Daily Stock Market News

1. bigbear0083 — Today at 7:37 AM
   https://nitter.it/DeItaone/status/1681209944811487239#m
   *Walter Bloomberg (@DeItaone)
   ECB'S KNOT: WE'LL NEED TO HIKE IN JULY ECB'S KNOT: OPTIMISTIC TO SEE INFLATION HITTING 2% IN 2024
2. [7:37 AM]
   https://nitter.it/DeItaone/status/1681210035672604673#m
   *Walter Bloomberg (@DeItaone)
   ECB'S KNOT: HIKES BEYOND JULY POSSIBLE, NOT CERTAIN
3. [7:37 AM]
   https://nitter.it/DeItaone/status/1681212086578184192#m
   *Walter Bloomberg (@DeItaone)
   FRANCE TO RAISE REGULATED ELECTRICITY PRICES 10% IN AUG: ECHOS
4. [7:37 AM]
   https://nitter.it/DeItaone/status/1681222910000676865#m
   *Walter Bloomberg (@DeItaone)
   AT&T SHARES UP 1.1% PREMARKET AFTER ENDING PRIOR SESSION AT THREE-DECADE LOW $T
5. [7:37 AM]
   https://nitter.it/DeItaone/status/1681227469637001216#m
   *Walter Bloomberg (@DeItaone)
   MORGAN STANLEY SHARES UP 1.2% PREMARKET AHEAD OF Q2 RESULTS $MS
6. [7:37 AM]
   https://nitter.it/DeItaone/status/1681229509574500352#m
   *Walter Bloomberg (@DeItaone)
   Samsung, the world’s largest memory chipmaker, will likely make Tesla Inc.’s next-generation Full Self-Driving (FSD) chips to be used in the top US electric carmaker’s Level-5 autonomous driving vehicles https://www.kedglobal.com/korean-chipmakers/newsView/ked202307180017 $TSLA
   
7. [7:37 AM]
   https://nitter.it/DeItaone/status/1681229754672857088#m
   *Walter Bloomberg (@DeItaone)
   RUSSIA'S DEFENCE MINISTRY: RUSSIA CARRIED OUT 'REVENGE STRIKES' ON UKRAINIAN PORTS OF ODESA AND MYLOLAYIV, ALL TARGETS HIT - IFAX
8. [7:38 AM]
   https://nitter.it/DeItaone/status/1681231048586280963#m
   *Walter Bloomberg (@DeItaone)
   DEUTSCHE BANK DRAWS FRESH ECB SCRUTINY OVER FX SWAP SALES
9. [7:38 AM]
   https://nitter.it/DeItaone/status/1681244681408069632#m
   *Walter Bloomberg (@DeItaone)
   U.S. NATIONAL CROSSES MILITARY DEMARCATION LINE INTO N. KOREA -YONHAP
10. [7:38 AM]
    https://nitter.it/DeItaone/status/1681248219697643520#m
    *Walter Bloomberg (@DeItaone)
    $AMD: BofA Securities cuts price target to $130 from $135
11. [7:38 AM]
    https://nitter.it/DeItaone/status/1681248863775080448#m
    *Walter Bloomberg (@DeItaone)
    $NVDA: BofA Securities raises price target to $550 from $500
12. [7:38 AM]
    https://nitter.it/DeItaone/status/1681249135658258435#m
    *Walter Bloomberg (@DeItaone)
    BANK OF AMERICA JULY FUND MANAGER SURVEY: SENTIMENT REMAINS BEARISH
13. [7:38 AM]
    https://nitter.it/DeItaone/status/1681249304818720768#m
    *Walter Bloomberg (@DeItaone)
    BOFA FMS: 'LONG BIG TECH' MOST CROWDED TRADE, THEN 'LONG JAPAN'
14. [7:38 AM]
    https://nitter.it/DeItaone/status/1681250432599879683#m
    *Walter Bloomberg (@DeItaone)
    YELLEN SAYS `INTENSITY’ OF US HIRING DEMANDS `HAS SUBSIDED’
15. [7:38 AM]
    https://nitter.it/DeItaone/status/1681250790478839808#m
    *Walter Bloomberg (@DeItaone)
    YELLEN SAYS EVERY REASON TO SEE HOUSING INFLATION IMPULSE DROPPING
16. [7:38 AM]
    https://nitter.it/DeItaone/status/1681250807344242688#m
    *Walter Bloomberg (@DeItaone)
    YELLEN SAYS DON’T MAKE TOO MUCH OF JUNE CPI REPORT
17. [7:38 AM]
    https://nitter.it/DeItaone/status/1681253811224997890#m
    *Walter Bloomberg (@DeItaone)
    BANK OF AMERICA SHARES UP 1% PREMARKET AFTER Q2 RESULTS $BAC
18. [7:39 AM]
    https://nitter.it/DeItaone/status/1681253822692302848#m
    *Walter Bloomberg (@DeItaone)
    BOFA CEO MOYNIHAN: CONTINUE TO SEE A HEALTHY US ECONOMY
19. [7:39 AM]
    https://nitter.it/DeItaone/status/1681260324312186881#m
    *Walter Bloomberg (@DeItaone)
    Upgrades $AIRC: BMO Capital Upgrades to Outperform from Market Perform - PT $42 (from $39) $CAMT: BofA Securities Upgrades to Buy from Neutral - PT $50 (from $30) $CASY: Credit Suisse Upgrades to Outperform from Neutral - PT $285 (from $235) $CPT: BMO Capital Upgrades to Outperform from Market Perform - PT $126 (from $125) $PINS: Evercore ISI Upgrades to Outperform from In Line - PT $41 (from $30) $UNH: Bernstein Upgrades to Outperform from Market Perform - PT $603 (from $595)
20. [7:39 AM]
    https://nitter.it/DeItaone/status/1681260604676243456#m
    *Walter Bloomberg (@DeItaone)
    Downgrades $ATVI: Atlantic Equities Downgrades to Neutral from Overweight - PT $95 $ATVI: Baird Downgrades to Neutral from Outperform - PT $90 $ATVI: Wells Fargo Downgrades to Equal Weight from Overweight - PT $95 $BBIO: Jefferies Downgrades to Hold from Buy - PT $33 (from $24) $CE: Deutsche Bank Downgrades to Hold from Buy - PT $125 (from $120) $COHR: BofA Securities Downgrades to Neutral from Buy - PT $55 $COMM: Deutsche Bank Downgrades to Hold from Buy - PT $6 (from $8) $CWH: Raymond James Downgrades to Market Perform from Outperform $CYRX: UBS Downgrades to Neutral from Buy - PT $17 (from $28) $ESAB: JPMorgan Downgrades to Neutral from Overweight - PT $74 (from $70) $ESS: Stifel Downgrades to Hold from Buy - PT $120 (from $205) $G: Citi Downgrades to Neutral from Buy - PT $42 (from $46) $HZO: Raymond James Downgrades to Market Perform from Outperform $IRT: BMO Capital Downgrades to Market Perform from Outperform - PT $19 $LESL: Loop Capital Downgrades to Hold from Buy - PT $16 (from $16) $LITE: BofA Securities Downgrades to Underperform from Neutral - PT $50 $LPX: TD Securities Downgrades to Hold from Buy $MASI: Stifel Downgrades to Hold from Buy - PT $120 (from $205) $MTSI: BofA Securities Downgrades to Neutral from Buy - PT $72 $NCLH: Truist Securities Downgrades to Hold from Buy - PT $23 (from $17) $ONEW: Raymond James Downgrades to Market Perform from Outperform $PII: Raymond James Downgrades to Market Perform from Strong Buy $PRDS: JMP Securities Downgrades to Market Perform from Market Outperform - PT $2.02 (from $2.19) $SHOP: Evercore ISI Downgrades to In Line from Outperform - PT $69 $TTD: New Street Research Downgrades to Sell from Neutral - PT $69 (from $57)
21. [7:39 AM]
    https://nitter.it/DeItaone/status/1681260935569129472#m
    *Walter Bloomberg (@DeItaone)
    Coverage Initiated $AVDX: Susquehanna initiates at Positive - PT $15 $BJRI: Piper Sandler initiates at Neutral - PT $35 $BLMN: Piper Sandler initiates at Neutral - PT $28 $CABA: Guggenheim initiates at Buy - PT $34 $CAKE: Piper Sandler initiates at Neutral - PT $36 $CBRL: Piper Sandler initiates at Neutral - PT $96 $CDW: Barclays initiates at Equalweight - PT $198 $CHUY: Piper Sandler initiates at Neutral - PT $43 $COMP: BTIG initiates at Buy - PT $5 $DENN: Piper Sandler initiates at Neutral - PT $12 $DIN: Piper Sandler initiates at Neutral - PT $63 $DOUG: BTIG initiates at Neutral $DRI: Piper Sandler initiates at Neutral - PT $167 $EAT: Piper Sandler initiates at Neutral - PT $40 $EXPI: BTIG initiates at Sell - PT $14 $FAF: BTIG initiates at Neutral $FDS: Autonomous Research initiates at Outperform - PT $475 $FHN: Baird initiates at Neutral - PT $14 $FNF: BTIG initiates at Buy - PT $47 $FWRG: Piper Sandler initiates at Overweight - PT $22 $GAMB: B.Riley initiates at Buy - PT $14 $HOUS: BTIG initiates at Neutral $INTS: Benchmark initiates at Speculative Buy - PT $12 $MLCO: Macquarie initiates at Outperform - PT $16.30 $MSCI: Autonomous Research initiates at Outperform - PT $575 $PLAY: Piper Sandler initiates at Overweight - PT $56 $RMAX: BTIG initiates at Neutral $TARS: William Blair initiates at Outperform $TTD: Redburn initiates at Sell - PT $34 $TXRH: Piper Sandler initiates at Overweight - PT $126
22. [7:39 AM]
    https://nitter.it/DeItaone/status/1681262534454566912#m
    *Walter Bloomberg (@DeItaone)
    RUSSIAN FOREIGN MINISTRY SAYS LAVROV DISCUSSED WAYS OF EXPORTING GRAIN WITH TURKISH COUNTERPART - RIA
23. 
    bigbear0083 — Today at 8:33 AM
    https://nitter.it/DeItaone/status/1681273240470077440#m
    *Walter Bloomberg (@DeItaone)
    STELLANTIS SEES SEVERE RISK OF FUTURE CHIP SHORTAGES
24. [8:33 AM]
    https://nitter.it/DeItaone/status/1681273712195018752#m
    *Walter Bloomberg (@DeItaone)
    NVIDIA NEARS DEAL WITH CLOUD PROVIDER LAMBDA LABS: INFORMATION $NVDA
25. [8:33 AM]
    https://nitter.it/DeItaone/status/1681275289484009473#m
    *Walter Bloomberg (@DeItaone)
    $NFLX: Benchmark raises price target to $293 from $250
26. [8:33 AM]
    https://nitter.it/DeItaone/status/1681276532625375233#m
    *Walter Bloomberg (@DeItaone)
    ?U.S. June Retail Sales Due 8:30 a.m. ET; Seen +0.5% ?U.S. June Retail Sales Ex-Autos Due 8:30 a.m. ET; Seen +0.3%
27. [8:33 AM]
    https://nitter.it/DeItaone/status/1681276723789193217#m
    *Walter Bloomberg (@DeItaone)
    BANK OF AMERICA SLIPS 0.4%, ERASING EARLIER GAIN AFTER RESULTS $BAC
28. [8:33 AM]
    https://nitter.it/DeItaone/status/1681277183828934656#m
    *Walter Bloomberg (@DeItaone)
    $AAPL: Jefferies raises price target to $225 from $210
29. [8:34 AM]
    https://nitter.it/DeItaone/status/1681279604168830982#m
    *Walter Bloomberg (@DeItaone)
    Resumed Federal Student Loan Payments to Weigh on Retailers: Stifel The resumption of federal student loan payments will likely weigh on consumer spending in retail, according to a survey by analysts at Stifel. The analysts say in a research note that 20% of respondents had outstanding federal loans, and that resuming payments will likely dampen retail sales ahead of the back-to-school shopping season. The analysts view Target and Ulta as most impacted because of their exposure to discretionary categories $TGT $ULTA
30. [8:34 AM]
    https://nitter.it/DeItaone/status/1681280297797550081#m
    *Walter Bloomberg (@DeItaone)
    U.S RETAIL SALES (MOM) (JUN) ACTUAL: 0.2% VS 0.3% PREVIOUS; EST 0.5%
31. [8:34 AM]
    https://nitter.it/DeItaone/status/1681280452357750784#m
    *Walter Bloomberg (@DeItaone)
    U.S CORE RETAIL SALES (MOM) (JUN) ACTUAL: 0.2% VS 0.1% PREVIOUS; EST 0.3%
32. 
    bigbear0083 — Today at 1:19 PM
    https://nitter.it/DeItaone/status/1681285948804300802#m
    *Walter Bloomberg (@DeItaone)
    TRADERS FULLY PRICE A FED QUARTER-POINT RATE HIKE NEXT WEEK
33. [1:19 PM]
    https://nitter.it/DeItaone/status/1681285966122590208#m
    *Walter Bloomberg (@DeItaone)
    S&P 500, NASDAQ 100 INDEX FUTURES EXTEND PREMARKET DECLINES
34. [1:19 PM]
    https://nitter.it/DeItaone/status/1681287171330670599#m
    *Walter Bloomberg (@DeItaone)
    CHARLES SCHWAB SEES 2023 REVENUE TO DECLINE BY 7%–8% Y/Y $SCHW
35. [1:19 PM]
    https://nitter.it/DeItaone/status/1681290677773017088#m
    *Walter Bloomberg (@DeItaone)
    U.S. June Industrial Production Due 9:15 a.m. ET; Seen Flat U.S. June Capacity Use Due 9:15 a.m. ET; Seen 79.5%
36. [1:19 PM]
    https://nitter.it/DeItaone/status/1681291715632676864#m
    *Walter Bloomberg (@DeItaone)
    US Jun Industrial Production -0.5%; Consensus 0.0% US Jun Capacity Util -0.5-Pt At 78.9%; Consensus 79.5%
37. [1:19 PM]
    https://nitter.it/DeItaone/status/1681295742357340160#m
    *Walter Bloomberg (@DeItaone)
    S&P 500 FALLS 0.1% AT THE OPEN; NASDAQ 100 DROPS 0.3%
38. [1:19 PM]
    https://nitter.it/DeItaone/status/1681298267458641920#m
    *Walter Bloomberg (@DeItaone)
    Fewer Homes Changing Hands in the US, Redfin says Just 1% of US homes have changed hands this year, Redfin says, the lowest share in at least 10 years. Roughly 14 of every 1,000 US homes changed hands during the first six months of 2023, down from 19 of every 1,000 during the same period of 2019. In 2018, Freddie Mac estimated that about 2.5 million more homes needed to be built to meet demand, with the shortfall mainly due to a lack of construction of single-family homes. The homebuying boom of late 2020 and 2021, driven by record-low mortgage rates, remote work and a surge in investor purchases, depleted already low inventory levels. Finally, 2022's soaring mortgage rates exacerbated the shortage by handcuffing homeowners to their comparatively low rates.
39. [1:19 PM]
    https://nitter.it/DeItaone/status/1681300618147958785#m
    *Walter Bloomberg (@DeItaone)
    MORGAN STANLEY CFO: FOR THE FIRST TIME SINCE THE BEGINNING OF THE YEAR, JUNE SAW POSITIVE MONTHLY FLOWS INTO EQUITY MARKETS
40. [1:19 PM]
    https://nitter.it/DeItaone/status/1681302898008023041#m
    *Walter Bloomberg (@DeItaone)
    US NAHB Jul Housing Index 56 Vs 55 In Jun
41. [1:19 PM]
    https://nitter.it/DeItaone/status/1681302910909714433#m
    *Walter Bloomberg (@DeItaone)
    US May Business Inventories +0.2%; Expected +0.2%
42. [1:19 PM]
    https://nitter.it/DeItaone/status/1681303002894991361#m
    *Walter Bloomberg (@DeItaone)
    ECB OFFICIALS SEE COMMUNICATION AS TOUGHEST CHALLENGE IN JULY
43. [1:19 PM]
    https://nitter.it/DeItaone/status/1681303041788755970#m
    *Walter Bloomberg (@DeItaone)
    GERMAN BONDS EXTEND GAINS; 10-YEAR YIELD FALLS 10BPS TO 2.38%
44. [1:19 PM]
    https://nitter.it/DeItaone/status/1681303425450119178#m
    *Walter Bloomberg (@DeItaone)
    Warner Music, TikTok Announce Licensing Partnership $WMG
45. [1:19 PM]
    https://nitter.it/DeItaone/status/1681303905253351426#m
    *Walter Bloomberg (@DeItaone)
    US TO ANNOUNCE $1.3 BLN IN MILITARY AID FOR UKRAINE
46. [1:20 PM]
    https://nitter.it/DeItaone/status/1681306142457335809#m
    *Walter Bloomberg (@DeItaone)
    S&P 500 BANKS INDEX HITS OVER FOUR-MONTH HIGH, UP 1.5%
47. [1:20 PM]
    https://nitter.it/DeItaone/status/1681314349313593344#m
    *Walter Bloomberg (@DeItaone)
    Taco John's, Taco Bell End 'Taco Tuesday' Trademark Fight -- WSJ Taco John's Gives Up on Defending 'Taco Tuesday' Trademark -- WSJ Taco John's Has Owned the 'Taco Tuesday' Trademark Since 1989 in Every State but New Jersey -- WSJ $YUM
48. [1:20 PM]
    https://nitter.it/DeItaone/status/1681316999195140097#m
    *Walter Bloomberg (@DeItaone)
    MORGAN STANLEY'S GORMAN SAYS IT'S HARD TO ARGUE FOR MORE RATE INCREASES
49. [1:20 PM]
    https://nitter.it/DeItaone/status/1681317183383814146#m
    *Walter Bloomberg (@DeItaone)
    MORGAN STANLEY'S GORMAN SAYS RATE CUTS WONT HAPPEN THIS YEAR
50. [1:20 PM]
    https://nitter.it/DeItaone/status/1681318013981835270#m
    *Walter Bloomberg (@DeItaone)
    MORGAN STANLEY'S GORMAN SAYS A RECESSION IS LESS LIKELY
51. [1:20 PM]
    https://nitter.it/DeItaone/status/1681324238874062848#m
    *Walter Bloomberg (@DeItaone)
    RUSSIA SUSPENDED NAVIGATION VIA KERCH STRAIT FROM JULY 16 - TWO SOURCES
52. [1:20 PM]
    https://nitter.it/DeItaone/status/1681325403531616256#m
    *Walter Bloomberg (@DeItaone)
    Bonds Have Potential for Equity-Like Returns With Less Risk, Says Pimco The bond market offers investors the potential for equity-like returns with less volatility compared to the stock market and also resilience in the face of a likely recession, Richard Clarida, global economic advisor, and Dan Ivascyn, group chief investment officer at Pimco say in a note. "The bond market's massive repricing may allow investors to earn the highest real yields in 12 years without taking uncomfortable risk," Ivascyn says. Pimco is focusing on "high quality, less economically sensitive areas of the market" for now and could move into riskier areas over the next few years. They expect policy tightening and bank challenges will impact markets more directly over the next few quarters.
53. [1:20 PM]
    https://nitter.it/DeItaone/status/1681326361091112961#m
    *Walter Bloomberg (@DeItaone)
    MICROSOFT TO CHARGE BUSINESSES $30 PER USER PER MONTH FOR MICROSOFT 365 COPILOT - PRESS RELEASE $MSFT
54. [1:20 PM]
    https://nitter.it/DeItaone/status/1681326938089050115#m
    *Walter Bloomberg (@DeItaone)
    Microsoft to charge premium for generative AI features https://www.ft.com/content/a0bc149f-404b-45c3-836c-2297035526c9
    
