Notes/Observations
- Focus remains on trade; China said seek full roll back of tariffs before signing ‘Phase 1’ of the trade deal; US thinking about such a move
- Major Euro Area PMI Services showing signs of stabilization; hold onto expansion territory (Beats: Germany, Euro Zone, Italy; Misses: Spain; in-line: France)
- Surprise rise in German Sept factory activity; gives hope that economy would stabilize
- Euro Zone Sept Retail Sales bests expectations
Asia:
- Japan Oct Final PMI Services revised lower to register its 1st contraction since Sept 2016( 49.7 v 50.3 prelim)
- BOJ Sept minutes (two meetings ago): Appropriate to persistently continue with current powerful easing
- New Zealand Q3 Unemployment Rate 4.2% v 4.1%e
Europe/Mideast:
- PM Johnson spokes to President Trump on Tuesday (Nov 5th) asking him to lift tariffs on UK goods including s including Scotch whisky
Americas:
- Fed’s Kashkari (dove; non-voter): US interest rates are now modestly accommodative
- US officials said to be open to roll backs of tariffs on Chinese goods if they get enough in return (China said to continue to seek a full roll back of tariffs before signing ‘Phase 1’ of the trade deal)
- Trump Official stated that the White House was open to pushing govt’s shutdown deadline to Dec with a short-term pending bill (Note: current funding deadline is Nov 21st)
Energy:
- Weekly API Oil Inventories: Crude: +4.3M v +0.6M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.18% at 403.52, FTSE -0.24% at 7,370.16, DAX -0.15% at 13,129.08, CAC-40 0.00% at 5,847.00, IBEX-35 -0.45% at 9,366.00, FTSE MIB -0.14% at 23,331.50, SMI -0.02% at 10,270.50, S&P 500 Futures -0.07%]
- Market Focal Points/Key Themes: European Indices trade slightly lower across the board tracking lower Indices in Asia and slightly lower US Index futures. On the earnings front German auto maker BMW trades lower despite a top and bottom line beat and affirmed outlook; Adidas declines as earnings momentum slowed in Q3; while Wirecard also declines slightly on earnings and affirmed outlook. Other notable decliners include ISS, Dialog Semiconductor, Intu and Verbund among others. UK retailer Marks & Spencer trades over 3% higher on earnings and stronger Food sales, which offset weaker clothing sales; French bank Societe General gains over 4% as restructuring costs weighed on profits, but delivered on capital, with Ahold Delhaize also gaining sharply on a rise in profits and Revenue. Other notable gainers include Heidelberger Druck, Brenntag, Alstom, Securitas and Ultra Electronics among others. In other news Mothercare trades over 40$ higher as the company appointed administrators, while Breedon, and ScS are among the decliners following placings. Looking ahead notable earners include Lumber Liquidators, Humana, CVS, Wendy’s Performance Food Group and AES Corp among others.
Equities
- Consumer discretionary: Marks & Spencer [MKS.UK] +4.5% (earnings), Ahold Delhaize [AD.NL] +3% (earnings), Mothercare [MTC.UK] +44% (administrators appointed), Intu Properties [INTU.UK] -16% (trading update), Adidas [ADS.DE] -3% (earnings)
- Materials: Voestalpine [VOE.AT] -1.5% (earnings)
- Financials: Societe Generale [GLE.FR] +4% (earnings)
- Industrials: BMW [BMW.DE] +0.5% (earnings), Brenntag [BNR.DE] +5% (earnings)- Technology: Wirecard [WDI.DE] -1% (earnings), Dialog Semi [DLG.DE] -5.5% (earnings)
- Telecom: Iliad [ILD.FR] +5% (analyst action)
Speakers
- ECB’s De Guindos (Spain): Bank profitability constrained by bleaker economic outlook
- ESM Regling stated that needed a European fiscal buffer fund in the range of €100-200B
- ECB SSM chief Enria: Stability from Basel III comes at ‘fair place’
- German Economic Advisors cut 2020 GDP growth to 0.9% (as expected)
- Iceland Central Bank (Sedibanki) Policy Statement after the cut of it key rate noted that the current interest rate level should suffice to ensure medium-term price stability. Economic outlook could be overly optimistic given global uncertainty. Outlook for 2020 had deteriorated and now saw GDP growth at 1.6%. Inflation eased in Oct to 2.8%; had been at or above 3% level since spring. Headline inflation expected to subside faster than previous forecast and align with target by end-2019
- Thailand Central Bank (BOT) Policy Statement noted that the decision to cut by 25bps was not unanimous (5-2). Inflation was seen below target and exports seen falling by more than current forecast. Thai tourism growth was also seen slower and was concerned over the strength of the THB currency (Baht); Baht appreciation could impact the economy
- S&P affirmed South Korea sovereign rating at AA; outlook stable
- International Atomic Energy Agency (IAEA): Have inspectors on the ground in Iran and will report any activities (**Note: Iran President Rouhani stated that it would further scale back on its nuclear commitment)
Currencies/Fixed Income
- EUR/USD was inching higher but holding below the 1.11 level for the time being. Euro aided by improving PMI Services data in the session. Better German factory orders provided additional hope that region’s economy would stabilize
- JPY currency (Yen) moved off the 109 level as market participants weighed alleged Chinese demands for the Trump administration to roll back tariffs in order to secure the 1st phase of a trade agreement .
- GBP steady as campaigning official begun for the Dec 12th election. GBP/USD holding below the 1.29 level in quiet trade.
