Awaiting ECB As Region Turns Up The Virus Restrictions

Notes/Observations

• EU CPI data in session (German States and Spain prelim Oct readings mixed) with annual pace skirting negative territory and far from ECB target
• Double-dip lockdowns in Europe threatens to overwhelm the region economic defenses (France and Germany recently announced new lockdown measures to contain the coronavirus)
• ECB seen keeping policy steady later today but likely to hint of further stimulus in December.
• Companies expected to report during the NY morning include Allegheny Technologies, Baxter International, Comcast, ConocoPhillips, DuPont, Huntsman, International Paper, Kellogg, Moody’s, Moderna, Newmont Mining, Royal Caribbean, Ralph Lauren, Spotify, Molson Coors, Tempur Sealy, Willis Towers Watson, YUM! Brands
• Apple is due to issue Q4 results after the US market close

Asia:

• Japan Sept Retail Sales M/M:-0.1% v + 1.0%e; Y/Y: -8.7% v -7.6%e
• BOJ left its policy unchanged as expected; Left Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintained 10-Year Yield Target at 0.00%. Statement reiterated stance that would take more action without hesitation if needed. Reiterated stance that risks were tilted to downside for economic and price outlook. Reiterated stance that overall assessment that economy remained severe but activity had picked up
• BOJ Quarterly Outlook for Economic Activity and Prices cut the FY20/21 GDP outlook from -4.7% to -5.5% while raising FY21/22 GDP growth form 3.3% to 3.6%. BOJ maintained its FY20/21 CPI at -0.5% while raising FY21/22 CPI from +0.3% to +0.4%

Coronaviurs:

• Total global cases: 44.5M (+1.3% d/d); total deaths: 1.17M (+0.7% d/d)

Europe:

• UK Govt officials said to expect a result on efficacy of Pfizer Coronavirus Vaccine before Oxford vaccine. UK govt believed that the German backed Pfizer vaccine could be ready to distribute before Christmas with first shots due to go the vulnerable and elderly
• President Macron announced its 2nd national lockdown starting from Friday, Oct 30th with restrictions to end on Dec 1st. Schools to remain open, bars and restaurants to be closed during the lockdown. To ease lockdown conditions when new daily infections “fall to about 5,000/day”
• German Chancellor Merkel announced that Germany to begin a ‘lockdown light’ from November 2nd

Americas:

• Supreme Court rejected President Trump’s attempt to block North Carolina’s mail in ballot extension
• House Speaker Pelosi stated that had been negotiating on a $2T relief package with the White House; details on aid bill could change after the election
• Presidential Candidate Biden said to have noted he would consult US Allies for collective leverage for future tariffs on China
• Brazil Central Bank (BCB) left the Selic Rate Target unchanged at 2.00% (as expected)

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.47% at 343.80, FTSE +0.24% at 5,596.41, DAX +0.63% at 11,632.90, CAC-40 +0.42% at 4,590.19, IBEX-35 -0.64% at 6,431.00, FTSE MIB +0.51% at 17,988.50, SMI +0.33% at 9,650.75, S&P 500 Futures +0.72%]
• Market Focal Points/Key Themes: European indices open higher but later turned to trade mixed; risk sentiment impacted over concern of further measures after France and Germany announce one-month lockdowns; better performing sectors include technology and consumer discretionary; telecom and financials sectors among those trading in the red; energy sector supported by earnings; focus on results of ECB policy meeting; Tiffany approves being acquired by LVMH; earnings expected during the upcoming US session include Blue Apron, Deutsche Boerse, Activision Blizzard and Apple

Equities

• Energy: Royal Dutsch Shell [RDSA.NL] +3% (earnings; raises dividend)
• Financials: Standard Chartered [STAN.UK] -5% (earnings), Credit Suisse [CSGN.CH] -5% (earnings)
• Industrials: Volkswagen [VOW3.DE] +3% (earnings), Airbus [AIR.FR] -1% (earnings)
• Technology: WPP [WPP.UK] -3% (sales)
• Telecom: Nokia [NOKIA.FI] -17% (earnings), BT Group [BT.A.UK] +6% (earnings), Orange [ORA.FR] +4% (earnings), Telefonica [TEF.ES] -3% (earnings)

Speakers

• German Chancellor Merkel commented that the situation in country was dramatic as health authorities were near their limits. If waited until UCI units were full then it would have been too late. Economic life should continue to take place where non-necessary contact could be avoided
• Spain Econ Min Calvino stated that expected to approve an extension and modification of State-backed credit lines in coming weeks
• Russia Central Bank (CBR) Gov Nabiullina stated that CPI was seen around the 4% level at this time
• Philippines Central Bank (BSP) Gov Diokno reiterated stance that future rate decision to be data-dependent
• Taiwan Central Bank (CBC) Sept Minutes saw a member note that the TWD currency continued to face appreciation pressure. A member saw no need to maintain TWD currency at certain level. A member saw limited impact from any rate cut
• BOJ Gov Kuroda post rate decision press conference reiterated view that economic activity had started to pick up but risks remained tilted to the downside. Reiterated stance that BOJ was prepared to ease further if necessary and would not hesitate to add to measure. Reiterated stance to target 2% inflation. Reiterated view that was CPI slightly negative due to oil, Pandemic, and travel restrictions. JPY currency (Yen) had been moving within a narrow range; to continue watching market impact closely. FX price action had been more stable than stocks and bonds
• China Communist Party Plenary 5-year plan said to stick with strategy of boosting domestic demand. It made no mention GDP growth; officials only stressed the quality of growth. China to target stronger domestic market by 2025. To promote peaceful cross-strait development; seeks peaceful ties and unification with Taiwan

