Notes/Observations
- Risk appetite continues to find footing on hopes for fresh piecemeal US fiscal stimulus
- Numerous European central bankers stress that they still have ammunition to address crisis
Asia:
- RBNZ Assistant Gov Hawkesby: RBNZ was ‘actively’ working on Negative interest rates and funding for lending program
- RBNZ Chief Economist Ha stated that would rather do too much too soon rather than too little too late and be aggressive with stimulus. Looking at tiering regime for Negative OCR plan
- Bank of Japan (BOJ) quarterly Regional Economic Report (Sakura) raised assessment in 8 of 9 regions
- Japan Aug Current Account (BoP basis): ¥2.10T v ¥2.03Te
- South Korea Aug Current Account: $6.6B v $7.5B prior;
Europe:
- Coronavirus restrictions said to be further tightened in parts of England early next week
Americas:
- FOMC Sept Minutes noted that the path of the economy to depend significantly on the course of the virus. Almost all members viewed meeting as the appropriate time to modify forward guidance to provide greater clarity regarding the likely future path of the federal funds rate
- House Speaker Pelosi and Treasury Sec Mnuchin spoke on Airline bailout bill; will speak again tomorrow (Thursday, Oct 8th)
- White House Chief of Staff Meadows: Senate Majority Leader McConnell (R) willing to look at separate airline bill, there is wide support on certain parts of stimulus; Trump would be willing to look at counter proposal if Speaker Pelosi comes back with something closer to proposal by Trump Admin
- VP Pence, Senator Harris hold first, only vice presidential debate; lash over handling of coronavirus (atmosphere more respective compare to the Presidential one held last week)
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.39% at 366.88, FTSE -0.09% at 5,941.15, DAX +0.41% at 12,981.05, CAC-40 +0.22% at 4,892.83, IBEX-35 +1.07% at 6,984.00, FTSE MIB +0.59% at 19,549.50, SMI +0.49% at 10,237.50, S&P 500 Futures +0.38%]
- Market Focal Points/Key Themes: European indices open higher across the board but moderated gains as the session wore on; better performing sectors include financials and telecom; materials sector leads to the downside followed by consumer discretionary; GVC to acquire Bet.pt; Liberbank and Unicaja start merger negotiations; Ratos B sells stake in Bisnode; Talk Talk received takeover proposal; reportedly LSE agrees to sell Italian unit to Euronext; earnings expected in the upcoming US session include Nielsen Holdings and Park Aerospace
Equities
- Consumer discretionary: EasyJet [EZJ.UK] -2% (trading update), GVC Holdings [GVC.UK] +7% (trading update; acquisition), Givaudan [GIVN.CH] -2% (Rev numbers)
- Consumer staples: Imperial Brands [IMB.UK] +1% (trading update)
- Healthcare: Idorsia Pharmaceuticals [IDIA.CH] +1% (capital raise)
- Technology: Electrocomponents [ECM.UK] +2% (trading update), AMS [AMS.CH] -2% (prelim Rev)
Speakers
- BOE Gov Bailey stated that was not expecting a 2nd wave of coronavirus outbreak to have the same economic impact as back in spring. He did concede that the pandemic to obviously add to economic uncertainty. Reiterated view that risks remained to the downside but BOE was no means out of firepower. Q3 output seen 7-10% below pre-covid level
- ECB’s De Guindos (Spain) reiterated Council view that the central bank still had ammunition. Inflation expectations were low and must act with available tools. Stressed that any removal of fiscal support must be gradual
- ECB’s Schnabel (Germany) stated that markets were vulnerable to repricing after compression of risk premiums. Warned banking sector bad loans could become problematic
- EU’s Dombrovskis (trade chief): Reiterates EU stance that prepared to retaliate over US tariffs
- Spain Econ Min Calvino: To lower 2020 debt issuance by €15B to €115B
- China Golden Week holiday consumer spending (Oct 1-7th) Y/Y: +6.3% with spending mostly went to travel, transportation, shopping and dinning out
Currencies/Fixed Income
