Awaiting The US Election Results

Notes/Observations

• US presidential election keeps market participants on the sidelines. Will the blue wave complete a sweep or be stymied by inaccurate polling????? The 1st wave of individual State results to begin after 19:00 ET (00:00 GMT)
• Companies expected to report during the NY morning include Emerson Electric, Eaton Corp, Humana, Johnson Controls, McKesson, Spirit Aerosystems, Sysco Corp, Thomson Reuters, Wayfair

Asia:

• Reserve Bank of Australia (RBA) cut both Cash Rate Target and 3-year Yield Target by 15bps to 0.10% (as expected); expanded its govt QE bond purchases by A$100B with purchases in the 5-10- year maturities over the next 6 months. RBA stated that it is prepared to do more if necessary
• RBA Gov Lowe noted that it had done all it could do on rates, the focus was now on QE
• South Korea Oct CPI slowed in Oct with Core inflation marking the sharpest fall since September 1999 (CPI M/M: -0.6% v 0.0%e; Y/Y: 0.1% v 0.8%e; Core CPI Y/Y: 0.1% v 0.7%e)
• China said to be considering banning wheat imports from Australia (adding to a list of Austrian products already being blocked by China)

Coronaviurs:

• Total global cases 46.86M (+0.8% d/d); total deaths: 1,21M (+0.5% d/d)

Europe:

• Coronavirus infections have risen to record levels across most of Europe and France, Belgium, England and some other countries have closed non-essential shops for November

Americas:

• Election Polls suggest that Democratic challenger Joe Biden leading in all 6 battleground states (Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin). Question remains whether such a lead was within the margin of error???

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +1.59% at 353.38, FTSE +1.74% at 5,753.37, DAX +1.87% at 12,003.95, CAC-40 +2.03% at 4,786.32, IBEX-35 +1.42% at 6,679.00, FTSE MIB +2.18% at 18,779.50, SMI +1.32% at 9,920.50, S&P 500 Futures +1.36%]
• Market Focal Points/Key Themes: European indices open higher across the board and advanced further in the green as the session progressed; sectors trading to the upside include materials and financials; telecom and health care among underperforming sectors; chemicals sector under pressure following Bayer results, financials supported by BNP Paribas results; Arnaud, Lagardere and Bollore in talks over Hchette; Telit receves Prelim takeover offer from DBAY; focus on US elections with results expected through the European night; earnings expected in the upcoming US session include Eaton, Humana, Ferrari and Emerson Electric

Equities

• Consumer discretionary: Wizz Air [WIZZ.UK] +3% (traffic), AB Foods [ABF.UK] -1.5% (earnings), Hugo Boss [BOSS.DE] +5% (earnings)
• Financials: BNP Paribas [BNP.FR] +5% (earnings)
• Healthcare: Bayer [BAYN.DE] -1.5% (earnings; Roundup cases update)
• Industrials: Crest Nicholson [CRST.UK] +17% (trading update)

Speakers

• ECB’s Knot (Netherlands) stated that additional funding mechanism was needed to support recovery. Noted that the PEPP (Pandemic Fund) was an emergency program and we were in such a situation
• Sweden Central Bank (Riksbank) Gov Ingves noted that the proposed central bank law was not good and needs to be rewritten and believed it would limit the Riksbank ability to react flexibly in times of crisis> Have not discussed buying equities as part of QE
• German Fin Min Scholz commented ahead of Eurogroup meeting that EU recovery funds must be made available soon. No need to alter parameters on Recovery Fund. No Eurogroup decision at today’s meeting on digital currency but must make swift progress
• Italy govt said to be prepared for at least €1.8B in new relief as lockdowns measures appeared imminent
• Turkey Central Bank (CBRT) raises TRY currency (Lira) Swap rate by 150bps to 13.25%
• Poland Central Bank (NBP) said to delay its schedule Nov policy meeting by two days. MPC moved from Wed, Nov 4th until Friday, Nov 6th. Speculation had risen that Polish government could implement a harsh lockdown to contain the coronavirus pandemic
• Malaysia Central Bank Policy Statement reiterated that monetary policy stance was appropriate and accommodative. Saw significant improvement in Q3 economic activity and expected to further improve in 2021. Introduction of targeted measures to contain pandemic in several regions could affect momentum of recovery in Q4. Underlying inflation expected to remain subdued in 2021
• Bank of Korea (BOK) Oct Minutes noted that a stronger cooperation with govt needed in 2021. One Member noted that an accommodative was policy needed to support the economy. One Member noted that recent economic condition did not diverge much from Aug forecasts. One Member noted that uncertainty to future growth path would remain high

