Author: Consultant

• The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from Sept. 15.
• The move came after the world’s second-biggest economy has struggled after its post-pandemic recovery faltered.

China’s central bank said on Thursday it would cut the amount of cash that banks must hold as reserves for the second time this year to help keep liquidity ample and support a nascent economic recovery.

The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) for all banks, except those that have implemented a 5% reserve ratio, by 25 basis points from Sept. 15.

The move came after the world’s second-biggest economy has struggled after its post-pandemic recovery faltered.

To support the economy, the government has rolled out a series of policy measures in recent months, including steps to spur housing demand.

This is a breaking news story, please check back later for more.

New England on alert: Hurricane and Tropical Storm watches issued for much of coastline ahead of Lee’s arrival (foxweather.com)

• The consumer price index rose 0.6% in August, its biggest monthly gain of 2023. The inflation gauge rose 3.7% from a year ago.
• Core CPI increased 0.3% and 4.3% respectively, against estimates for 0.2% and 4.3%. Fed officials focus more on core as it provides a better indication of where inflation is heading over the long term.
• Energy prices fed much of gain, rising 5.6% on the month, an increase that included a 10.6% surge in gasoline.
• The jump in headline inflation hit worker paychecks. Real average hourly earnings declined 0.5% for the month.

CPI report August 2023: Inflation rose 0.3% (cnbc.com)

• Patients taking diabetes and weight loss drugs say they’ve also noticed changes in their cravings for alcohol, nicotine, opioids and some compulsive behaviors, such as online shopping and gambling.
• These anecdotal reports add to the growing list of potential benefits of GLP-1s like Ozempic and Wegovy beyond shedding unwanted pounds.
• Several studies in animals back up those reports, but more research needs to be done in humans to prove that those treatments can curb addiction.

https://www.cnbc.com/2023/09/10/ozempic-wegovy-drinking-smoking-what-we-know.html

A deposit of lithium recently discovered along the Nevada-Oregon border may be among the world’s largest, having potentially huge implications for the transition to electric vehicles. 

Volcanologists and geologists from Lithium Americas Corporation, GNS Science, and Oregon State University reported their findings in a paper for Science Advances, published August 31. 

Lithium deposit found in US may be among world’s largest, study finds | Fox Business

• Global leaders announced a multinational rail and ports deal linking the Middle East and South Asia on Saturday on the sidelines of the G20 summit in New Delhi.
• The pact comes at a critical time as U.S. President Joe Biden seeks to counter China’s Belt and Road push on global infrastructure by pitching Washington as an alternative partner and investor for developing countries at the G20 grouping.

U.S., India, Saudi, EU unveil a massive rail, ports deal at G20 (cnbc.com)

Monday September 11

China’s aggregate yuan loans, new loans and money supply.

Japan machine tool orders

Earnings include: NanoXplore Inc.

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Tuesday September 12

Germany’s ZEW Survey

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for August.

Earnings include: Evertz Technologies Ltd.; Wall Financial Corp.; WildBrain Ltd.

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Wednesday September 13

Euro zone industrial production

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q2.

(8:30 a.m. ET) U.S. CPI for August. The consensus on the Street is an increase of 0.6 per cent from July and up 3.6 per cent year-over-year.

(2 p.m. ET) U.S. budget balance for August.

Earnings include: Dollarama Inc.; North West Company Inc.

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Thursday September 14

Japan’s core machine orders and industrial production

ECB monetary policy announcement

(8:30 a.m. ET) Canadian wholesale trade for July. Estimate is a month-over-month increase of 1.4 per cent.

(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 9. Estimate is 225,000, up 9,000 from the previous week.

(8:30 a.m. ET) U.S. retail sales for August. The Street expects an increase of 0.2 per cent from July (or 0.4 per cent excluding automobiles).

(8:30 a.m. ET) U.S. PPI final demand for August. Consensus is a rise of 0.4 per cent from July and up 1.2 per cent year-over-year.

(10 a.m. ET) U.S. business inventories for July.

Earnings include: Adobe Inc.; Empire Company Ltd.; Oracle Corp.; Transat AT Inc.

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Friday September 15

China’s industrial production, retail sales and fixed asset investment.

Eurogroup meeting

(8:30 a.m. ET) Canadian manufacturing sales and new orders for July. Estimates are increases of 0.7 per cent and 0.8 per cent from June, respectively.

(8:30 a.m. ET) Canada’s international securities transactions for July.

