Will impact of tariffs now show up in US CPI? UK unemployment still elevated

EU Mid-Market Update: Will impact of tariffs now show up in US CPI? UK unemployment still elevated; EU leaders speak up before Trump/Putin meeting; 10-year JGB was untraded.

Notes/observations

- Europe tracks Asia steadily higher as US futures are mixed. Seasonality of Aug playing its part. Waiting on US inflation data at 08:30 ET (12:30 GMT). Bond yields flat, except UK Gilts, up mid-single digit bps across curve.

- UK job data was slightly better than analysts expected, buoying sterling and firming up neutral rate expectations after hawkish pivot from BOE decision last week, but the data still showed subdued activity, and continued slowdown in the labor market. The unemployment rate of 4.7% is a 4-year high and economic inactivity is lowest since Q1 2020 at 21%.

- Japan’s 10-year JGB was untraded all day for the first time since Mar 2023 and Credit Suisse global banking panic; It is underscoring an unusual bout of illiquidity in one of the market’s most traded securities. The freeze may reflect broader market stress or caution ahead of US CPI print.

- Canola futures fell 2-3% as China unveiled prelim results from its Canadian canola probe, applying rule to collect security deposits of 75.8% from Aug 14th.

- During earnings call, recruitment giant PageGroup said it has seen three straight quarters of improving conversion from accepted offers to placements in the US.

- Asia closed mixed with Nikkei225 outperforming +2.1%. EU indices -0.1% to +0.5%. US futures -0.1% to +0.1%. Gold +0.3%, DXY 0.0%; Commodity: Brent +0.1%, WTI 0.0%; Crypto: BTC -2.3%, ETH +0.8%.

Asia

- Reserve Bank of Australia (RBA) cut Cash Rate Target by 25bps to 3.60%; As expected.

- China Commerce Min (MOFCOM): Launches anti-dumping probe into Canadian pea starch, begins today Aug 12th and runs for a year; Could be extended by 6 months.

- China Finance Ministry (MOF): Will offer interest subsidy policies to enterprises in eight consumer sectors, including catering, tourism and elderly care.

- China Foreign Ministry: Hope US will take practical actions to maintain the stability and smooth operation of the global chip supply chain.

- China updates Export Control List; Firms can apply to trade with entities under the list; Halts measures on 12 US entities on export list - statement.

- South Korea Pres Lee and US Pres Trump confirmed to hold Summit meeting on Aug 25th; the leaders will discuss cooperation related to chips, batteries and shipbuilding.

- South Korea Presidential Office: No change in position on tax [threshold related to stock tax]; to monitor market and discussion between the government and ruling DP.

- South Korea KDI [think tank] Maintains 2026 GDP growth at 0.8%; 2026 GDP growth forecast at 1.6% - press.

Europe

- Italy said to seek to shrink Chinese holdings at strategic companies - press.

- EU Foreign Policy Commissioner Kallas: Will work on a 19th package of sanctions against Russia.

- Romania Central Bank (NBR) updates quarterly staff projections: Raising 2025 but cutting 2026 inflation forecasts.

Americas

- Trump: Confirms Dr. E.J. Antoni as nominee for Commissioner of the Bureau of Labor Statistics - Truth Social.

- White House officials say that Fed Vice Chairs Bowman and Jefferson are being considered for Fed Chair post; Dallas Fed's Logan also under consideration - press.

- Elon Musk: xAI to take immediate legal action against Apple for "antitrust violation"- post on X.

Conflicts/Tensions

- Ukraine Pres Zelenskiy reportedly told European leaders that they must reject any settlement proposed by Trump in which Ukraine gives up further territory, but that Russia could be allowed to retain some of the land it has taken - UK press.

- Ukraine Pres Zelenskiy: See Russian army preparing for new offensive.

- Ukraine Pres Zelenskiy: Russia sanctions should remain in place until Ukraine gets security guarantees - comments following call with Canada PM Carney.

- UK PM Starmer and Canada PM Carney agreed that a peace deal must be built with Ukraine, and not imposed upon it.

Trade

- Trump signs Executive Order extending China tariff deadline by 90 days to Nov 9th (as widely expected) - CNBC.

- Trump: Gold will not be tariffed - Truth Social post.

- China reportedly over the past few weeks urged firms not to use less advanced chips, including Nvidia H20, in new guidance – Press.

- China reportedly loosens urea exports to India in sign of thawing tensions - press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.27% at 548.24, FTSE +0.30% at 9,157.05, DAX -0.03% at 24,066.26, CAC-40 +0.43% at 7,731.88, IBEX-35 +0.56% at 14,928.54, FTSE MIB +0.53% at 41,804.00, SMI +0.07% at 11,877.44, S&P 500 Futures -0.11%].

Market Focal Points/Key Themes: European indices open higher across the board and remained upbeat during the early part of the session; better performing sectors include materials and energy; among underperforming sectors are technology and financials; focus on US CPI coming out later in the day; earnings expected in the upcoming Americas session include Sea Limited, Cardinal Health and Smithfield Foods.

Equities

- Consumer discretionary: PageGroup [PAGE.UK] -2.0% (earnings; trends), Ceconomy [CEC.DE] +0.5% (final earnings), Entain [ENT.UK] -1.5% (earnings), Lufthansa [LHA.DE] -1.0% (hearing analyst downgrade).

- Healthcare: Novartis [NOVN.CH] +1.0% (trial data).

- Industrials: Komax [KOMN.CH] -12.0% (earnings).

- Technology: ASML [ASML.NL] -1.0% (China urges firms not to use prior generation chips, including Nvidia H20).

Speakers

-Romania Central Bank (NBR) Gov Isarescu: If we want to avoid recession faster, then absorption of EU funds is necessary; FX rate is currently at an equilibrium level.