Currencies/Fixed Income

• USD was softer but well contained within recent ranges as US election Day was about to commence. If polls are correct the Democratic candidate Joe Biden was looking likely to win. Focus also to be whether the blue Democratic wave sweeps both Houses of Congress.
• EUR/USD was higher by approx 0.5% in quiet trade but dealers noted that upside appeared to be capped for the time being. Concerns about social restrictions in Europe to tame resurgence in Covid-19 cases should prevent the euro currency from rising too far and unlikely to break out of the 1.20 ceiling. Dealers noted that bigger and longer Pandemic Emergency Purchase Program and new and more attractive Targeted Longer-Term Refinancing Operations are likely to be the ECB at its December meeting,
• GBP/USD was edging back towards the 1.30 area. Analysts have revised their BOE call now that a 2nd national lockdown appears imminent in the UK and are now calling for an additional £100B being added to the QE bond buying scheme

Economic Data

• (MY) Malaysia Central Bank (BNM) left its Overnight Policy Rate unchanged at 1.75% (as expected)
• (TR) Turkey Oct CPI M/M: 2.1% v 2.2%e; Y/Y: 11.9% v 12.0%e; CPI Core Index Y/Y: 11.5% v 11.8%e
• (TR) Turkey Oct PPI M/M: 3.6% v 2.7% prior; Y/Y: 18.2% v 14.3% prior
• (CH) Swiss Oct CPI M/M: 0.0% v 0.0%e; Y/Y: -0.6% v -0.6%e; CPI Core Y/Y: -0.1% v -0.2%e
• (CH) Swiss Oct CPI EU Harmonized M/M: 0.0% v 0.1%e; Y/Y: -0.9% v -0.8%e
• (FR) France Sept YTD Budget Balance: -€161.6B v -€165.7B prior
• (IN) India Oct Preliminary Trade Balance: -$8.8B v -$2.7B prior

Fixed Income Issuance

• (ID) Indonesia sold total IDR29.5T vs. IDR20T target in bills and bonds
• (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2030, 2035 and 2040 bonds
• (UK) DMO sold £2.75B in 0.125% Jan 2028 Gilts; Avg Yield: 0.116% v 0.086% prior; bid-to-cover: 2.67x v 3.22x prior; Tail: 0.2bps v 0.1bps prior
• (AT) Austria Debt Agency (AFFA) sold €690M vs. €690M indicated in 0% Oct 2040 RAGB bond; Avg Yield: -0.059%; bid-to-cover: 1.95x

