Putin Hits Tipping Point as Ukraine Tightens Rebel Noose (Bloomberg)
Bank of England holds steady as rates debate heats up (Reuters)
Russia Bans Array of U.S., EU Foods in Retaliation Move (Bloomberg)
Deutsche Telekom Rejects Iliad Bid, Leaves Door Open to US Sale (NYTimes)
BofA Said Nearing Up to $17 Billion Mortgage Settlement (Bloomberg)
One of the main stories overnight was the surprise spike in Australian unemployment. For July, the unemployment rate rose to 6.4% from 6.0% in the previous month. However, judging by the information at hand, there is no discernable reason to explain the jump. The participation rate only increased by one tenth and the net employment change for the month was -300 (that's hundred). Irregardless, the AUD is showing the largest negative return in currencies overnight and did not make any move to recover. The RBA has been in a neutral stance for the past nine months and the clear reaction is to move more dovish. Its monetary policy report is due late tonight.
The Bank of England kept rates on hold at 0.5% for another month. No mention was made in the statement about any dissent, so we will have to wait until the minutes are released in two weeks to see what push was made to hike rates. The main story today is what Draghi says at the ECB press conference, scheduled to start at 8:30am ET. There have been no media leaks that indicate he will make any large changes to the current policy stance. The one potential comment could be on the ABS program, which Germany's financial ministry has spoken negatively about.
German Bunds continue to rally, the 2yr Schatz yield dropped below zero again this morning due to the country's industrial production growth coming on the light side in June. It's been at least a year since we reached that level. For perspective, the Swiss 10yr is 0.49% versus the 1.08% Bund, so dropping below 1% is not out of the realm of possibilities. This is keeping a bid behind US Treasuries this morning, where, if you can believe it, realized and implied volatility on swaptions remains near the record low level set in May 2013.
Russia officially announced overnight that it was banning food imports from most Western countries. The foods included all cheese, fish, beef, pork, fruit, vegetables, and dairy products, and applies for all countries that have imposed sanctions against Russia. Keep an eye on the dry bulk shippers, and by extension the Baltic Dry Index, as this would directly impact them.
- Australian unemployment rate (July) up to 6.4% vs 6.0% expected, prior 6.0%
-- Employment change -0.3K vs 13.2K exp, prior 14.9K
- Eurozone industrial production MoM (June) up 0.3% vs 1.2% exp, prior -1.7%
US Economics (Time Zone: EST)
08:30 Initial Jobless Claims - 289K, exp. 304k, prior 302k
08:30 Continuing Claims - 2518K, exp 2512K, prior 2539k
3:00 Consumer Credit (June) - exp $18.65B, prior $19.62B
11:00 Fed to purchase $2.05b-$2.5b notes in 7 to 10-year range
Cooper Tire (CTB)
Goodrich Petroleum (GDP)
Duke Energy (DUKW)
Monster Beverages (MNST)
Lions Gate (LGF)
Linn Energy (LINE)
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