European Inflation Data Remains Soft, Focus On FOMC Rate Decision

Notes/Observations

• Various European Oct CPI data (German States, Spain) registering level well below ECB target level;
• Focus on FOMC rate decision; some believe the Fed might give a ‘hawkish cut’

Asia:

• Australia Q3 CPI data registered its 5th consecutive annual reading below RBA target range of 2-3% target (Q/Q: 0.5% v 0.5%e; Y/Y: 1.7% v 1.7%e)
• Japan Sept Retail Sales data registered its largest increase since March 2014 (M/M: 7.1% v 3.5%e; Y/Y: 9.1% v 6.0%e). Reminder: Japan implemented its sales tax hike in Oct
• China UN Envoy: US criticism of China policy in Xinjiang was not helpful for having a ‘good’ solution to the issue of trade talks

Brexit:

• UK Parliament approved general election to be held on Dec 12th with the vote being 438 to 20 in favor (Note: This will be the first December election since 1923. The 25-day election campaign to officially begin next week after Parliament is dissolved.
• EU’s Tusk: third Brexit delay ‘may be the last one’
• National Institute of Economic and Social research (NIESR Think Tank) study: growth would be 3.5% lower in 10 years’ time under the current Brexit deal as it would leave the UK £70B worse off than if it had remained in the EU

Americas:

• White House spokesperson: China and US were working to finalize text to sign Phase 1 deal at mid-Nov Chile APEC meeting
• US official stated that the U.S.-China trade deal might not be ready for signing in Chile but did not suggest the talks had fallen apart only more time was needed
• US House of Representatives passed bipartisan bill to sanction Turkey over its incursion into Syria

Energy:

• Weekly API Oil Inventories: Crude: +0.6M v +4.5M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.07% at 397.92, FTSE -0.18% at 7,293.35, DAX -0.21% at 12,911.94, CAC-40 +0.13% at 5,747.55, IBEX-35 -1.02% at 9,304.50, FTSE MIB -0.05% at 22,670.50, SMI -0.02% at 10,255.50, S&P 500 Futures -0.05%]
• Market Focal Points/Key Themes: European Indices trade mostly lower across the board following lower Indices in Asia and slightly lower US futures amid a heavy day for corporate news. On the earnings front shares of Dax component Bayer traders higher on flat sales and core earnings which came ahead of forecasts; German car giant Volkswagen is also gaining on a top and bottom line beat; French traded L’Oreal climbs over 5% on Revenues and LFL figures which beat forecast, while Fucks Petrolub, Standard Chartered, Matas and SCA are among other notable gainers on earnings. Deutsche Bank declines over 5% after booking a loss on restructuring and weakness in trading; Italian tyre manufacturer Pirelli also declines on earnings and guidance cut; Santander weighs on the Ibex as the company reported a 75% drop in Q3 profits; Credit Suisse also declines on earnings and a cautious CEO commentary, while Airbus also declines on earnings and cash flow concerns. Other notable decliners on earnings include De La Rue, Next, Recticel, Clariant and Ahlstrom-Munksjo among others. In other news Fiat Chrysler and Peugeot Citroen shares rise sharply as the companies confirm talks regarding a possible merger, while DIA declines as the company will not request shares of second tranche of capital increase in additional allocation period. Looking ahead notable earners include Yum Brands, Mckessen, Crocs, WellCare Health, Entergy and Bunge among others.

Equities

• Consumer discretionary: L’Oreal [OR.FR] +5.5% (sales), Pirelli [PIRC.IT] -7% (earnings), Next [NXT.UK] -3% (earnings)

Consumer staples:

• Energy: Total [FP.FR] +0.5% (earnings)
• Financials: Standard Chartered [STAN.UK] +2% (earnings), Credit Suisse [CSGN.CH] -2.5% (earnings), Deutsche Bank [DBK.DE] -6.5% (earnings), Santander [SAN.ES] -4% (earnings)
• Healthcare: Bayer [BAYN.DE] +2% (earnings), Novartis [NOVN.CH] -1% (study update)
• Industrials: Fiat-Chrysler [FCA.IT] +9%, PSA [UG.FR] +6%, Renault [RNO.FR] -4% (Fiat-PSA confirm merger talks), Volkswagen [VOW3.DE] +0.5% (earnings), Krones [KRN.DE] +9% (earnings)
• Technology: Worldline [WLN.FR] -4% (stake)
• Materials: Clariant [CLN.CH] -2% (earnings), Wacker Chemie [WCH.DE] -1.5% (analyst action)

