Notes/Observations
- Optimism perking up of a potential Brexit agreement between UK-EU
- Risk appetite trying to continue to build upon recent vaccine trial success
Asia:
- China Think Tank CASS economist Li stated that China should set an avg annual GDP target of ~5% for 2021-2025 period. Saw 2020 GDP growth between 2-3% with a rebound in 2021 to a “relatively high level”
- RBA Minutes stated that monetary and fiscal support would be needed for some time. Reiterates stance that saw no hike until actual inflation was sustainably within 2-3% target band. Reiterated view that was not expecting to raise rates for at least 3 years. Board was prepared to do more if necessary/ Did discuss targeting a longer-dated yield
Coronaviurs:
- Total global cases over 55M; total deaths 1.33M
- UK lockdown conditions could continue beyond the Dec 2nd end-date as it’s too early to know the effect of current restrictions
Europe:
- UK Chief Negotiator Frost told PM Johnson to expect a trade deal early part of the week of Nov 23rd as he said to pinpoint “a possible landing zone”
- EU said to be considering ways to fast track any Brexit deal. A deal would be given a new ‘classification’ that, would remove the need to have it ratified by every European parliament. Would only require the approval of EU leaders and the European Parliament.
- ECB’s Lane (Ireland, chief economist): ECB to provide enough monetary stimulus at its next meeting to make sure governments, companies and households have access to cheap credit throughout the coronavirus crisis. There would be cheap credit as long as pandemic crisis lasted. Europe’s spending surge would not make debt unsustainable
Americas:
- Senate to hold procedural vote on Shelton for Fed position on Tuesday, Nov 17th
- President Trump said to have asked for options on attacking Iran’s main nuclear site, but ultimately decided against taking the dramatic step
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.17% at 389.06, FTSE -0.50% at 6,389.49, DAX -0.08% at 13,128.45, CAC-40 -0.08% at 5,467.14, IBEX-35 -0.70% at 7,930.00, FTSE MIB +0.23% at 21,366.50, SMI +0.04% at 10,591.36, S&P 500 Futures -0.33%]
- Market Focal Points/Key Themes: European indices open mixed and traded largely sideways; better performing sectors include telecom and materials; energy and financials sectors among underperformers; BBVA and Sabadell confirmed in merger talks; Bouygues sells Alstom shares; Dassault Systems gives long term outlook at CMD; Santander buys core assets of Wirecard; earnings expected during the upcoming US session include Home Depot, Walmart and Kohl’s
Equities
- Consumer discretionary: Experian [EXPN.UK] +1.5% (earnings), EasyJet [EZJ.UK] -3% (earnings)
- Consumer staples: Imperial Brands [IMB.UK] +2.5% (earnings)
- Financials: Craneware [CRW.UK] +9% (AGM)
- Industrials: Scapa Group [SCPA.UK] +6% (earnings), Alstom [ALO.FR] -8% (placement)
Speakers
- German Chancellor Merkel stated that the domestic economy to recovery if we are able to keep the virus numbers low
- Germany Foreign Min Maas stated that would continue to look for solution to unblock EU funds
- Poland Central Bank Gatnar stated that there was no room to cut interest rates but saw QE as effective and should be continued. Believed the current Base Rate of 0.10%wais too low and should more like 0.50%. A rate hike was possible if growth returned
- Poland MPC Member Ancyparowicz stated that saw a risk that the recession could last longer should expand QE to fight COVID fallout
- Sweden NIER Think Tank Extra Business Survey: Manufacturing sector continues to recover
- Japan PM Suga stated after meeting with Australia’s PM that they reached a broad agreement with on reciprocal access agreement
- China Foreign Ministry spokesperson Zhao Lijoan: Maintaining sound bilateral ties with the UK, No impact on relationship whether there is Brexit or not
Currencies/Fixed Income
- Recent success of various coronavirus vaccine trials has put the USD on softer footing. Dealers noted that the unwinding of safe-haven flows putting mild pressure on the greenback as risk appetite was trying to make a strong comeback
