*** ECONOMIC DATA ***

- (SZ) Swiss SECO releases Sept Economic Forecasts; Raises GDP outlook for 2009, 2010 period

- (FI) Finland Aug Unemployment Rate: 7.6% v 8.3%e

- (SZ) Swiss Aug Trade Balance (CHF): 1.8B v 2.2B prior

- (SA) South Africa Aug CPI M/M: 0.3% v 0.3%e; Y/Y: 6.4% v 6.4%e

- (DE) Danish Sept Consumer Confidence Indicator: -1.1 v -2.0e

- (TA) Taiwan Aug Unemployment Rate: 6.1% v 6.0%e

- (IT) Italian Q2 Unemployment Rate: 7.4% v 7.7%e

- (HK) Hong Kong Aug CPI - Composite Index Y/Y: -1.6% v -0.5%e

- (HK) Hong Kong Q2 Balance of Payments: $143.1B v $68.9B prior, Current Account: $46.1B v $43.0B prior



*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

- European markets look set to recover losses from yesterday's session. Markets have trended broadly higher following a positive open that followed a mixed Asian session. With Japanese markets closed for public holiday again, Asian trading remained thin. Comments out of the Asian Development Bank, raising its 2009 GDP targets for China and India provided equities some running room ex-China. Chinese markets for the third straight session traded lower, closing down more than 2%. European sector performance was mixed, with all major sectors trading in the green. Oil and gas names led the Eurostoxx50, basic resource and mining names on the FTSE100 and mixed Industrials led the way on the DAX. Volume levels have remained light through the European morning.



- In individual equities: Cadbury's [CBRY.UK] CEO said a possible Kraft merger makes "some strategic sense." WPP Group's [WPP.UK] CEO said the company continues to look for cost cutting options in the short term period. Imperial Tobacco [IMT.UK] said its overall performance and financial position is in line with management's expectations and that trends outlined in the July 23rd report have continued. The Altadis integration is progressing well and is on track to deliver the expected synergies. JD Sports [JD.UK] reported H1 Net £7M v £6M y/y, Rev £324M v £289.9M y/y; 6-week LFL sales +0.8%. Air France [AF.FR] is trimming its long haul capacity 1.8%, while overall capacity to decline 2% over winter season. Reducing medium haul capacity 2.9% y/y. Sanofi-Aventins [SAN.FR] won a new order for approx 27M doses of H1N1 (swine flu) vaccine from the US Govt. This order brings the total to approx 75M. Accor [AC.FR] said it would sell 158 F1 hotel properties for €272M, in an effort to reduce net debts by €187M in FY09. Heidelbergcement [HEI.GE] priced 62.5M in new common shares (50% of share outstanding) at €37/shr to rase €2.25B. Note that the shares will be offered on 2 for 1 basis. Deutsche Wohnen [DWNI.GE] said it would issue 55.4M new shares (2.1x shares outstanding) at €4.50/share. Shareholders will be able to acquire 21 shares for each 10 shares held. ABB Group's [ABBN.SZ] chairman said demand remains subdued, confident current cost savings program will be sufficient. Current cost savings targets are put at $2B.



- In speakers: the ECB's Weber commented that recent euro moves were not out of line, given economic data from the Euro Zone. The central banker then reiterated the standard ECB line on rates and growth, noting that 1.0% interest rates were appropriate and that it was too early to exit "extremely loose" monetary policy. He did note that once the economy recovered, the ECB has an obligation to decisively counter long-term inflation risks and building liquidity. Polish Central Banker Skrzypek commented that there was a serious risk that the country's debt-to-GDP ratio could exceed 55%. He noted that the Polish GDP needed stimulation. Polish Central Banker Noga commented that he saw Poland's Q3 GDP registering a positive reading and Q4 GDP seen around +1%. Noga noted that interest rate increases could be possible around the summer of 2010. He forecasted CPI moving back towards the 2.5% target by mid-2010 period but conceded it might take longer than prior estimates. He noted that further rate cuts in 2009 are unlikely. The IMF commented that the Russian Ruble was fairly valued based on current level of oil prices. The IMF sees a fairly rapid economic recovery in H2 and reiterated that Russia's 2010 GDP was seen at up 1.5%. Moody's noted that there were some stabilization in Latvia and Hungary (and Iceland) but the situation was far from recovery. Italy raised its 2009 GDP forecast to -4.8% from -5.2% prior; it also amended its 2010 GDP to +0.7% from +0.5% prior. The Swiss Gov't raised its GDP view for both 2009 and 2010 period. SECO now sees 2009 GDP -1.7% v -2.7% prior; 2010 GDP +0.4% v -0.4% prior view in June. The Swiss Gov't maintained its 2009 unemployment estimate at 3.8% and improved its 2010 unemployment projection to 5.2% v 5.5% prior. A Chinese minister reiterated the official Gov't view that industries were at critical phase of recovery and that it was too early to remove stimulus.



