BOE Acts To Add More QE Ahead Of UK 2nd National Lockdown

Notes/Observations

• BOE delivered more QE as UK prepares to enter its 2nd national lockdown; stood ready to take additional action if necessary
• Germany Sept Factory orders slowed sharply and missed expectations
• EU Commission cuts its 2021 GDP growth outlook for region; facing a sluggish recovery next year
• US companies expected to report earnings during the NY morning include AmerisourceBergen, Becton Dickinson, Bristol-Myers, Cardinal Health, CIGNA, GM, Canada Goose, New York Times, Papa John’s, Regeneron, Teva, Triumph Group,

Coronaviurs:

• Total global cases 48.0M (+1.3% d/d); total deaths: 1.22M (+1.5% d/d)
• Italy PM Conte: to impose intermediate new COVID restrictions in Puglia and Sicily regions

Europe:

• Chancellor of the Exchequer Sunak (Fin Min) expected to announce a new economic package of measures as Britain goes into a 2nd national lockdown
• EU chief Brexit Negotiator Barnier: Differences remain in Brexit talks and reiterated stance that level playing field, governance and fisheries are main areas of differences
• UK Negotiator Frost noted that progress had been made on the Brexit front but wide divergences remain on core issues

Americas:

• Presidential challenger Joe Biden (Democrat) projected to win Michigan/Wisconsin; outright victory in terms of electoral vote is one State away; Focus on results from Nevada and Georgia on Thursday
• Trump campaign to challenge votes in Wisconsin, Georgia, Pennsylvania and Michigan

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.81% at 366.26, FTSE +0.41% at 5,907.50, DAX +1.17% at 12,468.10, CAC-40 +0.96% at 4,969.97, IBEX-35 +1.11% at 6,857.00, FTSE MIB +1.79% at 19,705.50, SMI +0.49% at 10,336.74, S&P 500 Futures +1.78%]
• Market Focal Points/Key Themes: European indices open higher across the board and advanced further in the red as the session progressed; better performing sectors include technology and consumer discretionary; sectors underperforming include financials and materials; focus still on pending electoral results in the US as well as conclusion of FOMC meeting; earnings expected during upcoming US session include Becton Dickinson, Ball Corp, Cigna and Linde

Equities

• Consumer discretionary: Sainsbury [SBRY.UK] -3% (strategy update; earnings), Lufthansa [LHA.DE] -3% (earnings)
• Financials: Societe Generale [GLE.FR] +4% (earnings), UniCredit [UCG.IT] +1% (earnings), Commerzbank [CBK.DE] -5% (earnings), ING [INGA.NL] -7% (earnings)
• Healthcare: Astrazeneca [AZN.UK] +1% (earnings)
• Technology: Dialog Semi [DLG.DE] +6% (earnings), Infineon [IFX.DE] +3% (Qualcomm earnings)
• Materials: ArcelorMittal [MT.NL] +1% (earnings)

Speakers

• BOE Nov Minutes noted that the vote was unanimous (9-0) to keep interest Rates unchanged at 0.10% while raising Asset Purchase target (APT) by £150B to £895B. Policy Statement noted that the outlook for economy remained unusually uncertain. It now saw Q4 GDP contracting as pandemic impact on growth was higher compared to August forecast. Saw signs that consumer spending had softened across a range of indicators and stress it would do what was necessary if outlook weakened and to keep asset purchases program under review. Outlook depended on pandemic and Brexit transition. Would not tighten policy until a clear sign spare capacity was being eliminated
• BOE Gov Bailey post rate decision press conference believed there was value in acting quickly and strongly to support the economy with asset purchases. ork on negative rates is ongoing. The £150B of QE to bring inflation back to target in two years. If outlook to inflation weakened then MPC stood ready to take whatever action was necessary
• BOE MPC member Broadbent: noted that MPC was conscience that monetary policy condition might tighten without action. Believed that inflation risks are broadly balance
• BOE MPC member Ramsden stated that would set out details of 2021 asset purchases in Dec
• Spain Econ Min Calvino noted that the domestic economic recovery to continue so long as virus was contained
• Greece PM Mitsotakis: To begin a 3-week national lockdown from Sat, Nov 7th
• Norway Central Bank (Norges) Policy Statement noted that it would hold interest rates at current level until it saw clear signs that economic conditions had normalize. Activity had picked up but remained below pre-pandemic level. Saw risk that inflation could be a bit lower than projected and possible imbalances due to period of low rates
• EU negotiators said to have cleared a key Recovery Fund hurdle
• Philippines Central Bank (BSP) Gov Diokno: To keep easing measures intact as long as growth remained below target. Full economic recovery was likely in 2022 and saw the PHP currency (Peso) remaining stable for a long time

