Treading water until Walmart earnings and kick off of Jackson Hole symposium

EU Mid-Market Update: Treading water until Walmart earnings and kick off of Jackson Hole Symposium; Meta AI unit hiring freeze confirmed by spokesperson.

– Euro climbed after both French and German flash PMIs for Aug were stronger than expected (both 49.9), highest manufacturing readings in >2 years but still remaining in contraction territory; Aggregate Euro Zone manufacturing beat as well, for first expansion in 38 months at 50.5.

- Meta has temporarily paused some AI hiring, with a spokesperson confirming a freeze that began last week and framing it as organizational planning amid budgeting and a restructuring of its AI division for superintelligence, after a blockbuster spending spree that drove costs higher.

- UK 10-year gilt up 2-3bps after public sector net borrowing (PSNB) in July was £1.1B, beating £3.2B forecast, but Jun borrowing revised up to £22.6B from £20.7B, raising debt concerns.

- Economists note UK Chancellor Reeves is still likely to raise ~£20B in taxes later this year to meet fiscal rules, creating room for BOE to cut rates.

- Oil rose on US demand signs after crude stockpiles fell 6M; Market mood remains weak amid OPEC+ unwinding 2.2M bpd cuts and focus on Russia-Ukraine peace talks, which could ease restrictions on Russian oil.

- Traders will be closely watching Walmart comments on its attitude towards any price increases; In late July, Jefferies analysts after meeting with WMT management said Walmart still saw a broadly stable U.S. consumer but with early signs of trade down and substitution, the “next wave” of tariff-driven price increases was progressing - perishables rose in April, infrequent general merchandise in June, faster-turn GM now, with seasonal items into Halloween and the holidays - so WMT planned to widen price gaps to win back-to-school even as reported inventories likely jump in Q2 due to higher-than-expected tariff rates.

- DeepSeek confirmed new V3.1 model, a hybrid inference model with Think and Non-Think modes that answers faster than R1-0528, improves tool use and multi-step agent tasks, and cancels the nighttime pricing discount as it pushes toward the agent era.

- Asia closed mixed with ASX200 outperforming +1.1%. EU indices -0.5% to +0.1%. US futures -0.3%. Gold -0.2%, DXY 0.0%; Commodity: Brent +0.8%, WTI +0.9%; Crypto: BTC -0.2%, ETH +1.1%.

Asia

- Japan Aug Preliminary PMI Manufacturing: 49.9 v 48.9 prior (2nd month of contraction).

- Australia Aug Preliminary PMI Manufacturing: 52.9 v 51.3 prior (8th month of expansion).

- Australia Aug Consumer Inflation Expectation: 3.9% v 4.7% prior.

- South Korea Aug Exports 20 Days Y/Y: +7.6% v -2.2% prior; Imports 20 Days Y/Y: +0.4% v -4.3% prior.

- South Korea July PPI Y/Y: 0.5% v 0.5% prior.

- New Zealand July Trade Balance (NZD): -0.6B v 0.1B prior.

- China said to discuss expanding the use of yuan and possibly stablecoins for cross-border trade and payments with some countries at the Shanghai Cooperation Organisation (SCO) Summit.

Global conflict/tensions

- Pentagon official stated that US would take only a "small role" in Ukraine's security guarantees; European officials concerned they would have to take on the bulk of the responsibility for keeping peace in Ukraine.

- Russia Foreign Min Lavrov stated that Russia would accept if the security guarantees to Ukraine were provided on equal basis with the participation of countries like China, the United States, the United Kingdom and France.

Europe

- German Finance Ministry Monthly Report: Federal and state tax revenue +3% y/y.

Americas

- FOMC July Minutes noted near-term inflation rise seen as likely; magnitude, timing and persistence uncertain. Majority saw inflation risk outweighing employment risk.

- Fed's Cook (voter) stated that had no intention of being bullied to step down; Would be gathering accurate information to provide facts; Would take questions on her financial history seriously.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.24% at 557.74, FTSE -0.09% at 9,279.95, DAX -0.12% at 24,248.10, CAC-40 -0.48% at 7,934.08, IBEX-35 -0.42% at 15,230.50, FTSE MIB +0.12% at 42,917.00, SMI -0.47% at 12,211.94, S&P 500 Futures -0.11%].

