Awaiting Word On Latest Round Of Brexit Negotiations

Notes/Observations

• Renewed uncertainty over stimulus following Trump’s tweetfest
• Germany Aug Industrial Production misses expectations; Spain and Norway readings also softer
• EU stresses UK to show flexibility in order to advance current round of Brexit negotiations

Asia:

• Fitch affirmed South Korea sovereign rating at AA-; Outlook Stable

Corronavirus:

• Total global cases 35,731,494 (+0.9% d/d); total deaths: 1,05M (+0.5% d/d)

Europe:

• ECB’s Lane (Ireland, chief economist): expect half of cumulative decline in output in first half of the year to have been reversed during Q3
• France Stats Agency (Insee) maintained its 2020 GDP forecast at -9.0%); GDP could contract if more restrictions were imposed
• UK Fin Min Sunak is working on plan to provide new Treasury support for businesses that have been the worst hit by new local lockdown restriction
• PM Johnson’s Cabinet said to be divided over tougher COVID lockdown actions. ‘Traffic light’ system that has been proposed could be postponed as Sunak has called for a committee to make decisions about ‘red zone’ restrictions

Americas:

• President Trump tweeted that he directed Republicans to stop negotiating on fiscal stimulus until after the election . He later tweeted several offers of short-term stimulus that he’d be willing to sign immediately
• Senate Majority Leader McConnell: Speaker Pelosi did not make a reasonable offer on stimulus plan
• Fed’s Mester (FOMC voter) expressed disappointed that fiscal talks had been halted; timing of fiscal stimulus was less important than approving a package; recovery would continue but it would be slower

Energy:

• Weekly API Crude Oil Inventories: +1.0M v -0.8M prior
• NHC issued update on Hurricane Delta: set to be a massive hurricane when it makes landfall on Friday evening

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.01% at 365.92, FTSE -0.05% at 5,946.95, DAX -0.06% at 12,897.90, CAC-40 +0.10% at 4,900.20, IBEX-35 -0.19% at 6,923.00, FTSE MIB -0.04% at 19,422.50, SMI +0.03% at 10,235.91, S&P 500 Futures +0.59%]
• Market Focal Points/Key Themes: European indices open mixed but later slipped into the red across the board; US stimulus uncertainty said to be weighing on risk sentiment, while covid cases rise across Europe; better performing sectors include consumer discretionary and industrials; financials and energy sectors among underperformers; reportedly Continental looking to sell parts of automotive division; Telefonica Deutschland and Deutsche Telekom agree to expanded cooperation on fixed networks; no major earnings releases expected during upcoming US session

Equities

• Consumer discretionary: Tesco [TSCO.UK] +3% (earnings; new CFO), Dustin Group [DUST.SE] +11% (earnings), TUI [TUI1.DE] -5% (CFO steps down)
• Industrials: BMW [BMW.DE] -1% (deliveries)
• Technology: Dialog Semi [DLG.DE] +3% (raises outlook

Speakers

• Ireland Foreign Min Coveney reiterated EU stance that sought the closest possible relationship between UK-EU. Gaps on fisheries remainsedvery wide and reiterated EU stance that issue of level playing field was important. Barnier would not enter tunnel talks without any move by UK on State aid issue
• European center-right bloc (EPP) Member Liese: Party to abstain on vote to propose 60% CO2 reduction target
• Iceland Central Bank (Sedibanki) Policy Statement noted that the outlook had deteriorated relatively to the Aug forecast due to increased spread of coronavirus. Inflation rose to 3.2% which is slightly above forecasts while H1 GDP was stronger than anticipated
• Ukraine Fin Min Marchenko stated that had no special target for UAH currency (Hryvnia); saw no impact on CPI from currency decline. Expected IMF funds by end of year and added that was not a good time to tap international bond markets

Currencies/Fixed Income

• Risk aversion sentiment that highlighted last hour of US trading on Tuesday was alleviated after President Trump provided additional tweet on stimulus measures and market took note of several offers of short-term stimulus that he’d be willing to sign immediately. President later asked Congress to extend $25B in new payroll assistance to US airlines.
• Dealers to also assess the upcoming FOMC Minutes coupled with several Fed speakers for further signs of how they view the outlook. Overall dealers believe that fading hopes of a US stimulus deal should support safe-haven flows
• European Aug production data highlighted the bumpy road ahead for Europe on the recovery path. Germany Aug IP unexpectedly declined. EUR/USD proce action over-looking the data to trade higher by 0.3% but locked into a 1.17-1.18 range for the time being
• GBP/USD was higher by 0.3% as dealers awaiting further news on Brexit trade negotiations that continued in London this week. Irish Foreign Minister highlighted the EU stance on key issues and stressed that UK needed to show flexibility to break the deadlock.

