Weekend Update

Top Stories

Germany has opted to back the European Central Bank in its push for conditions for reducing borrowing costs, potentially through sovereign bond-buying. (1)

Spanish bank loans grew to 9.42 percent in May, while loans that fell into arrears grew 8.4 billion euros to 164.4 billion. These numbers are record highs for Spain, which just sought a 100 billion eurozone bailout. (2) Spain aims to request its first rescue payment shortly. (3)

Economic Releases & Statistics

Consumer spending fell to 1.5 percent, down from the first quarter’s 2.4 percent. U.S. Producer Price Index grew 0.3 percent in July, surpassing estimates for a 0.2 percent rise. Core PPI rose 0.4 percent, good prices increased 0.5 percent while energy prices fell 0.4 percent. (4) The Consumer Price Index was unchanged in July, versus forecasts for a 0.2 percent growth. Annually, the CPI grew 1.4 percent, down from June’s 1.7 percent. (5) Business inventories grew 0.1 percent in June to $1.58 trillion, while sales dropped 1.1 percent, the sharpest decline since March 2009. (6) U.S. retail sales grew 0.8 percent following four months of decline. Passing forecasts for a 0.3 percent rise, it is the biggest growth since February. Purchases rose in all 13 categories. (7) Industrial production rose 0.6 percent in July following May and June gains of 0.1 percent. This was in line with estimates. Capacity utilization grew 0.4 percent to 79.3 percent, the highest since April 2008. (8)

U.S. housing starts declined 1.1 percent to 746,000, countering forecasts for a rise to 756,000. Building permits grew to 812,000, the most since August 2008. Single-family home construction dropped 6.5 percent to 502,000, the first decline since February. Unemployment claims grew 2,000 to 366,000 last week, slightly higher than estimates for a rise to 365,000. (9)

Stocks & Earnings

Cisco Systems Inc.’s shares grew 9 percent on Thursday following a 75 percent rise in its quarterly dividend and its “commitment to return at least 50 percent of free cash flow in dividend and buybacks.” (10) On Friday, Facebook shares fell 4.3 percent to a new low as the company’s investors were given their first opportunity to sell. (11) Wal-Mart saw second quarter profits increase by 5.7 percent through further lowering prices and increasing merchandise. (12)

Global Currencies

U.S. benchmark Treasury bonds interest rates have begun rising following record lows. The 10-year Treasury bond has grown 28 percent and the 5-year bond has risen 36 percent since July 24. (13) Chile’s central bank opted to hold its key interest rate at 5 percent for the seventh straight month. (14) The Australian dollar fell 0.4 percent to $1.0474, continuing a 5-day slide to 1 percent. New Zealand’s dollar fell 0.1 percent to 80.94 U.S. cents following gains over the last two days. (15)

Oil & Energies

Natural gas storage grew 20 billion cubic feet to 3.261 trillion cubic feet, weaker than expectations for a 22 to 26 billion cubic feet gain. (16) Crude inventories fell 1 percent, 3.7 million barrels, to 366.2 million barrels, exceeding forecasts for a 1.5 million barrel decline. Gasoline storage declined 1.2 percent or 2.4 million barrels to 203.7 million, slightly greater than estimates for a 2.3 million barrel drop. Distillates grew 700,000 barrels to 124.2 million barrels, exceeding expectations for no change. (17) The U.S. increased oil imports by 20 percent from Saudi Arabia this year, growing its dependence on the kingdom. (18)

Grains & Field Crops

The weekly Crop Progress report showed conditions poor for Corn Belt crops but unchanged from last week. Corn in good/excellent condition continued at 23 percent, with 42 percent of corn dented and 78 percent doughing. 30 percent of soybeans in good/excellent condition while 38 percent are in poor/very poor condition. 83 percent of the crop has set pods. Spring wheat in good/excellent condition consists of 61 percent and only 11 percent is in poor/very poor condition. 65 percent of the crop has been harvested as of August 13. (19)

With the U.S.’ corn crop facing losses, Brazil is forecast to export as much as 15 million tonnes of corn this year and 20 million tonnes next year. The nation’s poor roads and bottlenecks at its ports could hamper this number slightly. Thanks to Chinese demand, its soy exports grew 41 percent last year, now accounting for 9.1 percent of Brazil’s exports. (20) Brazil will reportedly overtake the U.S. as the world’s largest soybean exporter in 2012-13. In response to higher prices, Brazilian and Argentinean farmers are estimated to plant more soybeans this season. (21)

Monday, Argentina approved the genetically modified Roundup Ready 2 soybean seed for use by its farmers. The seed is already used in Brazil. (22) Heavy storms in Argentina last week are prompting concerns of swamped fields as farmers prepare for fall planting. (23)

