Notes/Observations
- Risk aversion flows dominate as rising coronavirus infections leading to increased restrictions in Europe
- Market nervousness ahead of next Tuesday’s US Presidential elections
Asia:
- Australia Q3 CPI Q/Q: 1.6% V 1.5%e; Y/Y: 0.7% V 0.6%e
- RBA Board member Harper stated that it had the scope to ramp its easing further and was not lacking in firepower. RBA could ramp up bond buying indefinitely
Coronaviurs:
- Total cases 43.9M (+1.0% m/m); total deaths 1.17M (+0.6 d/d%)
Europe:
- French President Marcon to announce tighter measure on Wednesday night which might impose a four-week national lockdown from midnight on Thursday (Oct 29th)
- Germany Chancellor Merkel to meet with State Premiers on Wed (Oct 28th) regarding new measures to slow COVID spread. Seeking to shut theaters, opera and concert hall, fitness studios, casinos and cinema. All restaurants, bars and pubs to close except for takeaway. Measures due to take place from Nov 4th until the end of month
- PM Johnson said to be coming under increasing lobbying pressure from scientific advisers for new lockdown. Second Covid wave forecast could be more deadly than first
Energy:
- Weekly API Crude Oil Inventories: 4.6M v 0.6M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -1.91% at 345.80, FTSE -1.61% at 5,636.66, DAX -2.77% at 11,729.10, CAC-40 -2.51% at 4,611.86, IBEX-35 -1.84% at 6,529.00, FTSE MIB -2.60% at 18,174.50, SMI -1.41% at 9,747.61, S&P 500 Futures -1.18%]
- Market Focal Points/Key Themes: European indices open lower across the board and fell further in the red as the session wore on; Greece, Czechia closed for holiday; investor sentiment impacted over concerns of further lockdowns as covid cases continue to rise across Europe; better preforming sectors include technology and consumer discretionary; financials and industrials sectors among underperformers; KAZ minerals receives takeover offer from Nova Resources; PSA and FCA announce merger progress; PSA to sell stake in Faurecia; reportedly Daimler looking at raising stake in Aston Martin; reportedly France planning month-long lockdown, earnings expected during the upcoming US session include General Electric, Boeing, Eni and GlaxoSmithKline
Equities
- Consumer discretionary: Next [NXT.UK] +1% (trading update), Delivery Hero [DHER.DE] +5% (sales), Heineken [HEIA.NL] -3% (earnings), Carrefour [CA.FR] -2% (sales)
- Energy: KAZ Minerals [KAZ.UK] +9% (to be acquired)
- Financials: Deutsche Bank [DBK.DE] -3% (earnings)
- Industrials: Aston Martin Lagonda [AML.UK] +8% (deal with Daimler), Faurecia [EO.FR] -6% (PSA to sell stake), PSA [UG.FR] -4% (earnings)
Speakers
- German Financial Stability Council: Overall 2020 budget deficit seen at 6.0% with 2021 deficit around 4.0% and 2022 deficit at 2.0%
- Turkey Central Bank (CBRT) Gov Uysal Quarterly Inflation Report press conference noted that the domestic economy was recovering fast and would likely to post positive growth in 2020. Tight policy stance to continue until marked drop in inflation. He noted that CBRT did not have an exchange rate target but conceded that the Lira currency was extremely undervalued. Believed geopolitical developments weighed on exchange rates. If necessary CBRT would take the needed steps, including on policy rate
- Turkey Central Bank (CBRT) Quarterly Inflation Report raised its outlook on inflation. Raised 2020 CPI from 8.9% to 12.1%, Raised 2021 CPI from 6.2% to 9.4%. Raised end-2020 Food price inflation from 10.5% to 13.5% and raised end-2021 Food price Inflation from 8.0% to 10.5%. CBRT did maintain its view that saw CPI slowing to 5% in the medium term (gradually converge to target)
Currencies/Fixed Income
- Session was dominated by risk aversion flows as rising coronavirus infections was leading to increased speculation of more restrictions imminent in Europe. Reports circulating that both France and Germany would announce more measures on Wed sent money into safe haven assets.
- EUR/USD was softer by 0.3% to test 1.1750 area as more lockdown measures would derail the budding fragile recovery in the region. Ahead of ECB’s rate decision on Thursdays (tomorrow session) concerns on growth also provided more speculation that recent soft EU Sept inflation data could face further deteriorated from renewed Covid-19 measures. Nonetheless the situation in Europe painting the picture for a compelling case for additional monetary stimulus at some point.
- German 10-year Bund Yield was at -0.64%, lower by 2.5bps at one point during the session to its lowest level since March
- JPY also benefiting from safe-haven flows with USD/JPY testing below 104.20 at one point.