Currencies/Fixed Income

• EUR/USD was little changed in session around the 1.1730 area. EU CPI data in session highlighted that the annual pace of various countries were skirting negative territory and far from ECB target. Compounding the situation was the new double-dip lockdowns in Europe which threatened to overwhelm the region economic defenses (France and Germany recently announced new lockdown measures to contain the coronavirus). ECB was seen keeping policy steady later today but would likely to hint of further stimulus in December.

Economic Data

• (NL) Netherlands Oct Producer Confidence Index: -5.6 v -4.8 prior
• (DE) Germany Oct CPI North Rhine Westphalia M/M: +0.3% v -0.2% prior; Y/Y: -0.1% v -0.3% prior
• (ZA) South Africa Sept M3 Money Supply Y/Y: 9.5% v 11.0%e; Private Sector Credit Y/Y: 3.1% v 4.1%e
• (FI) Finland Sept House Price Index M/M: +1.3% v -1.5% prior; Y/Y: +2.2% v -0.3% prior
• (DE) Germany Oct CPI Saxony M/M: 0.0% v -0.1% prior; Y/Y: 0.0% v 0.1% prior
• (ES) Spain Oct Preliminary CPI M/M: 0.5% v 0.6%e; Y/Y: -0.9% v -0.4%e
• (ES) Spain Oct Preliminary CPI EU Harmonized M/M: 0.3% v 0.5%e; Y/Y: -1.0% v -0.7%e
• (HU) Hungary Sept Unemployment Rate: 4.4% v 4.8%e
• (SE) Sweden Aug Non-Manual Workers Wages Y/Y: 2.0% v 1.9% prior
• (DE) Germany Oct Unemployment Change: -35.0K v -5.0Ke; Unemployment Claims Rate: 6.2% v 6.3%e
• (DE) Germany Oct CPI Brandenburg M/M: 0.1% v 0.1% prior; Y/Y: -0.1% v -0.2% prior
• (DE) Germany Oct CPI Hesse M/M: 0.0% v -0.2% prior; Y/Y: -0.6% v -0.5% prior
• (DE) Germany Oct CPI Bavaria M/M: +0.2% v -0.3% prior; Y/Y: -0.1% v -0.2% prior
• (IT) Italy Oct Consumer Confidence Index: 102.0 v 102.0e; Manufacturing Confidence: 95.6 v 91.8e; Economic Sentiment: 92.9 v 91.1 prior
• (IS) Iceland Oct CPI M/M: 0.4% v 0.4% prior; Y/Y: 3.6% v 3.5% prior
• (UK) Sept Net Consumer Credit: -£0.6B v +£0.7Be; Net Lending: £4.8B v £3.6Be
• (UK) Sept Mortgage Approvals: 91.5K v 76.1Ke (highest since 2007)
• (UK) Sept M4 Money Supply M/M: +0.9% v -0.5% prior; Y/Y: 12.3% v 12.1% prior; M4 Ex IOFCs 3M Annualized: 6.1% v 7.1% prior
• (PT) Portugal Oct Consumer Confidence: -25.5 v -26.3 prior; Economic Climate Indicator: 0.0 v -0.5 prior
• (ZA) South Africa Sept PPI M/M: 0.3% v 0.3%e; Y/Y: 2.5% v 2.5%e
• (SL) Sri Lanka Oct CPI Y/Y: 4.0% v 3.8%e
• (EU) Euro Zone Oct Economic Confidence: 89.6e; Industrial Confidence: -9.6 v -10.9e; Services Confidence: -11.8v -14.0e; Consumer Confidence (final reading): -15.5 v -15.5 advance
• (BE) Belgium Q3 Preliminary GDP Q/Q: -10.7% v -11.8% prior; Y/Y: -5.2% v -13.9% prior
• (IT) Italy Sept Hourly Wages M/M: 0.1% v 0.1% prior; Y/Y: 0.5% v 0.6% prior
• (CA) Canada Oct CFIB Business Barometer: 53.3 v 59.2 prior

Fixed Income Issuance

• (IN) India sold total INR230B vs. INR230B indicated in 2023, 2033, 2035 and 2050 bonds
• (DK) Denmark sold total DKK7.88B in 1-month, 3-month, 6-month and 9-month bills

