Notes/Observations
- BOJ announced its Bond purchases for month of Nov which saw its 3rd straight month of tweaks. Increased the amounts to purchase in 1-5 year range but cut back on the number of days of purchases (move seen to aid JGB functionality)
- Germany Sept Retail Sales misses expectations (trend of softer EU data continues)
- France Oct Preliminary CPI registers a slight miss but stays above the ECB target
- Italy Unemployment misses expectations (climbs back above the 10% level)
- Spain Q3 Preliminary GDP bucks the trend and meets expectations and keeps pace steady compared to prior quarter
Asia:
- Australia Q3 CPI saw its annual pace below the RBA target range (Q/Q: 0.4% v 0.5%e, Y/Y: 1.9% v 1.9%e). Softer inflation was anticipated by the RBA some months back
- China Oct Manufacturing PMI barely hangs onto expansion for its lowest level in two year; (50.2 v 50.6e v 50.8 prior; Non-manufacturing PMI: 54.6e v 54.9 prior; Composite PMI: No est v 54.1 prior
- South Korea Sept Industrial Production registers its largest decline since 2013 (Y/Y: -8.4% v -5.1%e)
- Japan Sept Preliminary Industrial Production misses expectations (M/M: -1.1% v -0.3%e; Y/Y: -2.9% v -2.1%e)
- (JP) BOJ Quarterly Outlook for Economic Activity and Prices trims its inflation outlook but maintains its overall assessment of economy
- (JP) BOJ keeps policy steady (as expected) with Interest Rate on Excess Reserves (IOER) unchanged at -0.10%; maintained its policy framework of “QQE with Yield Control” around 0.00% and asset purchases at annual pace of ¥80T
Europe:
- Italy Treasury: EU Commission has requested clarification on debt reduction plans; to respond by Nov 13th
- EU Commission letter reiterated that Italy’s public debt was still a key vulnerability and a concern for the entire Euro Zone
Americas:
- Bank of Canada (BOC) Gov Poloz: The policy rate would need to rise to neutral to achieve our inflation target. Neutral rate seen between 2.5-3.55 area (rate currently at 1.75%)
Energy:
- Weekly API Oil Inventories: Crude: +5.7M v +9.9M prior
Macro
- (JP) Japan: The BoJ unexpectedly cuts its inflation projections again following its latest review of monetary policy and quarterly forecast update. The short-term rate remained at -0.1% and 10Y rates at near 0%. Core consumer inflation projection for the current fiscal year ending March 2019 was trimmed to 0.9% from 1.1% prior, and to 1.4% from 1.5% for fiscal 2019-20. BoJ monetary stimulus, alongside government fiscal stimulus, isn’t having much of an impact, as the pick-up in core CPI leaves the growth rate well short of the 2% inflation desired by the BoJ. Of course, a lack of wage growth remains a barrier to the BoJ’s reflationary goal.
- (FR) France: HICP inflation held steady at 2.5% y/y in October, with prices up 0.1% m/m. The national rate came in at 2.2% y/y, also unchanged from September. Core inflation, remains way below the ECB’s definition of price stability, giving the ECB ammunition to argue that the Eurozone still needs a substantial degree of stimulus.
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +1.5% at 360.8, FTSE +1.5% at 7138, DAX +1.4% at 11441, CAC-40 +2.1% at 5083, IBEX-35 +1.5% at 8943, FTSE MIB +0.9% at 19160, SMI +1.1% at 8948, S&P 500 Futures +0.6%]
Market Focal Points/Key Themes:
Equities
- European Indices trade sharply higher across the board following on from gains in the US and Asia overnight. US futures build upon yesterdays gains pointing to another strong open. Positive earnings from a number of names have helped underpin gains. French CAC components Airbus, Air France, L’Oreal and Sanofi all trade higher after positive results; In Spain banking giant Santander and Telecom name Telefonica also trade higher after Q3 results. In the UK Standard Chartered followed HSBC with strong earnings with shares rising over 4%, meanwhile Next declines Next Retail sales fell more than expected. In the US Facebook shares rise in the pre market after a profit beat, however MAUs fell slightly short of forecasts; Electronic Arts trading lower after cutting its outlook. Looking ahead notable earners include Anthem, Kellogg, Bunge, General Motors and Sprint among others.