-RBA Gov Bullock: There was no discussion of a larger cut at today's meeting - post rate decision press conference.

-South Africa Min: Govt to do everything possible to keep US market open for our goods - press.

Economic data

-(UK) July BRC LFL Sales Y/Y: 1.8% v 2.0%e.

-(IE) Ireland July Construction PMI: 47.1 v 48.6 prior.

-(NL) Netherlands July CPI M/M: 1.3% v 0.0% prior; Y/Y (final): 2.9% v 2.9% prelim; CPI EU Harmonized M/M: 1.0% v 1.0% prelim; Y/Y: 2.5% v 2.5% prelim.

-(FI) Finland June Current Account Balance: €1.2B v €0.2B prior.

-(UK) JUNE AVERAGE WEEKLY EARNINGS 3M/Y: 4.6% V 4.7%E; Weekly Earnings (ex-bonus) 3M/Y: 5.0% v 5.0%e; Private Earnings (ex-bonus) 3M/Y: 4.8% v 4.8%e.

-(UK) JULY JOBLESS CLAIMS CHANGE: -6.2K V -15.5K PRIOR; CLAIMANT COUNT RATE: 4.4% V 4.4% PRIOR; Payrolled Employees Monthly Change: -8K v -20Ke.

-(UK) JUNE ILO UNEMPLOYMENT RATE: 4.7% V 4.7%E; Employment Change 3M/3M: 238K v 185Ke.

-(RO) Romania July CPI M/M: 2.7% v 1.5%e; Y/Y: 7.8% v 6.5%e.

-(TR) Turkey Jun Current Account Balance: -$2.0B v -$1.3Be.

-(TR) Turkey June Retail Sales Y/Y: 14.7% v 17.6% prior.

-(DE)Germany Aug ZEW current situation Survey: -68.6 V -67.0e; Expectations survey: 34.7 V 39.5e.

-(EU) Euro Zone July ZEW Expectations Survey: 25.1 v 36.1 prior.

Fixed income issuance

-(UK) DMO SELLS £4.75B IN 4.375% MAR 2030 GILTS; AVG YIELD: 4.022% V 4.078% PRIOR; BID-TO-COVER: 3.15X V 3.12X PRIOR; TAIL: 0.1BPS V 0.2BPS PRIOR.

-(ES) Spain Debt Agency (Tesoro) sells total €2.52B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

-(TW) Taiwan sells NT$25B vs. NT$25B indicated in 10-year Bonds; Avg Yield: 1.368%, bid-to-cover: 2.10x.

Looking ahead

- 05:30 (ZA) South Africa Q2 Unemployment Rate: No est v 32.9% prior.

- 05:30 (ZA) South Africa Jun Total Mining Production M/M: No est v 3.7% prior; Y/Y: No est v 0.2% prior; Gold Production Y/Y: No est v 1.5% prior; Platinum Production Y/Y: No est v -0.6% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2037, 2040 and 2044 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €6.47B with 33 bids recd).

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills.

- 06:00 (FI) Finland to sell RFGB Bonds.

- 06:00 (RO) Romania to sell RON500M in 7.1% July 2034 bonds.

- 06:00 (PT) Portugal July Final CPI M/M: No est v -0.4% prelim; Y/Y: No est v 2.6% prelim; CPI EU Harmonized M/M: No est v -0.4% prelim; Y/Y: No est v 2.5% prelim.

- 06:00 (US) July NFIB Small Business Optimism: No est v 98.6 prior.

- 06:30 (IN) India July CPI Y/Y: No est v 2.1% prior.

- 06:30 (TR) Tukey to sell bonds (2 tranches).

- 06:30 (EU) ESM to sell €B in 6-month Bills.

- 08:00 (BR) Brazil July IBGE Inflation IPCA M/M: No est v 0.2% prior; Y/Y: No est v 5.4% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) July CPI M/M: No est v 0.3% prior; Y/Y: No est v 2.7% prior; CPI (ex-food/energy) M/M: No est v 0.2% prior; Y/Y: No est v 2.9% prior; CPI Index NSA: No est v 322.561 prior; CPI Core Index: No est v 327.600.

- 08:30 (CA) Canada Jun Building Permits M/M: No est v 12.0% prior.

- 08:30 (US) July Real Avg Hourly Earning Y/Y: No est v 1.0% prior; Avg Weekly Earnings Y/Y: No est v 0.7% prior.

- 08:30 (CL) Chile Central Bank Economist Survey.

- 08:55 (US) Weekly Redbook LFL Sales data.

-11:30 (US) Treasury to sell 6-Week Bills.

- 14:00 (US) July Federal Budget Balance: No est v $27.0B prior.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 18:45 (NZ) New Zealand July Total Card Spending M/M: No est v -0.2% prior; Retail Card Spending M/M: No est v 0.5% prior.

- 19:00 (KR) South Korea July Unemployment Rate: No est v 2.6% prior.

- 19:50 (JP) Japan July PPI M/M: No est v -0.2% prior; Y/Y: No est v 2.9% prior.

- 21:30 (AU) Australia Q2 Wage Price Index Q/Q: No est v 0.9% prior; Y/Y: No est v 3.4% prior; Home Loans Value Q/Q: No est v -1.6% prior; Owner-Occupier Loan Value Q/Q: No est v -2.5% prior; Investor Loan Value Q/Q: No est v -0.3% prior.

- 22:30 (HK) Hong Kong to sell combined HK$2.5B in 1-year and 5-year Bonds.

- 23:00 (KR) South Korea Jun M2 Money Supply M/M: No est v 1.0% prior; ‘L’ Money Supply M/M: No est v 0.5% prior.

- 23:35 (JP) Japan to sell 5-Year JGB Bonds.