55. [1:20 PM]
    https://nitter.it/DeItaone/status/1681330539314249728#m
    *Walter Bloomberg (@DeItaone)
    MICROSOFT, META EXPAND AI PARTNERSHIP WITH LLAMA 2
56. [1:20 PM]
    https://nitter.it/DeItaone/status/1681330697741516803#m
    *Walter Bloomberg (@DeItaone)
    Meta Platforms, Microsoft Team Up to Distribute New AI Software for Commercial Use --WSJ Updated Version of Meta AI Language Model Will Be Free --WSJ Microsoft to Charge $30 a Month for Access to AI-Powered Assistant for Office Workplace Software --WSJ
57. [1:20 PM]
    https://nitter.it/DeItaone/status/1681341269467971595#m
    *Walter Bloomberg (@DeItaone)
    Most Britons Would Now Vote To Rejoin EU A majority of Britons believe the U.K.'s EU exit was a mistake and would vote to re-join the bloc in another referendum, a survey shows. Some 51% of Britons would now vote to re-join the EU versus 32% who would back staying out, giving a headline vote figure of 61%-39% and the highest level of support for re-joining to date, according to the YouGov poll of 2,151 adults. "This is a substantial change from early 2021, at which point Britons were divided 40% against joining the EU and 42% in favor," YouGov says. Meanwhile, 57% of Britons say the country was wrong to back Brexit in 2016--the highest "Bregret" figure YouGov has recorded to date--while 32% said it was the right decision
58. [1:21 PM]
    https://nitter.it/DeItaone/status/1681352823131324435#m
    *Walter Bloomberg (@DeItaone)
    94 COUNTERPARTIES TAKE $1.717T AT FED REVERSE REPO OP
59. [1:22 PM]
    https://nitter.it/DeItaone/status/1681353483000135680#m
    *Walter Bloomberg (@DeItaone)
    US SENATOR THUNE READIES AI CERTIFICATION BILL: AXIOS
60. [1:22 PM]
    https://nitter.it/DeItaone/status/1681353583470559236#m
    *Walter Bloomberg (@DeItaone)
    CITI SEES GOLD PRICES POTENTIALLY SCALING FRESH RECORDS OF $2,150 AT SOME POINT IN 1H’24
61. 
    bigbear0083-Bot4BOT — Today at 1:22 PM
    CREDIT SUISSE INCREASES S&P 500 YEAR-END 2023 TARGET TO 4,700 FROM 4,050
    
    1
62. 
    bigbear0083 — Today at 1:46 PM
    https://nitter.it/DeItaone/status/1681355568076800029#m
    *Walter Bloomberg (@DeItaone)
    BIDEN SAYS YES WHEN ASKED IF HE IS WORRIED ABOUT U.S. SOLDIER IN NORTH KOREA
63. [1:46 PM]
    https://nitter.it/DeItaone/status/1681355959988371465#m
    *Walter Bloomberg (@DeItaone)
    Walmart Has Digital Growth Win During Amazon Prime Day Event: Jefferies Walmart outpaced rivals Target and Amazon in daily active users as all three launched multi-day savings events last week. Walmart's daily active users grew 27% year-over-year during Amazon's Prime day event, compared to a 5% rise for Amazon and a 10% drop in Target's daily active users, according to analysts at Jefferies. The growing digital presence for Walmart is a good sign for 2Q revenue, and indicates the retailer is "gaining mind and wallet share," the analysts say in a research note. Walmart shares edge down 0.2% to $154.53.
64. [1:46 PM]
    https://nitter.it/DeItaone/status/1681357292724273162#m
    *Walter Bloomberg (@DeItaone)
    U.S. NATURAL GAS FUTURES EXTEND GAINS, PRICES UP BY 5%
    

Message #・news

 

whoops! that format came out kinda bad lol. think it came out that way because it was a c&p from the chatroom. will try to fix this up come next week

nevermind! fixed it

 

Markets chop as Powell avoids future rate commitments - Newsquawk US Market Wrap

WEDNESDAY, JUL 26, 2023 - 04:31 PM

• SNAPSHOT: Equities mixed, Treasuries up, Crude down, Dollar down.
• REAR VIEW: Fed hike 25bps, as expected; Powell stresses a data-dependent approach and no decision has been made about future meetings; Smaller-than-expected DoE crude draw; Soft Australian CPI; KO earnings beat & raised FY guidance; Strong GOOGL report driven by core advertising units growth; MSFT issue disappointing AI guidance.
• COMING UP: Data: German Gfk, US Durable Goods, PCE Prices Advance, IJC, GDP Advance Events: ECB Policy Announcement Speakers: ECB's Lagarde Supply: Japan, Italy & US Earnings: L'Air Liquide, BNP Paribas, Mercedes-Benz, ArcelorMittal, L'Oreal, Poste Italiane, Renault, Schneider Electric, STMicroelectronics, TotalEnergies, Volkswagen, Anglo American, Barclays, BT, Shell, McDonalds, Ford, Abbvie, Mastercard, Intel Corp.

MARKET WRAP
Stocks headed lower ahead of the Fed rate decision which saw a 25bp hike as expected with the statement a copy & paste job from June, albeit with the acknowledgement activity grew at a moderate pace (prev. modest). The statement and rate decision sparked little reaction but the press conference saw two-way movements. Markets perceived the initial half of the presser as dovish with Powell avoiding any commitment to future rate hikes and stressing a data-dependent approach, although he did note they are prepared to hike if the data deems it necessary. The SPX saw a peak of 4610 before paring with Powell repeating the June SEPs that the FOMC does not see inflation returning to the 2% target by 2025 (those forecasts incorporate one more rate hike after today, based on the dot plots in June). Stocks completely unwound their gains with the Nasdaq underperforming following MSFT earnings (disappointing AI guidance) from after hours Tuesday while the Russell 2k outperformed on a regional bank (KRE) rebound. The Dollar was ultimately lower, with the buck failing to recoup losses during Powell, as yields were also lower across the curve in a steeper fashion. Crude prices settled in the red with little influence from the FOMC, with primary price action following the smaller-than-expected draw from the DoE inventory report. Attention Thursday turns to US GDP data ahead of US PCE and ECI on Friday, alongside the resumption of Fed speak, as well as a plethora of earnings, all in the backdrop of the ECB Thursday and BoJ Friday.

CENTRAL BANKS
FOMC STATEMENT REVIEW: The Fed hike hiked its FFR by 25bps to 5.25-5.50%, as expected, with the IOR rate also hiked 25bps to 5.40%. The statement was largely a copy paste from the June FOMC with the key guidance remaining, "In determining the extent of additional policy firming that may be appropriate…". One slight adjustment was the description of economic activity, the statement said that economic activity has been expanding at a "moderate" pace vs a "modest" pace in the June statement. Elsewhere, it reiterated job gains have been robust, and the unemployment rate remains low. Crucially, the Fed retained the language that “inflation remains elevated… Committee remains highly attentive to inflation risks”, reflective of its cautiousness in overreacting to a single data print (the fall in June CPI). That sentiment chimes with WSJ's Timiraos tweet earlier, "Fed officials have probably felt burned by getting too excited by one or two months of solid inflation prints over the past two years, which is reason for them to curb their enthusiasm over the June CPI today".

POWELL PRESSER: Powell's prepared remarks were largely in fitting with prior commentary from the Fed Chair, noting that future rate decisions will be data-dependent, whilst reiterating that full effects of tightening are yet to be felt. He gave familiar commentary on the economy saying that there is still a long way to go to 2% inflation, whilst noting there are continuing signs of labour supply and demand coming into better balance. He did make a point of noting that growth in consumer spending has slowed from earlier in the year.

