Notes/Observations
Asia:
- Path towards a Brexit deal might be opening up but latest proposal from UK still faced some headwinds
- EU Leaders might need an additional Summit before end of Oct to secure a Brexit deal
- Germany Oct ZEW Survey mixed. Current Situation hits a fresh 9-year low as Expectation Survey beats.
Asia:
- RBA Oct Minutes reiterated stance that saw an extended period of low rates as likely and was prepared to cut rates again if necessary
- China Sept CPI hits its annual target and highest level since 2013 (Y/Y: 3.0% v 2.9%e)
Brexit:
- Reports of a ‘cautious optimism’ for reaching a deal on Northern Ireland border said to surface, shifting tone from EU’s Barnier’s pessimism on Sunday. A narrow path to a deal could said to be appearing with an eventual solution could look close to a “dual customs” territory originally proposed in Theresa May’s Chequers plan
- EU said to considering emergency summit to get Brexit deal done. EU internal talk said to be focusing now on a possible “holding pattern statement” at this week’s EU leaders summit. Likely note of great progress in negotiations but still needed more time
- UK political scene of a renewed threat from cross-party ‘rebel alliance’ pushing for second referendum. PM Johnson stated that a second referendum would be more toxic than the first
Americas:
- President Trump directed Vice Pres Pence to travel to Turkey soon; wanted immediate ceasefire. Pence said sanctions to continue until Turkey agreed to ceasefire, Turkey sanctions imposed were ‘a beginning’
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.31% at 391.02, FTSE -0.06% at 7,208.81, DAX +0.39% at 12,535.56, CAC-40 +0.41% at 5,666.43, IBEX-35 +0.58% at 9,300.00, FTSE MIB +0.46% at 22,200.50, SMI +0.20% at 9,984.00, S&P 500 Futures +0.41%]
Market Focal Points/Key Themes:
Equities
- European Indices trade higher, with the exception of the FTSE100, which trades lower on a firmer Sterling as initial Brexit optimism pushes Cable towards 1.27. Asian Indices traded mixed while US Index futures point to a higher open. On the corporate front shares of HelloFresh and Indivior trade sharply higher as the companies raises their full year outlook, with Hays and Dot digital also gaining on trading updates. Meanwhile German traded Kloeckner falls over 17% after cutting it’s full year EBITDA forecast, with Marston’s, Renishaw and FACC among other decliners on earnings. In M&A activity, Brady PLC gains as Hanover Bidco makes £8.3M cash offer, Eland Oil & Gas also gains as Seplat Petroleum makes 166p/shr bid, while Accesso Tech declines as there are currently no indications of interest are at a level that the Board feels offers sufficient value to shareholders. In other news Wirecard declines over 18% as the FT published documents on Wirecard’s accounting practices. Looking ahead the banks kick of the official start of earnings season, with JP Morgan, Goldman Sachs, CItiGroup, Wells Fargo set to report, alongside United Health and Johnson and Johnson among others.
- Consumer discretionary: HelloFresh [HFG.DE] +20% (raises outlook), Marston’s [MARS.UK] -9% (trading update)
- Energy: Eland Oil & Gas [ELA.UK] +28% (to be acquired)
- Financials: Brady [BRY.UK] +33% (to be acquired), Hays [HAS.UK] +6% (trading update), Bank of Ireland [BIRG.IE] +5% (new CFO)
- Healthcare: Indivior [INDV.UK] +12% (raises outlook)
- Industrials: Kloeckner [KCO.DE] -12% (profit warning), Vesuvius [VSVS.UK] -12% (trading update)
- Technology: Wirecard [WDI.DE] -16% (FT allegations), Renishaw [RSW.UK] -8% (trading update), accesso Technology Group [ACSO.UK] -13% (updates on sale process)
Speakers
- EU Chief negotiator Barnier: Brexit deal was still possible this week
- EU Chief negotiator Barnier said to have told EU27 that latest proposals from UK were not enough. He might recommend to EU Leader Summit that more negotiations were needed afterwards
- EU officials: UK gave new version of Brexit plan to EU on Monday, Oct 14th. Additional reports circulated that UK would table fresh proposals to break the Brexit deadlock
- German Chancellor Merkel: Brexit talks were very, very complicated
- Netherlands Foreign Min Blok: UK must improve Brexit proposal; still had time to reach a Brexit deal
- BOE Gov Carney testimony to Treasury Select Committee noted that there was ample time to ensure an orderly transit for the next governor, plenty of good candidates
- ECB’s Knot (Netherlands): Council agreed that a review of ECB policy was needed
- German Econ Min Altmaier reiterated Germany did not need any economic stimulus program, but needed to cut bureaucracy, taxes
- Spain govt said to cut its 2019 GDP growth forecast from 2.2% to 2.1%
- Italy govt said to be seeking a budget deal by the today’s midnight deadline in order to submit spending plan to the EU Commission
- Norway Central Bank (Norges) Bank Dep Gov Nicolaisen: Housing market was in balance
- Czech Central Bank’s Holub (chief economist): Domestic economy is roughly in-line with forecasts
- China Foreign Ministry Spokesman Geng Shuang: Chinese firms have purchased some US products based on demand and would accelerate purchases of US farm goods. No difference with US on 1st phase of trade agreement
- China PBOC Official Ruan Jianhong: liquidity at reasonably ample level. There was no basis for continued inflation, or continued deflation in China. To pay attention to inflation trends
- OPEC Sec Gen Barkindo: Being cautious in projecting demand for both 2019 and 2020 period. Demand was driving the market rather than supply. Producers were committed to maintaining stability
- Fed’s Bullard (voter, dovish dissenter): Decision of future rate cuts was meeting-by-meeting; Fed might choose to lower rates again. Trade policy was an uncertain factor and was not expecting trade uncertainty to be resolved over next 2 years. Could not react to day-to-day headlines on trade.