Speakers

• Incoming ECB Chief Lagarde: Economic growth was precarious and fragile; saw geopolitical threats from trade wars and Brexit
• Spain acting PM Sanchez: no plans to change income tax
• Treasury Sec Mnuchin: Domestic economy continued to be strong with low unemployment and low inflation
• China Foreign Ministry Spokesman Geng Shuang: lead China, US trade negotiators will speak again soon. Working-level China-US trade talks will continue at a fast pace in the meantime

Currencies/Fixed Income

• Focus on the FOMC rate decision later today with some dealers expecting a ‘hawkish cut’. Markets highly anticipating a 25bps in the target range but the focus will be on signals from Chair Powell who may be getting ready to pause this year’s monetary easing campaign.
• GBP/USD was slightly higher and trying to get a foothold back above the 1.29 level. Dealers noted that Cable seen in a 1.27-1.30 rang for the time being after a stellar performance in Oct. Analysts added that the waning possibility of a no-deal Brexit outcome would likely provide a floor to the GBP pound regardless of the rising pre-election uncertainties.
• USD/JPY holding below the pivotal 109 resistance level with focus turning to BOJ rate decision on Thursday. BOJ likely to keep its powder dry and save it for another day as some of the global tensions have eased in recent weeks.

Economic Data

• (NL) Netherlands Oct Producer Confidence Index: 3.6 v 3.3 prior
• (FR) France Q3 Preliminary GDP Q/Q: 0.3% v 0.2%e; Y/Y: 1.3% v 1.3%e
• (NO) Norway Sept Retail Sales (with auto/fuel) M/M: -0.1% v +0.3%e
• (TR) Turkey Oct Economic Confidence: 89.8 v 86.0 prior
• (FR) France Sept Consumer Spending M/M: -0.4% v 0.0%e; Y/Y: 0.3% v 0.6%e
• (DE) Germany Oct CPI Saxony M/M: +0.1% v -0.1% prior; Y/Y: 1.0% v 1.0% prior
• (ES) Spain Oct Preliminary CPI M/M: 1.0% v 0.8%e; Y/Y: 0.1% v 0.0%e
• (ES) Spain Oct Preliminary CPI EU Harmonized M/M: 0.6% v 0.6%e; Y/Y: 0.2% v 0.1%e
• (CH) Swiss Oct KOF Leading Indicator: 94.7 v 93.5e
• (HU) Hungary Aug Average Gross Wages Y/Y: 11.5% v 11.2%e
• (AT) Austria Q3 Preliminary GDP Q/Q: 0.1% v 0.1% prior; Y/Y: 1.5% v 1.8% prior
• (AT) Austria Sept PPI M/M: 0.0% v -0.3% prior; Y/Y: -1.1% v -0.8% prior
• (SE) Sweden Aug Wages Non-Manual Workers Y/Y: 2.6% v 2.8% prior
• (DE) Germany Oct Unemployment Change: +6.0K v +3.0Ke; Unemployment Claims Rate: 5.0% v 5.0%e
• (DE) Germany Oct CPI Brandenburg M/M: 0.0% v -0.1% prior; Y/Y: 1.1% v 1.3% prior
• (DE) Germany Oct CPI Hesse M/M: 0.1% v 0.0% prior; Y/Y: 1.2% v 1.2% prior
• (DE) Germany Oct CPI Bavaria M/M: 0.1% v 0.0% prior; Y/Y: 0.9% v 1.1% prior
• (DE) Germany Oct CPI Baden Wuerttemberg M/M: 0.1% v 0.1% prior; Y/Y: 1.1% v 1.2% prior
• (IT) Italy Oct Consumer Confidence Index: 111.7 v 111.8e; Manufacturing Confidence: 99.6 v 98.6e; Economic Sentiment: 99.0 v 98.6 prior
• (CH) Swiss Oct Credit Suisse Expectations Survey: -30.5 v -15.4 prior
• (DE) Germany Oct CPI North Rhine Westphalia M/M: +0.1% v -0.1% prior; Y/Y: 1.2% v 1.3% prior
• (PT) Portugal Oct Consumer Confidence Index: -7.2 v -7.1 prior; Economic Climate Indicator: 2.1 v 2.2 prior

Fixed Income Issuance

• (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
• (DK) Denmark sold total DKK2.68B in 1-month and 3 month bills