Looking Ahead

• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
• 05:30 (DE) Germany to sell €500M in 0.5% Apr 2030 inflation-linked bunds (Bundei)
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 6-month Bills
• 06:00 (BR) Brazil Central Bank Oct Minutes
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey
• 06:30 (CL) Chile Central Bank Traders Survey
• 06:30(UK) DMO to sell £2.0B in 1.25% Oct 2041 Gilts; Avg Yield: % v 0.750% prior; bid-to-cover: x v 2.12x prior; Tail: bps v 0.3bps prior
• 06:30 (EU) ESM to sell €2.0B in 3-month Bills; Avg Yield: -0.6270% v -0.5700% prior; Bid-to-cover:x v 7.22x prior (Oct 6th 2020)
• 07:45 (US) Goldman Economist Chain Store Sales
• 08:00 (BR) Brazil Oct PMI Manufacturing: No est v 64.9 prior
• 08:00 (SG) Singapore Oct Purchasing Managers Index (PMI): 50.5e v 50.3 prior; Electronics Sector Index: No est v 50.9 prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (EU) European Finance Ministers meeting (Eurogroup)
• 09:45 (US) Oct ISM New York: No est v 56.1 prior
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (over 20-years)
• 10:00 (CO) Colombia Oct PMI Manufacturing: No est v 50.4 prior
• 10:00 (US) Sept Factory Orders: 1.0%e v 0.7% prior; Factory Orders (ex-transportation): 0.6%e v 0.7% prior
• 10:00 (US) Sept Final Durable Goods Orders: 1.9%e v 1.9% prelim; Durables (ex-transportation): 0.8%e v 0.8% prelim; Capital Goods Orders (non-defense/ex-aircraft): 1.0%e v 1.0 prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.8 prelim
• 10:00 (MX) Mexico Sept Total Remittances: $3.5Be v $3.6B prior
• 10:00 (MX) Mexico Central Bank Economist Survey
• 10:00 (MX) Mexico Weekly International Reserve data
• 10:30 (MX) Mexico Oct PMI Manufacturing: No est v 42.1 prior
• 11:00 (DK) Denmark Oct Foreign Reserves (DKK): No est v 455.7B prior
• 11:30 (US) Treasury to sell 52-Week Bills
• 13:00 (BR) Brazil Oct Trade Balance: $6.1Be v $6.2B prior; Total Exports: $18.6Be v $18.5B prior; Total Imports: $12.4Be v $12.3B prior
• 14:00 (CO) Colombia Monetary Policy Minutes
• (AR) Argentina Oct Government Tax Revenue (ARS): No est v 606.5B prior
• 16:00 (KR) South Korea Oct Foreign Reserves: No est v $421B prior
• 16:30 (AU) Australia Oct Performance of Construction Index: No est v 45.2 prior
• 16:30 (US) Weekly API Oil Inventories
• 16:45 (NZ) New Zealand Q3 Unemployment Rate: 5.3%e v 4.0% prior
• 16:45 (NZ) New Zealand Q3 Employment Change Q/Q: -0.7%e v -0.4% prior; Y/Y: 0.2%e v 1.1% prior (revised from 1.2%)
• 17:00 (AU) Australia Oct Final PMI Services: No est v 53.8 prelim; PMI Composite: No est v 53.6 prelim
• 18:50 (JP) BOJ Sept Minutes (two meetings ago)
• 18:50 (JP) Japan End-Oct Monetary Base: No est v ¥606.0T prior
• 19:00 (NZ) New Zealand Oct Commodity Price: No est v -0.2% prior
• 19:30 (HK) Hong Kong Oct PMI Composite: No est v 47.7 prior
• 19:30 (SG) Singapore Oct PMI Composite: No est v 45.1 prior
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills; Avg Yield: % v 0.49% prior; bid-to-cover: x v 1.74x prior (Oct 26th 2020)
• 05:30 (DE) Germany to sell €500M in 0.5% Apr 2030 inflation-linked bunds (Bundei); Real Yield: % v -1.25% prior; Bid-to-cover: x v 1.51x prior (Oct 6th 2020)
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €1.04B with 12 bids recd)
• 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 6-month Bills
• Sells € in 3-month Bills; Avg Yield: % v -0.693% prior; Bid-to-cover: x v 3.60x prior (Oct 13th2020)
• Sells € in 6-month Bills; Avg Yield:% v -0.581% prior; Bid-to-cover: x v 1.69x prior (Sept 1st 2020)
• 05:30 (ZA) South Africa to sell combined ZAR6.6B in 2030, 2035 and 2040 bonds
• 06:00 (BR) Brazil Central Bank Oct Minutes
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey
