ECB Members Comments On Options Ahead Of Key Dec Meeting Following A Plethora Of Growth And Inflation

Notes/Observations

• Various Final Oct CPI readings for EU countries at or below the 0.0% level (France, Spain in session)
• More EU members Q3 GDP data showed end to recession but recent lockdown measures cloud growth outlook down the road

Asia:

• China Premier Li conformed that China would be able to register growth in 2020
• RBNZ Gov Orr stated that was very comfortable with FLP and QE programs at present; Foreign asset purchases were not a preferred option

Coronaviurs:

• Total cases 52.7M (+1.2% d/d); total deaths: 1.29M (+0.7%)

Europe:

• ECB’s Muller (Estonia) stated that the Pandemic bond buying fund (PEPP) was not the best tool to provide more stimulus and favored tools that directly reached the economy. Believed 2nd wave of coronavirus was likely stronger than expected
• IMF chief Georgieva reiterated stance that countries should not withdraw stimulus too early. Governments and Central Bank actions put a floor under the economy
• PM Johnson Top Aide Cummings said to plan to leave his role by the end of 2020

Americas:

• Trump Administration said to have finalized Executive Order to ban US purchases or sales of securities in Chinese companies with links to the China military

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.20% at 385.94, FTSE -0.02% at 6,337.95, DAX +0.49% at 13,117.35, CAC-40 +0.58% at 5,393.71, IBEX-35 +0.98% at 7,802.00, FTSE MIB +0.46% at 20,913.50, SMI +0.01% at 10,497.00, S&P 500 Futures +0.89%]
• Market Focal Points/Key Themes: European indices open modestly lower across the board but later turned back into the green (the FTSE 100 being a notable exception); risk-off sentiment attributed to consideration of economic impact from anti-covid measures; utilities and technology sectors among the better performers; underperforming sectors include consumer discretionary and energy; German Health Minister said too early to determine if measures have been effective; reportedly Italy looking at extending lockdowns; Unibail Rodamco Westfield under analyst review for downgrade; earnings expected during the upcoming US session include Spectrum Brands, VIPShop and Meridian Bioscience

Equities

• Consumer discretionary: Galliford Try [GFRD.UK] +17% (trading update), Robit [ROBIT.FI] +11% (reinstates guidance)
• Energy: Engie [ENGI.FR] +3.5% (earnings), EDF [EDF.FR] +1% (earnings)
• Industrials: Vinci [DG.FR] +1.5% (COVID-19 update), Hapag-Lloyd [HLAG.DE] -8% (earnings)

Speakers

• ECB’s Schnabel (Germany): ECB would be there as long as necessary. ECB to discuss the intensity of asset purchases. Situation in Europe at this time was difference from the spring period
• ECB’s Rehn (Finland): Up to member States to decide if EU loans were appropriate for Recovery Fund
• ECB’s de Cos (Spain) reiterated Council stance that risks in the Euro area are to the downside and important to maintain flexibility in purchase programs. Inflation in coming quarters might be lower than forecast, upcoming macroeconomic projections in December likely be revised downwards
• Czech Central Bank (CNB) Nov Minutes noted that the 2nd wave of pandemic posed considerable risk to forecast. Autumn shutdown of economy to be small in scale compared to spring but effects to be longer-lasting. Consensus that FX rate was fostering a desirable easing of monetary conditions. Majority considered more likely that interest rates would be left at a low level for longer than assumed under baseline scenario. Rate hike likely to begin later than Q2 2021
• German Economy Ministry stated that the outlook for domestic exports remained cautiously optimistic. Recovery should continue when Covid-19 infections were contained again
• Italy Debt Agency (Tesoro) chief Iacovoni: Italian debt is sustainable
• German DIW Institute chief Fratzscher stated that German economy to take €20B hit from new restrictions measures to combat virus spread
• Ireland Debt Agency (NTMA) chief O’Kelly stated that debt to rise to €250B in coming and added that it could increase debt comfortably
• Italy Dep Health Min stated that the country did not need a national lockdown (**Note: reports circulated that Italy would look to extend the regional lockdown after Dec 3rd)
• Hong Kong Govt commented that the domestic economy to likely see further modest improvements in Q4 but the near-term outlook to hinge critically on local coronavirus situation. Amended its 2020 GDP forecast from -8.0 to -6.0% range to -6.1% and cut its 2020 CPI from 0.8% to 0.3%
• China Foreign Ministry spokesperson Wang Wenbin stated that China govt vowed to defend Chinese company rights; urge US to withdraw executive order. China congratulated Joe Biden on winning the US Presidential election

Currencies/Fixed Income

• FX market was dull despite the plethora CPI and GDP data released in the session.
• EUR/USD slightly higher by 0.2% and holding above the 1.18 level
• GBP/USD was higher by 0.3% at 1.3160 as Brexit talks missed another deadline but negotiations would continue into next week thus keeping the door open for potential deal. Dealers noted that over the past 4+ years various Brexit deadlines had been postponed thus the current situation appeared less sensitive to developments. There is only 6 weeks until the end of the transition period and such laxness could be quickly tossed back onto the backburner.

