1% m/m) house price measures, which would see y/y rates continue to edge lower. However with sales picking up, and both inventories and mortgage rates low, the trend is likely to reverse higher in coming months. After unexpected falls in July, both New (exp. 3.3% m/m vs. prior -12.8%) and Pending Home Sales (exp. 1.0% vs. -2.5%) are seen rebounding, with the reported sharp rise in Existing sales suggesting some upside risks, or upward revisions. Q2 final GDP is now very historical, and in any case projected to be unrevised at 2.0% SAAR, with last week seeing a sharp jump in the NY Fed GDP Nowcast 's estimates for Q3 and Q4 GDP by 0.7 and 0.9 ppt to 2.2% and 2.0%, which would continue to argue against (though far from exclude) further Fed rate cuts. The Goods Trade Balance is seen edging wider to $-73.4 Bln from July's $72.3 Bln, implying Net Exports will be broadly neutral in terms of contribution to Q3 GDP (given a Q2 average Goods Trade deficit of $-73.3 Bln), though anecdotal evidence suggest that primary resource (energy/metals) exports should post a strong again, while imports appear likely to have fallen, and as such the risk for a narrower deficit. But it is the Durable Goods and Personal Income/PCE reports which may well garner most attention, with Durables taking a headline hit from aircraft (unsurprisingly weak Boeing Orders) at -1.2% m/m, with ex-Transport seen up 0.3% and Non-defence Capital Goods ex-Aircraft Orders up 0.2%, though the steep fall in the ISM New Orders index to 47.2 implies considerable downside risks on the core components. Another solid increase in Average Hourly Earnings and a solid, though slower gain in Retail Sales predicate forecasts for 0.4% and 0.3% m/m respectively, but market attention will be on the core PCE Deflator, following higher then expected core CPI, with a gain of 0.2% m/m expected which would push the y/y rate up to 1.8% from 1.6%, and per se getting ever closer to the Fed's 2.0% target. On balance, such outcomes would continue to vindicate the Fed's caution in cutting rates further.
Elsewhere September Tokyo CPI is forecast to edge down by 0.1 pt on all measures (headline 0.5%, core 0.6%), and French HICP to be unchanged at 1.3% y/y, underling that both the BoJ and ECB remain a distance from their inflation targets. In the UK, following from a smaller than seasonally usual £1.97 Bln surplus, the PSNB is expected to post a £6.65 Bln deficit, sharply wider than August 2018's £-2.87 Bln, as weak revenue growth and rising expenditure (July 4.2% y/y) take their toll. Inflation data from Mexico (exp. 3.05% y/y) and Brazil (exp. 3.21%) are seen little changed from August, giving scope for further cuts in rates, though much will depend on the respective FX performance.
- On the central bank front, a plethora of Fed speakers (no fewer than nine) will underline the deep divisions on the appropriate level for US rates, and sustain the current lack of guidance and rather fluid outlook. Draghi's regular testimony to the European Parliament will garner plenty of attention, with the ECB's equally deep divisions over the recent easing package in plain sight, while the BoJ speakers will doubtless continue to underline an increased willingness to ease policy, though without offering concrete indications of what may or may not materialize in October. Elsewhere, New Zealand's RBNZ is seen holding rates at 1.0%, having clearly signalled that it wanted to see how its aggressive 50 bps cut in August plays out, with little pressure on it, given that Q2 GDP did not slow as much as had been expected, though markets continue to discount a further 25 bps rate cut in November, and as much as 50 bps more in 2020. in the EM space, further 25 bps rate cuts are expected in Mexico (7.75%) and the Philippines (4.0%), while continued sharp falls in inflation, a strong EGP and rising FX reserves are expected to see Egypt's central bank cut rates by 150 bps (Lending 13.75%, Depo 12.75%), though the focus there is increasingly on rising political protests. Policy meetings in Hungary, Angola, Kenya and Thailand are expected to see rates left on hold, though the very weak Thai trade data could perhaps prompt the BoT to cut again.
