Breakfast Bites - Tue Sep 12, 2023

Rise and shine everyone.

We received improved sentiment data from Germany, the UK’s wages remain sticky, the 5Y Japanese Government Bond Auction went well and we have the US 10Y note auction later today at 1pm ET. And it’s Apple launch day.

US Equity Futures are lower this morning alongside gold and copper. Crude Oil continues to be strong closing in on $88/bbl. Bitcoin crossed $25k and is up almost 4%. The US Dollar Index is also higher with higher shorter term rates. The Yield Curve is a -0.71%.

Asia and Australia

• Asian equities again mixed in Tuesday trading. Australia's ASX turned around a soft opening into a gain for the second consecutive day, Japan's main benchmarks set to close higher. Hang Seng also rallied from a poor start, mainland China stocks flat.

• Country Garden has been granted more debt repayment extensions on 6 out of 8 onshore bonds by 3 years. Notional value worth total CNY10.8B ($1.48B).

• PBOC expected to cut RRR for second time this year after August credit data beat expectations, showing signs of stability.

• The 5Y JGB Auction held yesterday was not as much of a disappointment as the previous auctions. The auction saw relatively good demand providing a lift for JGBs. The Ministry of Finance sold ¥2.5 trillion ($17 billion) of debt maturing in June 2028, and will offer ¥1.2 trillion of new 20-year bonds Thursday. - After Governor Ueda’s comments yesterday, it would seem that the market is more confident on rates going higher.

• Australian consumer confidence fell further into deeply pessimistic territory in September despite RBA keeping cash rate unchanged for a third straight month.

• Arm underwriters will close IPO orders Tuesday, a day earlier than planned. IPO still expected to be priced Wednesday at or above the initial range of $47~$51. Offering said to be oversubscribed by as much as 10 times and could end up as much as 15 times by Wednesday.

• Alibaba CEO says AI now key priority in group revamp plan

Europe, Middle East, Africa

• European equity markets mixed. FTSE 100 outperforms. Retail, Telecom and Insurance sectors outperform, while Chemicals, Technology and Real Estate lag.

• UK unemployment increases, but wage growth accelerates due to bonuses. Total average earnings, including bonuses at 8.5% versus consensus 8.2% and prior 8.4% revised from 8.2%. This isn’t great for the BoE as sticky wages are proving to be an issue for inflation.

• UK grocery inflation has fallen to its lowest level in a year heading into September. Annual grocery inflation was 12.2% in the four weeks to 3-Sep, down from 12.7% in August.

• Germany’s ZEW investor sentiment unexpectedly improved in September to -11.4 vs -12.3. However, current conditions index continued to weaken to the lowest level in three years to -79.4 vsprior -71.3. It would seem that there remains caution around the immediate economic landscape.

• The Eurozone ZEW investor sentiment came in worse that at -8.9 vs -5.5 in the previous month. The number came in worse than the expected level of -6.2.

The Americas

• Oracle fiscal Q1 revenue largely in line while profitability and FCF surprised to the upside. Fiscal Q2 guidance for 5-7% revenue growth lagged the consensus for +8%, while EPS only captured the Street at the high end of the outlook range. The market was underwhelmed with the stock price dropping nearly -10%.

• Apple launches their new iPhone 15 models today along with Apple Watch Series 9. They expect to introduce the first phones that were manufactured at the plant in India. Previews seemed fairly positive on hardware upgrades. There is however debate as to whether this enough to drive upgrades at a time when consumer spending is slowing down.

• Heading into the 14-Sep contract expiry deadline, UAW has dialed back its pay-increase demand in negotiations with the Big Three US automakers. Recently offered proposals that include a mid-30% wage increase, down from initial demand of 40%+.

• BofA's latest Global Fund Manager Survey said investor sentiment no longer extremely bearish, with global equity allocations at a 17-month high.

• NFIB small business optimism index slipped to 91.3 in August from 91.9 in July, marking 20th consecutive month below 49-year average of 98.

• Tesla upgraded to overweight from equal-weight at Morgan Stanley on Dojo supercomputer opportunity.

Calendar

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)