- In Currencies: The greenback entered the European morning on wobbly legs and under renewed pressure following comments from the Canadian PM and Russian Deputy PM on Monday, to the effect that the dollar is still the favored carry trade funding currency. The Asian Development Bank raising its GDP for both China and India provided the backdrop of improved risk appetite during the session. The G20 meeting set for Sept 24th/25th also gained in significance as the issue of imbalances could provide the way for more bearish USD momentum. The ECB's Weber provided a rare FX observation when he commented that recent currency market behavior was not out of line with Euro-zone economic data compared to other regions. EUR/USD tested above the 1.4800 level for its best level in almost 12 months. USD/CHF tested 1.0230 for 14 months lows (July 2008 levels). The JPY currency was firmer for most of the session as dealers continue to try to figure out where Japan's Fin Min Fujii (and the new Japanese Gov't) stands on FX policy.



- In Fixed Income: Government bonds are weaker this morning in Europe as equities and currencies enjoy a risk revival. Bunds have suffered under the weight of supply, with the Netherlands selling €2B in a variety of DSL's and Italy selling €2B in a reopening of the 2025 BTP. And the Bundesbank set a 2.5% coupon on the new 5y Bobl, of which up to €7B is expected to be auctioned off tomorrow. Ahead of the Treasury's $43B 2y Note auction, the existing 2y Note hit an overnight high yield above 1%, with the new notes trading about 5bps cheap in the when issued market. The 10-year note tested 3.50% and the Long Bond briefly reached 4.26%. In corporates, Anlgo American launched a €750M 4y , with pricing indicated at 180bps over swaps, whilst KPN has come to market with a €700M 15y as part of a refinancing operation. Finally, Aussie insurance name QBE is planning a 6y GBP offering, with price talk at 330bps over Gilts.



- In Energy: Saudi ARAMCO's CEO stated that he saw little chance of pumping oil from fields that were idled next year because the recovery in global demand had not started. The executive said he did not see a major shift in demand unless the economic recovery accelerates. Saudi Arabia had idled about 4M bpd (33% of total production capacity). Iranian nuclear head stated that Iran had created new generation of centrifuges.



- In the papers: FT opinion piece noting that "G7 should deal with the dollar" as the article noted that a dollar collapse would have grave consequences for the world. According to the article coordinated intervention has worked in the past in currency markets and should be considered again for the dollar by the G7 nations. The opinion piece noted that officials at the Bank of Canada and the RBNZ have warned about developments in the currency markets.



*** NOTES ***

- Singapore's sovereign wealth fund GIC has reduced its stake in Citigroup to below 5% from 9%

- Expectations rising that G20 will call for gains in other currencies to help reduce global trade imbalances

- USD hits fresh 2009 lows against Euro and Swiss franc pairs



***Looking Ahead

- 7:45 (US) ICSC/GS weekly chain store sales

- 8:00 (PD) Poland Aug Core Inflation M/M: 0.1%e v 0.4% prior, Y/Y: 2.9%e v 2.9% prior

- 8:30 (CA) Canadian Jul Retail Sales M/M: 0.7%e v 1.0% prior, Less Autos: 0.1%e v 1.0% prior

- (SA) South Africa Reserve Bank (SARB) Rate decisions: No change expected, current Base Rate is 7.0%

- 8:55 (US) Redbook weekly retail sales

- 10:00 (US) Richmond Fed Manufacturing Index: 16e v 14 prior

- 10:00 (US) July House Price Index: 0.5%e v 0.5% prior

- 12:30 (MX) Mexico to sell 2.5B in 5-year FRN and 2.0B in 20-year bonds; to sell 30-year Inflation-linked

- 13:00 (US) Treasury's $43B 2 year note auction

- 15:30 (MX) Mexico Aug Unemployment rate: 6.0% expected versus 6.1% prior

- 16:30 (US) API Crude Oil/Gasoline/Distillate Inventories

- 17:00 (US) Weekly ABC Consumer Confidence: No estimate versus -49 prior

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