September 07, 2022

Daily Report 07/09/2022

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The final reading for the UK services-sector PMI index was revised down to an 18-month low of 50.9 for August from the flash reading of 52.5 and the composite index also dipped below the 50.0 level. Overall business confidence remained weak with further concerns surrounding the impact of a surge in energy prices. Truss was confirmed as the winner in the Conservative leadership contest, although the margin of victory was narrower than expected which may limit authority. Markets will be watching the Cabinet appointments and, importantly, details of an energy package which are expected to be unveiled later this week. Overall Sterling sentiment was, however, still very fragile given fears over the outlook. Bank of England Monetary Policy Committee member Mann stated that a drift in medium-term inflation expectations was already apparent. She added that it was better to act forcefully and fast to keep expectations in check rather than adopting a gradual approach and maintained a hawkish policy stance.

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German factory orders declined 1.1% for July after a revised 0.3% decline the previous month and slightly weaker than consensus forecasts. There were expectations of further strong EU fiscal support packages to curb the impact of surging energy prices and government yields moved sharply higher on the day.

Key Data 

10.00 Gross Domestic Product (QoQ) (Q2) Exp. 0.6% Prev. 0.6%
10.00 Gross Domestic Product (YoY) (Q2) Exp. 3.9% Prev. 3.9%

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The final US PMI services index for August was revised slightly lower to 43.7 from the flash reading of 44.3 and following a 47.3 reading for July. In contrast, the ISM non-manufacturing index strengthened slightly to 56.9 for August from 56.7 the previous month and above consensus forecasts of 55.1. Business activity and new orders increased at a faster rate while there was a marginal increase in employment for the month. There was an easing of supply-side difficulties while there was only a slight easing of inflation pressures for the month which suggested stronger inflation pressures within the services sector.

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