European bourses weaker, US futures contained; DXY lower & Fixed firmer; US NAHB due - Newsquawk US Market Open

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Monday, Sep 18, 2023 - 10:06 AM
  • European bourses are in the red with US futures contained in light newsflow ahead of a key Central Bank week
  • DXY above 105.00, but in the red, Antipodeans outperform with other G10s relatively contained vs USD
  • Debt futures depressed heading into a packed week, yields bid across the curve with the belly leading
  • Crude benchmarks remain firmer as known demand- & supply-side factors continue to assist
  • US’ Sullivan and China’s Wang Yi met with talks described as candid, substantive and constructive
  • Looking ahead, highlights include US NAHB Housing Market Index. Remarks from Saudi Arabia’s Energy Minister, ECB's Panetta


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  • European bourses are in the red, Euro Stoxx 50 -0.8%, with participants cautious ahead of a Central Bank frenzy.
  • Sectors have Health Care at the bottom weighed on by Lonza while pressure on LVMH's Champagne brands has put Consumer Products & Services on the backfoot.
  • Stateside, futures are essentially unchanged on the session after Friday's pressure, ES +0.1%, with the US docket light until Wednesday's FOMC.
  • JP Morgan on EZ Equity Strategy: stays cautious on the region and expects defensive sectors to trade better into year-end. Click here for more detail.
  • Click here for more detail.


  • DXY sits on a 105.000 handle within tight range ahead of NAHB on a quiet agenda before this week's Central Bank-fest.
  • Kiwi and Aussie marginally outperform against Greenback above 0.5900 and 0.6400 respectively in the absence of anything specific.
  • Other majors relatively contained vs Buck as Franc, Yen, Pound, Loonie and Euro keep afloat of 0.9000, 148.00, 1.2350, 1.3550 and 1.0650.
  • PBoC set USD/CNY mid-point at 7.1736 vs exp. 7.2707 (prev. 7.1786)
  • Czech Central Bank Governor Michl said let’s forget about near-term rate cuts and that there will be no rate cuts in September and October, while they expect higher rates in the longer term and want to be a hawkish central bank. Furthermore, Michl said core inflation does not allow a rate cut now and they will wait for data in November and January, according to Reuters.
  • Click here for more detail.
  • Click here for the Option Expires for the NY Cut.


  • Debt futures remain depressed and defensive awaiting inflation data, a swathe of September policy meetings and flash PMIs.
  • Bunds and Gilts teeter mostly above 130.00 and 95.00 between 130.24-129.97 and 95.23-94.96 respective parameters.
  • T-note hovers within 109-09/16 range pre-NAHB.
  • Click here for more detail.


  • WTI October and Brent November futures are firmer intraday, although off best levels with support emanating from Central Bank expectation, demand side support via China and ongoing Saudi/Russia curbs.
  • WTI trades around USD 91.30/bbl and towards the top end of a 90.86-91.70/bbl parameter thus far, while its Brent counterpart oscillates around USD 94.30/bbl in a USD 93.93-94.78/bbl band.
  • TTF is softer intraday despite Offshore Alliance members starting another 24-hour stoppage while Norway's Troll field has begun to increase output after its prolonged shutdown.
  • Spot gold is rangebound between the 50- and 200-DMAs while base metals are more mixed given the cautious tone.
  • Australia’s Offshore Alliance union said members began another 24-hour stoppage on Sunday at Chevron’s (CVX) Australian LNG facilities.
  • French PM Borne said the government plans to permit gas stations to sell fuel at a loss for a limited period of a few months to help contain inflation.
  • Troll field in Norway to start ramping up output on Monday following the prolonged shutdown, according to Bloomberg's Stapczynski.
  • Kuwait KNPC says power was cut at the Al Ahmadi (25k BPD) and Abdallah (270k BPD) refineries last night but work continues; working towards full production capacity, exports remain unaffected, according to a KNPC statement.
  • Kazakhstan raised its daily oil and gas condensate production by 10% on Sunday from Saturday to 250.4k tons following the completion of maintenance at the Karachagnak and Tengiz fields.
  • China August refined copper output +16.4% Y/Y to 1.12mln metric tons; Lead output +5.5% Y/Y to 619k tons, according to the stats bureau.
  • Ukraine intends to sue Hungary, Poland and Slovakia due to their refusal to drop a ban on Ukrainian agricultural products, via Politico.
  • Click here for more detail.