Economic Data

• (DE) Germany Aug Industrial Production M/M: -0.2% v +1.5%e ; Y/Y: -9.6% v -8.7%e
• (FI) Finland Aug Preliminary Trade Balance: -€0.3B v -€0.5B prior
• (ZA) South Africa Sept Gross Reserves: $54.4B v $55.0Be; Net Reserves: $50.7B v $50.9Be
• (DK) Denmark Aug Industrial Production M/M: +5.9 v -5.8% prior
• (NO) Norway Aug Industrial Production M/M: 1.1% v 2.5% prior; Y/Y: 8,3% v 7.4% prior
• (NO) Norway Aug Manufacturing Production M/M: 3.0% v 1.8% prior; Y/Y: -2.5% v -6.1% prior
• (CN) China Sept Foreign Reserves: $3.143T v $3.157Te (1st decline in 6 months)
• (FR) France Aug Trade Balance: -€7.7B v -€7.0B prior
• (FR) France Aug Current Account Balance: -€4.7 v -€5.7B prior
• (ES) Spain Aug Industrial Production M/M: 0.4% v 0.9%e; Y/Y: -5.7% v -5.9%e; Industrial Output NSA (unadj) Y/Y: -5.7% v -4.9%e
• (CH) Swiss Sept Foreign Currency Reserves (CHF): 873.5B v 848.6B prior
• (CZ) Czech Aug Trade Balance (CZK): 7.6B v 15.5Be
• (CZ) Czech Industrial Output Y/Y: -8.0% v -4.3%e; Construction Output Y/Y: -9.7%v -10.4% prior
• (AT) Austria Sept Wholesale Price Index M/M: -0.8% v +0.1% prior; Y/Y: -5.0% v -4.0% prior
• (MY) Malaysia End-Sept Foreign Reserves: $105.0B v $104.8B prior
• (SE) Sweden Sept Budget Balance (SEK): -13.1 v 19.8B prior
• (UK) Sept Halifax House Price Index M/M: 1.6% v 1.6% prior; 3M/Y: 7.3% 5.2% prior (strongest reading since June 2016)
• (IT) Italy Aug Retail Sales M/M: 8.2% v 3.8%e; Y/Y: +0.8% v -7.1% prior
• (TW) Taiwan Sept Trade Balance: $7.1B v $5.7Be; Exports Y/Y: 9.4% v 9.6%e; Imports Y/Y: -5.4% v +2.3%e
• (CZ) Czech Sept International Reserves: $157.8B v $159.8B prior
• (TW) Taiwan Sept Foreign Reserves: $499.6Bt v $498.2B prior
• (UK) July ONS House Price Index Y/Y: 2.3% v 3.6%e
• (UK) Q2 Unit labor Costs Y/Y: 27.4% v 6.7% prior
• (IS) Iceland Central Bank (Sedibanki) left the 7-Day Term Deposit Rate at 1.00%
• (SG) Singapore Sept Foreign Reserves: $328.0B v $327.5B prior

Fixed Income Issuance

• (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
• (VN) Vietnam sold total VND11.1T in bonds
• (DK) Denmark sold total DKK4.28B in 2025 and 2029 DGB bonds
• (UK) DMO sold £2.5B in 0.375% Oct 2030 Gilts; Avg Yield: % v 0.263% prior; Bid-to-cover: x v 2.96x prior; Tail: bps v 0.2bps prior
• (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2028 and 2032 bonds

