Overnight Summary And Look At The Day's Events

It's quiet out there, quieter than usual. Perhaps this is because Merkel is in Canada today and so hasn't had a chance to crash any dreams of magic money trees yet. The EURUSD however did drop preemptively without any news and touched on 3 day lows moments ago under 1.2280, forcing DraghiFX and his long EURUSD call to pay another margin call. Eventwise, in Europe Spain continues to pretend it does not exist, with its bond yields quietly sliding lower even as the country's economy continues to deteriorate, on expectations that Rajoy will ask for a bailout, when in fact the lower yields go, the more unlikely this event is. Of course, all that needs to happen for the deer in headlight market to snap out of its trance is a reminder of just how broke Spain is before it does need a bailout. In the meantime, Spain is extending unemployment benefits. More importantly, it seems that the Chinese slowdown is about to hit Germany like a brick wall: Hamburg - Europe’s second-largest container harbor - reported its first quarterly decline in container volumes in nine quarter. And now the recession is really coming to Germany.

More key overnights summarized by Bloomberg:

  • Spain’s government is considering a request for a sovereign bailout, European Economic and Monetary Affairs Commissioner Olli Rehn signaled in a Bloomberg Television interview yesterday
  • Spanish Prime Minister Mariano Rajoy risks irking the European policy makers he needs on his side after he extended unemployment benefits to avoid stoking social unrest
  • Hamburg, Europe’s second-largest container harbor, reported its first quarterly decline in container volumes in nine quarters as Europe’s debt crisis reached China, the port’s main trading partner
  • U.K. jobless claims unexpectedly fell in July and a wider measure of unemployment dropped to its lowest in a year as the Olympic Games created jobs in London
  • German bunds lower, Spanish and Italian 10-yr notes higher. BofAML IG Master spread narrows to new low for year. EUR/USD erases gains, slides to session-low $1.2283; European stocks, U.S. equity-index futures lower

What to look forward to today:

  • 7:00 am: MBA Mortgage Applications, Aug. 10 (prior -1.8%)
  • 8:30 am: Consumer Price Index M/m, July, est. 0.2% (prior 0.0%)
  • 8:30 am: CPI Ex Food & Energy M/m, July, est. 0.2% (prior 0.2%)
  • 8:30 am: Consumer Price Index Y/y, July, est. 1.6% (prior 1.7%)
  • 8:30 am: CPI Ex Food & Energy Y/y, July, est. 2.2% (prior 2.2%)
  • 8:30 am: Consumer Price Index NSA, July, est. 229.495 (prior 229.478)
  • 8:30 am: CPI Core Index SA, July (prior 229.916)
  • 8:30 am: Empire Manufacturing, Aug., est. 7 (prior 7.39)
  • 9:00 am: Total Net TIC Flows, June (prior $101.7b)
  • 9:00 am: Net Long-term TIC Flows, June, est. $40.0b, (prior $55b)
  • 9:15 am: Industrial Production, July, est. 0.5% (prior 0.4%)
  • 9:15 am: Capacity Utilization, July, est. 79.2% (prior 78.9%)
  • 9:15 am: Manufacturing (SIC) Production, July, est. 0.5%, (prior 0.7%)
  • 10:00 am: NAHB Housing Market Index, Aug., est. 35 (prior 35)
  • Central Banks
  • 8:00 pm: Fed’s Kocherlakota speaks on the Fed in Minot, North Dakota
  • Supply
  • 11:00 am: Fed to sell $7b-$8b notes due 9/15/14-4/30/15