Market Focal Points/Key Themes: European indices open generally lower and remained under pressure through the early part of the session; risk appetite at a low ebb ahead of Jackson Hole; among better performing sectors are energy and industrials; sectors inclined to the downside include consumer discretionary and communication services; oil & gas subsector supported following drop of inventories in the US; earnings expected in the upcoming US session include Walmart.

Equities

- Consumer discretionary: CTS Eventim [EVD.DE] -17.5% (earnings; costs rise), WH Smith [SMWH.UK] -36.5% (overstatement of expected Headline trading profit in North America), Hays [HAS.UK] -6.0% (trading update; dividend cut).

- Healthcare: Nicox [COX.FR] +10.5% (positive trial results) - Industrials: Rheinmetall [RHM.DE] +3.0% (Pentagon official says US will take only a "small role" in Ukraine's security guarantees), BMW [BMW.DE] -1.0% (said to be considering entering into an engine cooperation with Mercedes).

- Technology: ASML [ASML.NL] -0.5% (Meta AI hiring freeze; new DeepSeek model).

Speakers

- Ukraine Pres Zelenskiy ruled out meeting Putin in Moscow; Peace talks should take place in ‘neutral Europe’. Saw Switzerland, Austria, Turkey as possible venues. Want to have understanding of security guarantees in 7–10 days, then bilateral and trilateral leaders meetings. Ruled out China among security guarantors.

Currencies/fixed income

- USD was softer in the session as better PMI readings came out of Europe. The data out of Europe offset the hawkish tone from Wed FOMC Minutes where the majority saw inflation risk outweighing employment risk. Focus US OMI and weekly claims data later in the session. Friday will see the long awaited Jackson Hole speech from Fed Chair Powell.

- EUR/USD above 1.1650 as Euro Zone PMI registered its 1st expansion in 38 months.

- GBP/USD at 1.3466 by mid-session aided by better PMI Services data.

- USD/JPY at 147.60 at mid-day. The 20-year JGB yield tested its highest level since its launch back in 1999.

- 10-year German Bund yield at 2.72% and 10-year Gilt yield at 4.69%. 10-year Treasury yield: 4.30%.

Economic data

- (NL) Netherlands July Unemployment Rate: 3.8% v 3.8% prior.

- (NL) Netherlands Aug Consumer Confidence: -32t v -32 prior.

- (UK) July Public Finances (PSNCR): +£3.0B v -£16.4B prior; Net Borrowing (PSNB): £1.1B v £2.0Be.

- (CH) Swiss July Trade Balance (CHF): 4.6B v 5.7B prior; Exports M/M: -2.7% v +7.3% prior; Imports M/M: -0.3% v +0.9% prior; Watch Exports Y/Y: +6.9% v -5.6% prior.

- (NO) Norway Q2 Overall GDP Q/Q: 0.8% v 0.1% prior; GDP Mainland Q/Q: 0.6% v 0.3%e.

- (SE) Sweden Q2 Industry Capacity: 88.5% v 88.1% prior.

- (DK) Denmark Aug Consumer Confidence: -17.2 v -15.7 prior.

- (JP) Japan July Final Machine Tool Orders Y/Y: 3.6% v 3.6% prelim.

- (CH) Swiss July M3 Money Supply Y/Y: 4.7% v 4.3% prior.

- (TR) Turkey Aug Consumer Confidence : 84.3 v 83.5 prior.

- (FR) France Aug Preliminary Manufacturing PMI: 49.9 v 48.1e (31st month of contraction); Services PMI: 49.7 v 48.5e.

- (DE) Germany Aug Preliminary Manufacturing PMI: 49.9 v 48.8e (38th month of contraction); Services PMI: 50.1 v 50.3e (2nd month of expansion).

- (EU) Euro Zone Aug Preliminary Manufacturing PMI: 50.5 v 49.5e (1st expansion in 38 months); Services PMI: 50.7 v 50.8e.

- (PL) Poland July Sold Industrial Output M/M: 0.2% v -1.0%e; Y/Y: 2.9% v 1.8%e.

- (PL) Poland July PPI M/M: -0.1% v 0.0%e; Y/Y: -1.2% v -1.4%e.