  • Two key House Republican factions, the House Freedom Caucus and Main Street Caucus, reached a deal to temporarily fund the government for an extra month and avert a shutdown, according to Semafor.
  • UAW and automakers resumed talks on reaching a new contract and Ford (F) said it is committed to reaching an agreement with UAW that rewards workers and allows Ford to invest in the future, while Stellantis (STLA) offered union employees cumulative raises of nearly 21% over the life of the contract and proposed a plan to keep the Illinois assembly plant open. However, UAW stated that Stellantis is playing games with the future of the assembly plant and UAW’s President Fain said in an interview with CBS that they are prepared to do whatever they have to do when asked whether they are ready to order strikes at additional plants.
  • WSJ's Timiraos' FOMC preview: "Why a Soft Landing Could Prove Elusive"
  • Click here for the US Early Morning Note.


  • UK opposition Labour Party leader Keir Starmer pledged to seek a major rewrite of the Brexit deal in 2025 if the party wins the next general election, according to FT.
  • ECB’s Holzmann said that they definitely cannot say this was the final hike but the likelihood of another hike is not that big and noted that inflation risks haven’t receded lately. Furthermore, he stated that there is a risk more tightening will be needed and it wasn’t an easy decision at the last meeting where they had to weigh all arguments very carefully in order to come to an agreement.
  • ECB’s Muller sees a good case that no further rate hikes are needed and noted a strong case to quicken the balance sheet roll-off, while he added that the ECB should discuss an earlier end of PEPP reinvestment.
  • ECB’s Stournaras said governments must do their part in reining in consumer prices after borrowing costs reached a level that could be their peak, while he stated that monetary policy has done its part to fight inflation and it is up to fiscal policy to take off some of the heat, according to Bloomberg.
  • ECB's Kazimir said he wishes the September rate hike was the last but cannot rule out further rate increases; only the March forecast can confirm that ECB is heading towards inflation goal; end of rate hikes to open debate on how to adjust PEPP and APP. Once clear that no more rate hikes are needed, debate should start on speeding up QT. Premature to place bets on the first-rate cut.
  • ECB's de Guindos says parts of underlying inflation are moderating.
  • Bundesbank Monthly Report (September): expects the German economy to shrink in Q3 on weak industry and muted private consumption.
  • Moody’s raised Greece’s sovereign rating by two notches from Ba3; Outlook Stable from BA1; Outlook Positive and S&P affirmed Spain at A; Outlook Stable, while Fitch affirmed Germany at AAA; Outlook Stable and affirmed Malta at A+; Outlook Stable.


  • UK Rightmove House Price Index MM (Sep) 0.4% (Prev. -1.9%); YY (Sep) -0.4% (Prev. -0.1%)