Precious Metals

Strikers at the Lonmin platinum mine in Marikana, South Africa were fired upon by local police on Thursday, resulting in 35 fatalities. Roughly 3,000 miners had gathered to press for wage increases, some armed with machetes and clubs. (24) China National Gold Corp is considering a bid for Barrick Gold’s African unit in order to help satiate their nation’s rising gold demand. A takeover of the unit would grow the company’s reserves by a third. (25)

Other Commodities

Espirito Santo, the largest coffee-growing state in Brazil, is forecast to see continued rains next week. (26) The nation’s coffee consumption grew 3 percent over the last year through April, consuming almost 20 million coffee bags. This growth is estimated to slow to 2.2 percent, totaling 20.4 million bags, over the next year. Brazil’s coffee crop is officially estimated at 50.45 million bags, up 6.95 million bags from last year’s harvest. (27) Sugar waiting in Brazilian ports fell 9.4 percent this week to 2.3 million metric tons, down from 2.5 million tons earlier. (28)

Ivory Coast’s cocoa bean exports fell 4.4 percent this season to 1.315 million metric tons, weaker than forecasts for a 1.36 million ton harvest. Dry weather may hamper the current crop, to be harvested in October. (29) Two Ivory Coast cocoa shipments to Brazil last month, totaling 10,000 tonnes, arrived infested with insects. The shipment was undocumented and had not been fumigated. (30) Ghana’s western region received 4.5 millimeters of rain at the beginning of August, hampering harvesting of the main cocoa crop. The global cocoa demand may outpace supply by 13,000 tons, or upwards of 270,000 tons if an El Niño does form, in the 2012-13 season. (31)

Next Week:

Date Currency Event GMT Forecast Previous
19-Aug Sun NZD NZD Performance Services Index 22:30   54.30
GBP GBP Rightmove House Prices (MoM) 23:01 -1.70%
GBP GBP Rightmove House Prices (YoY) 23:01 2.30%
20-Aug Mon JPY JPY Leading Index 05:00   92.60
JPY JPY Coincident Index 05:00 93.80
JPY JPY Convenience Store Sales (YoY) 07:00 -2.60%
EUR EUR Euro-Zone Construction Output s.a. (MoM) 09:00 0.10%
EUR EUR Euro-Zone Construction Output w.d.a. (YoY) 09:00 -8.40%
USD USD Chicago Fed Nat Activity Index 12:30 -0.15
NZD NZD Net Migration s.a. 22:45 490.00
AUD AUD Reserve Bank Board – August Minutes 01:30
NZD NZD Credit Card Spending s.a. (MoM) 03:00 0.80%
NZD NZD Reserve Bank of New Zealand 2-Year Inflation Expectation 03:00 2.40%
NZD NZD Credit Card Spending (YoY) 03:00 4.60%
21-Aug Tue JPY JPY All Industry Activity Index (MoM) 04:30 0.20% -0.30%
JPY JPY Nationwide Department Store Sales (YoY) 05:30 -1.20%
JPY JPY Tokyo Department Store Sales (YoY) 05:30 -0.10%
CHF CHF Money Supply M3 (YoY) 07:00 7.40%
CHF CHF Real Estate Index Family Homes 07:00 410.40
GBP GBP Public Finances (PSNCR) (Pounds) 08:30 3.0B
GBP GBP PSNB ex Interventions 08:30 -1.8B 14.4B
GBP GBP Public Sector Net Borrowing (Pounds) 08:30 -4.0B 12.1B
GBP GBP CBI Trends Total Orders 10:00 -9.00 -6.00
GBP GBP CBI Trends Selling Prices 10:00 -3.00
CAD CAD Wholesale Sales (MoM) 12:30 0.30% 0.90%
USD USD Fed’s Lockhart Speaks in Atlanta 12:45
JPY JPY Adjusted Merchandise Trade Balance (Yen) 23:50 -¥460.0B -¥300.8B
JPY JPY Merchandise Trade Exports (YoY) 23:50 -2.70 -2.30
JPY JPY Merchandise Trade Balance Total (Yen) 23:50 -¥270.0B ¥61.7B
JPY JPY Merchandise Trade Imports (YoY) 23:50 3.00 -2.20
AUD AUD Westpac Leading Index (MoM) 00:30 0.80%
AUD AUD DEWR Internet Skilled Vacancies (MoM) 01:00 -1.80%
22-Aug Wed JPY JPY Supermarket Sales (YoY) 05:00   -3.90%
USD USD MBA Mortgage Applications 11:00 -4.50%
CAD CAD Retail Sales (MoM) 12:30 0.10% 0.30%
CAD CAD Retail Sales Less Autos (MoM) 12:30 0.30% 0.50%
USD USD Existing Home Sales 14:00 4.50M 4.37M
USD USD Existing Home Sales (MoM) 14:00 3.00% -5.40%
USD USD Fed Releases Minutes from August 1 FOMC Meeting 18:00
JPY JPY Japan Buying Foreign Bonds (Yen) 23:50 ¥170.1B
JPY JPY Japan Buying Foreign Stocks (Yen) 23:50 -¥23.2B
JPY JPY Foreign Buying Japan Bonds (Yen) 23:50 -¥141.0B
JPY JPY Foreign Buying Japan Stocks (Yen) 23:50 -¥68.1B
AUD AUD CBAHIA House Affordability 01:00 61.80
CNY CNY Conference Board China July Leading Economic Index 02:00
CNY CNY HSBC Flash Manufacturing PMI 02:30 49.30
USD USD Fed’s Evans holds press briefing in Beijing 03:30
23-Aug Thu CHF CHF Trade Balance (Swiss franc) 06:00   2.25B
EUR EUR German Gross Domestic Product s.a. (QoQ) 06:00 0.30% 0.30%
EUR EUR German Gross Domestic Product n.s.a. (YoY) 06:00 0.50% 0.50%
EUR EUR German Domestic Demand 06:00 -0.30%
EUR EUR German Capital Investment 06:00 -1.50% -1.10%
EUR EUR German Imports 06:00 1.00% 0.00%
EUR EUR German Private Consumption 06:00 0.20% 0.40%
CHF CHF Exports (MoM) 06:00 0.50% -2.60%
CHF CHF Imports (MoM) 06:00 -3.10%
EUR EUR German Gross Domestic Product w.d.a. (YoY) 06:00 1.00% 1.00%
EUR EUR German Exports 06:00 1.20% 1.70%
EUR EUR German Government Spending 06:00 0.20% 0.20%
EUR EUR German Construction Investment 06:00 2.00% -1.30%
EUR EUR French Purchasing Manager Index Manufacturing 07:00 43.80 43.40
EUR EUR French Purchasing Manager Index Services 07:00 50.10 50.00
EUR EUR German Purchasing Manager Index Manufacturing 07:30 43.50 43.00
EUR EUR German Purchasing Manager Index Services 07:30 50.10 50.30
EUR EUR Euro-Zone Purchasing Manager Index Composite 08:00 46.50 46.50
EUR EUR Euro-Zone Purchasing Manager Index Services 08:00 47.70 47.90
EUR EUR Euro-Zone Purchasing Manager Index Manufacturing 08:00 44.20 44.00
GBP GBP BBA Loans for House Purchase 08:30 26269.00
GBP GBP CBI Reported Sales 10:00 15.00 11.00
USD USD Initial Jobless Claims 12:30 365K 366K
USD USD Continuing Claims 12:30 3305K
USD USD Markit US PMI Preliminary 12:58
USD USD New Home Sales (MoM) 14:00 3.40% -8.40%
USD USD House Price Purchase Index (QoQ) 14:00 0.60%
EUR EUR Euro-Zone Consumer Confidence 14:00 -22.00 -21.50
USD USD New Home Sales 14:00 362K 350K
USD USD House Price Index (MoM) 14:00 0.50% 0.80%
USD USD EIA Natural Gas Storage Change 14:30 20.00
NZD NZD Trade Balance (New Zealand dollars) 22:45 -47M 331M
NZD NZD Balance (YTD) (New Zealand dollars) 22:45 -647M -747M
NZD NZD Exports (New Zealand dollars) 22:45 3.78B 4.20B
NZD NZD Imports (New Zealand dollars) 22:45 3.76B 3.87B
JPY JPY Corporate Service Price (YoY) 23:50 -0.20% -0.30%
AUD AUD Conference Board Leading Index 00:00 0.40%
JPY JPY Cabinet Office Monthly Economic Report
EUR EUR German Import Price Index (MoM) 0.90% -1.50%
EUR EUR German Import Price Index (YoY) 1.40% 1.30%
CNY CNY MNI August Flash Business Sentiment Indicator 01:35
24-Aug Fri JPY JPY BOJ Governor Shirakawa to Hold Press Conference 07:45    
GBP GBP Gross Domestic Product (QoQ) 08:30 -0.50% -0.70%
GBP GBP Gross Domestic Product (YoY) 08:30 -0.60% -0.80%
GBP GBP Private Consumption 08:30 -0.10%
GBP GBP Government Spending 08:30 1.90%
GBP GBP Gross Fixed Capital Formation 08:30 1.90%
GBP GBP Exports 08:30 -1.70%
GBP GBP Imports 08:30 -0.30%
GBP GBP Total Business Investment (QoQ) 08:30 1.90%
GBP GBP Total Business Investment (YoY) 08:30 14.80%
GBP GBP Index of Services (MoM) 08:30 -1.80% 0.90%
GBP GBP Index of Services (3Mo3M) 08:30 0.00% 0.50%
USD USD Durable Goods Orders 12:30 2.00% 1.60%
USD USD Durables Ex Transportation 12:30 0.50% -1.10%
USD USD Cap Goods Orders Nondef Ex Air 12:30 -1.40%
USD USD Cap Goods Ship Nondef Ex Air 12:30 1.20%
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