Notes/Observations
- UK CPI falls to a 3-year low but focus remains on upcoming election
- Tariffs rollback emerging as the main stumbling block in efforts by the US & China to a limited trade deal – Risk aversion sentiment creeps back into markets
- New Zealand Central Bank (RBNZ) unexpectedly keeps policy steady
Asia:
- New Zealand Central Bank (RBNZ) left the Official Cash rate (OCR) unchanged at 1.00% (not expected) with vote being unanimous to keep policy steady. Economic developments since Aug did not warrant a policy change. Employment was around max sustainable level and inflation within target range. Past reductions were transmitting through economy and would take time to take full effect
- Hong Kong Govt suspends all schools on Thursday, Nov 14th
Brexit:
- YouGov/Sky general election poll: Tories 42% (+3), Labour 28% (+2), Lib Dems 15% (-2), Brexit Party 4% (-6)
Americas:
- President Trump: The Fed has moved too slow; The Fed doesn’t let us use negative rates, putting US at a disadvantage. China had taken advantage of the US because of its WTO designation as a ‘developing nation’ . China was devaluing its currency. We’re close to signing a ‘Phase 1’ trade deal with China . The EU has high trade barriers; repeats that in some ways the EU was worse than China regarding trade barriers
- White House Econ Adviser Kudlow: wouldn’t put a timeline on China trade deal; ‘close’ meant ‘close’. Made a lot of progress on IP theft and financial services as part of trade deal; also made progress on currency stability as well as commodities and ag issues. Possible tariff adjustments could be part of ‘Phase 1’ trade deal signing; Trump had yet to sign off on anything
- White House economic advisers said to be considering whether to campaign on 15% tax rate proposal for middle class Americans ahead of next year’s election (Note: Kudlow on CNBC: any new tax policy won’t be released for many months)
- House Appropriations Committee Chair Lowey (D-NY): it appeared the stopgap spending bill will go to Dec 20th ( Reminder: The current temporary govt funding measure expires on Nov. 21st)
- House of Representatives Intelligence Committee to hold public hearings for three days next week in its impeachment inquiry of President Trump
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.66% at 404.20, FTSE -0.63% at 7,318.84, DAX -0.89% at 13,165.92, CAC-40 -0.53% at 5,888.24, IBEX-35 -1.52% at 9,168.00, FTSE MIB -0.95% at 23,555.50, SMI -0.69% at 10,242.50, S&P 500 Futures -0.40%]
- Market Focal Points/Key Themes: European indices trading in the red following lower indices in Asia and slightly lower US futures. On a busy corporate earnings front, risers include German Bechtle beating on top and bottom line and Salvatore Ferragamo, which reported yesterday after market close. Danish traded Ambu rallying 14% on full year earnings and Chairman stepping down Wizz Air trades lower despite posting solid results and raised net profit guidance. Other notable underperformers following earnings include ABN Amro -6%, Leoni -10% reflecting Q3 net loss and Bilfinger -5%, British Land, Nordex, Lanxess, Salzgitter and Sixt. Coca Coca Cola Hellenic outperforming +5% following trading update that saw the bottler reporting solid revenues and confident FY outlook In other UK trading updates, Tullow Oil tanking ~21% following trading update and cuts to FY production outlook and luxury retailer Mulberry also down meaningfully. In other news, Spanish Prosegur up +4% following purchase of 20.1M of own shares from institutional investor Looking ahead notable earners include Canada Goose, CAE and Meritor among others.
Equities
- Consumer discretionary: Bechtle [BC8.DE] +2.5% (earnings), Saint-Gobain [SGO.FR] -2.5% (acquistion), Sixt [SIX2.DE] -4% (earnings), Wizz Air [WIZZ.UK] -2.5% (earnings)
- Consumer staple: Safilo [SFL.IT] +6.5% (earnings)
- Energy: Nordex [NDX1.DE] -2.5% (earnings), Tullow Oil [TLW.UK] -21% (trading update)
- Financials: ABN AMRO [ABN.NL] -5.5% (earnings)
- Healthcare: Ambu [AMBUB.DK] +14% (earnings), Almirall [ALM.ES] -10% (placing)
- Industrials: BBA Aviation [BBA.UK] +0.5% (trading update), Taylor Wimpey [TW.UK] -1.5% (trading update), Leoni [LEO.DE] -10% (earnings)
- Materials: Lanxess [LXS.DE] -3.5% (earnings)
Speakers
- SNB’s Jordan reiterated stance that negative interest rates and FX intervention preparation remained necessary
- German Bundesbank official Buch reiterated stance of seeing rising financial stability risks; low interest rates was one risk to financial stability. Also expressed concern that banks might be underestimating credit risk.
