Various EU Members Exit Recession But Fresh Lockdown Measures Adds To Gloom

Notes/Observations

• Month end session see plethora of CPI and GDP data but focus turning to next week’s US election and next ECB meeting in Dec
• EU GDP data shows recession ending in region (Spain, Italy, Germany, Portugal all exited recession) but new lockdown measures likely to ensure a double-dip one occurs

Asia:

• South Korea Sept Industrial Production registered its highest annual pace since Feb (M/M: 5.4% v 3.1%e; Y/Y: 8.0% v 1.3%e)
• Japan Oct Tokyo CPI Y/Y: -0.3% v -0.1%e; CPI (ex-fresh food) Y/Y: -0.5% v -0.5%e
• Japan Sept Jobless Rate: 3.0% v 3.1%e
• Japan Sept Preliminary Industrial Production M/M: 4.0% v 3.0%e v 1.0% prior; Y/Y: -9.0% v -9.8%
• China NDRC Official stated that to propose numeric targets for next 5 years and improve policy adjustments beyond economic cycles

Europe:

• ECB officials policymakers said to have debated on tools to be used in the next stimulus package. Some members favored expanding the Pandemic Bond Buying scheme (PEPP) while others said to have wanted TLTRO. Other ECB members wanted a mix of both
• IMF cuts UK 2020 GDP forecast from -9.8% to -10.4%. Stressed economy continued to need policy support, BoE monetary policy should remain accommodative
• PM Johnson said to be under pressure to impose pre and post-Christmas lockdowns
• EU Commission President Von der Leyen: COVID cases would overwhelm our healthcare system if we did not act quickly. Stressed that needed to be very careful about how we lifted restrictions

Americas:

• Sen Elizabeth Warren reportedly will put name up for Biden team to become Treasury Sec in a potential administration
• Canada PM Trudeau is expected to announce $15B in new permanent spending

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.05% at 341.54, FTSE -0.17% at 5,572.38, DAX -0.31% at 11,562.65, CAC-40 +0.20% at 4,578.58, IBEX-35 +0.38% at 6,436.00, FTSE MIB -0.02% at 17,869.50, SMI -0.16% at 9,540.69, S&P 500 Futures -1.34%]
• Market Focal Points/Key Themes: European indices open lower across the board but moderated losses as the session progressed (CAC40 returning to the green); market sentiment impacted over concerns of lower economic outlook; better performing sectors include energy and utilities; consumer discretionary and technology sectors among those trading to the downside; Sweden closed early for holiday; Volvo sells US Trucks to Izuzu as part of strategic alliance; earnings expected during the US session include Exxon Mobil, Under Armour, Honeywell and Audi

Equities

• Consumer discretionary: Air France-KLM [AF.FR] -3% (earnings), Ubisoft [UBI.FR] -7.5% (earnings)
• Energy: Total [FP.FR] +2% (earnings; affirms dividend)
• Financials: NatWest [NWG.UK] +5% (earnings)
• Healthcare: Novo Nordisk [NOVOB.DK] -1% (earnings), AstraZeneca [AZN.UK] -1% (divests drug rights), AstraZeneca [AZN.UK] -1% (divests drug rights)
• Industrials: Safran [SAF.FR] +1.5% (sales)

Speakers

• ECB’s Holzmann (Austria) stated that it was correct to assume Lagarde did signal more stimulus. Could come up with new instruments by the Dec policy meeting. Decision to be data-dependent. He noted that sawlittle effectiveness in any interest rate cut
• ECB’s Mersch (Luxembourg) stated that ECB to take into account the situation in Europe; General Council to do its part during the 2nd wave of the pandemic. Outlook had suddenly taken a turn for the worst and ECB was all in agreement that need to recalibrate measures and encouraged govt to spend more. He stressed that fiscal policy was the most appropriate response to the pandemic
• ECB Survey of Professional Forecasters (SPF) maintained its 2020 HICP (EU Harmonized CPI) at 0.3% while cutting the 2021 HICP (EU Harmonized CPI) from 1.0% to 0.9%. Raised 2020 GDP forecast from -8.3% to -7.8% (**Note: ECB Sept Staff Projections saw it at -8.0%) while cutting 2021 GDP growth from 5.7% to 5.3%
• Germany Economic Ministry updated Economic Outlook which raised its 2020 GDP from -5.8% to -5.5% while maintaining the 2021 GDP growth at 4.4% (as anticipated)
• German Econ Min Altmaier stated that 3 GDP data showed that Germany could quickly recover and expected to be back at pre-pandemic growth level in 2022. He cut Q4 GDP growth forecast from 1.1% to 0.4% as Germany implemented its lockdown light measures

Currencies/Fixed Income

• EUR/USD was little changed despite a rash of growth in EU’s various GDP data released in the session. Overall sentiment was the data would signal that this was the peak in optimism now that tighter restrictions are imposed at the start of 4Q to contain a second wave of the pandemic. Dealers building upon the ECB signal of further easing at its Dec policy meeting. EUR/USD near 1-month lows