- Politically, the Chinese delegations early departure from last week's 'sherpa' talks ahead of the higher level talks in early October suggests little progress was made, even if both sides were keen to describe last week talks as constructive and productive, and amid the temporary exemptions to tariffs announced (even if this looks to be a case of attempting to ease pass through price pressures to US consumers). The fact that Trump continues to opine that he does "need a trade deal with Chine before next year's elections" and that he is only interest in a comprehensive and 'better', not a partial deal, while China continues to stress the need for any deal to be fair, and also see tariffs rolled back, underlines the divide between the two sides remains very large. But at least they continue to talk, and the use of more militaristic language has been toned down for the time being. On the UK/Brexit front, the Supreme Court ruling on the prorogation of parliament is due early in the week, though even if it is deemed unlawful, all the indications are that Johnson & CO will apparently either ignore the ruling, look for some other loophole, or opt for another prorogation - whatever the outcome, the constitutional crisis remains staggering, above all in a so-called highly developed democracy. Johnson scheduled to meet with EU's Tusk on Monday on the sidelines of the UN General Assembly, while talks with the EU will continue. All the evidence suggests no progress has been made, with the UK outline of proposals to discuss how the Irish border backstop might be changed continuing to fail to meet the EU requirement that they respect the integrity of the Single Market, and adhere to the terms of the Good Friday Agreement. As for the situation in the Middle East, the primary risk remains the same that with the level of brinkmanship at stratospheric levels, a precipitate action by either side could easily escalate into full-scale conflict in next to no time.
Main Economic Data & Events - 23 to 27 September 2019
* Sunday, 22 September
== EVENTS ==
U.S.A. ----- Trump joins Indian PM Modi at “Howdy, Modi” a gathering of Indian Americans
* Monday, 23 September
# HOLIDAYS: Bulgaria - Independence Day; Japan - Autumn Equinox; Saudi Arabia - National Day
# ECONOMY: Eurozone, USA & Australia - 'Flash' Manufacturing & Services PMI (Sep); Singapore - CPI (Aug); U.K. - CBI Industrial Trends (Sep); Brazil - Current Account (Aug); Mexico - Retail Sales (Jul); Canada - Wholesale Sales (Jul); Colombia - Monthly GDP (Jul)
# EARNINGS: ASA International (Q2) • Directa Plus (H1) • Keystone Law (H1) • Miton Group (H1) • Solutions 30 SE (H1) • Tiziana Life Sciences (H1) • Xpediator (H1) // Ascena Retail (Q4) • Carnival Corp (Q3)
== EVENTS ==
Switzerland 08:00 KOF Institute Autumn Economic Forecasts
Kenya ----- CBK rate decision - No change 9.0%
U.K. ----- UK Supreme Court ruling on prorogation due 'early' this week
Germany ----- BoE's Tenreyro speaks in Frankfurt
Eurozone ----- Draghi testifies at European Parliament
U.S.A. ----- UK PM Johnson meets with Eu's Tusk on sidelines of UN General Assembly 14:50 NY Fed's Williams introductory speech at 2019 U.S. Treasury Market Conference
18:00 St. Louis Fed's Bullard speaks on U.S. economy and monetary policy
19:30 SF Fed's Daly speaks on "Supporting Economic Opportunity
in America's Urban and Rural Communities"
----- UN Climate Action Summit
Colombia ----- BanColombia rate decision - No change 4.25%
Peru ----- CBRP rate decision - No change 4.25%
* Tuesday, 24 September
