Notes/Observations
- Rising coronavirus cases and its impact on economic growth aids safe-haven flows
- US Stimulus agreement remains elusive
- China Communist Party of China (CPC) begins its 5th plenary session. Leaders seen charting an economic course from 2021 to 2025 in an effort to ensure balanced growth and avoid stagnation
Asia
- Japan’s 3rd extra budget seen around ¥10T (~$95.5B), part of effort to counter negative impact of COVID; Japan might seek to issue bonds to fund some of the extra budget
- China PBoC Gov Yi Gang reiterated stance that govt to improve CNY currency (yuan) flexibility and reduce restrictions on cross-border use of the yuan. Reiterated stance to further internationalize the use of the yuan (CNY)
Coronaviurs
- Spain declared 6-month COVID emergency, imposed nationwide curfew
- Italy ordered bars and restaurants to close by 6 p.m. and shut public gyms, cinemas and swimming pools.
Europe
- Optimism grows on Brexit as both sides said to have made concessions to enable progress in the discussions
- Brexit talks could see German Chancellor Merkel intervene after France refused fishing compromise. Talks have turned more optimistic, but fishing continues to be a sticking point.
- UK PM Johnson was said to wait for US elections outcome before no-deal Brexit decision. PM said to await clarity on the presidential election result before finally deciding whether to jump to ‘no deal’ with the EU, or to conclude that this is just too risky with Biden heading for the White House
- S&P revised Italy sovereign outlook to Stable from Negative; affirmed BBB rating
- S&P affirmed United Kingdom sovereign rating at AA; outlook Stable
- S&P affirmed Greece sovereign rating at BB-; outlook Stable
Americas
- House Speaker Pelosi stated that she was not giving up on stimulus Bill and remained optimistic ; hoped to hear from Administration on a potential deal on Monday . Would still follow up stimulus aid after the US election regardless of the outcome
Energy
- Libya National Oil Company (NOC) said to have lifted force Majeure on El Feel field
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.46% at 360.84, FTSE +0.07% at 5,864.35, DAX -1.99% at 12,394.50, CAC-40 -0.37% at 4,891.38, IBEX-35 -0.01% at 6,893.00, FTSE MIB -0.69% at 19,152.50, SMI +0.03% at 10,026.68, S&P 500 Futures -0.86%]
- Market Focal Points/Key Themes: European indices open lower across the board and remained under pressure as the session wore on; all sectors in the red, but those performing not so bad include telecom and health care; underperforming sectors lead by energy and financials; new confinements announced in Europe; SAP reports results, dragging on DAX; Lufthansa announces further aircraft lay-ups; Bayer acquires US pharma company Asklepios; earnings expected in the upcoming US session include Alphabet, Hasbro and Celanese Corporation
Equities
- Consumer discretionary: Lufthansa [LHA.DE] -2% (new lockdowns, groundings), Basic-Fit [BFIT.NL] -5% (trading update)
- Energy: Galp Energia [GALP.PT] -3% (earnings)
- Industrials: Acerinox [ACX.ES] +2% (earnings)
- Technology: SAP [SAP.DE] -17% (earnings; cuts targets)
- Telecom: Cellnex Telecom [CLNX.ES] +3% (acquisition talks with CK Hutchison)
Speakers
- German IFO Economists noted that exports had deteriorate due to rising inflection rate; auto sector was an exception to the gloom. Forecasted Q4 GDP at 2.1% (barring any 2nd virus lockdown). Closing of schools and nurseries to have massive impact on economy
- Ukraine Central Bank Gov Sologub said to have been opposed to recent reshuffling of senior officials at the bank. He noted that reshuffling was done in a non-transparent way and could hamper cooperation with IMF
- China to impose sanctions on companies that sell arms to Taiwan; sanctions list includes Boeing, Lockheed Martin, Raytheon (**Reminder: On Oct 21st US State Dept confirmed the Pentagon had officially notified Congress of three potential sales of military equipment to Taiwan)
- Saudi Oil Min Abdulaziz: Getting rid of oil and gas was far-fetched and unrealistic; needed to look at options to mitigate emissions to fight climate change
Currencies/ Fixed Income
- Safe-haven flows dominated in the session. Renewed doubts of a US fiscal stimulus measures before the November 3rd presidential election circulated and rising virus restrictions in Europe kept growth fears intact.
- Markets eyeing Thursday’s ECB meeting as Europe implement stronger restrictions due to rising coronavirus infections across the region. The situation is creating anxiety over the economic outlook. EUR/USD was lower by 0.4% by midsession to hover just above the 1.18 level.