Currencies/Fixed Income
- GBP currency continued to exhibit volatility as Brexit tunnel negotiations continued. GBP/USD re-approached 3-month highs near the 1.27 level as some optimism on talks resurfaced. However, reports that the EU Leaders might need an additional summit this month in order to secure a deal put some damper on price action. GBP/USD at 1.2630 just ahead of the mid-session.
Economic Data
- (NL) Netherlands Aug Retail Sales Y/Y: 3.9% v 5.1% prior (revised from 5.2%)
- (FI) Finland Aug Current Account Balance: €0.2B v €0.3B prior
- (FI) Finland Aug GDP Indicator Y/Y: 2.5% v 2.5% prior
- (DK) Denmark Sept PPI M/M: 0.0% v -0.3% prior; Y/Y: -2.5% v -3.1% prior
- (NO) Norway Sept Trade Balance (NOK): -1.2B v +5.3B prior
- (NO) Norway Q3 House Price Index Q/Q: 0.9% v 1.0% prior
- (CH) Swiss Sept Producer & Import Prices M/M: -0.3% v 0.0%e; Y/Y: -2.0% v -1.7%e
- (FR) France Sept Final CPI M/M: -0.3% v -0.3%e; Y/Y: 0.9% v 0.9%e; CPI Ex-Tobacco Index: 104.4 v 104.5e
- (FR) France Sept Final CPI EU Harmonized M/M: % v -0.4%e; Y/Y: % v 1.1%e
- (TR) Turkey July Unemployment Rate: 13.9% v 13.0% prior
- (PL) Poland Sept Final CPI M/M: 0.0% v -0.1% prelim; Y/Y: 2.6% v 2.6% prelim
- (TR) Turkey Sept Central Gov’t Budget Balance (TRY): B v 0.6B prior
- (CN) China Sept Aggregate Financing (CNY): 2.270T v 1.900Te v
- (CN) China Sept M2 Money Supply Y/Y: 8.4% v 8.2%e v 8.2% prior; M1 Money Supply Y/Y: 3.4%e v 3.4% prior; M0 Money Supply Y/Y: No est v 4.8% prior
- (CN) China Sept New Yuan Loans (CNY): 1.69T v 1.360Te
- (UK) Sept Jobless Claims Change: +21.1K v +16.3K prior; Claimant Count Rate: 3.3% v 3.3% prior
- (UK) Aug Average Weekly Earnings 3M/Y: 3.8% v 4.0%e; Weekly Earnings (ex-bonus) 3M/Y: 3.8% v 3.7%e
- (UK) Aug ILO Unemployment Rate: 3.9% v 3.8%e; Employment Change 3M/3M: -56K v +26Ke
- (IT) Italy Aug General Government Debt: €2.463T v €2.466T prior
- (DE) Germany Oct ZEW Current Situation Survey: -25.3 v -23.6e; Expectations Survey: -22.8 v -26.4e
- (EU) Euro Zone Oct ZEW Expectations Survey: -23.5 v -22.4 prior
Fixed Income Issuance
- (ES) Spain Debt Agency (Tesoro) sold total €2.1B vs. €1.5-2.5B indicated range in 3-month and 9-month Bills
- (CH) Switzerland sold CHF454.0M in 3-month bills; Avg Yield: -0.943% v -0.912% prior
Looking Ahead
- 05:30 (UK) Weekly John Lewis LFL Sales data
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
- 05:30 (DE) Germany to sell €4.0B in 0% Sept 2021 Schatz
- 05:30 (UK) DMO to sell conventional 0.875% Oct 2029 Gilt
- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 06:00 (IE) Ireland Aug Trade Balance: No est v €6.3B prior
- 06:15 (SE) Sweden Central Bank (Riksbank) Gov Ingves in London
- 07:00 (IS) Iceland Sept Unemployment Rate: No est v 3.5% prior
- 07:45 (US) Weekly Chain Store Sales data
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (UK) BOE’s Vlieghe on Monetary Policy in London
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (CA) Canada Sept Existing Home Sales M/M: 2.0%e v 1.4% prior
- 09:00 (BE) Belgium Aug Trade Balance: No est v €1.3B prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (US) Fed’s Bostic (dove, non-voter) on Community development
- 09:00 (RU) Russia announces upcoming OFZ Bond issuance
- 10:30 (NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: No est v +0.2% prior
- 10:30 (CA) Canada to sell 3-month, 6-month and 12-month Bills
- 11:00 (CO) Colombia Aug Manufacturing Production Y/Y: 2.5%e v 3.5% prior
- 11:00 (CO) Colombia Aug Retail Sales Y/Y: 7.2%e v 8.5% prior
- 11:30 (IL) Israel Sept CPI M/M: -0.2%e v +0.2% prior; Y/Y: 0.4%e v 0.6% prior
- 11:30 (US) Treasury to sell 13-week and 26-week Bills
- 12:45 (US) Fed’s George (hawk, voter)
- 15:30 (US) Fed’s Daly (dove, non-voter)
- 16:00 (US) Weekly Crop Condition Report
- (CO) Colombia Central Bank Economist Survey