POWELL Q&A: In his Q&A, Powell said they hadn't made a decision to go every other meeting and haven't made any decisions about future meetings, which was received dovishly as markets look for any guidance/hints towards a September hike. Powell said the June CPI, while welcome, was only one month's report, and that the intermeeting data came in broadly in line with expectations. He leaned heavily on data dependence, saying it is possible the Fed could hike again in September if data warrants it, adding that we have eight weeks to September and looking at all the data until then. He later added that a more gradual pace does not automatically go to every other meeting, saying he thinks it makes "all the sense in the world" to slow down, caveating that the Fed is not taking moving at consecutive meetings off the table. A potentially hawkish comment was his line that stronger growth, over time, could add to inflation and may require a policy response; this could imply that above-forecast growth surprises could offset the dovish policy response from the fall in inflation. However, there was some discussion over rate cuts that caught the eye, namely, his line that if we see inflation coming down credibly, the Fed could move down to a neutral rate level and then below neutral at some point, albeit he pushed back on any rate cuts this year. On inflation, he said he needs to see inflation "durably down" and wants to see core inflation coming down, which is still pretty elevated. Powell said his base case is inflation gets to target without the worst outcome for the job market. In fact, he noted Fed staff no longer forecast a recession. Said that we have seen some labour market softening not through higher unemployment but through fewer openings and quits. And finally, ahead of the latest Employment Cost Index on Friday, Powell said he doesn't think wages were an important cause for inflation early on but will be an important part of bringing it back down from now.

ECB PREVIEW: The ECB is anticipated to raise its deposit rate by 25 basis points to 3.75%, according to market pricing and analysts' consensus. The decision will be driven by the Governing Council's concern that inflation is set to remain high for an extended period. Despite a slight cooling in headline inflation from 6.1% to 5.5%, the super-core metric has increased to 5.5% from 5.3%. With the rate hike widely expected, attention will turn to any future tightening measures from September onwards. Bloomberg reporting suggested a challenge for policymakers will be keeping options open for the September meeting, avoiding explicit signals for either another rate hike or a pause. Market pricing currently gives a 50% probability of another 25 basis points hike in September. ECB President Lagarde is expected to emphasize the Bank's reliance on data, given that July and August inflation reports and latest macro projections will be available by September. To download the full Newsquawk preview, please click here.

DATA
NEW HOME SALES: US new home sales rose by 697k in June, cooler than May's 715k (which was downwardly revised from 763k) and beneath expectations of 725k. The median sale price fell 4% Y/Y to USD 415k, while new home supply rose to 7.4mths worth vs the 7.2mths worth in May, which Pantheon Macroeconomics points out is still well beneath the cycle peak of 10.1 in July 2022, but significantly above the pre-COVID trend of c. 5.5. Pantheon expects "new home supply to remain ample, in part because of the recent rebound in housing starts". The consultancy also notes that despite the miss and fall in June, the trend in new home sales remains firmly upwards, "even as aggregate mortgage demand continues to bounce around the cycle low". PM also expects this divergence to persist for the foreseeable future because a lack of existing homes on the market continues to push buyers to new homes.

FIXED INCOME
T-NOTE (U3) FUTURES SETTLED 17 TICKS HIGHER AT 112-04+

Treasuries bull steepened in the wake of Fed Chair Powell's reluctance to affirm a September rate hike. 2s -5.8bps at 4.835%, 3s -7.1bps at 4.474%, 5s -7.3bps at 4.102%, 7s -0.1bps at 3.996%, 10s -5.1bps at 3.861%, 20s -2.8bps at 4.129%, 30s -1.9bps at 3.934%.

INFLATION BREAKEVENS: 5yr BEI -1.0bps at 2.392%, 10yr BEI -2.0bps at 2.363%, 30yr BEI -1.9bps at 2.295%.

THE DAY: T-Notes marked a thin 111-21+/111-26 range during APAC trade on Wednesday, with a fleeting bid on the back of Australian CPI hitting its slowest pace since September 2021. Some chop in the European morning saw contracts eventually stretch to new resistance at 111-29 with catalysts light ahead of FOMC, paring slightly into the NY handover.

Earnings in the US pre-market from the likes of Coca-Cola (KO), Boeing (BA), and AT&T (T) contained nothing to be alarmed by from a macro perspective. Some selling flow on the cash open for bonds in NY was absorbed fairly easily, and earlier lows were respected, with contracts reversing to print interim highs of 111-31+ shortly after. The miss and downward revisions in June new home sales data didn't make a dent, and T-Notes traded within ranges on light activity through into the FOMC.

The statement saw little reaction given it was largely a copy & paste job from June accompanied by the 25bp hike as expected. However, the press conference saw USTs rally across the curve in a steepener as Powell stressed data dependence and refused to give any firm commitments to future decisions seeing T-Notes hit a high of 112-05+ before paring on his remark the FOMC sees inflation returning to the 2% target in 2025 (in fitting with June SEPs). Once the dust settled, however, T-Notes reclaimed the 112 handle in post-settlement trade.

Events now come thick and fast into the end of the week with month-end, 7yr auction, ECB, BoJ, US GDP, ECI, Jobless Claims, and European flash inflation data all due.

STIRS:

• SR3U3 flat at 94.57, Z3 +2.5bps at 94.615, H4 +2.5bps at 94.865 M4 +4.0bps at 95.220, U4 +6.0bps at 95.615, Z4 +8.0bps at 95.960, H5 +9.5bps at 96.210, M5 +10.0bps at 96.365, U5 +10.0bps at 96.460, U6 +10.0bps at 96.670, U7 +8.0bps at 96.665.
• SOFR rises to 5.06% from 5.05% as of July 25th, volumes rise to USD 1.470tln from 1.365tln.
• NY Fed RRP op demand rises to USD 1.750tln from 1.721tln) across 96 counterparties (prev. 96); no T-bill settlements.
• US sold USD 24bln of 2yr FRNs at high discount margin of 0.125%, covered 2.58x (vs six-auction avg. 2.87x).
• EFFR flat at 5.08% as of July 25th, volumes dip further to USD 89bln from 101bln.

THIS WEEK:

• THU: ECB Announcement, US GDP Advance/PCE (Q2), Durable Goods (Jun), Jobless Claims, Pending Home Sales (Jul), KC Fed index (Jul), 7yr auction.
• FRI: BoJ Announcement & Outlook Report, French Flash CPI (Jun), Spanish Flash CPI (Jun), EZ Business Confidence Survey (Jul), US PCE (Jun), ECI (Q2), UoM survey final (Jul).

CRUDE
WTI (U3) SETTLED USD 0.85 LOWER AT 78.78/BBL; BRENT (V3) SETTLED USD 0.69 LOWER AT 82.56/BBL

The crude complex was lower on Wednesday with the downside initiated after crude inventories fell less than expected with participants also cognizant of the Fed’s 25bps rate hike, albeit there was little reaction in crude to the statement or press conference. On the weekly EIA data, Crude stocks drew 0.6mln short of the expected -2.5mln, while in-fitting with the API data on Tuesday night Gasoline (-0.786mln) also saw a shallower draw than forecasted (-1.745mln). Although, Distillates were marginally greater than forecasted, with overall crude production declining to 12.2mln (prev. 12.3mln) and refining utilisation declining -0.9% against an expected rise of 0.3%. Back to the Fed, little reaction was observed in the crude complex in wake of the 25bps hike, as expected, with the statement largely a copy and paste job. Elsewhere, Russia oil exports are expected to rise in September amid refinery maintenance after cuts in June-August, according to Reuters citing sources. Looking ahead, there is a slew of pivotal US data in the upcoming days ahead of further central bank decisions (ECB, BoJ), and mega-cap earnings.

REFINERIES: Exxon's (XOM) Baton Rouge, Louisiana refinery (540k BPD) shut a 110k BPD gasoline-making unit (FCC) on Thursday for unplanned repairs, which could be down for three to four weeks. Separately, Chevron (CVX) El Segundo, California refinery (290k BPD) reports unplanned flaring but it added the temporary operational issue does not impact its ability to supply petroleum products to its customers.

TC ENERGY: Following Tuesday’s news of force majeure, TC Energy said the impacted section of the Columbia Gulf Transmission pipeline remains shut and they have determined plans to repair the pipeline. TRP later noted it is to boost capacity to Loudoun LNG interconnect, which followed Berkshire Hathaway Energy’s Cove Point earlier noting that gas supplies from Columbia Gas’s Loudoun LNG interconnect were currently at or near zero.

EARNINGS: Ahead of Shell (SHEL LN) earnings on Thursday, Hess (HES) surpassed expectations on the top and bottom line, alongside raising FY production view.

EQUITIES
CLOSES: SPX -0.02% at 4,566, NDX -0.40% at 15,499, DJIA +0.23% at 35,520, RUT +0.72% at 1,980.

SECTORS: Communication Services +2.65%, Industrials +0.66%, Financials +0.65%, Real Estate +0.34%, Technology -1.3%, Consumer Discretionary -0.06%, Utilities -0.05%, Energy -0.09%, Materials -0.28%, Health -0.08%.

EUROPEAN CLOSES: DAX -0.49% at 16,131, FTSE 100 -0.19% at 7,676, CAC 40 -1.35% at 7,315, Euro Stoxx 50 -1.04% at 4,346, IBEX 35 +0.85% at 9,600, FTSE MIB +0.05% at 28,980, SMI -0.48% at 11,177.

EARNINGS: Alphabet (GOOGL) surpassed St. expectations on the top and bottom line which was driven by core advertising units growth. Advertising, YouTube Ads, Google Other, and Cloud all came in above expectations. Separately, CFO Ruth Porat will assume newly created role of President and CIO, but will continue to serve as CFO as the company searches for her successor. Microsoft (MSFT) posted a fairly decent report all round, although next quarter revenue guide was slightly short, with disappointment on the AI commentary. Coca-Cola (KO) beat on profit and revenue alongside raising FY guidance amid resilient demand and higher prices. Boeing (BA) posted a shallower loss per share than expected and beat on revenue. Plans to ramp up production of 737 MAX narrow-body jets to 38 from 31 per month, indicating recovery in supply chains. Looking for stability at 38/mth and readiness in supply chain before approving the 42/mth rate for the 737. Said market is there for 60/mnth rate 737, but it’s just not a simple thing to do. Texas Instruments (TXN) beat on the top and bottom line. Although, it issued lighter-than-expected guidance for the current period, citing sluggish demand. CoStar Group (CSGP) marginally beat and missed on profit and revenue, respectively. Q3 revenue guide was light and lowered FY23 revenue outlook due to expectations of lower property transaction volumes. Waste Management (WM) fell short on the top and bottom line. Robert Half International (RHI) missed on EPS and revenue, while next quarter guidance was well short. Thermo Scientific (TMO) posted a poor report; EPS & revenue missed while FY guidance disappointed. Snap (SNAP) issued weaker-than-expected guidance and sees Q3 adj. EBITDA loss much deeper-than-expected with revenue guide also light. Exec said revenue growth remained challenged in Q2 as some headwinds from ad platform changes continued into the quarter. On earnings, posted a shallower loss per share than expected and beat on revenue and DAUs. Union Pacific (UNP) naming Jim Vena its new CEO which overshadowed its disappointing results. UNP blamed softening consumer markets, inflation, a one-time labour expense and increased workforce levels but said resource levels were more aligned with demand to finish the quarter. Out of Europe, Airbus (AIR FP) missed on revenue but reaffirmed A320 75 jets/month production rate by 2026; removed mention of the previous guide of 65/m by 2024-end, instead saying it would make tactical adjustments in response to volatile supply chains.

STOCK SPECIFICS: Wells Fargo (WFC) raised quarterly dividend to USD 0.35/shr (prev. 0.30/shr), announces new USD 30bln share repurchase programme. Banc of California (BANC) confirmed it will purchase PacWest (PACW), a deal that was first reported on by the WSJ during trading on Tuesday. Dish (DISH) confirmed reports it is to offer unlimited wireless postpaid services for a fixed price of USD 25/mnth to Amazon Prime (AMZN) customers. Gap (GPS) poached Richard Dickson, President and COO at Mattel (MAT) and the driver behind Barbie's revival, as its new CEO, according to WSJ. Volkswagen (VOW3 GY) to jointly develop two electric models for mid-size segment with XPeng (XPEV). Amazon (AMZN) Cloud unit adds AI models from startup Cohere to Amazon bedrock service; Exec said to Reuters that its Cloud has drawn thousands of customers to try it out.

US FX WRAP
The Dollar was lower and saw pronounced weakness, to lows of 100.850, as Fed Chair Powell answered his first question in the Q&A of his presser where he noted the Fed have not made a decision to go every other meeting and haven't made any decisions about future meetings, but could hike again in September if data warrants it. Powell continued to reiterate his data dependency and on June’s CPI report, added it was welcome but it was only one month's report. On the rate decision, the FOMC hiked the FFR by 25bps to 5.25-5.50%, as expected, with only cosmetic tweaks to the statement vs June’s meeting. Looking ahead, there is a slew of US economic data on Thursday with US GDP Advance/PCE (Q2) the highlight, accompanied by Durable Goods (Jun), Jobless Claims, and Pending Home Sales (Jul). Just for the record, the Dollar gyrated ahead of the Fed amidst somewhat conflicting impulses given risk-off positioning in equities and commodities that benefited safe-haven assets such as US Treasuries.

JPY was the G10 outperformer and as Powell continued through the Q&A USD/JPY even breached 140.00 to the downside, albeit briefly, to a low of 139.94. Nevertheless, the outlook now depends on whether the BoJ makes good on Governor Ueda's repeated indications policy will not be tightened on Friday, though economic projections at the meeting could sustain speculation a JGB yield cap rise is an eventuality. On month end, Credit Agricole notes, the moves in equity markets, when adjusted for market capitalisation and FX performance this month, suggest month-end portfolio-rebalancing flows are likely to be mild USD selling across the board with the strongest sell signal in the case of the USD vs JPY.

EUR was the next best performer vs the Buck, with EUR/USD ascending higher on the aforementioned Dollar pullback as opposed to anything Euro specific. The cross hit a peak of 1.1106 even though EZ economic data remains woeful, as focus now turns to the ECB meeting on Thursday where attention will be on clues over the ECB's tightening ambitions beyond July. On the headline, consensus and market pricing look for a 25bps hike, taking the deposit rate to 3.75%.

