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Tuesday, August 11

11th Aug - China's devaluation crashes markets

Previously on MoreLiver’s:

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The data was decent, good sentiment readings from Europe - but despite a solid start on Monday, the mood was ruined today by China's devaluation.

EURUSD continued creepig higher, although gave away some of the gains towards the end of the session.

After S&P500's promising start on Monday, all gains were wiped off today.

DAX rally on Monday was weak, and Tuesday's sell-off notable.

Weak oil- and stock prices pushed yields down

We the People of Europe Project Syndicate
There are striking parallels between America’s founding years and the European Union’s ongoing political and economic crisis. In fact, the creation of the US Constitution and the birth of the American people offer reasons to hope that some of the most difficult issues facing Europe can one day be resolved.

Sovereign debt repayments: Evidence on seniority voxeu
Greece is the first developed country to default on the IMF. But it continues to service its debt owed to private bondholders. How does this compare to historical experience? This column presents new evidence on seniority in sovereign debt markets. Despite the lack of a sovereign insolvency procedure, there is a clear-cut pecking order of sovereign debt repayments, which holds across countries and over time. Greece is an outlier case, and the Eurozone rescue loans face an elevated risk of arrears and haircuts in the future.

Deflation Stalks the Euro ZoneView / BB

Germany’s SPD struggles as Merkel’s popularity growsFT

Fears of financial crisis rise as Russia’s economy shrinksFT

Greece, lenders clinch bailout deal after marathon talks – Reuters
Greece says it has agreed outline of debt deal – FT
Greece reaches technical agreement with creditors – Open Europe

John J. Hardy: Is the Fed all bark and not bite?TF
US data and comments by the Fed still hint at a rate hike coming in September. But markets are now less searching for an answer to the question “How much will the Fed hike?” over the next one to two years?

Analysts sharply cut Japan growth forecasts, cloud BOJ optimism – Reuters

Yuan Devaluation Ripples Across Asia as Currencies, Metals Drop – BB
China devalues yuan after poor economic data – Reuters
China weakens renminbi amid global reserve currency push – FT
Q&A: China’s currency devaluation – FT
5 Things to Know About China’s Currency Devaluation – WSJ
China Enters Currency War - Devalues Yuan By Most On Record – ZH
What Does China’s Surprise Devaluation Mean for Yuan Globalization? – WSJ
What China’s surprise currency devaluation means – WaPo

Morning MoneyBeat AsiaWSJ
A Good Day to Buy (and Maybe Sell, Too)

Morning MoneyBeat EuropeWSJ
Global Stocks Fall as China Acts

Morning MoneyBeat USWSJ
Seasonals Suggest a Rally In the Next Two Weeks

Danske DailyDanske Bank

Euro rates updateNordea

Equities and bond yields up * EUR/CHF at its highest readings since February * ZEW expectations set to rise * Lockhart sees the point of liftoff close. We agree * Finally some NOK and SEK strength

Morning MarketsTF
The unexpected devaluation of China's currency by the Peoples' Bank of China has triggered the biggest one-day drop in the yuan since 1994.

Daily FX CommentMarc Chandler
China Surprises, Mini-Devaluation, USD Mostly Firmer

Daily ShotTF
Yuan down and Google shares up after important (independent) decisions that were made yesterday. While the prices of many commodities continue to depreciate, there are exceptions. Yesterday we heard about the rising prices of eggs, today we have a look at pork bellies.

Daily Press SummaryOpen Europe
Greece said to have reached deal with creditors on third bailout * BBC: Government plans to restrict EU migrants’ access to benefits could result in young Britons also losing their benefits * European Commission to disburse €2.4bn to help countries deal with inflow of non-EU migrants

Brussels PlaybookPolitico
Google becomes Alphabet — Immigration investment — EU Moon City?

China's Historic Devaluation Sends Equity Futures, Oil, Bond Yields Sliding, Gold Spikes


FX UpdateTF
The USD was on the defensive late yesterday after Fed speakers failed to offer anything new, but then a shock yuan devaluation by China overnight saw the USD recovering and Asian currencies, ex-JPY, sharply weaker.

From the FloorTF
The People's Bank of China has cut the value of the yuan in an effort to defend a flagging export sector and create a more market-driven currency. The move is widely seen as part of an effort to secure a "global reserve currency" future for the yuan.

Tämän vuoksi Kiina devalvoi * Fedin Lockhart painotti jälleen keskuspankin lähestyvän koronnostoa * Korot nousivat eilen * Venäjän talouden alamäki jyrkkeni toisella neljänneksellä

Roger Wessman: Eurojäsenyyden kustannukset SuomelleAP
Kilpailukyky on yhteisvaluuttaongelmaRoger Wessman

Palkkasumma kasvoi Q2 voimakkaimmin rakentamisen toimialallaTilastokeskus