- EUR/USD higher by 0.2% to test 1.1875 area. Market ignoring yesterday’s veto by Hungary and Poland which blocked the adoption of the EU’s 2021-2027 budget and recovery fund
Economic Data
- (NO) Norway Q4 Consumer Confidence: -11.5 v -10.0 prior
- (NO) Norway Q3 Overall GDP Q/Q: +4.6% v-4.7% prior; GDP Mainland Q/Q: 5.2% v 5.2%e
- (NO) Norway Sept Overall GDP M/M: 0.6% v 1.1%prior; Mainland GDP M/M: 0.6% v 0.6%e
- (HK) Hong Kong Oct Unemployment Rate: 6.4% v 6.6%e (matches highest level since 2005)
- (IT) Italy Sept Total Trade Balance: €5.9B v €3.9B prior; Trade Balance EU: €0.6B v €0.4B prior
Fixed income Issuance
- (ID) Indonesia sold total IDR24.6T vs. IDR20.0T target in bills and bonds
- (IT) Italy Debt Agency (Tesoro) opened book to sell USD-denominated 5-year bonds via syndicate; guidance seen +95bps to mid-swaps
- (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2030, 2032 and 2044 bonds
- (UK) DMO sold £3.25B in 0.125% Jan 2024 Gilts; Avg Yield: +0.025% v -0.017% prior; bid-to-cover: 2.41x v 2.34x prior; Tail: 0.2bps v 0.2bps prior
Looking Ahead
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 05:30 (DE) Germany to sell €5.0B in new 0.00% Dec 2022 Schatz
- 06:30(UK) DMO to sell £2.0B in 0.625% Oct 2050 Gilts
- 06:30 ESM to sell €2.0B in 6-month Bills
- 07:00 (MX) Mexico Oct Unemployment Rate (unadj): No est v 5.1% prior
- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.60%; Expected to leave Overnight Deposit Rate unchanged at -0.05%
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (ES) ECB’s De Guindos (Spain)
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 08:15 (CA) Canada Oct Annualized Housing Starts: 221.0Ke v 209.0K prior
- 08:30 (US) Oct Advance Retail Sales M/M: 0.5%e v 1.9% prior; Retail Sales (ex-auto) M/M: 0.6%e v 1.5% prior; Retail Sales (ex-auto/gas): 0.7%e v 1.5% prior; Retail Sales (Control Group): 0.5%e v 1.4% prior
- 08:30 (US) Oct Import Price Index M/M: 0.0%e v 0.3% prior; Y/Y: -0.7%e v -1.1% prior; Import Price Index (ex-petroleum) M/M: 0.4%e v 0.7% prior
- 08:30 (US) Oct Export Price Index M/M: 0.2%e v 0.6% prior; Y/Y: No est v -1.8% prior
- 08:30 (CA) Canada Sept Wholesale Trade Sales M/M: 0.4%e v 0.3% prior
- 08:30 (CA) Canada Sept Int’l Securities Transactions (CAD): No est v 15.5B prior
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate statement
- 09:00 (UK) BOE Gov Bailey at conference
- 09:15 (US) Oct Industrial Production M/M: +1.0%e v -0.6% prior; Capacity Utilization: 72.3%e v 71.5% prior; Manufacturing Production: +1.0%e v -0.3% prior
- 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (over 20-years
- 10:00 (US) Sept Business Inventories: 0.5%e v 0.3% prior
- 10:00 (US) Nov NAHB Housing Market Index: 85e v 85 prior
- 10:00 (MX) Mexico Weekly International Reserve data
- 11:00 (CO) Colombia Q3 GDP Q/Q: +8.6%e v -14.9% prior; Y/Y: -9.0%e v -15.7% prior
- 11:00 (RU) Russia Oct Industrial Production Y/Y: -5.5%e v -5.0% prior
- 11:00 (EU) ECB chief Lagarde
- 12:00 (UK) BOE’s Ramsden
- 14:00 (CO) Colombia Sept Economic Activity Index (Monthly GDP) Y/Y: -6.6%e v -10.6% prior
- 15:00 (US) Four Fed Presidents (Bostic, Daly, Kashkari, Rosengren) participate in discussion on racism and the economy
- 16:00 (US) Sept Net Long-term TIC Flows: No est v $27.8B prior; Total Net TIC Flows: No est v $86.3B prior
- 16:30 (US) Weekly API Oil Inventories
- 16:45 (NZ) New Zealand Q3 PPI Input Q/Q: No est v -1.0% prior; PPI Output Q/Q: No est v -0.3% prior
- 17:00 (AU) RBA Gov Lowe participates in Panel
- 18:30 (AU) Australia Oct Leading Index M/M: No est v 0.2% prior
- 18:50 (JP) Japan Oct Trade Balance: ¥300.0Be v ¥687.8B prior (revised from ¥675.0B); Adjusted Trade Balance: ¥117.4Be v ¥475.8B prior; Exports Y/Y: -4.5%e v -4.9% prior; Imports Y/Y: -8.8%e v -17.4% prior (revised from -17.2%)
- 19:30 (AU) Australia Q3 Wage Price Index Q/Q: 0.2%e v 0.2% prior; Y/Y: 1.5%e v 1.8% prior
- 20:30 (KR) Bank of Korea to sell 1.9 T in 2-Year Bonds
- 22:00 (TH) Thailand to sell THB25B in 2025 Bonds
- 22:35 (JP) Japan to sell 20-Year JGB Bonds
