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Majority Of UK Voters Back Leaving the European Union

A majority of Britons now favour leaving the European Union amid concerns over immigration, according to a shock poll.

 

The Survation poll for the Mail on Sunday found that if a referendum were held tomorrow 51% would vote to quit the EU against 49% who would vote to remain.

 

The findings contrast with a previous comparable poll carried out in July which has shown comfortable majorities in favour of staying in (54%-46%).

 

ECB PREVIEW: Draghi May Signal More QE as Forecasts Cut – Bloomberg

From Deborah L Hyde at Bloomberg:

 

Draghi is likely to say the central bank stands ready to do more at this week’s press conference, as inflation remains low after nearly six mos. of a bond-purchase program that’s meant to revive it, analysts write in published research.

 

JPMorgan (Greg Fuzesi)

- The main change in forecasts will come from oil prices, which lowers the predicted path for inflation over the next 12 mos.; expect 2017 est. to remain unchanged at 1.8% y/y with some risk of 1.7% y/y
- If mkt conditions and EM prospects don’t improve, easing in Oct. or Dec. would become a real possibility

 
Barclays (Philippe Gudin and Antonio Garcia Pascual)

- Expect ECB Draghi to maintain accommodative stance and insist that GC still has tools available should monetary and financial conditions tighten further
- Expect ECB to announce further easing before yr-end

 

Nomura (Nick Matthews and Norbert Aul)

- The risk of further ECB action as early as this week has clearly increased; while not the baseline case the likelihood of a surprise is elevated
- One tweak GC may be discussing is the 25% limit on buying, given originally said this initial cap would be in place for 6 months
- Too early for GGB collateral waiver

 
BofAML (Analysts led by Gilles Moec)

- Avoiding more euro re-appreciation is the N-T priority and “talking dovish” will likely be the ECB’s first port of call; given real economy data and Fed outlook uncertainty, hard to take action this soon
- Further out, China’s impact on consumer prices will matter more than growth effect and saying QE will continue beyond Sept.2016 would be a powerful form of forward guidance

 
Goldman Sachs

- Expect no change of stance but the statement and Draghi’s remarks will probably have a dovish undertone
- Expect GC to acknowledge uncertainty and echo comments in July that the ECB would respond by using all instruments available within its mandate

 
Deutsche Bank (Peter Sidorov, Marco Stringa, Mark Wall)

- While proprietary Financial Condition Index has tightened sharply in past few weeks, bank credit, static growth, lower oil prices are among reasons to keep policy steady
- Expect 2017 inflation forecast to be revised marginally lower
- Further out, capital outflows from China or falling FX reserves could weigh on the euro or EGB yields
- Expect the ECB to reiterate its readiness to act, if necessary

 
RBS (Giles Gale)

- Staff forecasts for inflation will be revised down for 2015, and probably for 2016; doubt end-2017 will slip this time
- Now is not the time for QE-extension but it’s coming soon

 
Morgan Stanley (Elga Bartsch)

- ECB likely to stress its easing bias; unlikely will take any tangible policy actions, although can’t be ruled out completely
- Expect staff to lower GDP projections to 1.25% and 1.75% vs 1.5% and 1.9%, reflecting lower-than- expected growth in 2Q and somewhat higher EUR/USD exchange rate

 
Market Securities (Christophe Barraud)

- ECB is unlikely to change its monetary policy stance as early as this meeting although dovish tone should stay
- Further non-conventional measures are unlikely although can’t be completely ruled out
- If it does make any changes, could alter the list of eligible agencies, change the 25% purchase limit on individual issues; will likely discuss the waiver for GGBs

 
RBC (Timo del Carpio)

- The GC’s dovish slant will probably remain fully intact even as the economic backdrop should encourage the ECB to leave policy unchanged
- Leaving the door open is very different from actively preparing a change of stance and recent remarks from GC members suggest a “wait-and-see” approach will prevail
- Since effects of easing still need time to feed through to the real economy, arguing for verbal intervention likely to be the primary means of cementing expectations

 
UniCredit (Marco Valli)

- Draghi likely to sound more dovish than he did in July; don’t expect any explicit hint that central bank is reconsidering policy stance, though door for further stimulus remains wide open
- Fall in Brent crude prices may push inflation forecasts to 0.1%-0.2% in 2015 (prev. 0.3%), 1.2%-1.3% in 2016 (prev. 1.5%), and to 1.6%-1.7% in 2017 (prev. 1.8%)
- Uncertainty over ECB’s baseline growth scenario to increase, given doubts over health of global trade; expect Draghi to respond with “strong commitment” to ease further if price stability appears threatened

 
ABN Amro (Nick Kounis)

- Drop in oil prices, which will keep headline CPI lower for longer, is a key factor behind rising risk of action from ECB as soon as this week, Nick Kounis, economist at ABN Amro, says in client note
- Sees now much bigger risk that ECB will step up QE as soon as Sept. meeting; see probability of action at ~40% Draghi expected to step up dovish rhetoric

US Vehicle Sales Should Remain Over 17 Million SAAR in August

Automakers will release August vehicle sales next Tuesday (September 1st) and currently, analysts expect sales (Seasonally Adjusted at Annualized Rate) to remain above 17 million.

