UK PM Johnson Set To Try Another Strategy To Secure A General Election

Notes/Observations

• UK PM Johnson tries for a 4th time to get his early elections via another approach; to propose a basic piece of legislation to change the date set in law for the next election to Dec 12th (would only require a majority vote)

Asia:

• Japan government said to propose ‘economic cooperation fund’ with South Korea in a bid speculated to be intended to ease trade tensions
• Hong Kong Chief Exec Lam: Expects negative economic growth for 2019; will closely monitor economic situation

Brexit:

• UK Parliament defeated govt motion that sought early elections on Dec 12th date. PM Johnson told Parliament he thinks the opposition wants to delay and cancel Brexit. Labour leader Corbyn (opposition) voted against an early general election as the party sought something that would take a ‘no deal’ Brexit off the table
• Parliament scheduled Tues debate (Oct 29th) on bill that sets Dec 12th election
• UK PM Johnson tells EU’s Tusk unwanted extensions damaging to our democracy and to relationship with the EU. Hoped to move forward rapidly to ending our EU membership and beginning talks on free trade agreement

Americas:

• President Trump: looking to be ahead of schedule on signing of ‘Phase 1’ of US-China trade deal; expects to sign pact at APEC meeting in Chile
• USTR said it will start on Nov 1st a process for considering extending for up to 12 months certain exclusions from additional tariffs on China imports that were granted in Dec 2018

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.47% at 397.10, FTSE -0.37% at 7,304.30, DAX -0.26% at 12,908.82, CAC-40 -0.23% at 5,717.43, IBEX-35 -0.57% at 9,379.00, FTSE MIB -0.31% at 22,624.50, SMI -0.22% at 10,209.50, S&P 500 Futures -0.08%]
• Market Focal Points/Key Themes: European Indices trade slightly lower across the board after a mixed session in Asia and mixed futures in the US. Shares of German traded Commerzbank trades slightly lower after reporting prelim results ahead of forecasts; French telecoms name Orange trades lower on in line results and slightly lower EBITDA guidance, Oil giant BP declines on a fall in Revenue and profits with Stora Enso, Poyry, Hunting and Deutsche Borse among other decliners on earnings. Caverion rises over 10% on strong earnings, with Greenyard also gaining after raising its outlook. Plus500 is another notable gainer on a rise in Revenues and margin, while Landis+Gyr, SMCP, Fresenius SE and Fresenius Medical and Varta are among some of the other names rising on earnings. In other news Schmolz + Bickenbach gains on receiving a request from Liwet Holding AG to replace the board; Schaffner gains on new contract awards, while Swedbank declines as the Swedish FSA opens sanction case after “some evidence of a misdemeanor appeared” during investigation. Looking ahead notable earners include Cummins, Mastercard, General Motors, Kellogg, HCA, Eaton and Ingersoll-Rand among others.

Equities

• Consumer discretionary: Stora Enso [STERV.FI] -5% (earnings), Caverion [CAV1V.FI] +14% (earnings; acquisition)
• Energy: BP [BP.UK] -1% (earnings), Hunting [HTG.UK] -2% (trading update)
• Financials: Swedbank [SWEDA.SE] -3% (investigation)
• Healthcare: Morphosys [MOR.DE] -3% (ends a clinical development), Fresenius Medical Care [FME.DE] +6% (earnings)
• Industrials: Fresenius [FRE.DE] +5% (earnings), Varta [VAR1.DE] +4% (earnings), Grifols [GRF.ES] +5% (earnings)
• Telecom: Orange [ORA.FR] -2% (earnings)

Speakers

• UK Govt said to be open to an amendment to hold an election on Dec 11th (**Note: Monday bill was for a Dec 12th election)
• RBA Gov Lowe reiterated stance that prepared to ease further if necessary, believes that negative rates unlikely in Australia

Currencies/Fixed Income

• USD price action was again subdued as markets focus on the upcoming FOMC rate decision and press conference (due Wed).
• GBP/USD was lower by 0.3% in the session as PM Johnson tries again to get his early election approved by Parliament. Price action has been subdued after the EU formally agreed to another 3-month extension to Brexit. GBP/USD moving away from ist recent 6-month highs that tested the 1.30 last week. Dealers noted that the current political ambitions of all UK parties involved continue to dominate the news flow.
• Continued optimistic views that the US-China 1st phase of the trade agreement will be signed by mid-November helped the USD/JPY to test above the 109 level for 3-month highs. On Monday President Trump echoed views from China’s MOFCOM that both sides appeared to be ahead of schedule on signing of ‘Phase 1’ of US-China trade deal (expected by mid-Nov at the upcoming APEC Summit).