Economic Data
- (DE) Germany Sept Import Price Index M/M: +0.3% v -0.3%e; Y/Y: -4.3% v -4.8%e
- (NO) Norway Sept Retail Sales M/M: 0.3% v 1.2%e
- (TR) Turkey Oct Economic Confidence: 92.8 v 88.5 prior
- (FR) France Oct Consumer Confidence: 94 v 93e
- (ES) Spain Aug Total Mortgage Lending Y/Y: -2.2% v -7.1% prior; House Mortgage Approvals Y/Y: -3.4% v -23.0% prior
- (ES) Spain Sept Adjusted Retail Sales Y/Y: -3.3% v -3.4%e; Retail Sales (unadj) Y/Y: -2.1% v -4.6% prior
- (SE) Sweden Oct Consumer Confidence: 90.0 v 88.5e; Manufacturing Confidence: 106.8 v 107.0e; Economic Tendency Survey: 96.3 v 94.5 prior
- (ZA) South Africa Sept CPI M/M: 0.2% v 0.2%e; Y/Y: 3.0% v 3.0%e (3rd straight month annual pace is within target)
- (ZA) South Africa Sept CPI Core M/M: 0.2% v 0.1%e; Y/Y: 3.2% v 3.2%e
- (SE) Sweden Sept Retail Sales M/M: +0.8% v -0.2% prior; Y/Y: 3.9% v 3.0% prior
- (AT) Austria Oct Manufacturing PMI: 54.0 v 51.7 prior (4th straight expansion and highest since Nov 2018)
- (CH) Swiss Oct Expectations Survey: 2.3 v 26.2 prior
Fixed Income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
Looking Ahead
- (ZA) South Africa mid-term budget
- 06:00 (IT) Italy Sept PPI M/M: No est v 0.1% prior; Y/Y: No est v -4.0% prior
- 06:00 (EU) Daily Euribor Fixing
- 06:00 (EU) ECB, BOE and SNB hold weekly 7-day and 3-month USD Liquidity Tender
- 06:00 (SE) Sweden to sell Bonds
- 06:00 (SE) Sweden to sell SEK10B in 6-month bills
- 06:00 (NO) Norway to sell NOK2.0B in 1.375% Aug 2030 bonds
- 06:00 (IT) Italy Debt Agency (Tesoro) to sell €6.5B in 6-month bills
- 06:00 (UK) DMO to sell £2.5B in 0.375% Oct 2030 Gilts
- 06:30 (DE) Germany to sell €2.0B in 0% May 2035 Bunds
- 06:30 (EU) ECB Long-Term Refinancing Operation (3-month LTRO tender) (prior €510M with 7 bids recd)
- 06:30 (HU) Hungary Debt Agency (AKK) to sell 12-Month Bills
- 07:00 (IE) Ireland Sept Retail Sales Volume M/M: No est v 1.3% prior; Y/Y: No est v 9.1% prior
- 07:00 (IL) Israel Sept Chain Store Sales M/M: No est v 0.7% prior
- 07:00 (US) MBA Mortgage Applications w/e Oct 23rd: No est v -0.6% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:45 (US) Daily Libor Fixing
- 08:00 (RU) Russia to sell 2029 and 2030 OFZ Bonds
- To sell inflation-linked 2029 OFZ bonds (no limit auction)
- To sell RUB30B in 2030 OFZ bond
- 08:30 (US) Sept Advance Goods Trade Balance: -$84.5Be v -$82.9B prior
- 08:30 (US) Sept Preliminary Wholesale Inventories M/M: 0.4%e v 0.4% prior; Retail Inventories M/M: No est v 0.8% prior
- 09:00 (UK) Daily Baltic Dry Bulk Index
- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.25%
- 10:30 (US) Weekly DOE Oil Inventories
- 13:00 (US) Treasury to sell 2-Year FRN
- 13:00 (US) Treasury to sell 5-Year Notes
- 17:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Rate Target unchanged at 2.00%
- 17:00 (KR) South Korea Nov Business Manufacturing Survey: No est v 68 prior; Non-Manufacturing Survey: No est v 62 prior
- 19:50 (JP) Japan Sept Retail Sales M/M: 1.0%e v 4.6% prior; Y/Y: -7.6%e v -1.9% prior
- 19:50 (JP) Japan Sept Dept. Store, Supermarket Sales Y/Y: -11.6%e v -3.2% prior
- 20:00 (NZ) New Zealand Oct Final Business Confidence: No est v -14.5 prelim; Activity Outlook: No est v 3.6 prelim
- 20:30 (AU) Australia Q3 Import Price Index Q/Q: -2.0%e v -1.9% prior; Export Price Index Q/Q: -3.5%e v -2.4% prior
- 21:05 (NZ) New Zealand to sell combined NZ$600M in 2023, 2029 and 2033 bonds
- (JP) BOJ Policy Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.10%; Expected to maintain its policy framework of “QQE with Yield Control” around 0.00%; Expected to maintain asset purchases at annual pace of ‘unlimited’
- (JP) BOJ Quarterly Outlook for Economic Activity and Prices
