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Macroeconomics: The Day Ahead for 8 Aug 23

  • Busy overnight run of data: China Trade, UK BRC Retail Sales, Japan Wages and Household Spending, Australia confidence surveys, US NFIB survey and US, Canada Trade ahead; smattering of Fed speakers, Brazil BCB minutes; Japan, UK, German and US debt sales

  • China Trade: sector specific factors dictate some of Import weakness, but cannot disguise sluggish underlying domestic demand

  • US NFIB Small Business Optimism: marginal setback expected as tighter credit conditions, though pick-up in hiring should temper any drop; selling prices also in view


There is a busy run of overnight data to digest, headline by China Trade, but the remainder of the data calendar is rather meagre outside of another busy run of corporate earnings, as markets focus on Thursday’s US CPI. Soft UK BRC Retail Sales and Barclaycard Consumer Spending, Japan’s mixed Wages and Household Spending and Australian Consumer and Business Confidence surveys demand some attention, with only US and Canadian Trade and US NFIB Small Business Optimism ahead. Some Fed speaker from Barkin and Harker, and the minutes of last week’s initial rate cut meeting in Brazil top a modest schedule of events. Bayer and Glencore headline earnings in Europe, with the US looking to Duke Energy, Eli Lilly, Globalfoundries, UPS and Warner Music amongst others. Super strong demand at Japan’s 30-yr JGB sale overnight was unsurprising given the recent rise in yields, but raises questions over Japanese forward appetite for foreign debt, with the UK selling 16-yr I-L, Germany 5-yr and the US 10-yr.

** China – July Trade Balance **

While there were an array of specific factors dictating some of the weakness in Imports, for example increased Brazil Soybean import inspections, the closing of arbitrage opportunities in Copper, and lower oil production and higher prices, the slump in imports was clearly also dictated by weak domestic demand, while exports remain under a cloud due to continued weak external demand. The data do not alter extant concerns on the sluggish pace of China’s post zero-Covid recovery, and the continued drag from the beleaguered property sector, which developer Country Garden’s confirmation of missed dollar bond payments underline.

** U.S.A. – July NFIB Small Business Optimism **

After recovering slightly more than expected in June, the NFIB survey is seen edging back down to 90.5 from 91.0, as higher interest rates weigh, though the pick-up in the already reported Employment indices, above all hiring intentions (17 vs. 15) contrasts with the otherwise weaker signals on labour demand. A close eye needs to be kept on Selling Prices after those dropped to their weakest since March 2021 in June, and Net Compensation that slid to 36 from 41.

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