- Sweden Central Bank (Riksbank) Dep Gov Floden: Limited possibility to make policy more expansionary but added fiscal policy had the scope to manage an economic slowdown
- Russia Dep Fin Min Kolychev: 2019 Budget spending was facing shortfall between RUB200-300B. Sovereign wealth fund spending would not increase inflation much and saw inflation bottoming out between 2.5-3.0% area in Feb-Apr 2020 period . Considering buying EUR currency (Euros) under budget rule
- China PBoC official denied rumor related to issuance of digital currency. Reiterated digital currency was still being tested and not issued yet. Had not authorized any asset trading platforms to trade digital currencies.
- China Foreign Ministry spokesperson Geng Shuang reiterated Gov condemns US bill supporting Hong Kong protesters. Reiterated support for Hong Kong police
- OPEC Sec Gen Barkindo reiterated that it is too early to make any decision on need for deeper production cuts at Dec meeting. OPEC to hold 5 technical meetings before the Dec 5-6th bi-annual meeting. OPEC was following progress in US-China trade talks and noted that an agreement would remove a dark cloud on markets
Currencies/Fixed Income
- The SEK currency was off its worst level after Oct CPI data came inline wit expectations and likely cementing the Riksbank planned rate hike in Dec.
- NZD currency (Kiwi) jumped over 1% after the RBNZ surprised markets with a steady policy. And defied expectations for an interest rate cut.
Economic Data
- (FI) Finland Sept Final Retail Sales Volume Y/Y: 4.1% v 2.8% prior
- (DE) Germany Oct Final CPI M/M: 0.1% v 0.1%e; Y/Y: 1.1% v 1.1%e
- (DE) Germany Oct Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 0.9% v 0.9%e
- (SE) Sweden Oct CPI M/M: 0.0% v 0.0%e; Y/Y: 1.6% v 1.6%e; CPI Level: 336.04 v 336.05e
- (SE) Sweden Oct CPIF M/M: 0.0% v 0.1%e; Y/Y: 1.5% v 1.5%e
- (SE) Sweden Oct CPIF (ex-energy) M/M: 0.0% v 0.0%e; Y/Y: 1.7% v 1.7%e
- (CZ) Czech Sept Current Account Balance (CZK): 7.7B v 1.2Be
- (UK) Oct CPI M/M: -0.2% v -0.1%e; Y/Y: 1.5% v 1.6%e; CPI Core Y/Y: 1.7% v 1.7%e; CPIH Y/Y: 1.5% v 1.6%e
- (UK) Oct RPI M/M: -0.2% v -0.1%e; Y/Y: 2.1% v 2.2%e; RPI –X (ex-mortgage Interest Payments) Y/Y:2.1 % v 2.2%e; Retail Price Index: 290.4 v 290.8e
- (UK) Oct PPI Input M/M: -1.3% v -1.1%e; Y/Y: -5.1% v -4.7%e
- (UK) Oct PPI Output M/M: -0.1% v 0.0%e; Y/Y: 0.8% v 0.9%e
- (UK) Oct PPI Output Core M/M: -0.1% v +0.1%e; Y/Y: 1.3% v 1.5%e
- (UK) Sept ONS House Price Index Y/Y:1.3% v 1.1%e
Fixed Income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold DKK4.14B in 3-month bills, Avg Yield: -0.765% v -0.770% prior; bid-to-cover: 1.14x v 1.19x prior
- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 3-month Bills; Avg Yield: -0.5207% v -0.5578% prior; Bid-to-cover: 2.17x v 2.24x prior
- (NO) Norway sold NOK2.0B v NOK2.0B in 3% 2024 bonds; Avg Yield: 1.31% v 1.09% prior; Bid-to-cover: 3.20x v 3.54x prior
- (IT) Italy Debt Agency (Tesoro) sold total €1.5B vs. €1.0-1.5B indicated range in 2047 and 2049 BTP bonds
Looking Ahead
- (IT) Italy Debt Agency (Tesoro) to sell €4.75-5.75B in 3-yrar and 7-year BTP bonds
- 05:30 (DE) Germany to sell €3.0B in 0% Aug 2029 Bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €0.75-1.0B in 1.95% Jun 2029 OT
- 06:00 (IL) Israel Oct Trade Balance: No est v -$1.9B prior
- 06:00 (PT) Portugal Oct Final CPI M/M: No est v 0.1% prelim; Y/Y: No est v 0.0% prior