AUD was the underperformer, and this was largely due to the cooler-than-expected Australian CPI overnight, which supported the argument for the RBA to continue its pause on rates at next week’s meeting. AUD/USD pulled back from 0.6793 to 0.6729, but was propped up within a zone that included 21 and 200 DMAs, while AUD/NZD reversed through 1.0900 to the brink of 1.0850 from 1.0920 to underpin NZD/USD between 0.6233-0.6184 bounds.

CAD was also lower and weighed on by the decline in crude prices, as opposed to anything Loonie-specific. Although, ahead of the FOMC we did get BoC Minutes which were largely a non-event, but noted the Governing Council debated keeping rates unchanged on July 12th and is waiting for more evidence to solidify the case for another hike. However, the consensus was that the cost of delaying action was larger than the benefit of waiting. For the rest of the week there is little scheduled for Canadian watchers, so catalysts will be on broader macro fundamentals and other key risk events.

CHF and GBP saw similar gains vs the Greenback, and without sounding like a broken record, strengthened through the aforementioned Powell Q&A with USD/CHF and USD/GBP hitting best levels of 0.8598 and 1.2960, respectively. Prior to the Fed, Pound and Franc were both largely sidelined in absence of anything specific, aside from slightly more negative Swiss investor sentiment.

EMFX was mixed. CLP, BRL, and MXN saw gains, TRY flat, while RUB, ZAR, and CNH were weaker. For the latter, Chinese economic stimulus buzz faded somewhat following a much more in line PBoC onshore reference rate. Although, the recent stimulus measures announced have provided some support to cyclical commodity prices such as copper, thus boosting the CLP in recent days. Nonetheless, HSBC writes “it remains to be seen if the positive momentum can be continued in terms of China’s growth prospects, but think that the CLP should continue underperforming the market in the days ahead given central bank USD purchases”. Although, there is a risk the Chilean central bank cuts by less than the 100bps the market is expecting on Friday (HSBC expects 75bp), and as such HSBC notes “a smaller-than-expected cut will also likely provide near-term support to the currency, but much will depend on the composition of the vote and the tone of the forward guidance.” The Real got a boost after Fitch upgraded Brazil to BB from BB-, with a stable outlook. Later on, Finance Minister Haddad hopes Brazilian interest rates end this year at 12% (currently 13.75%).

 

Stocks soar into month-end on strong earnings while Yen underperforms post BoJ puzzle - Newsquawk US Market Wrap


FRIDAY, JUL 28, 2023 - 04:10 PM

• SNAPSHOT: Equities up, Treasuries up, Crude up, Dollar flat.
• REAR VIEW: BoJ implements "flexible" YCC; Mixed EZ inflation data; Dovish Core PCE; ECI rising less than expected adds to soft landing narrative; Federal regulators home in on LYV's Ticketmaster; Stellar INTC report, highlighted by a return to profitability; F forecast deeper 2023 EV losses
• WEEK AHEAD PREVIEW: Highlights include US jobs report, BoE, RBA and PMI data. To download the report, please click here.
• CENTRAL BANKS WEEKLY: Previewing RBA, BCB and BoE; Reviewing FOMC, BoJ and ECB. To download the report, please click here.
• WEEKLY US EARNINGS ESTIMATES: [TUES]: CAT, MRK, PFE, UBER, SBUX, AMD; [WED] CVS, QCOM, PYPL; [THURS] CI, COP, AMZN, AMGN, GILD, ABNB, SYK, AAPL, BKNG. To download the report, please click here.

MARKET WRAP
Stocks advanced on Friday with outperformance in the Nasdaq with chip names soaring after Intel (INTC) posted a solid quarterly report where it returned to profit after two quarters of losses with strength attributed to a turnaround in the PC market. There were several key US data prints too, which were ultimately net-dovish. The Q2 ECI came in cooler than expected, PCE was broadly in line but the Core Y/Y was beneath analyst expectations and the Final UoM survey for July was revised lower, as were the 5-10yr inflation expectations, to 3.0% from 3.1%. Overnight, however, the BoJ had puzzled markets resulting in a very volatile Yen, where the Central Bank implemented a flexible YCC policy where it will buy unlimited 10yr JGBs at 1% but said it is not raising the yield cap of 0.5%. As we head to the end of the week the Yen is the underperforming currency with USD/JPY back above 141.00 from lows of 138.08. The Treasury curve bull steepened with the initial BoJ induced selling reversing while the soft US data did little to extend the bid. Crude prices closed the week at levels not seen since April as it tracked the positive risk sentiment. Attention next week turns to more large cap earnings with Apple (AAPL) and Amazon (AMZN) the highlights while the US jobs report on Friday will help with future Fed rate hike expectations, albeit there is still plenty of data between now and the September meeting. In Europe, EZ CPI is due after mixed regional reports and in wake of the 25bp hike from the ECB earlier in the week, who also put a lot of emphasis on data dependence for future rate decisions. There will also be interest rate decisions from the BoE and RBA, with the BoE expected to deliver a 25bp hike while views for the RBA are mixed between a 25bp hike and an unchanged decision.

GLOBAL
CORE PCE: The June Core PCE data was dovish overall, in fitting with what was seen in the CPI report, and supports the narrative about easing inflation. Core PCE printed 0.2%, in line with expectations, and cooling from 0.3%, while the annul measure eased to 4.1% from 4.6%, beneath expectations of 4.2%. Headline PCE rose 0.2% M/M (exp. 0.2%, prev. 0.1%) with the Y/Y rising 3.0% (exp. 3.0%, prev. 3.8%). Analysts at Pantheon Macroeconomics highlighted that the PCE core services ex-housing rose by 0.2%, matching the prior month’s pace. Overall, this is the latest report that shows evidence that inflation is falling and supports the soft landing narrative. With the Fed in data dependent mode, this report is unlikely to change the views of the FOMC and Fed Chair Powell; the Chair this week said there were still several data points between now and the next Fed meeting that would feature in their decision making, and he emphasised that the Fed was not on a pre-set path. Markets, however, are largely pricing in the Fed now at terminal, with only a 20% implied probability of another hike on September 20th. Between now and then we will see July CPI (Aug 10th), August CPI (Sept 13th), as well as two jobs reports on August 4th and September 1st. We will also see one more PCE report on August 31st. Therefore there is still a lot of data to digest when assessing how the Fed will react. Personal Income rose 0.3%, cooler than the 0.5% expected and 0.4% prior while consumption rose 0.5% from 0.1%, above the 0.4% expected. Real consumption rose 0.4%. Pantheon Macroeconomics add that "excess savings accumulated during Covid continue to dwindle, and the restart in student loan payments from September mean that outright declines in real consumers’ spending later this year are entirely plausible."

ECI: Employment Costs Index for Q2 rose 1.0%, less than the expected 1.1% and the prior 1.2%, which was the lowest Q/Q growth since Q2 2021, while it grew 4.5% Y/Y against +4.8% in Q1. Moreover, over the quarter, wages and salaries rose 1.0%, down from Q1's +1.2%, while benefit costs rose at a lower 0.9%, down from Q1's +1.2%. On the report, the deeper-than-expected fall in ECI adds to the soft landing narrative on the margin and will serve as a dovish data point in the Fed's calculus. We know that after Fed Chair Powell namechecked the report specifically on Wednesday, alongside the two more CPI and job reports, before the September FOMC. It's worth a caveat that since June, we have seen the more timely initial jobless claims print from the BLS tumble to their lowest levels since February, igniting concerns that the labour market could be retightening. Of course, this warrants close inspection in the months ahead to see if this reignites wage growth - the average hourly earnings figures in the July NFP report next Friday will be the next piece of evidence.

MICHIGAN SURVEY: The final Uni of Michigan survey in July saw the headline consumer sentiment index downwardly revised to 71.6 from 72.6, which still marks a large jump from June's 64.4. Both the current conditions and forward-looking expectations sub-indices saw downward revisions to 76.6 and 68.3 from the initial 77.5 and 69.4 readings, respectively. In all, still a solid pick-up for the consumer outlook in July, which has been given additional weight to by the surge in the Conference Board figures earlier this week. Meanwhile, the closely-followed consumer inflation expectations were unchanged at 3.4% in the year-ahead window, although the longer-term 5-10yr gauge saw a downward revision to 3.0% from 3.1%, which on the margin, alleviates some anxiety around any unanchoring of inflation expectations.

BoJ REVIEW: BoJ kept its policy settings unchanged, as expected with the Bank Rate held at -0.10% and YCC parameters maintained to target 10yr JGB yields around 0%, but it will guide yield curve control more flexibly with its daily fixed-rate purchases of 10yr JGBs at a rate of 1.0% (prev. 0.5%). This essentially means the +/- 50bps band for the 10yr JGB target will now be used as a reference point in market operations, allowing for greater flexibility. This means that the actual yield could occasionally move outside of this range. The BoJ also increased the amount of purchases to JPY 900bln from JPY 875bln. Meanwhile, the Outlook Report saw an upgrade to the FY23 Core CPI forecast to above the BoJ’s 2% inflation target. Delving a bit deeper into the core CPI forecasts, the fiscal 2023 median forecast was raised to 2.5% from 1.8%, but the 2024 median forecast was trimmed to 1.9% from 2.0%, and the 2025 median forecast was maintained at 1.6%. The announcement resulted in plenty of confusion, although the JPY ultimately weakened with the move less hawkish than a recent Nikkei report suggested. At the post-meeting presser, Governor Ueda emphasised the need for continued monetary easing, stating that the Bank is prepared to further ease policy if required. The focus is on enhancing the sustainability of Yield Curve Control, with the BoJ ready to conduct fixed-rate purchases if long-term yields exceed 1.0%. The Bank has created a 0.5-1.0% frame to respond to future risks, with 1.0% defined as a 'just-incase cap'. Despite some progress towards inflation goals, Ueda expressed uncertainty about future price rebounds, citing risks from a weaker global economy. Ueda said the BoJ is not targeting FX levels, but is including currency market volatility in its measures. Economic uncertainty remains high, and the Bank is prepared to respond flexibly to any materialised risks. Ueda denied any bias towards policy tightening, stating that the aim is to make YCC more sustainable, not to normalise policy. Analysts at Oxford Economics say “Despite today's surprise tweak to YCC policy, we continue to believe that Governor Ueda is determined to avoid premature tightening and will spend another year or so to carefully assess whether the economy is on track to achieve 2% inflation within his five-year term”, although the desk does highlight that “It is not clear at this stage how the 10-year yield will move under the new ceiling of 1.0% and how actively the BoJ will intervene in the market to enhance appropriate yield formation based on economic fundamentals.”

FIXED INCOME
T-NOTE (U3) FUTURES SETTLED 10+ TICKS HIGHER AT 111-11

Treasuries pare some losses into the weekend/month-end after initial BoJ-induced selling is unwound, but soft US data failed to extend the bid. At settlement, 2s -3.8bps at 4.901%, 3s -5.1bps at 4.545%, 5s -5.3bps at 4.198%, 7s -4.7bps at 4.093%, 10s -3.9bps at 3.973%, 20s -3.2bps at 4.233%, 30s -2.8bps at 4.031%.

INFLATION BREAKEVENS: 5yr BEI +1.8bps at 2.430%, 10yr BEI +1.4bps at 2.394%, 30yr BEI +0.5bps at 2.312%.

THE DAY: T-Notes saw two-way price action after the BoJ announced the increased flexibility to its JGB yield target, trading at 111-04 before the release, they then initially hit a peak of 111-10+ before bottoming at 110-25+ around 45 minutes after the release. However, as the dust settled, contracts recovered gradually into the London handover with attention on Ueda's presser, who provided some dovish offsets, who stressed the need for continued monetary easing, stating that the bank is prepared to further ease policy if required.

It was hard to garner much impetus from the inflation prints in Europe, with hot Spanish figures offset by soft French figures, while the regional German data was mixed ahead of the recently printed national level figures that saw M/M in line at +0.5% but Y/Y at 6.5% (exp. 6.6%). Dealers relayed below-average activity in London hours despite the surge in Tokyo activity.

T-Notes recovered gradually but steadily into the NY morning, going on to peak at 111-21 on back of the release of the Core PCE data - where M/M was in line while Y/Y was slightly soft - and the simultaneously released Q2 ECI, which saw the Fed-followed gauge come in on the soft side. But bulls had to be quick to turn a profit with a real lack of appetite seen to extend the bid before swiftly paring lower to form a base at 111-06. Modest strength was seen on the downward revision to the UoM sentiment survey (which included a slight fall in the long-term inflation expectation gauge), but very much within earlier ranges.

Contracts respected their NY morning ranges into the settlement with no other catalysts on the calendar. Those banking on signs of month-end Treasury buying in the NY afternoon were also disappointed, and perhaps the prospect of next week's quarterly refunding, where coupon sizes are expected to be increased, is keeping the offer heavy, particularly now that Japanese accounts may begin to look closer to home for yield after JGB yields hit highs not seen in nearly a decade.

NEXT WEEK (US items bolded):

• MON: *Chicago PMI (Jul), Dallas Fed Mfg. (Jul), SLOOS, Treasury Financing Estimates, Japanese Retail Sales (Jun), Chinese Official PMI (Jul), German Flash GDP (Q2), New Zealand Labour Cost Index (Q2).
• TUE: Final Manufacturing PMIs (Jul), ISM Manufacturing PMI (Jul), JOLTS (Jun), RBA Announcement, Chinese Caixin Manufacturing Final PMI (Jul), German/EZ Unemployment Rates (Jul), EZ/UK Final Manufacturing PMIs (Jul), New Zealand Jobs Report (Q2).
• WED: ADP Employment (Jul), Quarterly Refunding, BCB Announcement.
• THU: Services and Composite Final PMI (Jul), Durable Goods R (Jun), ISM Services PMI (Jul), Productivity (Q2), Jobless Claims, Fed's Barkin (nv), BoE Announcement and MPR, CNB Announcement, Chinese Caixin Final PMI (Jul), Swiss CPI (Jul), EZ/UK Services and Composite Final PMI (Jul).
• FRI: Jobs Report (Jul), RBA SoMP, EZ Retail Sales (Jun), Canadian Jobs Report (Jul).

