** EVENTS PREVIEW **
********************
As the Yellen Jackson Hole vigil continues amid thin summer markets, another modest schedule of statistics beckons, ranging from the overnight quarterly Australian Construction Output data and the details on German Q2 GDP, through South African CPI to US House Prices and Existing Home Sales, and finishing off with French Unemployment. Govt bond auctions come via way of a re-opening of the current benchmark German 5-yr OBL and a new US 5-yr Treasury Note. For all financial markets' justifiable scepticism about the Fed delivering on rate hike talk, it is difficult to deny the reality of 8 of the 12 (vs. prior 6) regional Fed banks calling for a 25 bps Discount Rate hike at their July meeting, even if the rate is largely symbolic these days. There will also be a lot of attention given to this afternoon's EIA oil inventories report after the API report showed an unexpected 4.46 Mln surge in Crude stocks against expectations of a 455K draw, which was only partially mitigated by a larger than expected 2.1 mln bbls draw in gasoline inventories (vs. expected 1.2 Mln). In respect of the Q2 German GDP details, a 0.6 ppt contribution from Net Exports helped to offset a slightly worse than expected -0.2% for Domestic Demand, with latter predicated on renewed weakness in CapEx -1.5% q/q (vs. Q1 1.7% q/q), and a reactive correction in Construction Investment of -1.6% q/q that followed a mild winter related 2.3% surge in Q1. Last but not least, a closer eye needs to be kept on China, with some disappointment in evidence that the PBOC conducted its first 14-day repo operation since February at unchanged rates, underlining that whatever easing they might conduct going forward will be via RRR cuts and targeted credit easing. China's bond future has started to fade in recent days, after a seemingly relentless rally since early June, with today's PBOC operation and rising concerns about onshore bond defaults (see chart).
** U.S.A. - July Existing Home Sales **
- After yesterday's New Home Sales 'surge' (+12.4% m/m to 654K), and a run of four months of consecutive gains (1.1%, 1.5%, 1.3% and March's 5.3% from a Feb -7.3%), July's Existing Home Sales are expected to slip 1.1% from a nine-year high of 5.57 Mln to 5.51 Mln. The usual caveats apply about revisions and the inherent volatility of the series, but the fact of the nine-year high, notwithstanding revisions, is the only appropriate perspective whatever the outcome, the more so given the overall profile of incoming sector data. An eye will as ever need to be kept on inventories, as well as prices, with the FHFA price measure (for June) on offer ahead of the NAR version.
from Marc Ostwald