- FX price action was subdued with little key data releases in the session.Both USD anf JPY currencies remained vulnerable to any unwinding of safe-haven flows as hopes for US fiscal stimulus remained. Markets believing that if Biden was elected then the US would quickly spend money to stimulate growth
- EUR/USD steady at 1.1770 area as various ECB members stressed the need to act if needed as the central bank still had ammunition to address the crisis
- USD/JPY was little changed hovering around the 106 area. Pair did test 3-week highs during the Asian session at 106.11
Economic Data
- (SE) Sweden Maklarstatistik Sept Housing Prices Y/Y: 10% v 8% prior; Apartment Prices Y/Y: 5% v 4% prior
- (NL) Netherlands Sept CPI M/M: -0.2% v -0.5% prior; Y/Y: 1.1% v 0.7% prior
- (NL) Netherlands Sept CPI EU Harmonized M/M: -0.4% v -0.7% prior; Y/Y: 1.0% v 0.3% prior
- (CH) Swiss Sept Unemployment Rate: 3.2% v 3.3%e; Unemployment Rate (Seasonally Adj): 3.3% v 3.4%e
- (DE) Germany Aug Current Account Balance: €12.8B v €16.2Be; Trade Balance: €16.5B v €16.0Be; Exports M/M: 2.4% v 1.5%e; Imports M/M: 5.8% v 1.5%e
- (NO) Norway Aug Overall GDP M/M: 0.7% v 1.3% prior; GDP Mainland M/M: 0.6% v 0.9%e
- (FR) Bank of France Sept Industrial (Business) Sentiment: 101 v 105e
- (CZ) Czech Aug Retail Sales Y/Y: -2.6% v -2.3%e; Retail Sales (ex-auto) Y/Y: 0.0% v 1.8%e
- (HU) Hungary Sept CPI M/M: -0.4% v 0.0%e; Y/Y: 3.4% v 3.9%e
- (TW) Taiwan Sept CPI Y/Y: -0.6% v -0.3%e; CPI Core Y/Y: 0.1% v 0.4%e; WPI Y/Y: -8.1% v -9.1% prior
- UN Sept FAO World Food Price Index: 97.9 v 95.9 prior
- (GR) Greece July Unemployment Rate: 16.8% v 18.0% prior
- (HU) Hungary Sept YTD Budget Balance (HUF): -2.270T v -2.261T prior
Fixed Income Issuance
- (IE) Ireland Debt Agency (NTMA) sold total €1.5B vs. €1.0-1.5B indicated range in 2027, 2030 and 2035 IGB bonds
Looking Ahead
- (IT) Italy Debt Agency (Tesoro) to hold bond exchange
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
- 05:30 (PL) Poland to sell Bonds
- 05:50 (HU) Hungary Central Bank announces 1-week Deposit facility
- 06:00 (IE) Ireland Sept CPI M/M: No est v -0.1% prior; Y/Y: No est v -1.0% prior
- 06:00 (IE) Ireland Sept CPI EU Harmonized M/M: No est v -0.1% prior; Y/Y: No est v -1.1% prior
- 06:15 (LX) ECB’s Mersch) Luxembourg)
- 06:45 (US) Daily Libor Fixing
- 07:00 (CL) Chile Sept CPI M/M: 0.3%e v 0.1% prior; Y/Y: 2.8%e v 2.4% prior
- 07:00 (MX) Mexico Sept CPI M/M: 0.3%e v 0.4% prior; Y/Y: 4.1%e v 4.1% prior; CPI Core M/M: 0.3%e v 0.3% prior
- 07:30 (EU) ECB Sept Minutes
- 08:00 (BR) Brazil CONAB Crop Report
- 08:00 (BR) Brazil Aug Retail Sales M/M: 3.0%e v 5.2% prior; Y/Y: 5.8%e v 5.5% prior
- 08:00 (BR) Brazil Aug Broad Retail Sales M/M: 4.1%e v 7.2% prior; Y/Y: 3.2%e v 1.6% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:15 (CA) Canada Sept Housing Starts: 240.0Ke v 262.4K prior
- 08:30 (US) Initial Jobless Claims: 820Ke v 837K prior; Continuing Claims: 11.40Me v 11.767M prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 2nd No est v $580.7B prior
- 10:00 (MX) Mexico Central Bank (Banxico) Sept Minutes
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:30 (US) Treasury to sell 4-week and 8-week bills
- 12:00 (CA) Canada to sell 2-year notes
- 13:00 (US) Treasury to sell 30-year notes
- 17:00 (NZ) New Zealand Sept ANZ Heavy Truckometer M/M: No est v -6.5% prior
- 19:30 (JP) Japan Aug Household Spending Y/Y: -6.7%e v -7.6% prior
- 19:30 (JP) Japan Aug Labor Cash Earnings Y/Y: -1.2%e v -1.5% prior (revised from -1.3%); Real Cash Earnings Y/Y: -1.4%e v -1.8% prior (revised from -1.6%)
- 20:30 (AU) RBA Financial Stability Review
- 20:30 (AU) Australia Aug Home Loans Value M/M: 1.9%e v 8.9% prior
- 21:00 (PH) Philippines Aug Trade Balance: -$2.0Be v -$1.8B prior; Exports Y/Y: -8.3%e v -9.6% prior; Imports Y/Y: -17.0%e v -24.4% prior
- 21:10 (JP) BOJ Outright Bond Purchase Operation in 5-10-year; over 25-year JGBs
- 21:45 (CN) China Sept Caixin PMI Services: 54.3e v 54.0 prior; PMI Composite: No est v 55.1 prior
- 23:30 (JP) Japan to sell 3-Month Bills
