Notes/Observations
- Brexit Trade agreement optimism continues to percolate
- UK CPI slightly higher than expected but well below target level which give BOE room to act more should it need to
- Euro Zone Oct Final CPI reading underscored the ultra-low trend as headline inflation remained negative with core at record low
- Japan’s Oct export level almost back at pre-pandemic levels but pick-up in virus infections likely to slow data for the rest of the year
Asia
- Japan Oct Trade Balance: ¥872.9B v ¥300.0Be with exports almost recovering to pre-pandemic levels
- BoJ) Gov Kuroda reiterated stance that was too early to debate exit from current Monetary policy. Needed to continue with current easing for ‘a while’
Europe
- Ireland PM Martin: EU and UK can see “the landing zones” on a trade deal, but UK will have to compromise. France understood to had accepted that its fishing rights in UK waters would be reduced after transition period ended on December 31st (**Insight: EU had previously noted that fisheries was one of the key issues for any agreement. The stance by France would lower one of the biggest hurdles to a deal)
- BOE’s Ramsden stated that was ready to take additional action if necessary to achieve our remit of meeting 2% inflation target; Forward guidance was more important in a recovery. Vaccine news could bolster resilience and mitigate some of the risks of long-term scarring
- France Fin Min Le Maire cut its 2021 GDP growth forecast from 8.0% to 6.0%
Americas
- Fed Chair Powell: next few months may be very challenging; economy is slowing and it remains uneven
- Senate blocked Judy Shelton nomination to Fed, but Republicans reserved ability to put nominee up for another vote in the near future. Vote was 47-50
Energy
- Weekly API Crude Oil Inventories: +4.2M v -5.1M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.23% at 389.72, FTSE -0.09% at 6,359.29, DAX +0.30% at 13,173.30, CAC-40 +0.23% at 5,495.40, IBEX-35 +0.31% at 7,959.00, FTSE MIB +0.93% at 21,633.50, SMI +0.12% at 10,577.50, S&P 500 Futures +0.21%]
- Market Focal Points/Key Themes: European indices open lower across the board but later turned to trade mixed; risk-off sentiment attributed to covid case reports combined with a profit taking after market moved higher earlier in the week; better performing sectors include technology and health care; reportedly Air France-KLM reportedly looking at capital raise; Intact Financial, Tryg reach agreement to acquire RSA; Eurazeo sells stake in Iberchem to Croda; earnings expected in upcoming US session include Sonos, Target and Nvidia
Equities
- Consumer discretionary: Ubisoft [UBI.FR] +5% (game sales)
- Financials: RSA Insurance [RSA.UK] +4% (to be acquired)
- Industrials: SAF-Holland [SFQ.DE] +13% (earnings), Spirax-Sarco [SPX.UK] -4% (trading update), Maersk [MAERSKB.DK] -2% (earnings; buyback)
- Technology: Micro Focus [MCRO.UK] +22% (trading update), Software AG [SOW.DE] +6% (earnings)
Speakers
- Bank of Spain (BOS) Dep Gov Delgado stated that the ECB to take into account the Dec Staff Forecasts on its decision regarding banking sector dividends
- Romania Fin Min Citu stated that he saw 2021 budget deficit to GDP around 7.0%
- Iceland Central Bank (Sedibanki) Policy Statement noted that qutumn surge in coronavirus infections and tightening of measures had weakened the economic rebound that began in Q3 . It forecasted 2020 GDP at -8.5% and saw 2021 GDP growth being weaker
- Thailand Central Bank Policy Statement noted that the vote was unanimous to keep policy steady and would focus on supporting economic recovery. Stressed that low rates were need to support economy. Inflation should return to target in 2021. BOT was prepared to use more appropriate tools if necessary but believed that fiscal policy should play a major role to support economy. BOT to assess the need for fresh steps in FX market
Currencies/ Fixed Income
- Continues hopes on various coronavirus vaccines weighed upon the USD as safe-haven flows unwound.
- EUR/USD edging back towards the 1.19 level in the session. Recall the 1.20 area saw a plethora of ECB speak on the potential impact FX had on inflation
- GBP/USD approaching the 1.33 level as Brexit optimism continued to percolate. Reports circulated that France understood to have accepted that its fishing rights in UK waters would be reduced after transition period ends on December 31st. Dealers also noted that low Inflation in the UK would give the BOE room to act if it needed to support the economy. Dealers noted that the 1.36 level is pivotal for the medium-term trend in the pair.