Currencies/Fixed Income

• USD was softer as markets awaited the official US Presidential election outcome but key drivers for risk assets remained in place. Although the chances of a Biden victory looks increasing likely analysts noted that downside risks remain from a contested election outcome.
• GBP reversed its initial losses after BOE delivered more QE as UK prepared to enter its 2nd national lockdown. BOE noted that it stood ready to take additional action if necessary. BOE was aggressive in its stance as it noted lockdown measures would mean Covid-19 developments would weigh on activity more than it projected in August and that the economic outlook was unusually uncertain. Gov Bailey stressed the urgency to act at this time
• EUR/USD was higher by 0.5% to approach the 1.18 neighborhood aided by the unwinding of risk assets.

Economic Data

• (NL) Netherlands Oct CPI M/M: +0.5 v -0.2% prior; Y/Y: 1.2% v 0.8%e
• (NL) Netherlands Oct CPI EU Harmonized M/M: +0.8% v -0.4% prior; Y/Y: 1.2% v 0.8%e
• (RU) Russia Oct PMI Services: 46.9 v 47.6e (1st contraction in 4 months); PMI Composite: 47.1 v 53.7 prior
• (CH) Swiss Q4 SECO Consumer Confidence: -12.8 v -14.5e
• (UK) Bank of England (BOE) left Interest Rates unchanged at 0.10% (as expected) while raising its Total Asset Purchase Program (APT) by £150B to £895B (more-than-expected)
• (DE) Germany Sept Factory Orders M/M: 0.5% v 2.0%e; Y/Y: -1.9% v -1.2%e
• (CH) Swiss Q3 Real Estate Bubble Index: 2.05 v 1.48 prior
• (CZ) Czech Sept Retail Sales Y/Y: -2.8% v -0.6%e; Retail Sales (ex-auto) Y/Y: 0.4% v 0.5%e
• (HU) Hungary Sept Retail Sales Y/Y: -2.0% v +1.1%e
• (TW) Taiwan Oct CPI Y/Y: -0.2% v -0.2%e; CPI Core Y/Y: 0.5% v 0.3%e; WPI Y/Y: -7.4% v -8.1% prior
• (TW) Taiwan Oct Foreign Reserves: $501.2B v $499.6B prior
• (DE) Germany Oct Construction PMI: 45.2 v 45.5 prior
• (SE) Sweden Q3 GDP Indicator Q/Q: 4.3% v 5.0%e; Y/Y: -3.5% v -3.7%e
• (SE) Sweden Sept Private Sector Production M/M: 0.4% v 1.0% prior; Y/Y: -3.7% v -4.1% prior
• (SE) Sweden Industrial Orders M/M: 0.3% v 5.6% prior; Y/Y: -0.3% v +0.2% prior
• (SE) Sweden Sept Industry Production Value Y/Y: -2.6% v -0.4% prior; Service Production Value Y/Y: -4.3% v -5.5% prior
• (NO) Norway Central Bank (Norges) left the Deposit Rate unchanged at 0.00% (as expected)
• (UK) Oct New Car Registrations Y/Y: -1.6% v -4.4% prior
• (IS) Iceland Oct Preliminary Trade Balance (ISK): -0.4B v -6.5B prior
• (IS) Iceland Q3 Unemployment Rate: 5.1% v 6.9% prior
• UN Oct FAO World Food Price Index: 100.9 v 97.8 prior
• (UK) Oct Construction PMI: 53.1 v 55.0e (5th month of expansion)
• (EU) Euro Zone Sept Retail Sales MM: -2.0% v -1.5%e; Y/Y: 2.2% v 2.8%e
• (GR) Greece Aug Unemployment Rate: 16.8% v 17.0% prior
• (CY) Cyprus Oct CPI M/M: % v 0.9% prior; Y/Y: % v -0.9% prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold €1.356B vs. €1.0-2.0B indicated range in 1.20% Oct 2040 Bonds; Avg Yield: 0.602%; Bid-to-cover: 2.01x
• (ES) Spain Debt Agency (Tesoro) sold €470M vs €250-750M indicated range in 0.15% Nov 2023 inflation-linked bond; Real Yield: -0.995% v -0.572% prior; Bid-to-cover: 2.37x v 1.57x prior
• (FR) France Debt Agency (AFT) sold total €10.994B vs. €9.5-11.0B indicated range in 2029, 2030, 2050 and 2055 Bonds
• Sold €3.497B in 0.50% May 2029 Oat; Avg Yield: -0.50% (record low) v -0.36% prior; Bid-to-cover: 1.82x v 1.63x prior
• Sold €3.498B in 0.00% Nov 2030 Oat; Avg Yield: -0.38% v -0.25% prior; Bid-to-cover: 2.36x v 1.82x prior
• Sold €2.521B in 1.50% May 2050 Oat; Avg Yield: 0.27% v 0.41% prior; Bid-to-cover: 1.61x v 2.54x prior
• Sold €1.478B in 4.00% Apr 2055 Oat; Avg Yield: 0.32% v 0.60% prior; Bid-to-cover: 1.77x v 1.64x prior