Economic Data
- (RU) Russia Oct PMI Services: 55.8 v 52.8e (4th month of expansion); PMI Composite: 53.3 v 51.4 prior
- (DE) Germany Sept Factory Orders M/M: 1.3% v 0.1%e; Y/Y: -5.4% v -6.3%e
- (TH) Thailand Central Bank (BOT) cut Benchmark Interest Rate by 25bps to 1.25% (as expected)
- (TW) Taiwan Oct CPI Y/Y: 0.4% v 0.5%e; CPI Core Y/Y: 0.7% v 0.5%e; WPI Y/Y: -6.2% v -4.7% prior
- (ES) Spain Sept Industrial Output NSA Y/Y: +3.1% v -0.8% prior; Industrial Output SA Y/Y: 0.8% v 1.5%e; Industrial Production M/M: -0.8% v -0.7%e
- (CZ) Czech Sept Industrial Output Y/Y: 4.9% v 4.5%e; Construction Output Y/Y: +0.2% v -2.4% prior
- (CZ) Czech Sept National Trade Balance (CZK): 25.1B v 17.3Be
- (HU) Hungary Sept Retail Sales Y/Y: 5.8% v 6.0%e
- (AT) Austria Oct Wholesale Price Index M/M: -0.4% v +0.3% prior; Y/Y: -2.8% v -1.5% prior
- (ES) Spain Oct Services PMI: 52.7 v 52.8e (72nd month of expansion but lowest since Sept 2018); Composite PMI: 51.2 v 51.4e
- (IT) Italy Oct Services PMI: 52.2 v 51.0e (9th straight expansion); Composite PMI: 50.8 v 50.2e
- (FR) France Oct Final Services PMI: 52.9 v 52.9e (confirmed 8th month of expansion); Composite PMI: 52.6 v 52.6e
- (DE) Germany Oct Final Services PMI: 51.6 v 51.2e (confirmed 76th month of expansion but lowest since Sept 2016); Composite PMI: 48.9 v 48.6e
- (IS) Iceland Central Bank (Sedibanki) cut the 7-Day Term Deposit Rate by 25bps to 3.00%
- (EU) Euro Zone Oct Final Services PMI: 52.2 v 51.8e (confirmed 77th month of expansion); Composite PMI: 50.6 v 50.2e
- (IS) Iceland Oct Preliminary Trade Balance (ISK): +2.7B v -17.6B prior
- (EU) Euro Zone Sept Retail Sales M/M: 0.1% v 0.0%e; Y/Y: 3.1% v 2.4%e
Fixed Income Issuance
- (IN) India sold total INR vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK2.54B v DKKB in 2025 and 2029 DGB bonds
- (SE) Sweden sold total SEK1.50B vs. SEK1.50B indicated in 2026 and 2029 Bonds
Looking Ahead
- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 2.50%
- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 1.50%
- (NL) Netherlands Debt Agency (DSTA) announcement for upcoming July 2029 DSL issuance for Nov 12th
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €375M in 13-Week Bills
- 06:00 (FI) Finland to sell €1.5B in 2034 and 2047 RFGB bonds
- 06:00 (PT) Portugal Q3 Unemployment Rate: No est v 6.3% prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Nov 1st: No est v 0.6% prior
- 07:00 (MX) Mexico Oct Consumer Confidence: 45.0e v 44.7 prior
- 07:00 (MX) Mexico Oct Vehicle Production: No est v 318.9K prior; Vehicle Exports: No est v 284.2K prior
- 07:00 (MX) Mexico Aug Gross Fixed Investment: -6.0%e v -7.6% prior
- 07:00 (UK) Parliament weekly PM Q&A in Commons
- 07:00 (RU) Russia to sell OFZ bonds
- 08:00 (HU) Hungary Central Bank Oct Minutes
- 08:00 (RU) Russia Oct CPI M/M: +0.2%e v -0.2% prior; Y/Y: 3.8%e v 4.0% prior
- 08:00 (RU) Russia Oct CPI Core M/M: 0.2%e v 0.2% prior; Y/Y: 3.9%e v 4.0% prior
- 08:00 (BR) Oct Vehicle Production: No est v 247.3K prior; Vehicle sales: No est v 234.9K prior; Vehicle Exports: no est v 36.6K prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (US) Fed’s Evans (dove, voter) in NY
- 08:30 (US) Q3 Nonfarm Productivity: 0.9%e v 2.3% prior; Unit Labor Costs: 2.2%e v 2.6% prior
- 09:30 (US) Fed’s Williams (dove, voter) in NY
- 10:00 (CA) Canada Oct Ivey Purchasing Managers Index (Seasonally Adj): No est v 48.7 prior; PMI (unadj): No est v 55.8 prior
- 10:30 (US) Weekly DOE Oil Inventories
- 12:00 (CA) Canada to sell 5 Year Bonds
- 13:00 (US) Treasury to sell 10-Year Notes
- 14:00 (AR) Argentina Sept Industrial Production Y/Y: -0.6%e v -6.4% prior; Construction Activity Y/Y: No est v -5.9% prior
- 15:15 (US) Fed’s Harker (hawk, non-voter)
- (MX) Citibanamex Survey of Economists
- 16:30 (AU) Australia Oct AiG Performance of Construction Index: No est v 55.8 prior
- 19:30 (AU) Australia Sept Trade Balance: A$5.1Be v A$5.9B prior