STIRS:

• SR3U3 +1.0bps at 94.590, Z3 +2.5bps at 94.620, H4 +4.0bps at 94.825, M4 +5.0bps at 95.140, U4 +5.0bps at 95.510, Z4 +5.0bps at 95.845, H5 +5.5bps at 96.100, M5 +6.0bps at 96.265, U5 +6.5bps at 96.365, U7 +6.0bps at 96.560.
• SOFR rises to 5.31% from 5.06% as of July 27th (in line with Fed 25bp hike), volumes rise to USD 1.501tln from 1.452tln.
• NY Fed RRP op demand at USD 1.730tln (prev. 1.736tln) across 99 counterparties (prev. 103).
• EFFR rise to 5.33% from 5.08% as of July 27th (in line with Fed hike), volumes rise to USD 105bln from 98bln.

CRUDE
WTI (U3) SETTLED USD 0.49 HIGHER AT 80.58/BBL; BRENT (V3) SETTLED USD 0.62 HIGHER AT 84.41/BBL

The crude complex ended the day, and fifth consecutive week, firmer after initially seeing losses on Friday amid mixed oil earnings and Dollar strength but soared into settlement despite no headline catalyst. On the day, oil seemingly tracked broader risk sentiment with complex-specific newsflow light aside from the release of global tier 1 data. Nonetheless, as mentioned, WTI and Brent hit session lows in the US morning of USD 79.07/bbl and 84.50/bbl, respectively, after disappointing reports from Exxon (XOM) and Chevron (CVX). XOM had mixed earnings, as profit missed but revenue beat, while CVX beat on profit and missed on revenue with sales and other operating revenues falling Y/Y, primarily due to lower commodity prices. In addition, CVX said that production was at the low end of guidance. Looking ahead, the key risk events next week reside around the US jobs report, global PMIs, mega-cap earnings from the likes of AAPL/AMZN, and rate decisions from the BoE, and RBA.

LOADINGS: North Sea Ekofisk crude oil stream is to load 11 cargoes in September (prev. 10 in August), according to a trade source cited by Reuters. Meanwhile, North Sea Oseberg 3 cargoes (prev. 3), Troll 3 (prev. 4), North Sea Brent 1 (prev. 2), and North Sea Forties 8 (prev. 6).

PEMEX: Said Q2 crude processing reached 826k BPD (prev. 835k BPD in Q1). In commentary, added the volume of missed crude production at Balam Ta was "not significant" after separate incident and hopes to finish works and return to full operations at the offshore platform in the first days of August. On production, will process in average of 900k BPD of crude in 2023, and expects to reach 1mln in 2024.

RUSSIA: WSJ reported that Russia's Rosneft oil in recent weeks wrapped up one its largest tenders in years. It noted that Russia struck deals to sell a substantial portion of its petroleum output to a group of previously little-known oil traders, locking in a stream of cash from its lifeblood industry.

BAKER HUGHES: At the week ending July 28th, Oil fell 1 to 529, Nat Gas dipped 3 to 128, leaving the total declining -5 to 664. As context, US drillers cut oil and gas rigs for the third week in a row and cut oil rigs for the eighth month in a row.

EQUITIES
CLOSES: SPX +0.99% at 4,582, NDX +1.85% at 15,750, DJIA +0.50% at 35,459, RUT +1.36% at 1,981.

SECTORS: Communication Services +2.3%, Consumer Discretionary +1.85%, Technology +1.48%, Consumer Staples +0.99%, Materials +0.69%, Industrials +0.62%, Health +0.29%, Financials +0.13%, Energy +0.1%, Real Estate -0.25%, Utilities -0.27%.

EUROPEAN CLOSES: DAX +0.39% at 16,469, FTSE 100 +0.02% at 7,694, CAC 40 +0.15% at 7,476, Euro Stoxx 50 +0.44% at 4,467, IBEX 35 -0.10% at 9,685, FTSE MIB -0.33% at 29,500, SMI -0.49% at 11,317.

STOCK SPECIFICS: Intel (INTC) posted a stellar report; returned to profitability and beat on revenue while Q3 guidance was also better than expected. An exec said all programmes in chip manufacturing were on schedule. The CEO, speaking on Bloomberg TV, said earnings are indicative of a turning point and execution and momentum are building but they still have a bit of work to do on data centre while inventory levels in PCs are now healthy, adding INTC is making progress with two big foundry customers. Procter & Gamble (PG) surpassed expectations on EPS, revenue and organic revenue. Exxon (XOM) had mixed earnings; profit missed but revenue beat. Kept production and cash distribution targets unaltered and in Q3 sees lower scheduled maintenance for energy products. Chevron (CVX) beat on profit and missed on revenue. Sales and other operating revenues fell Y/Y, fell primarily due to lower commodity prices. Said production was at the low end of guidance. DexCom (DXCM) surpassed Wall St. expectations on top and bottom line; raised FY revenue view. Ford Motor (F) beat on the top and bottom line, but the commentary was concerning. CFO sees 2023 EV losses at USD 4.5bln, up from USD 3bln earlier projection, adding that the new UAW labour contract will raise costs and that the slowdown in EV demand was because vehicles are too expensive, not because of demand. Roku (ROKU) saw better ads in Q2 and gave upbeat sales guidance. EPS was a much shallower loss per share than expected while revenue and active accounts beat. First Solar (FSLR) surpassed Wall. St expectations on the top and bottom line; will invest USD 1.1bln in 5th US mfg. facility. Juniper Networks (JNPR) earnings beat, but Q3 outlook was weak and added in Q3, expects to see continued weakness in bookings, particularly with Cloud and, to a lesser extent, Service Provider customers. Enphase Energy (ENPH) missed on revenue and next quarter's guide was well short of expectations. Mondelez (MDLZ) beat on the top and bottom line and lifted its outlook on organic revenue and adj. earnings growth. Biogen (BIIB) is to buy Reata Pharmaceuticals (RETA) for USD 172.50/shr in cash for about USD 7.3bln. Note, RETA closed Thursday at 108.55. Federal regulators home in on Ticketmaster (LYV) antitrust case, according to Politico.

WEEKLY FX WRAP
dovish hikes from Fed and ECB especially vs hawkish BoJ ‘hold’

USD/EUR/JPY - Scheduling in terms of calendar events effectively preordained that the DXY and its major constituents were likely to be inextricably linked by the policy actions of their respective Central Banks given that the FOMC, ECB and BoJ meetings ran consecutively from Tuesday to Friday. However, Eur/Usd and the index by default were already on the move at the start of the week when preliminary Eurozone PMIs were decidedly weaker than forecast (and downright bleak in certain instances) and flash US versions held up better (or even beat consensus in the case of manufacturing). Eur/Usd backed off accordingly from just under 1.1150 at best to a circa 1.1060 low, while the DXY bounced towards 101.500 from sub-101.00 at one stage with the Dollar also deriving impetus from elsewhere, like the Pound that was undermined by worse than expected UK PMIs. The Euro subsequently suffered another blow to the benefit of the Buck and other rivals, such as Sterling, when two out of three German Ifo survey metrics missed on the downside and Eur/Usd retreated to 1.1020 while the index topped 101.600 with an independent boost via considerably more exuberant than anticipated US consumer confidence. Consolidation followed as attention turned to the Fed and then the Greenback fell from grace as the all but priced in 25 bp hike came with dovish guidance in the accompanying statement and parts of Chair Powell’s press conference. The DXY reversed through 101.000 and pulled back further in dovish follow-on reaction to the brink of 100.500 as the spotlight switched to the ECB that matched the FOMC in context of tightening magnitude, but delivered what was arguably if not undoubtedly more dovish forward guidance. The GC left the door ajar for another hike in September, based on data ala the Fed, though there was enough to suggest key rates may have peaked as it tweaked forward guidance and President Lagarde said the change in language was not random or irrelevant. Moreover, in the Q&A she reiterated that rates will be ‘set at’ sufficiently restrictive levels to work towards the inflation goal rather than ‘brought to’ from the previous statement, adding that data and our assessment of this will tell us ‘if any’ and how much ground we will have to cover instead of the explicit there ‘is’ more to do before answering another question about the prospect of additional rate rises (voluntarily for that matter) with a ‘at this point I would not say so’. In response, Eur/Usd relapsed from a fractionally higher 1.1149 w-t-d peak 1.0966 or so and the Dollar index reclaimed all and more of its post-FOMC losses to reach 101.840, and again aided by US data that was super strong virtually across the board (including advance Q2 GDP, durable goods, weekly initial and continued jobless claims, plus pending home sales). Fast forward to Friday, and the stage was almost left clear for the BoJ that probably stole the whole show by tinkering with YCC and essentially lifted the lid on 10 year JGB tolerance to 1% from 50 bp. There was plenty of speculation about a YCT tweak, but no real validation from Bank officials and Governor Ueda in particular. Indeed, Usd/Jpy and Yen crosses had been retracing lower in advance of the BoJ, while the break-even per implied volatility spiked to 200+ pips, but even that paled in comparison to the resulting price action. Using Usd/Jpy as a proxy, the headline pair recoiled virtually three full big figures between 141.05-138.08 extremes and prevented the DXY from extending 102.000, for a while until the Euro resumed its slide (to around 1.0944) and the Yen ceded ground amidst remarks from Ueda in the presser framing the wider yield curve control zone as a move designed to provide more flexibility and enhance sustainability as opposed to tighter policy per se. Nevertheless, Usd/Jpy remained well off Monday’s approximate 141.81 weekly apex on the eve of month end when rebalancing models suggest the strongest selling against the backdrop of mildly/moderately negative Greenback flows.

GBP/AUD - The Pound and Aussie seemed set to end a very volatile and hectic final full week of the month at opposite sides of the G10 divide and appropriately perhaps. UK macro releases were mixed besides the aforementioned disappointing PMIs and came via CBI surveys, while Aussie data was largely below forecast and top tier in nature in the form of CPI and retail sales to push the odds firmly in favour of an RBA pause next week. Conversely, there is still an outside chance that the BoE will stick to a half point pace of tightening as it continues to combat inflation and if not then the probability of 25 bp is lofty at just shy of 75%. Assuming the markets are accurate, the RBA benchmark will stay at 4.10% and diverge further from the BoE’s Bank rate at 5.25%, let alone 5.5%. Hence, Cable recovered to 1.2850+ within 1.2764-1.2995 bounds and Aud/Usd floundered nearer 0.6623 than 0.6821.

CHF/CAD/NZD - All largely on the sidelines or fringes of the main action, as the Franc, Loonie and Kiwi tracked their US peer’s changing fortunes, with some direction taken from cross pairings, crude and other commodities. Usd/Chf whipsawed from 0.8553 to 0.8736 irrespective of net downside in Eur/Chf and some decent Swiss data/surveys, Usd/Cad climbed to 1.3249 from 1.3148 regardless of hawkish BoC minutes, monthly Canadian GDP growth and WTI’s robust revival, and Nzd/Usd descended from 0.6273 to 0.6122 despite Aud/Nzd tailwinds and no help from a decline in consumer sentiment.

SCANDI/EM - The Sek sharply underperformed, partly on technical grounds and external factors, but also on the back of a stack of worrying Swedish data highlighted by a significantly deeper than feared Q2 GDP contraction, while the Nok only really held up better thanks to the buoyancy in Brent oil. Meanwhile, the Cny and Cnh owed their resurgence to the persistence of the PBoC on the midpoint fixing front, the Politburo’s multi-pronged stimulus pledge and Chinese state bank intervention. The Rand relied on a combo of gold gains and constructive chart impulses to a large extent, the Brl got a helpful ratings upgrade from Fitch and the Mxn stronger Mexican IGAE economic activity to compound the upside in crude prices, but the latter hampered the Try alongside spikes in CBRT quarterly survey inflation projections, not to mention uncertainty over more new appointments at the Turkish Central Bank, and state banks had to prop it up. The Huf lost puff after the NBH continued its rate corridor adjustment (narrowed by another 100 bp) and the Ils was rattled by Israel’s Parliament ratifying parts of the controversial judicial reform bill following the breakdown of talks designed to find a compromise. On the flip-side, the Czk coped well with conflicting CNB comments, as Governor Michl said the Bank has to remain hawkish given that inflation is still not on a satisfactory level and the Hkd kept its Usd peg via a like-for-like HKMA 25 bp hike in footstep with the FOMC.

 

Dollar strengthens despite month-end selling flows; cyclical stocks prosper - Newsquawk US Market Wrap

MONDAY, JUL 31, 2023 - 04:30 PM

• SNAPSHOT: Equities up, Treasuries up, Crude up, Dollar up.
• REAR VIEW: Fed's Goolsbee is data-dependent; Chicago PMI misses; More China stimulus jawboning; XOM in talks with automakers to supply lithium; Fed SLOOS deteriorates as expected; Hot Core EZ CPI; BoJ steps in to stop JGB sell-off.
• COMING UP: Data: Caixin Manufacturing PMI, German Unemployment Rate, UK/EZ Final PMI, US ISM, JOLTS, New Zealand Labour Data Events: RBA Policy Announcement Speakers: Fed's Goolsbee Supply: Japan Earnings: Covestro, Deutsche Post, Daimler Truck, BP, Diageo, HSBC, American International Group Inc, Advanced Micro Devices Inc, Electronic Arts Inc, Merck & Co Inc.
• WEEK AHEAD PREVIEW: Highlights include US jobs report, BoE, RBA and PMI data. To download the report, please click here.
• CENTRAL BANKS WEEKLY: Previewing RBA, BCB and BoE; Reviewing FOMC, BoJ and ECB. To download the report, please click here.
• WEEKLY US EARNINGS ESTIMATES: [TUES]: CAT, MRK, PFE, UBER, SBUX, AMD; [WED] CVS, QCOM, PYPL; [THURS] CI, COP, AMZN, AMGN, GILD, ABNB, SYK, AAPL, BKNG. To download the report, please click here.