Economic Data

• (NL) Netherlands Sept Retail Sales Y/Y: 10.2% v 6.4% prior
• (FR) France Q3 Preliminary GDP Q/Q: 18.2% v 15.0%e; Y/Y: -4.3% v -7.3%e
• (FR) France Sept Consumer Spending M/M: -5.1% v -1.4%e; Y/Y: -1.3% v +2.2%e
• (DE) Germany Sept Retail Sales M/M: -2.2% v -0.6%e; Y/Y: 6.5% v 6.5%e
• (UK) Oct Nationwide House Price Index: M/M: 0.8% v 0.4%e; Y/Y: 5.8% v 5.2%e
• (FI) Finland Aug Final Trade Balance: -€0.3B v -€0.3B prelim
• (NO) Norway Sept Credit Indicator Growth Y/Y: 4.6% v 4.7% prior
• (DK) Denmark Sept Unemployment Rate (Seasonally Adj): 4.3% v 4.4% prior; Gross Unemployment Rate: 4.8% v 4.9% prior
• (TR) Turkey Sept Trade Balance: -$4.8B v -$4.9Be
• (TH) Thailand Sept Current Account Balance: $1.3B v $2.1Be
• (CH) Swiss Sept Real Retail Sales Y/Y: 0.3% v 4.0% prior
• (TH) Thailand Sept Overall Balance of Payments (BOP): -$1.5B v +$2.1B prior; Trade Balance: $3.2B v $5.4B prior; Exports Y/Y: % v -8.2% prior; Imports Y/Y: % v -19.1% prior
• (FR) France Oct Preliminary CPI M/M: -0.1% v 0.0%e; Y/Y: 0.0% v 0.1%e
• (FR) France Oct Preliminary CPI Harmonized M/M: -0.1% v 0.0%e; Y/Y: 0.0% v 0.1%e
• (ES) Spain Q3 Preliminary GDP Q/Q: 16.7% v 13.5%e; Y/Y: -8.7% v -11.8%e
• (IT) Italy Sept Preliminary Unemployment Rate: 9.6% v 10.1%e
• (CH) Swiss Oct KOF Leading Indicator: 106.6 v 108.0e
• (AT) Austria Q3 Preliminary GDP Q/Q: +11.1% v -12.1% prior; Y/Y: -5.3% v -14.5% prior
• (AT) Austria Sept PPI M/M: 0.1% v 0.0% prior; Y/Y: -1.8% v -1.9% prior
• (CZ) Czech Q3 Advance GDP (1st of 3 readings) Q/Q: 6.2% v 5.0%e; Y/Y: -5.8% v -6.7%e
• (HU) Hungary Aug Final Trade Balance: €0.3B v €0.3B prelim
• (HU) Hungary Aug Average Gross Wages Y/Y: 9.1% v 10.4%e
• (RU) Russia Narrow Money Supply w/e Oct 23rd (RUB): 13.42T v 13.48T prior
• (TW) Taiwan Q3 Preliminary GDP Y/Y: 3.3% v 1.1%e
• (CN) Weekly Shanghai copper inventories (SHFE): K v 155.5K tons prior
• (HK) Hong Kong Q3 Advance GDP Q/Q: 3.0% v 0.7%e; Y/Y: -3.4% v -5.6%e
• (DE) Germany Q3 Preliminary GDP Q/Q: 8.2% v 7.3%e; Y/Y: -4.3% v -5.5%e; GDP NSA (unadj) Y/Y: -4.1% v -5.2%e
• (IT) Italy Q3 Preliminary GDP Q/Q: 16.1% v 11.1%e; Y/Y: -4.7% v -8.4%e
• (NO) Norway Oct Unemployment Rate: 3.5% v 3.5%e
• (NO) Norway Central Bank (Norges) Nov Daily FX Purchases (NOK): -1.6B v -1.6Be
• (PL) Poland Oct Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 3.0% v 3.1%e
• (CZ) Czech Sept M2 Money Supply Y/Y: 11.2% v 9.8% prior
• (ES) Spain Aug Current Account Balance: €1.4B v €1.4B prior
• (IS) Iceland Sept Final Trade Balance (ISK): -6.5B v -3.8B prelim
• (PT) Portugal Q3 Advance GDP Q/Q: 13.2% v 9.4%e; Y/Y: -5.8% v -16.3% prior
• (PT) Portugal Oct Preliminary CPI M/M: 0.1% v 1.0% prior; Y/Y: -0.1% v -0.1% prior
• (PT) Portugal Oct Preliminary CPI EU Harmonized M/M: -0.1% v +0.8% prior; Y/Y: -0.6% v -0.8% prior

