US stocks finished with mild losses amid mixed data and higher yields - Newsquawk Asia-Pac Market Open

• US stocks finished with mild losses after having recovered into the NY afternoon as the acute Treasury bear-steepening lost momentum, while participants also digested several data releases including a disappointing ISM Services report which missed on the headline reading and saw a rise in the prices paid sub-index.
• USD was marginally lower amid a turnaround in sentiment into the NY afternoon which saw the DXY fall from highs, while there was a slew of mixed releases in which headline ISM Non-Manufacturing missed forecasts and jobless claims matched estimates on both continuing and initial claims.
• Looking ahead, highlights include Japanese Cash Earnings, Philippines CPI, Singapore Retail Sales & RBA SoMP.

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LOOKING AHEAD

• Highlights include Japanese Cash Earnings, Philippines CPI, Singapore Retail Sales & RBA SoMP.

US TRADE

• US stocks finished with mild losses after having recovered into the NY afternoon as the acute Treasury bear-steepening lost momentum, while participants also digested several data releases including a disappointing ISM Services report which missed on the headline reading and saw a rise in the prices paid sub-index.
• SPX -0.26% at 4,502, NDX -0.11% at 13,353, DJIA -0.19% at 35,216, RUT -0.28% at 1,961.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (non-voter) said inflation remains too high but noted that last month's inflation reading was a good one and hopes it is a sign, while he added that the Fed's objective is not to cause a recession but to reduce inflation. Barkin also stated that if a recession were to occur, it might be less severe and cause less labour market dislocation and said a further economic slowdown is almost surely on the horizon.
• US raised 16-, 13-, 26-, and 52-week bills by USD 5bln, 2bln, 2bln, and 2bln to USD 67bln, 60bln, 40bln and 55bln, respectively, with the 13- and 26-week to be auctioned on Aug 7th, while 6-week and 52-week will be auctioned on Aug 8th with all to settle on Aug 10th.
• Apple Inc (AAPL) Q3 2023 (USD): EPS 1.26 (exp. 1.19), Revenue 81.80bln (exp. 81.69bln), Products revenue USD 60.58bln (exp. 60.67bln), iPhone revenue USD 39.67bln (exp. 39.8bln), Mac revenue USD 6.84bln (exp. 6.37bln), iPad revenue USD 5.79bln (exp. 6.33bln).
• Amazon.com Inc (AMZN) Q2 2023 (USD): EPS 0.65 (exp. 0.35), Revenue 134.4bln (exp. 131.5bln)

DATA RECAP

• US S&P Global Services PMI Final (Jul) 52.3 (Prev. 52.4)
• US S&P Global Composite Final PMI (Jul) 52.0 (Prev. 52.0)
• US ISM Services PMI (Jul) 52.7 vs. Exp. 53.0 (Prev. 53.9)
• US ISM Non-Manufacturing Price Paid Idx (Jul) 56.8 (Prev. 54.1)
• US ISM Non-Manufacturing Employment Idx (Jul) 50.7 (Prev. 53.1)
• US ISM Non-Manufacturing New Orders Idx (Jul 2023) 55.0 (Prev. 55.5)
• US Factory Orders MM (Jun) 2.3% vs. Exp. 2.2% (Prev. 0.3%)
• US Continued Jobless Claims (22 Jul) 1.7M vs. Exp. 1.7M (Prev. 1.69M)
• US Initial Jobless Claims (29 Jul) 227.0k vs. Exp. 227.0k (Prev. 221.0k)
• US Productivity Prelim. (Q2) 3.7% vs. Exp. 2.0% (Prev. -2.1%)
• US Unit Labor Costs Prelim. (Q2) 1.6% vs. Exp. 2.6% (Prev. 4.2%)
• US Challenger Layoffs (Jul) 23.697k (Prev. 40.709k)

FIXED INCOME

• US Treasuries further bear-steepened on overhanging Fitch and supply fears.

FX

• USD was marginally lower amid a turnaround in sentiment into the NY afternoon which saw the DXY fall from highs, while there was a slew of mixed releases in which headline ISM Non-Manufacturing missed forecasts and jobless claims matched estimates on both continuing and initial claims.
• EUR traded relatively flat and on either side of 1.0950, while the latest PMI data from the bloc pointed to further inflation pressures and trade data from Germany disappointed.
• GBP was ultimately flat against the dollar in the aftermath of the BoE which hiked by 25bps as expected with Haskell and Mann opting for a 50bp hike, but Dhingra voted to leave rates unchanged again.
• JPY strengthened as the cautious mood spurred demand for haven currencies.
• CNB voted 7-0 to keep rates unchanged at 7.0% which it said is consistent with the new macro forecast of a decline in market rates across the horizon, while CNB Governor Michl said although inflation dropped, it is still at unacceptable levels and the board will make decisions based on data at the next meeting.