MARKET WRAP
Stocks were choppy on Monday with a strong outperformance in cyclicals with the Russell 2k surging to reclaim 2000, albeit amidst a lack of major data or catalysts with broader price action framed around month-end flows. The Fed's SLOOS survey saw bank lending standards tighten and loan demand decline, although hardly a surprise after Powell warned as much last Wednesday. The Chicago PMI rose less than expected and the Kansas Fed survey also remained subdued, but neither garnered much reaction. Fed Speak saw Goolsbee leave everything on the table for September ahead of key data releases. Elsewhere, China PMI data was subdued again but more assertive jawboning from government bodies on impending support measures was cited for oil ripping higher to post their best M/M gain since January 2022. The BoJ stepped in for a bond-buying operation as JGB yields hit new recent peaks, igniting Yen selling. In Europe, HICP flash Y/Y inflation data in July fell to 5.3% from 5.5%, as expected, although the core didn't improve as much as expected. Treasuries were slightly firmer with initial JGB weakness and corporate supply pressures absorbed, with attention now drifting to Wednesday's refunding announcement. The Dollar was bid despite month-end models pointing to selling, while a larger-than-expected Chile rate cut weighed on LatAm FX; AUD outperformed with RBA on deck.

US
FED: Chicago Fed President Goolsbee (voter, dove), in response to the PCE data, said it was fabulous news to see inflation come down this way, noting monthly readings have been quite good. In fitting to Chair Powell, Goolsbee did not commit to any future rate decisions, noting nothing is on or off the table for September and he doesn't know if the Fed should skip, stressing several key data points are due before the next meeting and that they will play it by ear on the restrictiveness of the policy rate. In regards to a soft landing, Goolsbee said so far we are on the 'golden path' and efforts to get inflation down thus far are working. He was very dismissive of the Phillips curve too, noting he does not think the historical relationship between unemployment and inflation has to exist in this case. Goolsbee also noted he has not seen anything tighter in credit conditions than what was expected and on the banking sector said he is a long-term advocate of higher capital in the banking sector. On wages, he repeated that they are not a leading indicator, while on housing he noted inflation is expected to start dropping in the sector.

SLOOS: In summary, the Fed's Q2 Senior Loan Officer Opinion Survey saw tighter standards reported across businesses and households with weakening loan demand; banks also said they expect to further tighten standards in the second half of the year. On loans to businesses, respondents reported tighter standards and weaker demand for C&I loans to firms of all sizes over Q2. Banks reported tighter standards and weaker demand for all CRE loan categories. On loans to households, banks reported that lending standards tightened across all categories of residential real estate (RRE) loans with demand also weakening. Banks reported both tighter standards and weaker demand for home equity lines of credit (HELOCs). Standards tightened for all consumer loan categories; demand weakened for auto and other consumer loans, while it remained basically unchanged for credit card loans. And on the outlook for H2 2023, banks said they expect to further tighten standards on all loan categories citing a less favourable or more uncertain economic outlook and expected deterioration in collateral values and the credit quality of loans. Note that Powell prefaced the release at last week's FOMC when he said, "[the SLOOS is] broadly consistent with what you would expect."

CHICAGO PMI: Chicago PMI rose to 42.8 from 41.5 but was beneath the expected 43.2. The headline figure has risen for two consecutive months, albeit remains slightly down since January which is broadly consistent with month-to-month growth in manufacturing output growth, which is bouncing around zero. Moreover, Chicago PMI tends to lag the trend in civilian aircraft orders – due to Boeing - and Pantheon Macroeconomics notes “the June spike in aircraft orders signals a sharp upturn in the index later this year”. However, this will tell us little about the broader outlook for manufacturing, which remains bleak. Overall, the consultancy concludes, “capital spending intentions in the regional Fed surveys bounced in June, suggesting a rebound in the hard output data towards the end of this year, but the July numbers have been mixed.”

GLOBAL
RBA PREVIEW: There are mixed views regarding the RBA meeting on Tuesday as a recent Reuters poll showed 20 out of 36 economists surveyed expect the RBA to raise the Cash Rate by 25bps to 4.35% and the remaining 16 are calling for rates to be maintained at 4.10%, while money markets had priced in a 79% probability for the central bank to continue pausing on rates and just a 21% chance for a 25bps hike. To download the full Newsquawk preview, please click here.

CHINESE EXPORT CONTROLS: Chinese export controls on key chipmaking material will come into effect on Tuesday 1st August. On July 3rd, in response to Western sanctions on the Chinese semiconductor sector, Beijing announced export restrictions on gallium and germanium - essential elements for manufacturing semiconductors and other electronics, effective from August 1st. China's Commerce Ministry (MOFCOM) stated that these measures were implemented to protect national security and interests. As per the new guidelines, Chinese exporters of these materials will now need to seek the ministry's approval, providing information about the end-users and the intended use of the materials. Analysts at Rabobank clarify such export controls do not necessarily mean that China’s exports of the rare metal will be restricted, but the process to obtain gallium could become more cumbersome and would be at greater risk of being disrupted in future, should geopolitical tensions increase further. To download the full Newsquawk analysis piece, please click here.

FIXED INCOME
T-NOTE (U3) FUTURES SETTLED 2 TICKS HIGHER AT 111-13

Treasuries were slightly firmer into month-end amid soft survey data, while JGB weakness and corporate supply pressures were absorbed. 2s -1.6bps at 4.881%, 3s -1.7bps at 4.525%, 5s -1.1bps at 4.184%, 7s -0.4bps at 4.085%, 10s -0.4bps at 3.965%, 20s -0.5bps at 4.225%, 30s -0.7bps at 4.023%.

INFLATION BREAKEVENS: 5yr BEI -2.2bps at 2.406%, 10yr BEI -2bps at 2.370%, 30yr BEI -3.3bps at 2.276%.

THE DAY: T-Notes hit initial peaks of 111-15 at the Globex open before better selling kicked in as the APAC session got underway on Monday, with JGBs leading the weakness. The selling momentum fizzed out after the BoJ made an unscheduled JGB buying announcement as the Japanese 10yr yield tested 0.60%. Chinese PMIs were mixed with strong mfg./weak services. Despite the pause for selling in APAC, T-Notes ultimately went on to print session lows at 111-02 as Europe returned from the weekend.

London's arrival coincided with a 6k T-Note block buy that initiated a recovery from there. EU Flash CPI was in line with expectations but core prints were hotter than expected, albeit garnered little market response. T-Notes saw a mild pullback in the NY morning amid a few corporate IG debt deals being announced, including chunky five-parters from both Mercedes-Benz and BAT, applying some supply pressure to govvies ahead of the Treasury's quarterly refunding announcement on Wednesday, where increased coupon auction sizes are expected.

111-08 served as support, and contracts began recovering as Chicago Fed's Goolsbee spoke on Yahoo! Finance. There was no explicit policy guidance from the official, who instead stuck to the party line of needing to see the totality of the data before a September rate decision, but he was quick to praise the Fed's progress along the "Golden Path" (lower inflation without rising unemployment). The slightly lower increase than expected in the Chicago Fed PMI only supported the rebound, breaking above the globex peak (111-15+), and was given weight to by the suppressed Dallas Fed index, while month-end buying was also on the radar. T-Notes ultimately peaked at 111-20, similar to Friday's 111-21 peak, before paring somewhat into settlement with an as-expected deterioration in the Fed's SLOOS survey (tighter lending standards and reduced loan demand) having little notable effect.

TREASURY FINANCING ESTIMATES: Treasury announced it expects to borrow USD 1.007tln in net marketable debt for Jul-Sept, up USD 274bln from the May estimate. Said the borrowing estimate assumes a September-end cash balance of USD 650bln and the estimate is higher than initially announced due to the lower beginning-of-quarter cash balance (USD 148bln) and higher end-of-quarter cash balance (USD 50bln), as well as projections of lower receipts and higher outlays (USD 83bln). Looking further ahead, Treasury said it is to issue USD 852bln in October-December 23, assuming a Dec-end cash balance of USD 750bln. Additional financing details relating to Treasury’s Quarterly Refunding will be released at 08:30ET on Wednesday, where coupon auction size increases are expected.

STIRS:

• SR3U3 flat at 94.59, Z3 +1bp at 94.63, H4 +3bps at 94.85, M4 +4bps at 95.17, U4 +4.5bps at 95.545, Z4 +4.5bps at 95.88, H5 +5bps at 96.145, M5 +5bps at 96.31, U5 +5.5bps at 96.415, U6 +2bps at 96.585, U7 +1bps at 96.565.
• SOFR fell to 5.30% from 5.31% as of July 28th, volumes fell to USD 1.419tln from 1.501tln.
• NY Fed RRP op demand surges to USD 1.821tln from 1.730tln amid month-end factors, across 105 counterparties (prev. 99).
• EFFR flat at 5.33% as of July 28th, volumes rise to USD 106bln from 105bln.
• US sold USD 73bln of 3-month bills at 5.280%, covered 2.92x; sold USD 65bln of 6-month bills at 5.270%, covered 2.95x.

THIS WEEK (US items bolded):

• TUE: Final Manufacturing PMIs (Jul), ISM Manufacturing PMI (Jul), JOLTS (Jun), RBA Announcement, Chinese Caixin Manufacturing Final PMI (Jul), German/EZ Unemployment Rates (Jul), EZ/UK Final Manufacturing PMIs (Jul), New Zealand Jobs Report (Q2).
• WED: ADP Employment (Jul), Quarterly Refunding, BCB Announcement.
• THU: Services and Composite Final PMI (Jul), Durable Goods R (Jun), ISM Services PMI (Jul), Productivity (Q2), Jobless Claims, Fed's Barkin (nv), BoE Announcement and MPR, CNB Announcement, Chinese Caixin Final PMI (Jul), Swiss CPI (Jul), EZ/UK Services and Composite Final PMI (Jul).
• FRI: Jobs Report (Jul), RBA SoMP, EZ Retail Sales (Jun), Canadian Jobs Report (Jul).

CRUDE
WTI (U3) SETTLED USD 1.22 HIGHER AT 81.80/BBL; BRENT (V3) SETTLED USD 1.02 HIGHER AT 85.43/BBL

Oil prices were firmer Monday, with China jawboning continuing to underpin the upward momentum that sees WTI and Brent post their best month since January 2022. Prices had been on the back foot during the APAC Monday session, with subdued Chinese PMI data the highlight. But, the later reaffirmations of incoming consumption support from Chinese government departments aided a reversal higher during the European session. The upside lost momentum as US trade got underway, albeit WTI (U3) and Brent (V3) contracts managed to hold onto their strength through the rest of the session before edging to session highs for settlement. In the energy space Monday, Reuters' latest monthly OPEC poll saw the cartel's July output fall 840k BPD from June to 27.34mln BPD amid Saudi output reductions and Nigeria's outages. While Reuters' latest analyst poll saw the third straight month of analyst price cuts: Brent is seen averaging USD 81.95/bbl in 2023 (prev. 83.03/bbl in June poll), WTI seen averaging USD 77.20/bbl (prev. 78.38/bbl). The latest Goldman Sachs note reaffirmed its price forecasts, citing an offsetting balance between a stronger demand outlook and the impact of higher realised inventories and sustained high-interest rates.

EQUITIES
CLOSES: SPX +0.15% at 4,589, NDX +0.04% at 15,757, DJIA +0.28% at 35,560, RUT +1.09% at 2,003.

SECTORS: Energy +2.00%, Real Estate +0.70%, Consumer Discretionary +0.56%, Materials +0.52%, Financials +0.44%, Industrials +0.23%, Technology +0.13%, Utilities +0.03%, Communication Services -0.03%, Consumer Staples -0.46%, Health -0.79%.

EUROPEAN CLOSES: DAX -0.14% at 16,446, FTSE 100 +0.07% at 7,699, CAC 40 +0.29% at 7,498, Euro Stoxx 50 +0.06% at 4,470, IBEX 35 -0.45% at 9,641, FTSE MIB +0.49% at 29,645, SMI -0.12% at 11,304.

STOCK SPECIFICS: EARNINGS: ON Semiconductor (ON) beat on the top and bottom line alongside lifting Q3 guidance. Loews (L) Q2 profit more than doubled as a jump in investment income cushioned a hit from higher catastrophe losses in its insurance unit. It also reported a higher return on investments, helped by a broader market rally. AerCap (AER) beat on the top and bottom line as well as raising FY23 profit view and announcing a new USD 500mln share buyback programme. SoFi Technologies (SOFI) beat on revenue, EPS, and EBITDA; Q4 revenue view was in line but it lifted its FY revenue guide.

STOCK SPECIFICS: Morgan Stanley boosted its Adobe (ADBE) price target as well as upgrading the stock citing AI tailwinds. Disney (DIS) hired former executives Kevin Mayer and Tom Staggs to advise CEO Bob Iger on dealing with the company's TV businesses, according to FT; the two were once seen as potential successors to Iger but left when their chances diminished. A judge ruled that Johnson & Johnson (JNJ) cannot use a unit's bankruptcy case to force cancer victims to drop lawsuits and accept a USD 8.9bln settlement related to talc products; JNJ plans to appeal the decision. Walmart (WMT) paid USD 1.4bln to buy out Tiger Global's shares in Flipkart valuing the Indian e-commerce giant at USD 35bln; gives Walmart more access to the growing digital consumer market. Ford (F) downgraded at Jefferies, citing weakness in Model E guidance. New Relic (NEWR) to be acquired by Francisco Partners and TPG for USD 87/shr or USD 6.5bln in cash. NEWR closed Friday at USD 74.05/shr. Sweetgreen (SG) surged following a Piper Sandler upgrade; noted that the tide may be turning for the co. XPeng (XPEV) tumbled in wake of a UBS downgrade; said cos. near-term gains may now all be priced in after shares more than doubled in price this year. Morgan Stanley downgraded Salesforce (CRM) noting the cos. near-term catalysts, including margin expansion and price increases, are in the “rear-view mirror.” Lithium miners (SQM, ALB) were supported, particularly Albemarle (ALB) after it was reported Exxon (XOM) is in talks with Tesla (TSLA), Ford (F) and Volkswagen (VOW3 GY) on supplying lithium, with ALB among producers XOM is in talks with, Bloomberg reported. Elsewhere, Electrek reported that Uber (UBER) is buying 100 Tesla (TSLA) Model Y vehicles to deploy in Tokyo.