Looking Ahead

• (BE) Belgium CPI M/M: No est v -0.5% prior; Y/Y: No est v 0.8% prior
• (BR) Brazil Sept Central Govt Budget Balance (BRL): No est v -16.9B prior
• (BE) Belgium Sept YTD Budget Balance: No est v -€118.1B prior
• 06:00 (EU) Euro Zone Oct Business Climate Indicator: -0.23e v -0.22 prior; Economic Confidence: 101.1e v 101.7 prior; Industrial Confidence: -8.7e v -8.8 prior; Services Confidence: 9.3e v 9.5 prior; Consumer Confidence (final): -7.6e v -7.6 advance
• 06:00 (IT) Italy Sept Hourly Wages M/M: No est v 0.1% prior; Y/Y: No est v 0.7% prior
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €4.5-5.5B in 5-year and 10-year BTP bonds
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €250-750M in 0.00% Jan 2025CCTeu (Floating Rate bonds)
• 06:30 ( EU) ECB alloment in 3-month LTRO operation
• 06:30 (DE) Germany to sell €3.0B in 0.00% Oct 2024 BOBL
• 06:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 07:00 (IL) Israel Sept Trade Balance: No est v -$1.3B prior
• 07:00 (US) MBA Mortgage Applications w/e Oct 25th: No est v -11.9% prior
• 07:00 (PT) Portugal Sept Industrial Production M/M: No est v -1.0% prior; Y/Y: No est v -4.8% prior
• 07:00 (PT) Portugal Sept Retail Sales M/M: No est v 1.1% prior; Y/Y: No est v 5.1% prior
• 07:00 (BR) Brazil Oct FGV Inflation M/M: 0.8%e v 0.0% prior; Y/Y: 3.3%e v 3.4% prior
• 7:00 (CZ) Czech Republic to sell 2023, 2026 and 2033 bonds
• 07:30 (IS) Iceland to sell 6-month Bills
• 07:45 (US) Daily Libor Fixing
• 08:00 (ZA) South Africa Sept Budget Balance (ZAR): No est v -32.8B prior
• 08:00 (MX) Mexico Q3 Preliminary GDP Q/Q: 0.2%e v 0.0% prior; Y/Y: +0.1%e v -0.8% prior
• 08:00 (CL) Chile Sept Unemployment Rate: 7.0%e v 7.2% prior
• 08:00 (CL) Chile Sept Industrial Production Y/Y: No est v 1.4% prior; Manufacturing Production Y/Y: 3.2%e v -1.5% prior; Total Copper Production: No est v 517.9K tons prior
• 08:00 (UK) Parliament weekly PM Q&A in Commons
• 08:00 (RU) Russia to sell OFZ bonds
• 08:15 (US) Oct ADP Employment Change: +110Ke v +135K prior
• 08:30 (US) Q3 Advance GDP Annualized Q/Q: 1.6%e v 2.0% prior; Personal Consumption: 2.6%e v 4.6% prior
• 08:30 (US) Q3 Advance GDP Price Index: 1.9%e v 2.4% prior; Core PCE Q/Q: 2.2%e v 1.9% prior
• 08:30 (US) Treasury Quarterly Refunding
• 09:00 (DE) Germany Oct Preliminary CPI M/M: 0.0%e v 0.0% prior; Y/Y: 1.1%e v 1.2% prior
• 09:00 (DE) Germany Oct Preliminary CPI EU Harmonized M/M: 0.0%e v -0.1% prior; Y/Y: 0.8%e v 0.9% prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:00 (HU) Hungary Central Bank Nagy at banking conference
• 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 1.75%
• 10:00 (BE) Belgium Q3 Preliminary GDP Q/Q: No est v 0.2% prior; Y/Y: No est v 1.2% prior
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 10.8% prior; Urban Unemployment Rate: 11.0%e v 11.4% prior
• 11:00 (HU) Russia President Putin with Hungary PM Orban in Budapest
• 13:30 (DE) ECB’s Lautenschlaeger (Germany; outgoing member))
• 14:00 (US) FOMC Interest Rate Decision: expected to cut Target Range by 25bps to 1.50-1.75%; Expected to cut Interest Rate on Excess Reserves (IOER) by 25bps to 1.55%
• 14:30 (US) Fed Chair Powell post rate decision press conference
• 17:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to cut Selic Rate by 50bps to 5.00%