  • Ukraine’s general in command of ground forces announced that Ukrainian forces recaptured the eastern village of Klishchiivka on the southern flank of Bakhmut, according to a Telegram post cited by Reuters.
  • North Korean leader Kim met with Russian Defence Minister Shoigu in Vladivostok who showed Kim Russia’s hypersonic Kinzhal missiles and three nuclear-capable strategic aircraft, according to Russian media.
  • IAEA said Tehran took a disproportionate and unprecedented measure in barring a third of IAEA’s most experienced inspectors in Iran and noted that these inspectors are among the most experienced energy experts with unique knowledge of enrichment technology, according to Reuters.
  • Israel PM Netanyahu said Iran is violating all its commitments to the international community after Tehran moved to ban multiple inspectors, according to Reuters.
  • Saudi Arabia reportedly informed the Biden admin of its decision to halt all discussions of normalising ties with Israel on Sunday, citing Israeli PM Netanyahu's "extremist" government, according to unconfirmed reports cited by The Jerusalem Post.
  • Taiwan's Defence Ministry said during the past 24 hours, 40 Chinese air force planes crossed Taiwan's air defence zone and said China's continuous military harassment can easily lead to a sharp increase in tensions and worsen regional security, while it urged Beijing authorities to immediately stop destructive actions, according to Reuters. Furthermore, AFP reported that Taiwan said it detected 103 Chinese warplanes around the island.
  • Turkish President Erdogan said Turkey could part ways with the EU if necessary following a report which criticised Turkey’s democratic shortcomings, according to Bloomberg.
  • Social media reports, citing Bulgarian radio, state that an unidentified drone with an 82mm mortar mine has crashed on the coast of Bulgaria (NATO member).


  • Bitcoin is firmer on the session but remains shy of the USD 27k mark and last week's USD 26.85k best. However, BTC is at the top-end of USD 26.38-26.80k parameters with specific newsflow light as markets generally prepare for blockbuster Wednesday and Thursday sessions.


  • APAC stocks were mostly lower following last Friday’s declines on Wall St and with the region cautious in a holiday-thinned start to a busy week of central bank policy announcements
  • ASX 200 was pressured with underperformance in tech and telecoms and with the handover of leadership at the RBA met with little fanfare.
  • Nikkei 225 remained closed as Japanese participants observed the Respect for the Aged Day holiday.
  • Hang Seng and Shanghai Comp retreated at the open with the declines in Hong Kong led by tech and property stocks including Evergrande shares which slumped by more than 20% in early trade after some of its wealth management employees were detained by Chinese authorities. Conversely, the losses in the mainland were later reversed in the aftermath of the PBoC’s firm liquidity efforts and the previously unannounced meeting between Chinese Foreign Minister Wang Yi and US National Security Adviser Sullivan.


  • US National Security Adviser Sullivan and Chinese Foreign Minister Wang Yi met in Malta over the weekend in an unannounced meeting to maintain open lines of communication with the discussions said to be candid, substantive and constructive, while they discussed security issues, Russia’s war in Ukraine and cross-Taiwan-Strait issues, according to the White House. Furthermore, a US official said the US sees some limited signs China may re-establish military communications with the US and the US raised concerns about Chinese assistance to Russia, as well as expressed concerns about China crossing the median line in the Taiwan Strait, according to Reuters.
  • China’s Foreign Ministry said following the meeting between Chinese Foreign Minister Wang and White House’s Sullivan that both sides agreed to continue to maintain high-level exchanges and hold consultations on Asia-Pacific affairs, maritime affairs and foreign policy, while it added that the Taiwan issue is the first insurmountable line on Sino-US relations, according to Reuters.
  • China's Foreign Minister Wang Yi said in a meeting with Malta's Foreign Minister that the two sides will work together to promote China-EU cooperation and China hopes Malta would continue to play a positive role in the development of China-EU relations. Furthermore, he said China-EU cooperation outweighs differences and China has consistently supported the EU's strategic independence and European integration, according to Reuters.
  • Chinese Foreign Minister Wang Yi will visit Russia from September 18th-21st for the China-Russia strategic security consultations.
  • IMF’s Georgieva said China’s ageing population and declining productivity are suppressing growth and Beijing should work to boost domestic consumption, while she urged China to address the weakness in the real estate sector and build-up of local government debt. Furthermore, she stated the IMF must carefully monitor the outflow of investments from China and said that some sectors still offer opportunities, according to Reuters.
  • German Foreign Minister Baerbock said Europe must reduce its dependence on China and the EU should de-risk from China but not decouple, according to Bloomberg.


  • Singapore Non-Oil Exports MM (Aug) -3.8% vs. Exp. 5.5% (Prev. 3.4%); YY (Aug) -20.1% vs. Exp. -15.8% (Prev. -20.2%)