Notes/Observations
- German ZEW Expectation Survey suggests the worst might be over; outlook appears to be stabilizing
- Europe awaits President Trump’s decision on automobile tariffs (Note: reports have circulated he would delay the decision by another six months)
Asia:
- Reserve Bank of New Zealand (RBNZ) Q4 Inflation Expectation Survey: 2-year Outlook: 1.80% v 1.9% prior (lowest since early 2017)
Americas:
- President Trump expected to announce this week that he is putting off a decision on whether to impose tariffs on European Union autos for another six months
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.08% at 405.68, FTSE +0.18% at 7,341.96, DAX +0.35% at 13,244.07, CAC-40 +0.19% at 5,905.12, IBEX-35 +0.20% at 9,407.00, FTSE MIB +0.45% at 23,590.50, SMI -0.08% at 10,297.50, S&P 500 Futures +0.03%]
- Market Focal Points/Key Themes: European indices trading mostly up to flat following mixed indices in Asia and slightly higher US futures.
- On a busy corporate earnings front, UK telecoms name Vodafone trades over 1% higher following H1 earnings and raised guidance, with Iliad up over 18% following earnings beat on top and bottom line and new share buyback program announcement; Dialog Semi rises 7% on update and raised long term targets and Infineon +5.5% following Q4 earnings; Deutsche Post rises 4% beating on top and bottom line and affirming outlook; Uniper trades over 3% higher following 9M earnings and raised FY guidance; Osram flat following earnings and job cuts press speculation. In the UK, ITV and Experian trade up 3% and 2.5%, respectively, following solid trading updates. Lonza falls over 4% following CEO stepping down and Continental -2% on final earnings. B&M European Value Retail dives almost 8% following earnings and announcement of strategic review of German unit. In other news, Renault down 3% on Nissan profit warning and dividend cut. Other decliners following earnings include IMCD -3%, 1&1 Drillisch -2.4% and DCC -3.5%. Meggitt down a tad despite strong Q3 organic revenue growth and raised FY revenue outlook. Trainline down 5% following 14.1% stake sale by key shareholders at 410p. Looking ahead notable earners Advance Dean Foods, Aecom, Tyson Foods and Advanced Auto Parts among others.
Equities
- Consumer discretionary: Deutsche Post [DPW.DE] +4% (earnings)
- Energy: Uniper [UN01.DE] +1% (earnings)
- Materials: IMCD [IMCD.NL] -2.5% (earnings), Lonza Group [LONN.CH] -4% (CEO steps down)
- Industrials: Continental [CON.DE] -2% (final earnings), Meggitt [MGGT.UK] -0.5% (trading update)
- Technology: Dialog Semi [DLG.DE] +7% (long-term targets), Infineon [IFX.DE] +5.5% (earnings), Electrocomponents [ECM.UK] -13.5% (earnings)
- Telecom: Vodafone [VOD.UK] +1% (earnings), Iliad [ILD.FR] +18% (earnings; buyback)
Speakers
- ECB’s Coeure (France) reiterated stance that Council was committed to continue net purchases for as long as necessary to reinforce the accommodative impact of policy rates. Should consider expanding access to ECB balance sheet
- Germany Chancellor Merkel stated that she believed that Brexit treaty has a good chance of approval in UK Parliament. ECB monetary easing will not continue forever
- UK Debt Management Office (DMO) raised the FY19/20 Gilt Remit from £117.8B to £122.8B
- German ZEW economists commented that it saw a growing hope that the international economic policy environment would improve in the near future. Agreement in US-China trade conflict was appearing more likely and that punitive tariffs in EU auto imports to US were less likely than projection just a few weeks ago
- Bank of Italy (BOI) Dep Gov Signorini: Govt 2020 GDP growth forecast seen as reasonable
- German draft law on exiting coal power: To avoid price hikes for consumers due to planned exit. Turning off facilities could be temporarily halted. 1st power plants should be taken off grid in 2020
- China banking regulator (CBIRC): M&A among banking sector always welcomed but to be decided by market; way to address risks among the smaller banks
Currencies/Fixed Income
- EUR/USD was steady with markets awaiting highly-anticipated announcement from the Trump administration on European automobile tariffs, Trump is expected to deflect from the decision for another 6 months but analysts noted that imposing them would retch up risk aversion sentiment. German ZEW Expectation Survey suggested that the worst might be over; outlook appeared to be stabilizing. Pair was at 10.25 just ahead of mid-session.