• 06:30 (CL) Chile Central Bank Traders Survey
• 06:30(UK) DMO to sell £2.0B in 1.25% Oct 2041 Gilts; Avg Yield: % v 0.750% prior; bid-to-cover: x v 2.12x prior; Tail: bps v 0.3bps prior
• 06:30 (EU) ESM to sell €2.0B in 3-month Bills; Avg Yield: -0.6270% v -0.5700% prior; Bid-to-cover:x v 7.22x prior (Oct 6th 2020)
• 07:45 (US) Goldman Economist Chain Store Sales
• 08:00 (BR) Brazil Oct PMI Manufacturing: No est v 64.9 prior
• 08:00 (SG) Singapore Oct Purchasing Managers Index (PMI): 50.5e v 50.3 prior; Electronics Sector Index: No est v 50.9 prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:00 (EU) European Finance Ministers meeting (Eurogroup)
• 09:45 (US) Oct ISM New York: No est v 56.1 prior
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (over 20-years)
• 10:00 (CO) Colombia Oct PMI Manufacturing: No est v 50.4 prior
• 10:00 (US) Sept Factory Orders: 1.0%e v 0.7% prior; Factory Orders (ex-transportation): 0.6%e v 0.7% prior
• 10:00 (US) Sept Final Durable Goods Orders: 1.9%e v 1.9% prelim; Durables (ex-transportation): 0.8%e v 0.8% prelim; Capital Goods Orders (non-defense/ex-aircraft): 1.0%e v 1.0 prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.8 prelim
• 10:00 (MX) Mexico Sept Total Remittances: $3.5Be v $3.6B prior
• 10:00 (MX) Mexico Central Bank Economist Survey
• 10:00 (MX) Mexico Weekly International Reserve data
• 10:30 (MX) Mexico Oct PMI Manufacturing: No est v 42.1 prior
• 11:00 (DK) Denmark Oct Foreign Reserves (DKK): No est v 455.7B prior
• 11:30 (US) Treasury to sell 52-Week Bills
• 13:00 (BR) Brazil Oct Trade Balance: $6.1Be v $6.2B prior; Total Exports: $18.6Be v $18.5B prior; Total Imports: $12.4Be v $12.3B prior
• 14:00 (CO) Colombia Monetary Policy Minutes
• (AR) Argentina Oct Government Tax Revenue (ARS): No est v 606.5B prior
• 16:00 (KR) South Korea Oct Foreign Reserves: No est v $421B prior
• 16:30 (AU) Australia Oct Performance of Construction Index: No est v 45.2 prior
• 16:30 (US) Weekly API Oil Inventories
• 16:45 (NZ) New Zealand Q3 Unemployment Rate: 5.3%e v 4.0% prior
• 16:45 (NZ) New Zealand Q3 Employment Change Q/Q: -0.7%e v -0.4% prior; Y/Y: 0.2%e v 1.1% prior (revised from 1.2%)
• 17:00 (AU) Australia Oct Final PMI Services: No est v 53.8 prelim; PMI Composite: No est v 53.6 prelim
• 18:50 (JP) BOJ Sept Minutes (two meetings ago)
• 18:50 (JP) Japan End-Oct Monetary Base: No est v ¥606.0T prior
• 19:00 (NZ) New Zealand Oct Commodity Price: No est v -0.2% prior
• 19:30 (HK) Hong Kong Oct PMI Composite: No est v 47.7 prior
• 19:30 (SG) Singapore Oct PMI Composite: No est v 45.1 prior
• 19:30 (AU) Australia Q3 Retail Sales M/M: -1.5%e v -4.0% prior; Q/Q: +6.0%e v -3.4% prior
• 20:00 (PH) Philippines Sept Trade Balance: -$2.0Be v -$2.1B prior; Exports Y/Y: -9.1%e v -18.6% prior; Imports Y/Y: -20.7%e v -22.6% prior
• 20:01 (IE) Ireland Oct PMI Services: No est v 45.8 prior; PMI Composite: No est v 46.9 prior
• 20:45 (CN) China Oct Caixin PMI Services: 55.0e v 54.8 prior; PMI Composite: No est v 54.5 prior
• 22:00 (CN) China to sell 3-year and 7-year Upsized Government bond
• 22:30 (AU) Australia Sept Retail Sales M/M: No est v -4.0% prior
• 22:35 (JP) Japan to sell 10-Year JGB Bonds
• (US) Presidential Election
• 20:00 (PH) Philippines Sept Trade Balance: -$2.0Be v $B prior; Exports Y/Y: -9.15e v -18.6% prior; Imports Y/Y: -20.7%e v -22.6% prior
• 20:01 (IE) Ireland Oct PMI Services: No est v 45.8 prior; PMI Composite: No est v 46.9 prior
• 20:45 (CN) China Oct Caixin PMI Services: 55.0e v 54.8 prior; PMI Composite: No est v 54.5 prior
• 22:00 (CN) China to sell 3-year and 7-year Upsized Government bond
• 22:30 (AU) Australia Sept Retail Sales M/M: No est v -4.0% prior
• 22:35 (JP) Japan to sell 10-Year JGB Bonds
• (US) Presidential Election