# HOLIDAYS: Namibia, South Africa - Heritage Day; ; Saudi Arabia - National Day
# ECONOMY: Japan - 'Flash' Manufacturing & Services PMI (Sep); Thailand - Manufacturing Output (Aug); France - Business Confidence (Sep); Germany - Ifo Business Climate (Sep); U.K.- PSNB (Aug); Mexico - Mid-momth CPI (Sep); Brazil - IBGE Inflation IPCA-15 (Sep); U.S.A. - Philly Fed Non-manufacturing survey (Sep), FHFA and S&P Case Shiller House Prices (Jul), Richmond Fed Manufacturing & Services surveys (Sep), Consumer Confidence (Sep); New Zealand - Trade Balance (Aug)
# EARNINGS: AA (H1) • AG Barr (H1 0.09) • Alliance Pharma (H1) • Animalcare Group (Q2) • Arc Minerals (Yr) • Borders & Southern Petroleum (H1) • Brand Architekts (Yr) • Card Factory (H1) • Close Brothers (Yr 1.34) • DP Poland (H1) • Eddie Stobart Logistics (H1) • Flowtech Fluidpower (H1) • Hotel Chocolat (Yr 0.10) • IHS Markit (Q3 0.63) • M&C Saatchi (H1) • Manchester United (Q4 -0.12) • Mortgage Advice Bureau (H1 0.12) • Motif Bio (H1) • Next Fifteen Communications (H1) • Orpea (H1) • Parques Reunidos Servicios (Q2) • Plant Health Care (H1) • Serica Energy (H1 0.22) • Sumo Group (H1) • TEN Entertainment (H1) • Time out Group (H1) • Union Jack Oil (H1) // AutoZone (Q4) • CarMax (Q2 $1.33) • Cintas (Q1 $2.15) • Nike (Q1 $0.70)
== EVENTS ==
Japan 06:35 BoJ's Kuroda speaks and holds press conference
Australia 10:55 RBA's Lowe speask at Armidale Business Chamber Dinner
Morocco ----- Bank Al-Maghrib rate decision - no change 2.25%
Slovakia ----- ECB's Kazimir holds a news conference
France ----- ECB's Villeroy de Galhau speaks
Brazil 12:00 BCB COPOM September policy meeting minutes
Spain 12:30 Bank of Spain Economic Forecast update
Hungary 13:00 MNB rate decision - No change 0.90% repo or -0.05%
Overnight Deposit Rate
Germany 13:00 ECB's de Guindos spekas at ECB Money Market Contact
U.S.A. ----- Trump & Macron speak at UN General Assembly
* Wednesday, 25 September
# ECONOMY: Japan - Services PPI (Aug); Australia - Skilled Vacancies (Aug); Malasyai - CPI (Aug); Germany - GfK Consumer Confidence (Oct); France - Consumer Confidence (Sep); U.S.A. - New Home Sales (Aug); Mexico - Unemployment Rate (Aug)
# EARNINGS: • 1pm (Yr 0.07) • Alpha FX (H1) • Boohoo (H1 0.03) • Echo Energy (H1) • Endava (Q4) • Equals Group (H1) • Ergomed (H1) • Goals Soccer Centres (H1) • President Energy (H1) • PRS REIT (H1) • RBG Holdings (H1) • Rothesay Life (H1) • WANdisco (H1)
Japan 00:50 BoJ July 29/30 policy meeting minutes
02:30 BoJ's Masai speaks at a meeting with business
leaders in Mie
New Zealand 03:00 RBNZ rate decision - no change 1.0%
Thailand 08:05 BoT rate decision - no change 1.50%
Croatia 09:00 HNB govenor Svaljek and gov minister talk to business
about 2020 priorities of economic and monetary policy
U.K. 11:00 ECB's Lautenschlager in a Big Issue Debate on
Cybersecurity at Sibos
Czech Rep. 12:00 CNB rate decision - no change 2.00%
U.S.A. 13:00 Chicago Fed's Evans speaks on the economy and policy
----- Bloomberg Global Business Forum - speakers includes
BoE's Carney, former US presidents Bush & Clinton,
JPM CEO Dimon & NZ PM Ardern Netherlands 14:00 CPB Releases World Trade Monitor
Sweden 14:10 Riksbank's Floden to discuss Riksbank's contingency
planning at the GRC Conference 2019
Germany 15:00 ECB's Coeure speaks at public hearing of the Digital
Agenda Committee of Bundestag
Guatemala ----- BdG rate decision - no change 2.75%
* Thursday, 26 September
# ECONOMY: Singapore - Industrial Production (Aug); Sweden - Consumer & Manufacturing Confidence (Sep), Trade Balance & PPI (Aug); Hong Kong - Trade Balance (Aug); South Africa - PPI (Aug); Mexico - GDP (July); U.S.A. - GDP (Q2 final), Advance Goods Trade Balance (Aug), Pending Home Sales (Aug), KC Fed Manufacturing Activity (Sep); Argentina - GDP (July)
Nitori Holdings (Q1) • Aberdeen Standard European Logistics Income (H1) • Accenture (Q4 1.71) • Adriatic Metals (Yr) • Alfa Financial Software (H1) • Allied Minds (H1) • BlueJay Mining (H1) • Chapel Down (H1) • Circassia Pharmaceuticals (H1) • DFS Furniture (Yr 0.19) • Eve Sleep (H1) • Hella GmbH (Q1) • Independent Oil & Gas (H1) • Jersey Oil & Gas (H1 -0.03) • Phoenix Spree Deutschland (H1) • Reabold Resources (H1) • Rockrose Energy (H1) • Sativa Investments (H1) • Xaar (H1) // Carnival (Q3 $2.53) • Conagra Brands (Q1 $0.39) • FactSet Research Systems (Q4 $2.46) • Fred's Inc (Q2) • Micron Technology (Q4 $0.45) • Rite Aid (Q2 $0.02) • Vail Resorts (Q4 $-2.54)