Economic Data

• (ZA) South Africa Sept M3 Money Supply Y/Y: 6.1% v 7.5%e; Private Sector Credit Y/Y: 6.2% v 6.9%e
• (UK) Oct Nationwide House Prices M/M: 0.2% v 0.0%e; Y/Y: 0.4% v 0.3%e
• (FR) France Oct Consumer Confidence: 104 v 104e
• (ES) Spain Aug Total Mortgage Lending Y/Y: -22.8% v +16.2% prior; House Mortgage Approvals Y/Y: -29.9% v +13.1% prior
• (HU) Hungary Unemployment Rate: 3.5% v 3.4%e
• (ES) Spain Sept Adjusted Retail Sales Y/Y: 2.4% v 3.2%e; Retail Sales (unadj) Y/Y: 3.6% v 3.3% prior
• (AT) Austria Oct Manufacturing PMI: 45.5 v 45.1 prior (7th straight contraction)
• (IT) Italy Sept PPI M/M: +0.1% v -0.5% prior; Y/Y: -2.4% v -2.1% prior
• (UK) Sept Net Consumer Credit: £0.8B v £0.9Be; Net Lending: £3.8B v £3.8Be
• (UK) Sept Mortgage Approvals: 65.9K v 65.0Ke
• (UK) Sept M4 Money Supply M/M: 0.7% v 0.4% prior; Y/Y: 4.0% v 3.3% prior; M4 Ex IOFCs 3M Annualized: 7.9% v 6.0% prior
• (ZA) South Africa Q3 Unemployment Rate: 29.1% v 29.0%e (highest level since 2008)

Fixed Income Issuance

• (ID) Indonesia sold total IDR7.43T vs. IDR7.0T target in 6-month and 9-month Islamic Bills & 2-year, 4-year, 15-year, and 30-year Islamic bonds (Sukuk)

Looking Ahead

• 06:00 (EU) Daily Euribor Fixing – 06:00 (IT) Italy Debt Agency (Tesoro) to sell 12-month Bills
• 06:00 (ZA) South Africa to sell combined ZAR4.53B in 2023, 2026 and 230 bonds
• 06:15 (CH) Switzerland to sell 3-month bills
• 06:30 (UK) Weekly John Lewis LFL Sales data
• 06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 06:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 06:30 (UK) DMO to sell 0.125% in inflation-linked Aug 2028 Gilts (UKTi)
• 06:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 07:00 (IE) Ireland Sept Retail Sales Volume M/M: No est v 5.7% prior; Y/Y: No est v 2.1% prior
• 07:45 (US) Weekly Chain Store Sales data
• 07:45 (US) Daily Libor Fixing
• 08:00 (ES) Spain Sept YTD Budget Balance: No est v -£14.9B prior
• 08:00 (ZA) South Africa Finance Ministry presents Medium-Term Budget (pushed ahead a day)
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (US) Aug S&P Case-Shiller 20-City M/M: -0.10%e v +0.02% prior; Y/Y: 2.10%e v 2.00% prior; House Price Index (HPI): No est v 218.00 prior
• 09:00 (US) Aug S&P Case-Shiller (overall) HPI Y/Y: No est v 3.18% prior; Overall HPI Index: No est v 211.72 prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:00 (RU) Russia announces upcoming OFZ Bond issuance
• 10:00 (US) Sept Pending Home Sales M/M: 0.8%e v 1.6% prior; Y/Y: 2.6%e v 1.1% prior
• 10:00 (US) Oct Consumer Confidence: 128.0e v 125.1 prior
• 10:00 (EU) Weekly ECB Forex Reserves
• 11:00 (MX) Mexico Weekly International Reserve data
• 13:30 (BR) Brazil Sept Total Federal Debt (BRL): No est v 4.074T prior
• 16:30 (US) Weekly API Oil Inventories