Looking Ahead

• (IL) Israel Oct Foreign Currency Balance: No est v $160.6B prior
• (IL) Israel Central bank (BOI) Oct Minutes
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year Bonds
• 06:00 (IE) Ireland Sept Industrial Production M/M: No est v -13.4% prior; Y/Y: No est v -4.6% prior
• 06:00 (ZA) South Africa Sept Electricity Production Y/Y: No est v -2.4% prior; Electricity Consumption Y/Y: No est v -0.4% prior
• 06:40 (ES) ECB’s de Guindos (Spain)
• 07:00 (CL) Chile Sept Nominal Wage M/M: No est v 0.2% prior; Y/Y: No est v 2.9% prior
• 07:00 (MX) Mexico Oct Vehicle Domestic Sales: No est v 77.8K prior
• 07:00 (MX) Mexico Oct Consumer Confidence: No est v 35.9 prior
• 07:00 (AT) ECB’s Holzmann (Austria)
• 07:30 (US) Oct Challenger Job Cuts: No est v +118.8K prior, Y/Y: No est v 185.9% prior
• 08:00 (RU) Russia Gold and Forex Reserve w/e Oct 30th: No est v $589.8B prior
• 08:00 (BR) Brazil Oct PMI Services: No est v 50.4 prior; PMI Composite: No est v 53.6 prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Q3 Preliminary Nonfarm Productivity: 5.6%e v 10.1% prior; Unit Labor Costs: -11.0%e v +9.0% prior
• 08:30 (US) Initial Jobless Claims: 735Ke v 751K prior; Continuing Claims: 7.20Me v 7.756M prior
• 08:30 (US) Weekly USDA Net Export Sales
• 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to leave 2-Week Repurchase Rate unchanged at 0.25%
• 09:15 (EE) ECB’s Muller
• 09:45 (CZ) Czech Central Bank (CNB) Gov Rusuk post rate decision press conference
• 10:00 (DE) ECB’s Weidmann (Germany)
• 10:00 (DE) ECB’s Schnabel (Germany)
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 14:00 (US) FOMC Interest Rate Decision: Expected to leave Target range unchanged between 0.00-0.25%; Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at 0.10%
• 14:00 (AR) Argentina Sept Industrial Production Y/Y: No est v -7.1% prior; Construction Activity Y/Y: No est v -17.7% prior
• 14:30 (US) Fed Chair Powell post rate decision press conference
• (MX) Citibanamex Survey of Economists
• 16:30 (AU) Australia Oct Performance of Services Index: No est v 36.2prior
• 18:30 (JP) Japan Sept Household Spending Y/Y: -10.5%e v -6.9% prior
• 18:30 (JP) Japan Sept Labor Cash Earnings Y/Y: -1.1%e v -1.3% prior; Real Cash Earnings Y/Y: -1.2%e v -1.4% prior
• 19:00 (CO) Colombia Oct CPI M/M: 0.2%e v 0.3% prior; Y/Y: 2.0%e v 2.0% prior
• 19:00 (CO) Colombia Oct CPI Core M/M: No est v 0.4% prior; Y/Y: No est v 1.6% prior
• 19:30 (AU) RBA Statement on Monetary Policy (SOMP)
• 21:00 (NZ) New Zealand Q4 Inflation Expectation Survey: 2-year outlook: No est v 1.43%
• 22:00 (ID) Indonesia Oct Foreign Reserves: No est v $135.2B prior
• 23:30 (JP) Japan to sell 3-Month Bills
• 23:35 (JP) Japan to sell Inflation-linked 10-year JGB bonds