Economic Data
- (UK) Oct CPI M/M: 0.0% v -0.1%e; Y/Y: 0.7% v 0.5%e; CPI Core Y/Y: 1.5% v 1.3%e; CPIH Y/Y: 0.9% v 0.7%e
- (US) Oct RPI M/M: 0.0% v -0.1%e; Y/Y: 1.3% v 1.2%e; RPI-X (ex-mortgage interest payments) Y/Y: 1.5% v 1.4%e; Retail Price Index: 294.3 v 293.9e
- (US) Oct PPI Input M/M: 0.2% v 0.0%e; Y/Y: -1.4% v -2.6%e
- (US) Oct PPI Output M/M: 0.0% v 0.1%e; Y/Y: -1.3% v -0.7%e
- (US) Oct PPI Output Core M/M: 0.2% v 0.1%e; Y/Y: 0.5% v 0.4%e
- (EU) EU27 Oct New Car Registrations: -7.8% v +3.1% prior
- (TH) Thailand Central Bank (BoT) left Benchmark Interest Rate unchanged at 0.50% (as expected)
- (AT) Austria Oct CPI M/M: 0.1% v 0.6% prior; Y/Y: 1.3% v 1.4% prior
- (IS) Iceland Central Bank (Sedibanki) cut the 7-Day Term Deposit Rate by 25bps to 0.75% (5th rate cut in 2020)
- (UK) Sept ONS House Price Index Y/Y: 4.7% v 2.9%e
- (EU) Euro Zone Oct Final CPI Y/Y: -0.3% v -0.3%e; CPI Core Y/Y: 0.2% v 0.2%e; CPI M/M: 0.2% v 0.2%e
Fixed income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (SE) Sweden opened book to sell Nov 2045 bond via syndicate; guidance seen -12bps to mid-swaps
- (DK) Denmark sold total DKK5.035B in 2022 and 2029 DGB bonds
- (UK) DMO sold £2.5B in 0.625% July 2035 Gilts; Avg Yield: 0.676% v 0.618% prior; bid-to-cover: 2.44x v 2.41x prior; Tail: 0.1bps v bps 0.2 prior
Looking Ahead
- (IL) Israel Nov 12-month CPI Forecast: No est v 0.3% prior
- 05:30 (UK) BOE’s Haldane (chief economist)
- 05:30 (DE) Germany to sell €3.0B in 0% Apr 2030 Bunds
- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 6-month and 12-month bills
- 06:00 (IE) Ireland Sept Property Prices M/M: No est v 0.3% prior; Y/Y: No est v -0.6% prior
- 06:00 (ZA) South Africa Sept Retail Sales M/M: 1.5%e v 4.0% prior; Y/Y: -2.3%e v -4.2% prior
- 06:00 (BR) Brazil Nov IGP-M Inflation (2nd Preview): 2.9%e v 2.9% prior
- 06:00 (RU) Russia to sell 2025, 2030 and 2031 OFZ bonds
- 06:30 (CL) Chile Q3 GDP Q/Q: +4.9%e v -13.2% prior; Y/Y: -9.2%e v -14.1% prior
- 06:30 (CL) Chile Q3 Current Account Balance: No est v $1.2B prior
- 07:00 (US) MBA Mortgage Applications w/e Nov 13th: No est v -0.5% prior
- 07:00 (UK) Weekly PM Question time in House
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Oct Housing Starts: 1.460Me v 1.415M prior; Building Permits: 1.568Me v 1.545M prior (revised from 1.553M)
- 08:30 (CA) Canada Oct CPI M/M: +0.2%e v -0.1% prior; Y/Y: 0.4%e v 0.5% prior; Consumer Price Index: 137.2e v 136.9 prior; CPI Core- Median Y/Y: 1.9%e v 1.9% prior; CPI Core- Common Y/Y: 1.5%e v 1.5% prior; CPI Core- Trim Y/Y: 1.8%e v 1.8% prior
- 08:30 (CA) Canada Oct Teranet House Price Index M/M: No est v 1.1% prior; Y/Y: No est v 6.7% prior; House Price Index (HPI): No est v 243.01 prior
10:30 (US) Weekly DOE Oil Inventories - 11:00 (RU) Russia Oct PPI M/M: 0.1%e v -0.6% prior; Y/Y: -0.2%e v 0.0% prior
- 12:15 (US) Fed’s Williams
- 13:00 (US) Treasury to sell 20-Year Bonds
- 13:20 (US) Fed’s Bullard
- 18:00 (US) Fed’s Kaplan moderates panel discussion
- 19:30 (AU) Australia Oct Employment Change: -27.5Ke v -29.5K prior; Unemployment Rate: 7.1%e v 6.9% prior; Full Time Employment Change: No est v -20.1K prior; Part Time Employment Change: No est v -9.4K prior; Participation Rate: 64.8%e v 64.8% prior
- 22:00 (KR) South Korea Q3 Short-Term External Debt: No est v $154.3B prior
- 22:00 (TH) Thailand Central Bank to sell THB20B in 2022 Bonds
- 22:30 (JP) Japan to sell 12-Month Bills
- 23:30 (JP) Japan Oct Tokyo Condominiums for Sale Y/Y: No est v 5.0% prior