- 06:00 (PT) Portugal Oct Final CPI EU Harmonized M/M: No est v 0.3% prelim; Y/Y: No est v 0.1% prior
- 06:00 (PT) Portugal Q3 Labour Costs Y/Y: No est v 0.9% prior
- 06:00 (ZA) South Africa Sept Retail Sales M/M: +0.6%e v -0.9% prior; Y/Y: 1.9%e v 1.1% prior
- 06:00 (BR) Brazil CONAB Crop Report
- 06:00 (CZ) Czech Republic to sell CZK5.0B in 2027 and 2033 bonds
- 06:00 (RU) Russia to sell OFZ bonds
- 06:30 (CL) Chile Central Bank Traders Survey
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Nov 8th: No est v -0.1% prior
- 07:00 (IS) Iceland Oct Unemployment Rate: No est v 3.5% prior
- 07:00 (IN) India Oct CPI Y/Y: 4.3%e v 4.0% prior
- 07:00 (BR) Brazil Sept Retail Sales M/M: 0.7%e v 0.1% prior; Y/Y: +2.1%e v 1.3% prior
- 07:00 (BR) Brazil Sept Broad Retail Sales M/M: 1.2%e v 0.0% prior; Y/Y: 5.1%e v 1.4% prior
- 07:00 (UK) Parliament weekly PM Q&A in Commons
- 08:00 (PL) Poland Sept Current Account Balance: -€0.2Be v -€0.6B prior; Trade Balance: €0.0Be v -€0.1B prior; Exports: €19.3Be v €17.6B prior; Imports: €19.3Be v €17.7B prior
- 08:00 (RU) Russia Q3 Advance GDP Y/Y: 1.7%e v 0.9% prior
- 08:00 (RO) Romania Central Bank (NBR) Nov Minutes
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Oct CPI M/M: 0.3%e v 0.0% prior; Y/Y: 1.7%e v 1.7% prior
- 08:30 (US) Oct CPI Ex Food and Energy M/M: 0.2%e v 0.1% prior; Y/Y: 2.4%e v 2.4% prior
- 08:30 (US) Oct CPI NSA: 257.200e v 256.759 prior; CPI Core Index: 265.074e v 264.595 prior
- 08:30 (US) Oct Real Avg Weekly Earnings Y/Y: No est v 1.0% prior (revised from 0.9%); Real Avg Hourly Earning Y/Y: No est v 1.3% prior (revised from 1.2%)
- 11:00 (US) Fed Chair Powell in Congress
- 12:00 (CA Canada to sell 3 Year Bonds
- 13:30 (US) Fed’s Kashkari (dove, non-voter) in Wisconsin
- 14:00 (US) Oct Monthly Budget Statement: -$129.1Be v +$82.8B prior
- 14:00 (AR) Argentina Sept Capacity Utilization: No est v 60.5% prior
- 14:10 (AU) RBA Gov Lowe in Parliament
- 16:00 (KR) South Korea Oct Export Price Index M/M: No est v -0.8% prior; Y/Y: No est v -5.0% prior
- 16:00 (KR) South Korea Oct Import Price Index M/M: No est v -0.4% prior; Y/Y: No est v -2.2% prior
- 16:30 (US) Weekly API oil Inventories
- 17:50 (AU) RBA’s Bullock participates on panel in Melbourne
- 18:50 (JP) Japan Q3 Preliminary GDP Q/Q: 0.2%e v 0.3% prior; GDP Annualized Q/Q: 0.9%e v 1.3% prior; GDP Nominal Q/Q: 0.3%e v 0.3% prior
- 19:00 (AU) Australia Nov Consumer Inflation Expectation Survey: No est v 3.6% prior
- 19:01 (UK) Oct RICS House Price Balance: -3%e v -2% prior
- 19:30 (AU) Australia Oct Employment Change: +15.0Ke v +14.7K prior; Unemployment Rate: 5.2%e v 5.2% prior; Full Time Employment Change: No est v +26.2K prior; Part Time Employment Change: No est v -11.4K prior; Participation Rate: 66.1%e v 66.1% prior
- 20:05 (NZ) New Zealand to sell NZD250M in 3% 2029 Bonds
- 21:00 (CN) China Oct Industrial Production Y/Y: 5.4%e v 5.8% prior; Industrial Production YTD Y/Y: 5.6%e v 5.6% prior
- 21:00 (CN) China Oct Retail Sales Y/Y: 7.8%e v 7.8% prior; Retail Sales YTD Y/Y: 8.1%e v 8.2% prior
- 21:00 (CN) China Oct Surveyed Jobless Rate: No est v 5.2% prior
- 21:00 (CN) China Oct YTD Fixed Urban Assets Y/Y: 5.4%e v 5.4% prior
- 21:00 (CN) China Oct YTD Property Investment Y/Y: No est v 10.5% prior
- 22:00 (TH) Thailand Central Bank to sell THB30B in 2022 bonds
- 22:35 (JP) Japan to sell 5-Year JGB Bonds
- 23:00 (JP) Japan Sept Tertiary Index M/M: 1.1%e v 0.4% prior