COMMODITIES

• Crude gained as Saudi announced extended production cuts and the dollar pared some strength.
• Saudi Arabia will extend the voluntary cut of 1mln BPD for another month to include September which can be extended and/or deepened.
• Russian Deputy PM Novak said within efforts to ensure the oil market remains balanced, Russia will continue to voluntarily reduce its oil supply for September with the oil exports cut at 300k BPD.
• White House's Kirby said the US is to continue working with producers and consumers to ensure the energy market promotes growth after the Saudi decision on oil production.

GEOPOLITICAL

• Polish PM said Wagner forces are moving towards NATO's eastern flank to destabilise, according to Al Arabiya.
• US Secretary of State Blinken said in the event of a return to the grain deal, the US will continue to make sure everyone can export food products safely including Russia. Blinken also stated they have not yet received a response from China's Foreign Minister Wang Yi on the invite to the US but expect to have an opportunity and fully expect Chinese counterparts to come to the US.
• Russian and Turkish Deputy Foreign Ministers discussed the grain deal, according to Bloomberg.
• US may put troops on commercial ships to stop Iran seizures, according to AP.

ASIA-PAC

NOTABLE HEADLINES

• PBoC held meetings to support the development of private firms and announced to roll-out guidelines to support private firms, while it will expand debt financing tools to support private firms and will implement differentiated housing credit policies in a precise manner. It was also reported that PBoC and NDRC officials are to hold a briefing on economic development on Friday at 10:00 local time (03:00BST/22:00EDT).
• US President Biden is being urged to limit further US investment in Chinese stocks and bonds ahead of an expected new order next week, according to FT citing US House China Committee Chair Mike Gallagher.
• US House China Committee Chairman held out the possibility of a subpoena in the Blackrock (BLK) and MSCI (MSCI) probe if they do not provide "fulsome" answers about investments in blacklisted Chinese companies.
• Indian government’s June review stated that the country’s exports are expected to perform well backed by a strong performance in services exports.

EU/UK

NOTABLE HEADLINES

• BoE raised the Bank Rate by 25bps to 5.25%, as expected, in which 8 voted for a hike and 1 voted for unchanged (both as expected). Dhingra voted to keep rates unchanged and explained that she sees risks of over-tightening, while Haskel and Mann voted for a 50bps hike to reduce the risk of more costly tightening. BoE reiterated that if there were to be evidence of more persistent pressures, then further tightening will be required but noted that the current monetary policy stance is restrictive and it will ensure the Bank Rate is sufficiently restrictive for sufficiently long.
• BoE Governor Bailey (post-meeting statement) said inflation is expected to step down further in July to around 7%, followed by a further decline in October to 5%, while he does not think it is time to declare it is all over yet and said there is no presumed path of interest rates from here. Furthermore, he does not think that there was a case for a 50bps rate rise and he will not predict when the BoE will start to cut rates as it is too soon to speculate, while he also noted that they might need to hike again but added that is not certain.
• BoE Governor Bailey said UK rates will have to remain restrictive and reiterated it is "too early" to see victory on inflation, while he noted the last mile of the inflation fight is to take some time, according to a Bloomberg TV interview.
• BoE Deputy Governor Ramsden responded that the MPC will make the decision on QT at the September meeting and he can personally see the case for slightly increasing the pace when asked about QT.
• UK Chancellor Hunt asked the FCA to carry out an urgent review on concerns around "debanking" and the government will determine whether further action is necessary based on the findings. FCA is to ask the biggest banks and building societies for data on account terminations and the reasons for them, while it will provide an initial assessment of account terminations by mid-September.
• ECB's Panetta said monetary policy may operate not just by increasing rates but also by keeping the prevailing level of policy rates for longer and said they must be prudent in calibrating the monetary policy stance if they are to reach the inflation target without harming economic activity unnecessarily. Furthermore, Panetta commented that he will decide in September whether they should pause or not.

DATA RECAP

• UK Services PMI (Jul F) 51.5 vs. Exp. 51.5 (Prev. 51.5)
• UK Composite PMI (Jul F) 50.8 vs. Exp. 50.7 (Prev. 50.7)
• German Services PMI (Jul) 52.3 vs. Exp. 52 (Prev. 52)
• German Composite Final PMI (Jul) 48.5 vs. Exp. 48.3 (Prev. 48.3)
• EU Services PMI (Jul F) 50.9 vs. Exp. 51.1 (Prev. 51.1)
• EU Composite PMI (Jul F) 48.6 vs. Exp. 48.9 (Prev. 48.9)
• EU Producer Prices MM (Jun) -0.4% vs. Exp. -0.2% (Prev. -1.9%)
• EU Producer Prices YY (Jun) -3.4% vs. Exp. -3.1% (Prev. -1.5%)