Headlines:
- Saxony August CPI +6.8% vs +6.7% y/y prior
- Bavaria August CPI +5.9% vs +6.1% y/y prior
- North Rhine Westphalia August CPI +5.9% vs +5.8% y/y prior
- Spain August preliminary CPI +2.6% vs +2.6% y/y expected
- ECB's Centeno: Even if we pause, saying we are done would be the wrong message
- ECB's Centeno: Growth indicators have been surprising to the downside recently
- BOJ's Tamura: Timing of easy policy exit must not be too late, but not too early too
- Eurozone August final consumer confidence -16.0 vs -16.0 prelim
- Germany July import price index -0.6% vs 0.0% m/m expected
- UK July mortgage approvals 49.44k vs 51.00k expected
- Switzerland August Credit Suisse investor sentiment -38.6 vs -32.6 prior
- Switzerland August KOF leading indicator index 91.1 vs 91.5 expected
- US MBA mortgage applications w.e. 25 August +2.3% vs -4.2% prior
- Dollar bears looking for that Goldilocks scenario on the US economy
Markets:
- GBP leads, JPY lags on the day
- European equities lower; S&P 500 futures down 0.1%
- US 10-year yields up 3.3 bps to 4.155%
- Gold flat at $1,937.82
- WTI crude up 0.7% to $81.21
- Bitcoin down 0.7% to $27,396
After the sharp moves yesterday, things are looking calmer for now at least in European trading.
The dollar steadied itself as bond yields also find a bit of a footing. But all of this is coming before we get to the US ADP employment roulette data later today.
Among the highlights of the session was CPI data for German states. The early one was for NRW which saw a slight rise in August inflation and that spooked ECB bettors a little. They moved to price in odds of a 25 bps rate hike to ~61% from around ~54% before that.
But after the other mixed readings, the pricing fell to ~51% and is now holding at around ~57%. As such, the euro is also holding steady across the board with EUR/USD little changed at 1.0885 currently.
The dollar is seeing gains more notable against the yen and antipodeans. USD/JPY is up 0.4% to 146.40 as slightly higher yields are helping. Meanwhile, AUD/USD is down slightly by 0.2% to 0.6470 but off its earlier lows of 0.6450 at least.
In the equities space, the mood is more tentative and tepid now as dollar and yields are holding their ground after the fall yesterday.
It's now over to the ADP number to see if there is reason for the outsized reaction yesterday to take hold again today.