U.S.A. 00:00 Dallas Fed's Kaplan participates in moderated Q&A
at Dallas Business Club Fall Economic Update
Fiji ----- RBF rate decision - no change 0.50%
Philippines 09:00 BSP rate decision - 25 bps cut to 4.0% O/N Borrowing
and 3.50% O/N Depo rates
Eurozone 09:00 ECB Economic Bulletin
Egypt ----- CBE rate decision - 150 bps rate cut to 12.75% Depo
and 13.75% Lending rates
Germany 14:30 ECB's de Cos, de Guindos and Knot speak at a
Germany 14:30 ECB's Draghi & Enria speak at a conference
U.S.A. 14:30 Dallas Fed's Kaplan ives opening remarks at "Forging
a New Path in North American Trade and Immigration"
15:00 St. Louis Fed's Bullard gives welcome remarks at
"Banking and the Economy: A Forum for Minorities in
16:45 SF Fed's gives welcome remarks at a "Fed Listens"
19:00 Minneapolis Fed's Kashkari holds a town hall event
21:30 Richmond Fed's Barkin speaks at at Financial Markets
Brazil 15:00 BCB Q3 Inflation Report
Mexico 19:00 Banxico rate decision - 25 bps rate cut to 7.75%
* Friday, 27 September
# ECONOMY: U.K. - GfK Consumer Confidence (Sep); Japan - Tokyo CPI (Sep); China - Industrial Profits (Aug); France - CPI (Sep prov.), Consumer Spending (Aug); Spain - Retail Sales (Aug); Italy - - Consumer & Manufacturing Confidence (Sep), PPI (Aug); Eurozone - EC Confidence surevys (Sep); U.S.A. - Personal Income / PCE (Aug), Durable Goods Orders (Aug)
# EARNINGS: Sugi Holdings (Q1) // Active Energy (H1) • Advanced Oncotherapy (H1) • Akari Therapeutics (Q2 -0.14) • Anglo African Oil & Gas (H1) • Avanti Communications (Yr) • Cadence Minerals (H1) • CVS Group (Yr 0.47) • Hawkwing (H1) • I3 Energy (H1) • MAM Software (Q4 0.06) • Savannah Petroleum (H1) • Victoria Oil & Gas (H1) • Zegona Communications (H1)
U.K. 08:00 BoE's Saunders speaks at a briefing hosted by Barnsley
& Rotherham Chamber of Commerce & Institute of
Germany 08:15 ECB's de Guindos and Knot speak at conference
Angola ----- BNA rate decision - no change 15.50%
Zambia 13:30 Finance Minister Ng'andu presents 2020 national
U.S.A. 13:30 Fed's Quarles speaks on "Macroprudential Regulation"
17:00 Philadelphia Fed's Harker speaks on the economic
outlook at Shadow Open Market Committee Fall Meeting
Peru ----- BCRP Inflation Report
GOVERNMENT BONDS ........................................................
* SOVEREIGN RATINGS UPDATES:
Poland, Serbia (Fitch); Ethiopia, Saudi Arabia & Ukraine (S&P); Israel, Slovakia (Moody’s)
U.S.A. USD 113.0 Bln 2, 5 & 7-yr & USD 18.0 Bln 2-yr FRN
USD 172 Bln T-bills (1, 2, 3 & 6-mth)
Belgium EUR 2.30-2.8 Bln total 7, 10 & 19-yr OLOs
Germany EUR 5.0 Bln 2-yr Schatz & EUR 3.0 Bln 10-yr Bund
Italy EUR 6.5 Bln (estimate) 5 & 10-yr BTPs
Japan JPY 2.1 Trln 2-yr & JPY 400 Bln 40-yr JGBs
Canada CAD 2.4 Bln 2-yr GoC
Global Strategist & Chief Economist
ADM Investor Services International Limited A Subsidiary of Archer Daniels Midland Company 4th Floor, Millennium Bridge House
2 Lambeth Hill, London EC4V 3TT
t +44 20 7716 8534 / m +44 7775 850465
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI. © 2019 ADM Investor Services International Limited.
+44 20 7716 8000
Contact Us Today
Download our brochure and learn about everything ADMISI has to offer.
© 2020 ADM Investor Service International Limited
ADMISI is a wholly owned subsidiary of Archer Daniels Midland (UK) Limited and indirectly is a wholly owned subsidiary of the Archer Daniels Midland Company (ADM).
ADM Investor Services International Limited is authorised and regulated by the Financial Conduct Authority and a member of the London Stock Exchange.