- GBP/USD moved off its worst level to be little changed at mid-session and holding above the 1.30 level. Brexit negotiations continue with talks turning more optimistic, but fishing issues continued to be a sticking point.
- TRY currency (Lira) registered fresh record lows as the currency blew through the 8 handle. Dealers have skepticism over the central bank’s efforts to shore up the currency at a time of rising geopolitical tensions.
Economic Data
- (FI) Finland Sept PPI M/M: -0.7% v +0.8% prior; Y/Y: -5.3% v -4.1% prior
- (FI) Finland Sept Preliminary Retail Sales Volume Y/Y: 1.9% v 5.6% prior
- (DK) Denmark Sept Retail Sales M/M: -0.9% v -0.9% prior; Y/Y: 4.2% v 2.1% prior
- (TR) Turkey Oct Real Sector Confidence (seasonally adj): 109.7 v 105.7 prior; Real Sector Confidence NSA (unadj): 108.1 v 105.3 prior
- (TR) Turkey Oct Capacity Utilization: 75.4% v 74.6% prior
- (ES) Spain Sept PPI M/M: +0.3% v -0.2% prior; Y/Y: -3.3% v -3.5% prior
- (CZ) (CZ) Czech Oct Consumer Confidence: -19.8 v -9.0 prior; Business Confidence: -1.8 v +1.7 prior; Composite Confidence (Consumer & Business Confidence): 5.4 v -0.5 prior
- (DE) Germany Oct IFO Business Climate Survey: 92.7 v 93.0e; Current Assessment Survey: 90.3 v 89.8e v 89.2 prior; Expectations Survey: 95.0 v 96.5e
- (CH) Swiss weekly Total Sight Deposits (CHF): 706.9B v 705.1B prior; Domestic Sight Deposits: 634.7B v 632.2B prior
Fixed Income Issuance
- None seen
Looking Ahead
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (CY) Cyprus to sell Bills
- 06:30 (DE) Germany to sell €3.0B in 12-month Bubills
- 06:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays
- 07:00 (IL) Israel Aug Manufacturing Production M/M: No est v -3.2% prior
- 07:00 (IL) Israel to sell combined ILS2.75B in 2023, 2025, 2030, 2037 and 2051 bonds
- 07:00 (RO) Romania to sell RON300 Mln 4.15% 2030 Bonds
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 07:45 (US) Daily Libor Fixing
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:00 (MX) Mexico Aug IGAE Economic Activity Index (Monthly GDP) M/M: 1.7%e v 5.7% prior; Y/Y: -8.3%e v -9.8% prior
- 08:30 (US) Sept Chicago Fed National Activity Index: 0.60e v 0.79 prior
- 08:30 (BR) Brazil Sept Total Outstanding Loans (BRL): 3.796Te v 3.736T prior (revised from 3.737T); M/M: 1.6%e v 1.9% prior; Personal Loan Default Rate: No est v 4.8% prior
- 09:00 (UK) Daily Baltic Dry Bulk Index
- 09:55 (FR) France Debt Agency (AFT) to sell €4.1-5.3B in 3-month, 6-month and 12-month bills
- 10:00 (US) Sept New Home Sales: 1.025Me v 1.011M prior
- 10:30 (US) Oct Dallas Fed Manufacturing Activity Index: 13.3e v 13.6 prior
- 10:45 (EU) ECB weekly QE bond buying update
- 11:30 (US) Treasuries to sell 13-Week and 26-Week Bills
- (IT) Italy Debt Agency (Tesoro) announcement on upcoming medium term issuance
- 15:00 (AR) Argentina Aug Supermarket Sales Y/Y: No est v 1.0% prior; Shop Center Sales Y/Y: No est v -83.3% prior
- 16:00 (US) Weekly Crop Progress Report
- 17:45 (NZ) New Zealand Sept Trade Balance (NZD): -1.0Be v -0.4B prior; Exports: 4.0Be v 4.4B prior; Imports: 5.0Be v 4.8B prior
- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 98.1 prior
- 19:00 (KR) South Korea Q3 Preliminary GDP Q/Q: +1.3%e v -3.2% prior; Y/Y: -1.9%e v -2.7% prior
- 21:30 (CN) China Sept Industrial Profits Y/Y: No est v 19.1% prior
- 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills
- 23:35 (JP) Japan to sell 2-Year JGB Bonds
- (CN) China Communist Party of China (CPC) begins its 5th plenary session