(8:30 a.m. ET) Canada’s new motor vehicle sales for July. Estimate is a month-over-month increase of 8.0 per cent.

(8:30 a.m. ET) U.S. import prices for August. Consensus is a rise of 0.3 per cent from July and up 2.9 per cent year-over-year.

(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for September.

(9 a.m. ET) Canadian existing home sales and average prices for August. Estimates are year-over-year increases of 7.0 per cent and 2.0 per cent, respectively.

(9 a.m. ET) Canada’s MLS Home Price Index for August. Estimate is a rise of 1.0 per cent year-over-year.

(9:15 a.m. ET) U.S. industrial production for August. The Street expects a rise of 0.1 per cent from July with capacity utilization remaining 79.3 per cent.

(10 a.m. ET) U.S. University of Michigan consumer sentiment for September.

PUBLISHED FRI, SEP 8 2023

Gold firmed on Friday as the dollar came off six-month highs but bullion was still en route to a weekly fall on chances of one more U.S. interest rate hikes this year.

Spot gold was up 0.2% to $1,922.94 per ounce but was set for a 0.8% weekly fall. U.S. gold futures rose 0.2% to $1,947.10.

The dollar’s strength, and a rebound in Treasury yields given expectations of the Federal Reserve raising rates in November, is pressuring gold, said Carlo Alberto De Casa, analyst at Kinesis Money.

But while “the overall scenario is very challenging,” gold is still seeing solid demand, De Casa said, adding the ECB was unlikely to raise interest rates given economic concerns.

The dollar eased 0.1% but was headed for its longest weekly winning streak in nine years, bolstered by recent strong U.S. economic data, including a drop in jobless claims.

Markets priced in an around 93% chance of the Fed keeping rates unchanged at its Sept. 19-20 meeting, but bet on 45% odds of one more hike before 2024, according to the CME FedWatch tool.

Higher rates dull appetite for zero-yield gold since they boost returns on competing safe-haven Treasury bonds, which are set for a weekly rise.

Three Fed officials on Thursday suggested the Fed could skip a rate hike in September but maintained that there was more work to be done to curb inflation.

“If the Fed ends up needing to hold longer, that becomes the worst of all possible worlds for gold because that means higher yields and a stronger dollar,” said Ilya Spivak, head of global macro at Tastylive.

PUBLISHED THU, SEP 7 2023

Oil prices hovered above $90 a barrel on Friday, on track to end the week higher as investors chose to focus on tighter supply, despite broader macroeconomic uncertainty.

Both oil benchmarks hit 10-month highs this week after Riyadh and Moscow extended their voluntary supply cuts of a combined 1.3 million barrels per day (bpd) to the end of the year.

However, both benchmarks ended Thursday slightly lower amid volatile trade on multiple signals warning of weaker demand in the coming months.

Traders who took some profit yesterday are back as they believe that the path of least resistance is certainly skewed to the upside, and oil prices are well on track to close another week in positive territory, said Naeem Aslam of Zaye Capital Markets.

Saudi Arabia will probably find it difficult to end its cuts at the end of the year without triggering an unwanted price slide, Commerzbank analysts added in a note.

Brent crude futures were up 71 cents to $90.63 a barrel, while U.S. West Texas Intermediate crude (WTI) futures were up 65 cents to $87.52 a barrel.

Both benchmarks close up about 2% last week – at $88.49 a barrel for Brent and $85.02 a barrel for WTI – in anticipation of the cut announcements.

On the demand side, a key concern is China, the world’s largest oil importer. The country has frustrated markets due to its sluggish post-pandemic recovery, while stimulus pledges have fallen short of expectations.

Data on Thursday showed overall exports and imports in the world’s second-largest economy fell in August, as sagging overseas demand and weak consumer spending squeezed businesses.

However, even in times of lackluster economic activity, China tends to bolster its storage capacity, particularly with the availability of cheap Russian crude. Last month, Chinese crude imports rose nearly 31%.

Demand for crude could also benefit from workers going on strike at projects in Australia which produce about 5% of the world’s supply of liquefied natural gas (LNG).

Meanwhile, questions remain about whether central banks in the United States and Europe will continue their aggressive interest rate hike campaigns to tame persistent inflation.

“Riyadh is acutely aware of the tightrope it walks between tightening the market and upsetting any up-and-until-now progress achieved by central banks in taming price-rise driven inflation,” said John Evans of oil broker PVM