COP was the worst performer on Wednesday, closing at 4,057 after trading above 4,000 the whole day. Our desk saw real money names unwinding USDCOP longs with corporates outflows as well. Leveraged names were quiet. Our trader thinks we could see some more position cleaning and RM unwinds.
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FI moves led by data is dominating markets today. Gilts are under pressure as UK wages ex Bonus reaches record highs, resulting in a spillover in European bonds. Risk-off sentiment coming from China is contributing to broad equity weakness and high-betas under pressure. Overnight the PBoC conducted a surprise 1y MLF cut of 15bps, also reducing the repo rate by 10bps. Chinese asset performance remained lackluster, USDCNH continued to make new YTD highs. USDJPY also remains above the 145 handle, despite a strong beat of Q2 GDP at 6.0% vs 2.9% consensus. AUD WPI came a touch lower, SEK July CPIF was broadly unchanged, while Germany ZEW expectations stabilized.
There’s more data to come: US Retail Sales at 08:30 EDT should highlight strong consumer strength, we expect a print of 0.5% in control group sales. Fed’s Kashkari’s Q&A session is worth watching at 11:00. CAD CPI also at 08:30 should provide guidance on the necessity of a hike in September. In EM, we anticipate slight slowdown in COP GDP at 12:00 EDT. Uruguay expect a monetary policy decision. INR/KRW/PLN/RON/CLP markets are on local holiday
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USTs bear-flatten amid front-end-heavy corporate supply; USD/CNH grinds higher as China stresses spread; JGB bear-steepening does not prevent USD/JPY from breaking 145; GBP/USD is stable before key data; Argentina hikes rates to 118%, devalues ARS to 350 per dollar; US 10y at 4.191% (+3.9bp).