Looking Ahead

• (DE) Germany Oct CPI Baden Wuerttemberg M/M: No est v -0.2% prior; Y/Y: No est v 0.0% prior
• (BE) Belgium Sept CPI M/M: No est v -0.4% prior; Y/Y: No est v 0.9% prior
• (BR) Brazil Sept Central Govt Budget Balance (BRL): No est v -96.1B prior
• (BR) Brazil Sept Total Formal Job Creation: No est v +249.4K prior
• (IT) Italy Debt Agency (Tesoro) to sell combined €4.5-5.5B in 5-year and 10-year BTP bonds
• (IT) Italy Debt Agency (Tesoro) to sell €0.75-1.0B in Dec 2023 CCTeu (floating rate Notes)
• 06:30 (HU) Hungary Debt Agency (AKK) to sell bonds
• 07:00 (IL) Israel Sept Unemployment Rate: No est v 4.9% prior
• 07:00 (BR) Brazil Oct FGV Inflation IGPM M/M: 3.1%e v 4.3% prior; Y/Y: 20.7%e v 17.9% prior
• 07:30 (IS) Iceland to sell 6-month and 12-month Bills
• 07:45 (US) Daily Libor Fixing
• 08:30 (US) Q3 Advance GDP Annualized Q/Q: +32.0%e v -31.4% prior; Personal Consumption: +38.9%e v -33.2% prior (**Note: 1st of 3 readings)
• 08:30 (US) Q3 Advance GDP Price Index: +2.9%e v -1.8% prior; Core PCE Q/Q: +4.0%e v -0.8% prior
• 08:30 (US) Initial Jobless Claims: 770Ke v 787K prior; Continuing Claims: 7.78Me v 8.373M prior
• 08:30 (US) Weekly USDA Net Export Sales
• 08:45 (EU) ECB Interest Rate Decision: Expected to leave Main Refinancing Rate unchanged at 0.00%; Expected to leave Marginal Lending Facility unchanged at 0.25%; Expected to leave Deposit Facility Rate unchanged at -0.50%
• 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 23rd:: No est v $585.3B prior
• 09:00 (DE) Germany Oct Preliminary CPI M/M: 0.0%e v -0.2% prior; Y/Y: -0.3%e v -0.2% prior
• 09:00 (DE) Germany Oct Preliminary CPI EU Harmonized M/M: 0.0%e v -0.4% prior; Y/Y: -0.4%e v -0.4% prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:30 (EU) ECB chief Lagarde post rate decision press conference
• 10:00 (US) Sept Pending Home Sales M/M: 3.0%e v 8.8% prior; Y/Y: 23.0%e v 20.5% prior
• 10:00 (FR) ECB’s Villeroy (France)
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:30 (US) Treasuries to sell 4-Week and 8-Week Bills
• 12:00 (CA) Canada to sell 30-year bonds
• 13:00 (US) Treasuries to sell 7-Year Notes
• 13:30 (BR) Brazil Sept Central Govt Budget Balance (BRL): -79.7Be v -96.1B prior
• 15:00 (AR) Argentina Aug Wages M/M: No est v 1.8% prior
• 17:00 (NZ) New Zealand Oct Consumer Confidence Index: No est v 100 prior
• 19:00 (KR) South Korea Sept Industrial Production M/M: +3.1%e v -0.7% prior; Y/Y: +1.3%e v -3.0% prior
• 19:00 (KR) South Korea Sept Cyclical Leading Index Change: No est v 0.6 prior
• 19:30 (JP) Japan Oct Tokyo CPI Y/Y: -0.1%e v +0.2% prior; CPI (ex-fresh food) Y/Y: -0.5%e v -0.2% prior; CPI (ex-fresh food/energy) Y/Y: -0.2%e v 0.0% prior
• 19:30 (JP) Japan Sept Jobless Rate: 3.1%e v 3.0% prior; Job-To-Applicant Ratio: 1.03e v 1.04 prior
• 19:50 (JP) Japan Sept Preliminary Industrial Production M/M: 3.0%e v 1.0% prior; Y/Y: -9.8%e v -13.8% prior
• 20:01 (UK) Oct Lloyds Business Barometer: No est v -11 prior
• 20:30 (AU) Australia Sept Private Sector Credit M/M: 0.1%e v 0.0% prior; Y/Y: 2.0%e v 2.2% prior
• 20:30 (AU) Australia Q3 PPI Q/Q: No est v -1.2% prior; Y/Y: No est v -0.4% prior
• 21:10 (JP) BOJ Outright Bond Purchase Operation in 1~3 Years, 3~5 Years and 5~10 Years maturities
• 22:00 (SG) Singapore Sept M1 Money Supply Y/Y: No est v 26.9% prior; M2 Money Supply Y/Y: No est v 11.5% prior
• 22:00 (SG) Singapore Sept Bank Loans and Advances Y/Y: No est v -1.0% prior
• 23:30 (JP) Japan to sell 3-Month Bills