US FX WRAP
The Dollar caught a bid on month-end despite many sell side models pointing to Dollar selling. Credit Agricole’s month-end saw "real money USD selling & corporate EUR buying again" whilst also noting flows are likely to be mild USD selling across the board, with the strongest sell signal in USD/JPY, while the corporate model is indicative of EUR buying. Barclays meanwhile says the passive rebalancing model at month-end shows weak USD selling against all majors. The data highlight in the US was the Chicago PMI data which rose from the prior 41.5 to 42.8, but was beneath expectations of 43.3. Meanwhile, Fed’s Goolsbee (voter) and Kashkari (voter) spoke, albeit Kashkari was over the weekend where he said he is not sure when the Fed will be done raising rates and they are making good progress but will let the data guide them and they may or may not hike in September. Goolsbee added he does not know if they should skip the September meeting, noting nothing is on or off the table, although did take comfort in the Fed being on the 'Golden Path', as in lowering inflation without unemployment rising. DXY rose from lows of 101.520 about an hour after the Chicago PMI data before gradually paring throughout the rest of the session to highs of 101.89 at time of writing.

The Euro was weighed on by the Dollar strength with EUR/USD briefly falling sub 1.10 heading into APAC trade Tuesday, with the cross hovering around that level despite hot inflation data and a strong GDP report. Eurozone inflation data saw the Y/Y HICP in line at 5.3%, cooling from the prior 5.5%, however the core metric (ex Food & Energy) was hotter than expected at 6.6% (exp. 6.4%, prev. 6.8%) while the super core was also hotter than expected at 5.5% (exp. 5.4%), but in line with the prior 5.5%. On the marginally hotter than expected data, there was little reaction in European assets or ECB market pricing, given there is another flash reading ahead of the September 14th meeting. Currently, market pricing is steady around a 25-30% probability of a 25bp hike in September. EU GDP data saw a 0.3% Q/Q gain, accelerating from the prior -0.1% and above expectations of +0.2% while Y/Y rose 0.6%, cooler than the prior 1.0% but above expectations of 0.6%.

The Yen was markedly weaker to start the week following on from the BoJ puzzle last week. During APAC trade on Monday, the BoJ, in an unscheduled announcement, offered to buy an unlimited amount of JGBs at a fixed rate with maturities of 5-10yr bonds and JPY 300bln in JGBs with residual maturity of 5-10yrs. The announcement follows the BoJ policy tweak on Friday where it implemented a flexible YCC policy where it will buy unlimited 10yr JGBs at 1% but said it is not raising the yield cap of 0.5%. The Yen rose back above 142 to see a high of 142.6, levels not seen since early July.

The Yuan saw marginal gains vs the Dollar, on both offshore and onshore currencies with the PBoC setting a firmer than expected Yuan fix. However, there was more policy jawboning from officials, noting they will adjust and improve its policies on property. Meanwhile, on data, the Chinese PMIs were mixed, the manufacturing saw a marginal beat at 49.3 (exp. 49.2, prev. 49.0) while the services data slipped to 51.5 from 53.2, beneath the 53 consensus - albeit remaining in expansionary territory. It is also worth noting the Chinese export controls on key chipmaking material will come into effect on Tuesday 1st August, a full Newsquawk analysis can be found here.

Cyclical currencies predominantly outperformed, although the GBP softened vs the Dollar and only saw marginal gains against the Euro. AUD was the clear gainer on more jawboning support from China while the China PMI data was mixed, the Manufacturing did top expectations. It’s also worth keeping an eye on Australian coal demand as China’s export bank on germanium comes into effect Tuesday - germanium is primarily obtained as a by-product of zinc production (75%) and from coal (25%). Furthermore, traders will be waiting for the RBA policy decision Tuesday with markets split between a hike or hold following the cooler-than-expected Aussie CPI data. NZD/USD also saw solid gains, rising from lows of 0.6150 to highs of 0.6225 where it briefly rose above the 100dma at 0.6198. AUD/NZD saw gains ahead of the RBA rate decision. CAD saw gains vs the buck, with USD/CAD falling from 1.3261 at the highs to lows of 1.3152 as oil prices surged throughout the session on Chinese stimulus hopes.

EMFX was mixed, but generally weaker following the Chile rate cut. MXN was weaker vs the buck while the prelim growth estimate came in line with expectations, but at a slower pace than the prior, posting 0.9% growth in Q2 vs 1.0% previously. The BRL saw gains but the CLP underperformed following Friday's larger than expected 100bp cut on Friday (more below). The BCB is also set to cut rates on Wednesday, albeit not by the same magnitude as Chile with the street looking for a 25bp cut to 13.5% from 13.75%, albeit some do look for a 50bp cut. COP was weaker in the session with the Columbia Central Bank keeping rates unchanged as expected in a unanimous decision while Governor Villar noting the bank will not provide forward guidance on rate moves.

CHILE: The Chile Central Bank cut rates by 100bps on Friday, taking its key rate to 10.25%, 50bp deeper than the analyst consensus of 10.75%, but in fitting with forecasts from Pantheon and Scotia. The decision was unanimous, it also noted how with developed country policy pointing to prolonged periods of tighter policy, the impulse the Chilean economy will receive will remain limited. Within the statement, it noted that the government has evolved broadly in line with estimates from the June Monetary Policy Report, and it has initiated its easing cycle based on the consolidation of the inflationary convergence process. However, it does acknowledge interest rates will accumulate a stronger reduction than what was considered in the June Monetary Policy Report. Given the larger-than-expected cut, the markets are pricing in an even more dovish outcome in September with 159bps of rate cuts implied, suggesting a 62% probability of a 150bp cut and a 38% probability of a 175bp cut.

 

Bond rot continues as rates vol spikes and Dollar struggles into NFP - Newsquawk US Market Wrap

THURSDAY, AUG 03, 2023 - 04:25 PM

• SNAPSHOT: Equities down, Treasuries down, Crude up, Dollar flat.
• REAR VIEW: US ISM Services PMI disappoints; US Jobless Claims inline; US Unit Costs ease, Productivity rises; BoE hike 25bps; Saudi to extend voluntary 1mln BPD cut; Unscheduled BoJ bond buy; QCOM sales and guidance miss; Ackman short US 30yr.
• COMING UP: Data: EZ Retail Sales, US NFP, Canadian Unemployment Speakers: BoE's Pill Earnings: Credit Agricole, Commerzbank, Maersk & Berkshire Hathaway.

MARKET WRAP
Stocks were ultimately just slightly lower on Thursday where indices recovered into the NY afternoon as the acute Treasury bear-steepening lost momentum. On which, the spike in yields, particularly at the back-end, appears to be driven by continued concerns over the ramped Treasury supply calendar announced this week but also some force selling concerns given Fitch's downgrade earlier in the week - Bill Ackman announcing he was short in size late on Wednesday was the cherry on the cake. In FX, the DXY was ultimately flat with risk currencies paring losses as stocks recovered through the US session, while havens Yen and Swissy outperformed; note that Sterling was flat where the currency failed to extend a sell-off despite the BoE's downgrade to a slower 25bp hike. Maybe there is something to be said, from a stability perspective, for the lack of material Dollar appreciation despite the c. 15bp spike in bond yields, which has also coincided with a spike in implied Treasury vol. Meanwhile, oil prices surged back higher after Saudi announced it will be extending its 1mln BPD production cuts through September ahead of Friday's JMMC, with energy in general trading well after the heavy losses on Wednesday.

GLOBAL
BOE REVIEW: As expected, the MPC came to market with a 25bps rate hike, taking the Base Rate to 5.25% and disappointing some outside calls for a larger 50bps move. The decision to raise rates was subject to an 8-1 vote with Dhingra the lone dissenter whilst the magnitude of the rate hike was subject to hawkish dissent from Mann and Haskel who backed a 50bps increase. The decision to move on rates was backed by the consensus view that although recent data outturns had been mixed, some key indicators, notably wage growth, had surprised significantly on the upside. In the accompanying statement, the MPC reiterated that "if there were to be evidence of more persistent pressures, then further tightening ... will be required"; it is worth noting that the MPC judges current policy as restrictive. Moving forward, Bailey stated that the MPC needs to make absolutely sure that inflation falls all the way back to 2%. The forecasts embedded in the accompanying MPR saw the 2023 inflation projection held at 5% whilst the two-year forecast was revised higher to 1.5% from 1.0% but ultimately still seen below target and therefore indicative that the MPC judges the current rate path to be tighter than required to return inflation back to mandated levels. From a growth perspective, GDP is seen at 0.5% per annum from 2023-2025. In the follow-up press conference, Bailey cautioned that continued strength in services prices may suggest high inflation will persist, adding that upside surprises on wage inflation suggest that it will take longer for second-round effects to fade. Bailey refused to get drawn into hypothesizing what will happen next for the Bank Rate and stressed the Bank's data dependency, however, he did note that there is more than one path for rates that would deliver inflation back to target. On the balance sheet, Deputy Governor Ramsden said that the MPC will make a decision on QT in September, however, he personally can see the case for slightly increasing the pace. Overall, the choppy price action in the aftermath of the announcement suggested that there was "something for everyone" in the release, or at least, there is uncertainty over what is to come in the coming months. That said, markets have seen a mild dovish repricing with the terminal now seen at circa 5.7% vs. 5.57% pre-release, likely as a result of the MPC now judging policy to be restrictive. In terms of desk views, ING suggests a "hike in September seems likely, but by November we think the news on services inflation and wage growth should be looking a little better".

US ISM SERVICES: ISM Services in July remained in expansionary territory for the seventh straight month but fell to 52.7 from 53.9, short of the expected 53.0. The internals were also disappointing as business activity and new orders fell to 57.1 (prev. 59.2) and 55.0 (prev. 55.5), respectively, in addition to employment declining to 50.7 (prev. 53.1) ahead of the payrolls report on Friday. However, the inflationary gauge of prices paid eerily lifted to 56.8 from 54.1. Within the release it added that the majority of respondents are cautiously optimistic about business conditions and the overall economy. Overall, ING noted, the ISM activity indicators suggest that manufacturing is in recession and service sector output is becoming a little more sluggish. The publication added, “in the near term their employment components indicate the likelihood of slowing hiring while the tightening of lending conditions and higher market interest rates indicate the threat of a major slowdown can't be ignored”.

US JOBLESS CLAIMS: The jobless claims data was in line with estimates at 227k, with forecasts ranging between 210-240k, and rising from the prior 221k. Note, the seasonal factors had expected a decrease of 13,895 from the prior week, with the unadjusted claims at 205, -8.5k from the prior week. Looking at each state, the greatest fall in claims were in Ohio (-2,958), California (-2,386), and Georgia (-1,593), while the largest increases were seen in Missouri (+2,458), Illinois (+657) and New Jersey (+598). The 4wk average of initial claims fell to 228k from 234k. Initial Jobless Claims were also in line with analyst expectations at 1.7mln, with analyst forecasts ranging between 1.68 and 1.725mln. It is worth noting neither of these metrics coincide with the usual survey period of Friday's NFP report and this release will do little to alter Fed thinking. With claims around this level, it is not one to suggest an imminent recession, however analysts at Oxford Economics suggest the data is consistent with labour market conditions that are probably too tight for the Fed. The consultancy also expects claims will rise later in the year as the economy falls into a mild recession, but they expect the rise in claims to be modest compared to prior downturns.

FED: Fed's Barkin (2024 voter) noted inflation remains too high but last month's inflation reading was a good one and hopes it is a sign. He stressed the Fed's objective is not to cause a recession but to reduce inflation. He also suggested that if a recession were to occur, it might be less severe and cause less labour market dislocation, but warned a further economic slowdown is almost surely on the horizon. Barkin added that consumer spending, while weaker, is far from weak. Barkin, on a soft landing, said there is still a plausible story that inflation normalizes in short order and the economy dodges additional trauma. On lags, he noted that rate increases work with a lag and that many models estimate their impact should start to really hit around now. He also warned that what we learned in the ’70s, is that if you don’t get inflation under control, it comes back even stronger.

NFP PREVIEW: The rate of payroll growth is expected to slow in July, while measures of wage growth are seen cooling further. Analyst whisper numbers and gauges of the US labour market strength are supportive of a decent reading: ADP’ s gauge of payrolls surprised to the upside once again, though many analysts dismiss the data series as a reliable forecaster for the NFP data; weekly claims data has trended lower relative to the June survey week; PMI surveys allude to healthy labour market conditions, and consumers have confidence in the outlook for the labour market. And tracking estimates are also above what the consensus predicts. Ahead, payroll additions are expected to ease further, but Fedwatchers still suggest that a print in July that is in line with the consensus would still likely keep the prospect of another FOMC rate rise in play. To download the full Newsquawk preview, please click here.

FIXED INCOME
T-NOTE (U3) FUTURES SETTLED 18 TICKS LOWER AT 110-07+

Treasuries saw further bear-steepening on overhanging Fitch and supply fears with vol buying accelerating. 2s +0.5bps at 4.896%, 3s +3.2bps at 4.591%, 5s +6.1bps at 4.302%, 7s +8.9bps at 4.261%, 10s +11.5bps at 4.194%, 20s +13.5bps at 4.494%, 30s +14.3bps at 4.308%.