 

Here are some forecasts from several specialists:

 

1/ Edmunds: Stock Market Fluctuations Don’t Slow August Car Sales, Says Edmunds.com

 

Edmunds.com, the premier destination for car shopping, forecasts that 1,538,958 new cars and trucks will be sold in the U.S. in August for an estimated Seasonally Adjusted Annual Rate (SAAR) of 17.4 million. The projected sales will be a 2.1 percent increase from July 2015, but a 2.8 percent decrease from August 2014.
 
“Sales momentum in August has been strong despite recent stock market fluctuations,” said Edmunds.com Senior Analyst Jessica Caldwell. “The fact that we will likely see a year-over-year decline in sales isn’t a troubling sign because last August was a monster month that included Labor Day weekend.”

 

2/ Wards: Forecast: LV SAAR Should Hold Steady in August

 

A new WardsAuto forecast calls for strong U.S. light-vehicle sales in August, extending a streak of light-vehicle SAARs that round to at least 17 million units. The report calls for automakers to sell 1.53 million LVs in the U.S. this month, for a daily sales rate of 58,866 units (over 26 days), a 0.7% improvement over same-month year-ago (27 days).

 

 

3/ Kelley Blue Book: New-Car Sales To Drop 4 Percent In August 2015, According To Kelley Blue Book

 

New-vehicle sales are expected to decline 4 percent year-over-year to a total of 1.52 million units in August 2015, resulting in an estimated 17.2 million seasonally adjusted annual rate (SAAR).
 
“While the outlook for August remains bright, we must keep an eye on the financial markets which have declined precipitously in the last few weeks on uncertainty in international markets, namely China,” said Alec Gutierrez, senior analyst for Kelley Blue Book.
 
“We remain confident that sales in August will remain robust; however, should the U.S. financial markets continue to falter, we could see demand for new cars soften in the short to medium term. It should be noted that the unemployment rate in the U.S. remains below 6 percent, while the auto finance environment remains as attractive as ever, so we don’t necessarily expect to see the sales pace deviate from its current 17 million-plus SAAR trajectory for 2015 unless the stock market continues its downward trajectory in the weeks and months to come.”

 

4/ J.D. Power and LMC Automotive: Industry Strength Continues in August, Full-Month Volume Impacted by Calendar

 

“On a year-over-year basis, August sales are going to appear weak, when in fact it’s really a variance in the numbers created by the calendar,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.“There certainly is no cause for alarm. In fact, the daily selling rate month-to-date in August is trending 8 percent higher than the same period a year ago, although we do anticipate the absence of the holiday in August sales will diminish that rate by the end of the month.
 
“Our expectation is that with Labor Day falling in September, sales that would have occurred this month are being pushed into next month. If that happens, September will move sales back to the strong trend line we’ve been seeing throughout the year.”

Deflation Fear Spurs Talk of More ECB QE – Bloomberg

From Deborah L Hyde at Bloomberg:

 

Market expectations for euro-area inflation have fallen back toward pre-ECB QE levels, sparking talk among analysts that Europe’s rate-setters may have to ease further.

 

Barclays (Cagdas Aksu)

- 5y5y fwd breakevens have cheapened globally over the past few weeks, and sensitivity to the oil price has increased.
- Oil’s fall will likely lead the ECB to lower its inflation projections on Sept. 3 staff projections, especially with EUR/USD struggling to cheapen.
- All of which means the bullish bias in EUR rates is unlikely to disappear as the ECB has little choice but to remain accommodative, if not increase its accommodation at some point.

 

JPMorgan (Greg Fuzesi)

- The ECB’s tolerance of downside surprises is low and it may step-up rhetoric.
- The ECB had started to go down this route in response to the Greek crisis and it may not take much for.

- It to say that an extension of QE beyond Sept 2016 is becoming more likely.
- If developments point to economic growth weakening as well, the ECB could move more quickly and consider stepping up the monthly pace of its QE purchases.

 

ING (Petr Krpata)

- The ECB will probably downgrade the CPI forecast given the fall in oil price.
- This will primarily cement the view that QE should be fully implemented until Sept.; for them to increase the program at this juncture, things would have to get really bad.
- Rising probability the ECB will implement QE fully isn’t enough to offset the repricing of Fed’s outlook, hence the EUR/USD rally.

 

Citigroup (Harvinder Sian)

- The cumulative impact on Europe CPI of a 10% RMB devaluation in 3Q 2015 is fairly substantial at 0.7% and pushes in the direction of lower for longer, at a minimum, but also more ECB easing
- Linkers can find few buyers in this environment and the miss in the market’s expected inflation versus – ECB projections is now too large for ECB credibility
- We think the ECB will not meet its inflation goal by Sept. 2016 and there are technical reasons why QE – will be extended and tapered until 2Q 2017
- ECB QE2 is also feasible.