- GBP/USD retraced some of the euphoria from yesterday’s rally after Brexit Party decide to not challenge the Conservatives in 317 seats at December’s UK general election. GBP/USD slightly softer at 1.2835. UK saw another batch of soft data with hourly earnings missing expectations. Gilt yields rose after the Debt Management Office raised its estimate for net financing requirement for 2019-2020
Economic Data
- (SE) Sweden Oct PES Unemployment Rate: 3.8% v 3.8% prior
- (NO) Norway Q3 GDP Q/Q: 0.0% v 0.2% prior; GDP Mainland Q/Q: 0.7% v 0.8%e
- (NO) Norway Sept GDP M/M: -0.4% v -0.6% prior; GDP Mainland M/M: -0.1% v -0.2% prior
- (NO) Norway Q3 Average Monthly Earnings Y/Y: 3.5% v 3.4% prior
- (TR) Turkey Sept Current Account Balance: $2.5B v $2.2Be
- (RO) Romania Oct CPI M/M: 0.4% v 0.4%e; Y/Y: 3.4% v 3.4%e
- (FR) Bank of France Oct Industrial (Business) Sentiment : 98 v 97e
- (ES) Spain Sept House transactions Y/Y: -12.0% v -21.1% prior
- (IS) Iceland Oct International Reserves (ISK): 838B v 826B prior
- (UK) Oct Jobless Claims Change: +33.0K v +13.5K prior; Claimant Count Rate: 3.4% v 3.3% prior
- (UK) Sept Average Weekly Earnings 3M/Y: 3.6% v 3.8%e; Weekly Earnings (ex Bonus) 3M/Y: 3.6% v 3.8%e
- (UK) Sept ILO Unemployment Rate: 3.8% v 3.9%e; Employment Change 3M/3M: -58K v -102Ke
- (DE) Germany Nov ZEW Current Situation Survey: -24.7 v -22.3e; Expectations Survey: -2.1 v -13.0e
- (EU) Euro Zone Nov ZEW Expectations Survey: -1.0 v -23.5 prior
Fixed Income Issuance
- (EU) EFSF opened itss book to sell Oct 2029 bond; guidance seen -7bps to mid-swaps
- (NE) Netherlands Debt Agency (DSTA) sold €1.41B vs. €1.0-2.0B indicated range in 0.25% 2029 DSL Bonds; Avg Yield: -0.115% v -0.427% prior
- (ZA) South Africa sold total ZAR4.53B vs. ZAR4.53B indicated in 2032, 2040, and 2044 bonds
- (ID) Indonesia sold total IDR8.0T in 6-month Islamic Bills and 2-year, 4-year, 7-year and 15-year Sukuk bonds
- (ES) Spain Debt Agency (Tesoro) sold total €4.9B vs. €4.5-5.5B indicated range in 6-month and 12-month bills
- (IT) Italy Debt Agency (Tesoro) sold €5.5B vs. €5.5B indicated in 12-month bills; Avg Yield: -0.135% v -0.213% prior; Bid-to-cover: 1.58x v 1.64x prior
Looking Ahead
- (US) President Trump in NY (afternoon speech)
- (PT) Bank of Portugal Sept ECB financing to Portuguese Banks: No est v €18.0B prior
- 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 €5.0B in new 0.0% Dec 2021 Schatz
- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month, 6-month and 12-month bills
- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 06:00 (PT) Portugal Employment Report
- 06:00 (US) Oct NFIB Small Business Optimism Index: 102.0e v 101.8 prior
- 06:30 (CL) Chile Central Bank Economists Survey
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia announces upcoming OFZ Bond issuance
- 07:00 (BR) Brazil Sept IBGE Service Sector Volume Y/Y: +0.5%e v -1.4% prior
- 07:45 (US) Weekly Chain Store Sales data
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:55 (US) Weekly Redbook LFL Sales data
- 08:55 (CA) Bank of Canada (BOC) Dinis on cybersecurity
- 09:00 (FR) France Debt Agency (AFT) to sell combined €3.4-4.6B in 3-month, 6-month and 12-month Bills
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:30 (CA) Canada to sell 3-month and 6-month bills
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 12:55 (US) Fed’s Harker in New York
- 16:00 US) Weekly crop report
- 16:45 (NZ) New Zealand Oct Food Prices M/M: No est v 0.0% prior
- 18:00 (KR) South Korea Oct Unemployment Rate: 3.5%e v 3.4% prior
- 18:00 – (US) Fed’s Kashkari (dove, non-voter) in Wisconsin
- 18:30 (AU) Australia Nov Westpac Consumer Confidence Index: No est v 92.8 prior
- 18:50 (JP) Japan Oct PPI M/M: 1.2%e v 0.0% prior; Y/Y: -0.3%e v -1.1% prior
- 18:50 (JP) Japan Sept Loans & Discounts Corp Y/Y: No est v 2.4% prior
- 19:30 (AU) Australia Q3 Wage Price Index Q/Q: 0.5%e v 0.6% prior; Y/Y: 2.5%e v 2.3% prior
- 20:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to cut Official Cash Rate (OCR) by 25bps to 0.75%
- 21:00 (NZ) New Zealand Central Bank (RBNZ) Gov post rate decision press conference
- 21:35 (CN) China to sell 2-year and 5-year Bonds (
- 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 0.9% prior; “L” Money Supply M/M: No est v 0.4% prior