Economic Data

• (FI) Finland Sept GDP Indicator Y/Y: -3.2% v -3.2% prior
• (FI) Finland Oct CPI M/M: 0.1% v 0.0% prior; Y/Y: 0.2% v 0.2% prior
• (FI) Finland Sept Current Account Balance: No est v €0.3B prior
• (DE) Germany Oct Wholesale Price Index M/M: -0.2% v 0.0% prior; Y/Y: -1.9% v -1.8% prior
• (DK) Denmark Q3 GDP Indicator Q/Q: +4.9 v -7.4% prior
• (RO) Romania Q3 Advance GDP Q/Q: 5.6% v 7.2%e; Y/Y: -6.0% v -4.4%e
• (TR) Turkey Sept Industrial Production M/M: 1.7% v 0.2%e; Y/Y: 8.1% v 8.2%e
• (CH) Swiss Oct Producer & Import Prices M/M: 0.0% v 0.1% prior; Y/Y: -2.9% v -3.1% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 118.0K v 131.3K tons prior
• (FR) France Oct Final CPI M/M: 0.0% v -0.1%e; Y/Y: 0.0% v 0.0%e; CPI (Ex-Tobacco Index): 103.75 v 103.7e
• (FR) France Oct Final CPI EU Harmonized M/M: 0.0% v -0.1%e; Y/Y: 0.1% v 0.0%e
• (ES) Spain Oct Final CPI M/M: 0.5% v 0.5%e; Y/Y: -0.8% v -0.9%e
• (ES) Spain Oct Final CPI EU Harmonized M/M: 0.3% v 0.3%e; Y/Y: -0.9% v -1.0%e
• (ES) Spain Oct CPI Core M/M: 0.6% v 0.1% prior; Y/Y: 0.3% v 0.4% prior
• (RU) Russia Narrow Money Supply w/e Nov 6th (RUB):13.41 T v 13.33 T prior
• (HU) Hungary Q3 Preliminary GDP Q/Q: 11.3% v 10.2%e; Y/Y: -4.6% v -5.4%e
• (NL) Netherlands Q3 Preliminary GDP Q/Q: 7.7% v 6.8%e; Y/Y: -2.5% v -3.4%e
• (NL) Netherlands Sept Trade Balance: €5.8B v €3.8B prior
• (NL) Netherlands Sept Consumer Spending Y/Y: -3.5% v -2.4% prior
• (HK) Hong Kong Q3 Final GDP Q/Q: -2.8% v 3.0%e; Y/Y: -3.5% v -3.4%e
• (PL) Poland Q3 Preliminary GDP Q/Q: 7.7% v 8.0%e; Y/Y: -1.6% v -1.8%e
• (PL) Poland Oct Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 3.1% v 3.0% prelim
• (CZ) Czech Sept Current Account Balance (CZK): 32.8B v 15.2Be
• (PT) Portugal Q3 Preliminary GDP (2nd reading) Q/Q: 13.3% v 13.2% advance; Y/Y: -5.7% v -5.8% advance
• (EU) Euro Zone Q3 Preliminary GDP (2nd reading) Q/Q: 12.6% v 12.7%e; Y/Y: -4.4% v -4.3%e
• (EU) Euro Zone Q3 Preliminary Employment Q/Q: +0.9% v -2.9% prior; Y/Y: -2.0% v -3.1% prior
• (EU) Euro Zone Sept Trade Balance (Seasonally adj): €24.0B v €22.5Be; Trade Balance NSA (unadj): €24.8B v €14.7B prior
• (CY) Cyprus Q3 Preliminary GDP Q/Q: +9.4% v -13.1% prior; Y/Y: -4.1% v -12.2% prior

Fixed income Issuance

• (ZA) South Africa sold total ZAR1.875B vs. ZAR2.0B indicated in I/L 2025, 2038 and 2050 Bonds

Looking Ahead

• (BR) Brazil Nov CNI Industrial Confidence: No est v 61.8 prio
• 06:00 (PT) Portugal Q3 labour Costs Y/Y: No est v 13.5% prior
• 06:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)
• 06:30 (TR) Turkey Central Bank Nov Expectations Survey: Expected Inflation Next 12 Months: No est v 10.5% prior
• 06:30 (IN) India Oct Trade Balance: -$8.8Be v -$2.7B prior
• 06:45 (US) Daily Libor Fixing
• 06:30 (IN) India Weekly Forex Reserve w/e Nov 6th: No est v $560.7B prior
• 07:00 (IS) Iceland Oct Unemployment Rate: No est v 9.0% prior (revised from 9.8%)
• 07:00 (BR) Brazil Sept Economic Activity Index (Monthly GDP) M/M: 1.0%e v 1.1% prior; Y/Y: -1.5%e v -3.9% prior
  – 07:00 (FI) ECB’s Rehn (Finland) on Strategy Review
• 07:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:00 (PL) Poland Sept Current Account Balance: €1.6Be v €1.0B prior; Trade Balance: €1.4Be v €0.7B prior; Exports: €20.9Be v €17.7B prior; Imports: €19.6Be v €17.0B prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance
• 08:30 (US) Oct PPI Final Demand M/M: 0.2%e v 0.4% prior; Y/Y: 0.4%e v 0.4% prior
• 08:30 (US) Oct PPI (ex-food/energy) M/M: 0.3%e v 0.4% prior; Y/Y: 1.2%e v 1.2% prior
• 08:30 (US) Oct PPI (ex-food/energy/trade) M/M: 0.2%e v 0.4% prior; Y/Y: 0.9%e v 0.7% prior
• 08:30 (US) Fed’s Bullard on US Economy and Monetary Policy
• 10:00 (US) Nov Preliminary University of Michigan Confidence: 82.0e v 81.8 prior
• 10:00 (CO) Colombia Sept Manufacturing Production Y/Y: -3.8%e v -10.3% prior
• 10:00 (CO) Colombia Sept Retail Sales Y/Y: -9.2%e v -17.1% prior
• 11:00 (EU) Potential sovereign ratings after European close
• 13:00 (US) Weekly Baker Hughes Rig Count
• 14:00 (CO) Colombia Sept Industrial Production Y/Y: No est v -12.2% prior