Looking Ahead

• (EG) Egypt Sept Net Reserves: No est v $38.4B prior
• (IL) Israel Sept Foreign Currency: No est v $161.7B prior
• (IT) Bank of Italy Balance-Sheet Aggregates
• (CO) Colombia Sept Consumer Confidence Index: No est v -25.4 prior
• (NO) Norway Central Bank (Norges) Dep Gov Bache
• 05:30 (DE) Germany to sell €3.0B in 0% Apr 2030 Bunds
• 05:30 (GR) Greece Debt Agency (PDMA) to sell 13-week bills
• 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:00 (IE) Ireland Aug Industrial Production: No est v 8.3% prior; Y/Y: No est v 12.9% prior
• 06:30 (UK) DMO to sell £750M in 0.125% I/L Aug2041 Gilts (UKTi)
• 06:45 (US) Daily Libor Fixing
• 07:00 (RU) Russia to sell OFZ Bonds
• 07:00 (US) MBA Mortgage Applications w/e Oct 2nd: No est v -4.8% prior
• 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 3.3%e v 3.9% prior; Y/Y: 18.3%e v 15.2% prior
• 07:00 (UK) Weekly PM Question time in House
• 07:30 (CL) Chile Sept Trade Balance: $0.8Be v $0.9B prior; Total Exports: No est v $5.4B prior; Total Imports: No est v $4.5 prior; Copper Exports: No est v $2.8B prior
• 07:30 (CL) Chile Sept International Reserves: No est v $37.7B prior
• 08:00 (PL) Poland Sept Official Reserves: No est v $139.1B prior
• 08:00 (HU) Hungary Central Bank Sept Minutes
• 08:00 (CL) Chile Aug Nominal Wage M/M: No est v 0.7% prior; Y/Y: No est v 2.8% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• (PL) Poland Central Bank (NBP) Interest Rate Decision: expected to leave Base Rate unchanged at 0.10%
• 08:00 (SE) Sweden Central Bank (Riksbank) Skingsley
• 08:00 (EU) ECB chief Lagarde at online forum
• 09:00 (RU) Russia Sept Official Reserve Assets: $590.0Be v $594.4B prior
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:30 (BR) Brazil Sept Vehicle Production: No est v 210.9K prior; Vehicle Sales: No est v 183.4K prior; Vehicle Exports: No est v 28.1K prior
• 10:00 (CA) Canada Sept Ivey Purchasing Managers Index (Seasonally Adj): No est v 67.8 prior; PMI (unadj): No est v 64.6 prior
• 10:30 (US) Weekly DOE Oil Inventories
• 10:30 (TR) Turkey Sept Cash Budget Balance (TR): No est v 30.4B prior
• 11:00 (US) IMF World Economic Outlook (WEO) 2020 global GDP currently at -4.9%
• 12:00 (CA) Canada to sell 5-year notes
• 12:30 (FR) ECB’s Villeroy (France) in Paris
• 13:00 (US) Fed’s Rosengren
• 13:00 (US) Treasury to sell 10-year notes
• 14:00 (US) FOMC Sept Minutes
• 14:40 (US) Fed’s Kashkari
• 15:00 (US) Aug Consumer Credit: $14.0Be v $12.3B prior
• 15:00 (AR) Argentina Aug Industrial Production Y/Y: No est v -6.9% prior; Construction Activity Y/Y: No est v -12.9% prior
• 15:00 (US) Fed’s Williams
• 16:30 (US) Fed’s Evans
• 19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 0.25%
• 19:00 (KR) South Korea Aug Current Account Balance: No est v $7.5B prior; Balance of Goods (BOP): No est v $7.0B prior
• 19:01 (UK) Sept RICS House Price Balance: 40%e v 44% prior
• 19:50 (JP) Japan Aug Current Account Balance (BOP basis): ¥2.032Te v ¥1.468T prior; Adjusted Current ¥1.545Te v ¥964.2B prior; Trade Balance: ¥404.0Be v ¥ 137.3B prior
• 21:00 (US) Vice Presidential Debate (Salt Lake City, UT)
• 20:00 (NZ) New Zealand Oct Preliminary Business Confidence: No est v -28.5 prior; Activity Outlook: No est v -5.4 prior
• 21:10 (JP) BOJ Outright Bond Purchase Operation in 3-5 year JGBs on Oct 7th
• 21:45 (CN) China Sept Caixin PMI Services: 54.3e v 54.0 prior; PMI Composite: No est v 55.1 prior
• 22:00 (JP) Japan Sept Tokyo Avg Office Vacancies : No est v 3.1% prior
• 23:30 (TH) Thailand Sept Consumer Confidence: No est v 51.0 prior; Economic Confidence: No est v 43.6 prior
• 23:30 (JP) Japan to sell 6-Month Bills
• 23:35 (JP) Japan to sell 5-Year JGB Bonds