- (PL) Poland Aug Consumer Confidence: -12.1 v -14.0e.

- (HK) Hong Kong July CPI Composite Y/Y: 1.0% v 0.9%e.

- (UK) Aug Preliminary Manufacturing PMI: 47.3 v 48.3e (11th straight contraction); Services PMI: 53.6 v 51.8e (4th month of expansion).

- (EU) Euro Zone Jun Construction Output M/M: -0.8% v -2.1% prior; Y/Y: 1.7% v 3.6% prior.

- (BE) Belgium Aug Consumer Confidence: -2 v -4 prior.

Fixed income issuance

– (FR) France Debt Agency (AFT) sold total €B vs. €8.5-10.5B indicated range in 2028, 2030 and 2031 Bonds.

- Sold €5.154B in 2.40% Sept 2028 Oat; Avg Yield: 2.31% v 2.27% prior, bid-to-cover: 3.03x v 3.25x prior (July 17th 2025).

- Sold €1.345B in 2.50% May 2030 Oat; Avg Yield: 2.62% v 2.58% prior; bid-to-cover: 4.68x v 3.49x prior (July 17th 2025).

- Sold €4.000B in 2.70% Feb 2031 Oat; Avg Yield: 2.77% v 2.74% prior; bid-to-cover: 2.86x v 2.72x prior.

- (SE) Sweden sold total SEK750M vs. SEK750M indicated in I/L 2036 and 2039 Bonds.

Looking ahead

- (AR) Argentina Aug Consumer Confidence: No est v 46.37 prior.

- (US) Jackson Hole Symposium begins.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 05:50 (FR) France Debt Agency (AFT) to sell €0.75-1.25B in inflation-linked 2032, 2040 and 2053 bonds (Oatei).

- 06:00 (UK) Aug CBI Industrial Trends Total Orders: -28e v -30 prior; Selling Prices: 20e v 21 prior.

- 06:00 (DE) German Bundesbank Monthly Report.

- 06:00 (CZ) Czech Republic to sell CZK5.0B in 12-month Bills.

- 06:00 (RO) Romania to sell combined RON1.0B in 2028 and 2033 bonds.

- 06:00 (VN) Vietnam Finance Ministry announcement on upcoming bond issuance (held on Wed).

- 07:00 (CA) Canada Aug CFIB Business Barometer: No est v 50.9 prior.

- 08:00 (MX) Mexico Jun Retail Sales M/M: -0.2%e v +1.8% prior; Y/Y: 2.5%e v 2.7% prior.

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

- 08:30 (US) Initial Jobless Claims: 225Ke v 224K prior; Continuing Claims: 1.96Me v 1.953M prior.

- 08:30 (US) Aug Philadelphia Fed Business Outlook: 6.7e v 15.9 prior.

- 08:30 (CA) Canada July Industrial Product Price M/M:0.3%e v 0.4% prior; Raw Materials Price Index M/M: -0.6%e v 2.7% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Aug 15th: No est v $686.4B prior.

- 09:30 (BR) Brazil July Tax Collections (BRL): No est v 234.6B prior.

- 09:45 (US) Aug Preliminary S&P Manufacturing PMI: 49.7e v 49.8 prior; Services PMI: 54.2e v 55.7 prior; Composite PMI: 53.5e v 55.1 prior.

- 10:00 (US) July Existing Home Sales: 3.92Me v 3.93M prior.

- 10:00 (US) July Leading Index: 0.0%e v -0.3% prior.

- 10:00 (EU) Euro Zone Aug Advance Consumer Confidence: -14.7e v -14.7 prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (MX) Mexico Central Bank (Banxico) AugMinutes.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

-13:00 (US) Treasury to sell 30-Year TIPS Reopening.

- 19:01 (UK) Aug GfK Consumer Confidence: -19e v -19 prior.

- 19:30 (JP) Japan July National CPI Y/Y: 3.1%e v 3.3% prior; CPI (ex-fresh food) Y/Y: 3.0%e v 3.3% prior; CPI (ex-fresh food/energy) Y/Y: 3.4%e v 3.4% prior.

- 22:00 (KR) South Korea to sell KRW1.0T in 1-year Bonds.

- 23:30 (JP) Japan to sell 3-Month Bills.