- Consumer discretionary: L’Oreal [OP.FR] +6% (earnings), Air France-KLM [AF.FR] +4% (earnings; progress on negotiations with cabin crew), Next PLC [NXT.UK] -3.5% (reports sales growth; affirms outlook), Mr Green & Co [MRG.SE] +48%, William Hill [WMH.UK] +7% (Mr Green & Co to be acquired by William Hill), Wolters Kluwer [WKL.NL] -2.5% (earnings), Societe Television Francaise 1 [TFI.FR] +11.5% (earnings)
- Financials: Banco Santander [SAN.ES] +4% (earnings; affirms outlook), Standard Chartered [STAN.UK] +6% (earnings), Sydbank [SYDB.DK] -12% (earnings; outlook cut), NEX Group [NXG.UK] +3.5% (CME received clearance for acquisition)
- Healthcare: Sanofi-Aventis [SAN.FR] +4% (earnings; partial outlook raise), Mithra Pharmaceuticals [MITRA.BE] +4.5% (agreement with Adcock Ingram)
- Industrials: Airbus [AIR.FR] +0.5% (earnings; partial outlook cut), Nokian Renkaat [NRE1V.FI] -13.5% (earnings; outlook cut)
- Technology: Dialog Semiconductor [DLG.DE] +8% (earnings; commences buyback program), RIB Software [RSTA.DE] +10% (earnings; raises Rev outlook)
- Telecom: Telefonica [TEF.ES] +3.5% (earnings; outlook raise), Eutelsat [ETL.FR] -11.5% (earnings; outlook cut)
Speakers
- ECB’s Hansson (Estonia): Reiterates temporary factors affecting Euro-Area growth; wage growth increasing confidence on achieving the inflation target
- Italy govt said to argue that the effective deficit to be nearer to 2%
- Italy Fin Min Tria reiterated stance that the domestic economy would not grow without stimulus
- Turkey Central Bank Gov Cetinkaya Quarterly Inflation Report press conference stated that it saw a marked deterioration in pricing behavior and reiterated to maintain tight monetary policy stance until inflation outlook improved. The tight stance to stay for the long term
- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raise the inflation outlook for the 2018 thru 2020 period markedly. Raised 2018 CPI from 13.4% to 23.5%; 2019 CPI from 9.3% to 15.2% and 2020 CPI from 6.7% to 9.3%.
- BOJ Gov Kuroda post rate decision press conference reiterated that the price momentum towards the 2% inflation target was maintained; risks were skewed to the downside for both the economy and prices. Reiterated its forward guidance to keep extremely low rates for an extended period. Would adjust monetary policy if risks materialized. Options included additional easing options include rate cuts, expansion of monetary base and asset purchases. BOJ was not thinking about widening the margin of yield movements or changing the zero percent target
- BOJ announced its Bond purchases for month of Nov which saw its 3rd straight month of tweaks. Increased the amounts to purchase in 1-5 year range but cut back on the number of days of purchases.
- India Finance Ministry Statement noted that it respected the RBI’s autonomy. Independence was essential and accepted governance requirement for the central bank. Govt would continue to consult with RBI. Govt placed its assessment of issues and suggesteds possible solutions and would continue to do so
- China State Council: Country has achieved overall economic stability; performance has been in proper range in the first three quarters of the year
- Iraq Oil Min Ghadhban: Current oil prices seen as fair
- Russia Oct oil production seen at 11.41M bpd (record level) v 11.36M bpd m/m
Currencies/ Fixed Income
- FX markets were generally quiet despite another rash of EU data. Market participants await the Euro Zone flash CPI data later today to gauge how core inflation is performing.
- EUR/USD was little changed around the 1.1350 area ahead of the Euro Zone inflation data. The pair still facing technical headwinds with sell-stops orders said to be lurking below the 1.1300 area
- USD/JPY moving back into its early Oct range with 115 seen as psychological resistance. BOJ made no surprises at the rate decision but did tweak its JGB bond buying program for November for the 3rd straight month in a move to aid JGB market functionality.
Economic data
- (DE) Germany Sept Retail Sales M/M: 0.1% v 0.5%e; Y/Y: -2.6% v +1.0%e
- (DK) Denmark Sept Unemployment Rate: 3.1% v 3.2%e; Gross Unemployment Rate: 3.9% v 3.9%e
- (FI) Finland Aug Final Trade Balance: -€0.4B v -€0.4B prelim
- (TR) Turkey Oct Economic Confidence: 67.5 v 71.0 prior
- (TR) Turkey Sept Trade Balance: -$1.9B v -$1.9Be