INFLATION BREAKEVENS: 5yr BEI -0.4bps at 2.369%, 10yr BEI +0.6bps at 2.369%, 30yr BEI +1.3bps at 2.332%.

THE DAY: After recovering somewhat during the NY afternoon on Wednesday to resistance at 110-28+, T-Notes began drifting lower again during the APAC session on Thursday with continued supply pressures. Some of the weakness was JGB-led as yields in Japan continue to edge higher, which ignited another unscheduled BoJ buying operation. There also remain some concerns over UST demand from those mandated with AAA after Fitch's downgrade. The bearishness was accentuated by Hedge Fund manager Bill Ackman announcing Wednesday that he is short the US 30yr "in size". China's Caixin Services PMI coming in hot could only have helped the govvie selling.

The continuous, gradual selling saw T-Notes find initial troughs at 110-09+ in the London morning, with contracts hovering near lows into the NY handover. Data in Europe saw mixed Services PMI in Europe with no massive shocks in either way. While the BoE's 25bp hike saw two-way action but nothing much for Treasuries in the context of their large ranges.

Fed's Barkin (nv) spoke ahead of the 08:30ET data, but added nothing incremental to the Fed debate. Initial jobless claims rose to 227 from 221k as expected, while Q2 productivity rose more than expected and unit labour costs slowed more than expected, with USTs seeing two-way action in the immediate aftermath, before further downside was seen, led by the long-end again and coinciding with a slew of put activity ahead of the ISM Services data, seeing T-Notes hit session lows of 110-05+, just off the early July lows of 110-05.

The miss on ISM Services didn't garner much immediate reaction but was soon followed by some chunky block steepeners, including 27.5k ZF/5.4k UB (5s30s), with the belly recovering into the NY afternoon and the long-end continuing to trade weakest. There was notable vol buying too, with implied vol having surged higher amid the latest bear-steepening, unsettling markets. Attention now hones in on Friday's payrolls report.

STIRS:

• SR3U3 -0.5bps at 94.59, Z3 -2bps at 94.62, H4 -2bps at 94.855, M4 -1.5bps at 95.19, U4 -1.5bps at 95.555, Z4 -2.5bps at 95.865, H5 -4bps at 96.095, M5 -6bps at 96.24, U5 -8bps at 96.30, U6 -10.5bps at 96.38, U7 -12bps at 96.32.
• SOFR falls to at 5.30% from 5.31% as of August 2nd, volumes fall to USD 1.416tln from 1.495tln.
• NY Fed RRP op demand rises to USD 1.777tln from 1.770tln, across 105 counterparties (prev. 101).
• EFFR flat at 5.33% as of August 2nd, volumes fall to USD 105bln from 108bln.
• US sold USD 71bln of 1-month bills at 5.275%, covered 2.80x; sold USD 61bln of 2-month bills at 5.285%, covered 2.77x.
• US raised its 16-, 13-, 26-, and 52-week bills by USD 5bln, 2bln, 2bln, and 2bln, respectively, to USD 67bln, 60bln, 40bln, and 55bln; 13- and 26-week auctioned on Aug 7th, 6-week and 52-week on Aug 8th; all to settle on Aug 10th.

FRIDAY: US Jobs Report (Jul), RBA SoMP, EZ Retail Sales (Jun), Canadian Jobs Report (Jul).

CRUDE
WTI (U3) SETTLED USD 2.06 HIGHER AT 81.55/BBL; BRENT (V3) SETTLED USD 1.94 HIGHER AT 85.14/BBL

Oil prices bounced back on Thursday as Saudi announced extended production cuts and the Dollar pared some strength. Sentiment in oil - and broader commodities - had hit a real snag after Wednesday's chunky selling with the refusal to sustain a bid on the massive 17mln bbl crude draw emboldening bears to see crude futures post their largest D/D loss since June, breaking the one-way traffic higher seen through July. Prices even began to extend lower on Thursday with WTI (U3) and Brent (V3) futures hitting lows of USD 78.69/bbl and 82.36/bbl, respectively. But the facts changed after Saudi came out and affirmed an extension of its production cuts with the potential to deepen them (more below), seeing prices rebound higher in the NY morning. There was some consolidation as the dust settled, but heading into the NY afternoon, combined with the Dollar paring some strength as the UST sell-off lost momentum, crude prices extended to highs ahead of their settlement, bringing prices back into their upward channel seen through July.

OPEC+: Saudi Arabia announced it would extend its voluntary oil production cut of 1mln BPD for another month to include September, which could be extended or, crucially, "extended and deepened", suggesting the Kingdom could go even further beyond what was largely considered the floor. The extension means Saudi will be producing 9mln BPD until at least the end of September, far beneath its maximum capacity of 12mln BPD. Meanwhile, Russian Deputy PM Novak announced Russia would continue to voluntarily reduce its oil supply in September, but at a smaller export reduction of 300k BPD vs the 500k BPD cut in August. The announcements preface the JMMC meeting on Friday, which kicks off at 13:00BST/08:00EDT, click here for a full Newsquawk primer.

EQUITIES
CLOSES: SPX -0.26% at 4,502, NDX -0.11% at 13,353, DJIA -0.19% at 35,216, RUT -0.28% at 1,961.

SECTORS: Utilities -2.29%, Real Estate -1.35%, Industrials -0.61%, Materials -0.6%, Health -0.5%, Technology -0.32%, Consumer Staples -0.17%, Communication Services -0.17%, Financials +0.07%, Consumer Discretionary +0.34%, Energy +0.95%

EUROPEAN CLOSES: DAX -0.79% at 15,893, FTSE 100 -0.43% at 7,529, CAC 40 -0.72% at 7,261, Euro Stoxx 50 -0.75% at 4,304, IBEX 35 -0.23% at 9,307, FTSE MIB -0.94% at 28,703, SMI -1.08% at 11,091.

EARNINGS: QUALCOMM (QCOM) missed on revenue and said 2023 handset units will be down at least a high single-digit percentage due to weak macro and slower China recovery. In addition, next quarter guidance was also short at the midpoint. EPS beat. PayPal (PYPL) missed on margins and active customer accounts; aside from that, it beat on revenue, profit was in line with next quarter guidance pretty good. Moderna (MRNA) posted a shallower loss per share than expected and beat on revenue. For the FY, sees COVID-19 vaccine revenue of USD 6-8bln (exp. 6.88bln). Albemarle (ALB) beat on profit and raised FY guidance citing rising lithium prices and vol. Although, revenue missed. DXC Technology (DXC) missed on the top and bottom line alongside a disappointing outlook for both next quarter and FY. DoorDash (DASH) posted a deeper loss per share than expected but beat on revenue. Lifted FY23 adj. EBITDA and marketplace GOV outlook. Etsy (ETSY) earnings beat, but next quarter guidance was light. Qorvo (QRVO) surpassed St. consensus on profit, revenue, gross and operating margins. Next quarter outlook was strong as the management said it expects September quarterly revenue to increase sequentially by more than 50%, “driven primarily by content gains” from Apple. McKesson (MCK) exceeded expectations on EPS and revenue, approved USD 6bln increase to share buyback programme and lifted quarterly dividend. Finally, it raised FY24 adj. EPS view. Goodyear Tire (GT) posted a surprise loss per share and missed on revenue. Exec said results were impacted by softer industry volume, ongoing effects of inflation, and storm-related interruption of operations at Tupelo. Nutrien (NTR) announced strategic actions expected to reduce controllable costs and enhance FCF; decided to indefinitely pause its ramp-up plans for potash production and halt work on its clean ammonia project at Geismar, Louisiana, as it grapples with falling prices. Robinhood (HOOD) MAUs missed but posted a surprise profit per share and beat on revenue.

STOCK SPECIFICS: Jefferies downgraded Southwest Airlines (LUV); said low-cost airlines appear to be struggling relative to premium peers, citing a key revenue margin for Southwest that shrunk during Q2. Tesla (TSLA) US executives and India's Commerce Minister held closed-door talks on carmaker's market entry plans, according to Reuters sources. Chenier Energy (LNG) CFO said it plans to step up its share repurchase programme and expects cost inflation of 10% for its expansion projects. Kroger (KR) and Albertsons (ACI) dodged a bid from consumers for a prelim injunction to halt the USD 24.6bln merger after a judge ruled the plaintiffs lacked standing and failed to explain how the deal would affect them personally. Roku (ROKU) downgraded at Citi. Avid Tech (AVID) soared on Reuters source reported PE firms Symphony Technology and Francisco Partners are among bidders for the co. Teamsters are demanding Kinder Morgan (KMI) negotiate a fair contract with better pay. Disney’s (DIS) ESPN is reportedly plotting its streaming future and is seeking tie-ups with leagues and rivals, according to WSJ citing sources.

US FX WRAP
The DXY was marginally lower on Thursday with a turn around in sentiment into the NY afternoon seeing DXY fall from highs of 102.84 to lows of 102.36, with the index hovering around 102.50 heading into APAC trade. Data saw jobless claims in line with expectations on both continuing and initial claims. Meanwhile, the ISM Services PMI missed expectations for July, falling to 52.7 from 53.9 (exp. 53.0). Overall business activity also declined, while the employment component fell to 50.7, just above contractionary territory of sub-50. Alongside this, the prices paid saw an increase, a worrying sign on the margin given the indicated growth slow down. Elsewhere, US unit labour costs growth for Q2 was much cooler than expected, while productivity beat. Challenger layoffs were lower than expected. Long-end Treasury yields continued to climb with alarming velocity ahead of NFP on Friday.

The Euro was relatively flat and traded either side of 1.0950 (currently sitting just below). EUR/USD hit a low of 1.0913 twice, more or less matching the 55dma at 1.0914 before moving higher. In Europe, the PMIs pointed to further inflation pressures while trade data in Germany disappointed, a full Newsquawk EU Data Wrap is available here.

The Pound was flat vs the Dollar and weaker vs the Euro in the aftermath of the BoE which hiked by 25bps as expected where Haskell and Mann opted for a 50bp hike, but Dhingra voted to leave rates unchanged again, with the remaining in favour of the 25bp hike. It also maintained forward guidance, leaving the door open for rate hikes in the future if necessary. A full Newsquawk review is available here. On the decision itself, GBP/USD fell from 1.2660 to lows of 1.2625 as the lower 25bp hike was confirmed (there was some pricing for a larger 50bp move), although the move was swiftly pared. Market pricing currently sees a 62% probability of another 25bp hike in September taking the rate to 5.5%, a level NatWest believes to be the peak. Markets however price at a peak rate of 5.71% in March 2025, implying an 84% probability of another hike by then. The lack of downside in GBP likely reflects positioning given the strong repricing lower of UK rates, and sell-off in Sterling, heading into the meeting.

The Yen saw gains vs the Dollar with USD/JPY falling from highs of 143.89 to lows of 142.07 on the initial risk off throughout the European morning but saw a turnaround once sentiment improved as Europe left with the Yen trading off risk sentiment on Thursday. The gains in the Yen come despite another unscheduled bond buy operation from the BoJ during APAC trade, although Rabo highlights the recent actions from the BoJ are helping to clarify how far policymakers are likely to allow 10yr JGB yields to move with yields hitting 0.65% before they acted. Rabobank also note that "on the assumption that hopes remain that the BoJ can creep towards a gradual move away from extremely accommodative policy, we see the potential for USD/JPY to move back towards 138 on a 3-to-6-month view".

The Franc was initially on a softer footing following the region's CPI print which cooled from the prior reading to be in line with the market's forecast at 1.6% and below the SNB's Q3 CPI YY forecast of 1.7%. CHF later reversed course amid the risk tone and USD/CHF looks to end the US session lower in its 0.8734-98 intraday band.

Antipodeans were mixed but relatively flat with the Aussie seeing marginal gains vs the Dollar and Kiwi seeing marginal losses although downside for the high-beta currencies was cushioned by the Chinese Caixin Services PMI which topped forecasts, whilst Australia's Trade Balance printed at a slightly wider surplus than expected, although Imports and Exports both contracted. AUD/USD hit a high in the US session on the risk turnaround with the pair hitting a high of 0.6568 with technicians looking towards the 0.66 level on the upside, and the Wednesday peak of 0.6629. NZD/USD fell under 0.6100 but losses stopped short of 0.6050 at 0.6061, with levels under the half-round figure seen at 0.6048 (29th June low) and thereafter at 0.6028 (lows on both the 7th and 8th of June).

The Yuan firmed on both offshore and onshore currencies vs the Dollar following a better than expected Caixin Services PMI survey, which rose to 54.1 from 53.9, above the 52.5 forecast, albeit the composite fell to 51.9 from 52.5. Note, the PBoC also posted a firmer Yuan fixing than expected at 7.1495 (exp. 7.1933), but above the prior 7.1368. Note, the PBoC also held meetings Thursday to support the development of private firms in the country's latest stimulative-natured efforts.

EMFX was generally weaker with COP, BRL, and MXN underperforming following the BCB 50bp rate cut (more below), weighing on broader LatAm FX currencies with CLP also softer vs the buck albeit not to the same extent as its peers given a rally in copper prices. Elsewhere, in CEE the CNB maintained rates at 7.0% in a unanimous decision, noting rates will be higher than the baseline forecast scenario in the coming quarters, and noted risks to the baseline are significant and tilted to the upside. The CNB also formally ended its exchange rate intervention policy to see CZK weaker vs the Euro.

BCB: The Brazilian Central Bank opted to cut rates by 50bps, on the larger side of expectations with market pricing going into the event more or less a coin toss between a 25 or 50bp reduction. The decision was not unanimous, however, in a 5-4 vote split with Governor Neto opting for the 50bp cut. The Copom also provided guidance, noting "Committee members unanimously anticipate further reductions of the same magnitude in the next meetings, and it judges that this pace is appropriate to keep the necessary contractionary monetary policy for the disinflationary process." It is worth noting that Finance Minister Haddad had alluded to such a move ahead of the decision, noting there is room for a 50bp cut and he was certain rates would be lowered.