Looking Ahead

• (MX) Mexico Sept YTD Budget Balance (MXN): No est v -275.0B prior
• 06:00 (EU) Euro Zone Q3 Advance GDP Q/Q: +9.6%e v -11.8% prior; Y/Y: -7.0%e v -14.7% prior
• 06:00 (EU) Euro Zone Oct Advance CPI Estimate Y/Y: -0.3%e v -0.3% prior; CPI Core Y/Y: 0.2%e v 0.2% prior; CPI M/M: 0.1%e v 0.1% prior
• 06:00 (EU) Euro Zone Sept Unemployment Rate: 8.2%e v 8.1% prior
• 06:00 (BE) Belgium Sept Unemployment Rate: No est v 5.1% prior
• 06:00 (IT) Italy Oct Preliminary CPI M/M: +0.2%e v -0.7% prior; Y/Y: -0.4%e v -0.6% prior
• 06:00 (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.3%e v 0.9% prior; Y/Y: -0.8%e v -1.0% prior
• 06:00 (GR) Greece Aug Retail Sales Value Y/Y: No est v -3.1% prior; Retail Sales Volume Y/Y: No est v -3.0% prior
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance (bills/oats)
• 06:30 (IN) India Weekly Forex Reserve w/e Oct 23rd : No est v $555.1B prior
• 06:30 (ZA) South Africa to sell combined ZAR2.0B in I/L 2025, 2033 and 2050 Bonds
• 07:00 (PT) Portugal Sept Industrial Production M/M: No est v 10.0% prior; Y/Y: No est v 3.0% prior
• 07:00 (PT) Portugal Sept Retail Sales M/M: No est v -1.4% prior; Y/Y: No est v -4.5% prior
• 07:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)
• 07:30 (CL) Chile Central Bank Meeting Oct Minutes
• 08:00 (ZA) South Africa Sept Trade Balance (ZAR): 30.0Be v 38.9B prior
• 08:00 (ZA) South Africa Sept Monthly Budget Balance (ZAR): -37.3Be v -63.7B prior
• 08:00 (BR) Brazil Aug National Unemployment Rate: 14.3%e v 13.8% prior
• 08:00 (BR) Brazil Sept PPI Manufacturing M/M: No est v 3.0% prior; Y/Y: No est v 13.5% prior
• 08:00 (MX) Mexico Q3 Preliminary GDP Q/Q: +11.9%e v -17.1% prior; Y/Y: -8.8%e v -18.7% prior
• 08:00 (MX) Mexico Aug Gold Production: No est v 5.8K kilograms; Silver Production: No est v 363.2K kilograms prior; Copper Production: No est v 44.1K tons prior
• 08:00 (CL) Chile Sept Unemployment Rate: 12.8%e v 12.9% prior
• 08:00 (CL) Chile Sept Retail Sales Y/Y: 6.1%e v 2.8% prior; Commercial Activity Y/Y: No est v 1.3% prior
• 08:00 (CL) Chile Sept Industrial Production Y/Y: No est v -4.8% prior; Manufacturing Production Y/Y: -3.3%e v -8.2% prior; Total Copper Production: No est v 489.5K tons
• 08:30 (US) Sept Personal Income: +0.4%e v -2.7% prior; Personal Spending: 1.0%e v 1.0% prior; Real Personal Spending (PCE): 0.8%e v 0.7% prior
• 08:30 (US) Sept PCE Deflator M/M: 0.2%e v 0.3% prior; Y/Y: 1.5%e v 1.4% prior
• 08:30 (US) Sept PCE Core Deflator M/M: 0.2%e v 0.3% prior; Y/Y: 1.7%e v 1.6% prior
• 08:30 (US) Q3 Employment Cost Index (ECI): 0.5%e v 0.5% prior
• 08:30 (CA) Canada Aug GDP M/M: 0.9%e v 3.0% prior; Y/Y: -4.1%e v -5.0% prior
• 08:30 (CA) Canada Industrial Product Price M/M: No est v 0.3% prior; Raw Materials Price Index M/M: No est v 3.2% prior
• 08:30 (BR) Brazil Sept Primary Budget Balance (BRL): No est v -87.6B prior; Nominal Budget Balance: No est v -121.9B prior; Net Debt to GDP Ratio: No est v 60.7% prior
• 09:00 (UK) Daily Baltic Dry Bulk Index
• 09:00 (DE) ECB’s Weidmann (Germany)
• 09:00 (IN) India announces upcoming bill issuance (held on Wed)
• 09:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming bond issuance
• 09:45 (US) Oct Chicago Purchaser Managers: 58.0e v 62.4 prior
• 10:00 (US) Oct Final University of Michigan Confidence: 81.2e v 81.2 prelim
• 11:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 4.810T prior
• 11:00 (CO) Colombia National Unemployment Rate: No est v 16.8% prior; Urban Unemployment Rate: 17.7%e v 19.6% prior
• 11:00 (CO) Colombia Sept Exports: $2.6Be e v $2.6B prior
• 12:00 (EU) Potential sovereign ratings after European close (Moody’s on Denmark, Netherlands and Saudi Arabia Sovereign Debt; S&P on Czech Republic Sovereign Debt; Fitch on Finland and Romania Sovereign Debt; Canadian rating agency DBRS on Italy Sovereign Debt
• 13:00 (US) Weekly Baker Hughes Rig Count
• 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 1.75%
• 21:00 (CN) China Oct Manufacturing PMI: 51.3e v 51.5 prior; Non-manufacturing PMI: 56.1e v 55.9 prior; Composite PMI: No est v 55.1 prior