- (TH) Thailand Sept Current Account Balance: $2.4B v $1.2Be; Overall Balance of payment (BOP): $1.0B v $0.2B prior; Trade Account Balance: $2.0B v $0.6B prior; Exports Y/Y: -5.5% v +5.8% prior; Imports Y/Y: % v 24.2% prior
- (FR) France Oct Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 2.2% v 2.3%e
- (FR) France Oct Preliminary CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 2.5% v 2.6%e
- (TW) Taiwan Q3 Preliminary GDP Y/Y: 2.3% v 2.5%e
- (ES) Spain Q3 Preliminary GDP Q/Q: 0.6% v 0.6%e; Y/Y: 2.5% v 2.5%e
- (ES) Spain Aug Total Mortgage Lending Y/Y: 10.3% v 14.0% prior; House Mortgage Approvals Y/Y: 6.8% v 14.6% prior
- (AT) Austria Q3 Preliminary GDP Q/Q: 0.4% v 0.3% prior; Y/Y: 2.4% v 2.7% prior
- (HU) Hungary Sept PPI M/M: +0.1% v -0.1% prior; Y/Y: 6.7% v 8.1% prior
- (ES) Spain Aug Current Account Balance: €1.8B v €0.1B prior
- (CH) Swiss Oct Credit Suisse Expectations Survey: -39.1 v -30.8 prior
- (IT) Italy Sept Preliminary Unemployment Rate: 10.1% v 9.9%e
- (NO) Norway Central bank (Norges) Bank Daily FX Purchases: -350M v -450M prior
- (IS) Iceland Sept Final Trade Balance (ISK): -14.1B v -15.1B prior
- (PL) Poland Oct Preliminary CPI M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.8%e
- (CZ) Czech Sept M2 Money Supply Y/Y: 4.3% v 5.0% prior
- 05:30 (SL) Sri Lanka Oct CPI Y/Y: 4.0%e v 4.3% prior
- (PT) Portugal Oct Preliminary CPI M/M: 0.0% v 1.1% prior; Y/Y: 1.0% v 1.4% prior
- (PT) Portugal Oct Preliminary CPI EU Harmonized M/M: 0.0% v 1.5% prior; Y/Y: 0.9% v 1.8%e
Fixed Income Issuance
- (IN) India sold total INR vs. INR150B indicated in 3-month, 6-month and 12-month bills
Looking Ahead
- (NO) Norway Central Bank (Norges) Gov Olsen
- 05:50 (EU) ECB allotment in 7-day USD Liquidity Tender
- 06:00 (EU) Euro Zone Oct Advance CPI Estimate Y/Y: 2.2%e v 2.1% prior; CPI Core Y/Y: 1.1%e v 0.9% prior
- 06:00 (EU) Euro Zone Sept Unemployment Rate: 8.1%e v 8.1% prior
- 06:00 (IT) Italy Oct Preliminary CPI (including tobacco) M/M: +0.2%e v -0.4% prior; Y/Y: 1.7%e v 1.5% prior
- 06:00 (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.4%e v 1.7% prior; Y/Y: 1.8%e v 1.6% prior
- 06:00 (BE) Belgium Sept Unemployment Rate: No est v 6.5% prior
- 06:00 (GR) Greece Aug Retail Sales Value Y/Y: No est v 2.5% prior; Retail Sales Volume Y/Y: No est v 4.0% prior
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:30 (EU) ECB Long-Term Refinancing Operation Result
- 06:30 (GR) Greece Debt Agency (PDMA) to sell €875M in 26-week bills
- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-month bills – 07:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Oct 26th: No est v +4.9% prior
- 07:00 (IE) Ireland Oct Unemployment Rate: no est v 5.4% prior
- 07:00 (IL) Israel Aug Manufacturing Production M/M: No est v 2.5% prior
- 07:00 (IL) Israel Sept Unemployment Rate: No est v 4.0% prior
- 07:00 (IN) India Sept Fiscal Deficit( INR Crore): No est v 51.0B prior
- 07:00 (SE) Sweden Central bank (Riksbank) Ingves at Bank of Portugal)
- 08:00 (ZA) South Africa Trade Balance (ZAR): 4.2Be v 8.8B prior
- 08:00 (CL) Chile Sept Manufacturing Production Y/Y: 0.8%e v 4.0% prior; Industrial Production Y/Y: -0.6%e v -1.8% prior; Total Copper Production: No est v 465.9K tons prior
- 08:00 (CL) Chile Sept Unemployment Rate: 7.2%e v 7.3% prior
- 08:00 (IN) India Sept Eight Infrastructure Industries (Key Industries): No est v 4.2% prior
- 08:00 (RU) Russia to sell combined RUB20B in 2021 and 2029 OFZ bonds
- 08:15 (US) Oct ADP Employment Change: +187Ke v +230K prior
- 08:30 (US) Q3 Employment Cost Index: 0.7%e v 0.6% prior
- 08:30 (CA) Canada Aug GDP M/M: 0.1%e v 0.2% prior; Y/Y: 2.4%e v 2.4% prior
- 08:30 (CA) Canada Sept Industrial Product Price M/M: No est v -0.5% prior; Raw Materials Price Index M/M: No est v -4.6% prior
- 08:30 (US) Treasury Quarterly Refunding Announcement
- 09:05 (UK) Baltic Dry Bulk Index
- 09:45 (US) Oct Chicago Purchasing Manager: 60.0e v 60.4 prior
- 10:00 (MX) Mexico Aug Gold Production: No est v 6.9K oz prior; Silver Production: No est v 304.6K oz prior; Copper Production: no est v 430.0K prior
- 10:30 (BR) Brazil weekly Currency Flow data
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 4.303T prior
- 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 9.2% prior; Urban Unemployment: 10.0%ev 10.1% prior
- 12:00 (NZ) New Zealand Oct QV House Prices Y/Y: No est v 4.6% prior
- 13:15 (CH) SNB President Jordan in Bern
- (BR) Brazil Central Bank (BCB) Interest Rate Decision: expected to leave Selic Target Rate unchanged at 6.50% (no set time)
