Notes/Observations
- Covid-19 vaccine news aiding some risk appetite
- Continues optimism on Brexit talks
- Major European PMI data mixed in session despite renewed lockdowns in many countries being implements in Nov (PMI Manufacturing: Beats: Germany, Euro Zone; UK (all in expansion); Misses: France (in contraction)); lockdown impact as severe compared to the spring
Asia:
- Australia Nov Preliminary PMI Manufacturing registered its 6th month of expansion and highest level since Dec 2017 (56.1 v 54.2 prior)
- New Zealand Q3 Retail Sales registered its largest increase on record (Q/Q: 28.0% v 19.0%e)
Coronaviurs:
- Total global cases 58.6M; total deaths: 1.39M
Europe:
- ECB’s Lane (Ireland, chief economist) stated that current lockdown measures would lead to drop in activity but impact would be less severe than in spring. Reiterated Council stance that did not believe interest rates are at the lower bound and saw room for further rate cuts in the future. Had to decide which instruments were currently the most effective, so far we’re indicating PEPP/TLTRO have been very effective. Reiterates Council stance that exchange rate matters for future of GDP and inflation dynamics but ECB does not target FX
- Brexit deal said to be 95% agreed; Legal text of agreement to be finalized in ‘almost all areas, covering almost all subjects’. Negotiators close to a deal but anxiety remains with state aid in particular remaining a sticking point
- UK PM Johnson said to prepared to make an intervention in deal talks with time running out and to speak to EU Commission President von der Leyen this week in a bid to get deal finalized
- France President Macron said to announce 3-steps plan to ease lockdown measures in his address to nation on Tue, Nov 24th
- Germany govt said to consider an extension of partial lockdown by three weeks until Dec 20th
- Chancellor of the Exchequer Sunak (Fin Min) stated that spending review would not result in austerity and would see more money for public services. Govt to focus on pandemic first than review borrowing later. Could not comment on future fiscal policy in regards to taxes and saw no need to decide now on extension of welfare credit benefits
- Germany reportedly to borrow up to €125B in debt in 2021 (more than previously planned)-
- Moody’s cut South Africa sovereign rating one notch to BB-; outlook Stable
- Fitch cuts South Africa sovereign rating from BB to BB- (one notch); Outlook negative
- Fitch affirmed Portugal sovereign rating at BBB; outlook Stable
Americas:
- President-elect Biden spokesperson noted that in meeting with Democratic Congressional leaders, Biden agreed with Pelosi and Schumer that they needed to pass a bipartisan COVID relief package during the current session
- Advisers to President-elect Biden said to also be looking for the US to head for a double-dip recession next year and pushing Democratic leaders to find a compromise with Republicans for economic aid even if it falls short of the larger package that they were originally seeking
- US Commerce Department said to be close to declaring 89 China aerospace and other companies as having ties to China military;
- US Navy admiral made an unannounced visit to Taiwan which could raise China’s ire
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.50% at 391.54, FTSE +0.33% at 6,372.60, DAX +0.96% at 13,263.80, CAC-40 +0.78% at 5,538.94, IBEX-35 +0.87% at 8,047.00, FTSE MIB +0.94% at 21,911.50, SMI +0.01% at 10,497.10, S&P 500 Futures +0.64%]
- Market Focal Points/Key Themes: European indices open higher across the board and stayed in the green as the session progressed; better performing sectors lead by energy and materials; utilities and telecom sectors among underperformers; AstraZeneca announces results of their anti-covid vaccine candidate study; DeLonghi acquires Capital Brands; reportedly US could include further Chinese companies on restricted list; reportedly CVC Capital taking interst in Bilfinger; HelloFresh buys Factor75; Elliott confirms offer for Aryzta; focus on potential announcement of UK covid measures for holidays; earnings expected in the upcoming US session include Agilent Technologies
Equities
- Consumer discretionary: Cineworld [CINE.UK) +18% (vaccine data; liquidity), TUI [TUI.UK] +9% (vaccine data), Aryzta [ARYN.CH] +3.5% (offer), Danone [BN.FR] -1% (capital markets day)
- Healthcare: AstraZeneca [AZN.UK] -2% (COVID-19 vaccine effective data)
Speakers:
- BOE’s Haldane (chief economist) stated that the domestic economy likely recovered approx 2/3 of its pandemic losses. Even with vaccine the crisis will leave economic scars
- German Health Min Spahn: 2nd wave of infections is broken but numbers remain too high
- China Foreign Ministry reiterated stance that would oppose US restrictions on Chinese companies with military ties from buying US goods and technology. Reiterated stance that US must recognize the sensitivity of the Taiwan issue
- Thailand Fin Min Arkhom stated that capital inflows were impacting the value of the THB currency (Baht)
Currencies/Fixed Income
- Major Euro Area PMI readings in the session suggested that impact from restrictions not as severe compared to the spring (echoes recent central bankers and govt officials rhetoric)
- GBP/USD was near a 3-month high as optimism about prospects of a UK-EU trade deal being agreed upon continued to percolate. UK PM Johnson said to be preparing to intervene in the negotiations to take it to fruition.
Economic Data
- (TR) Turkey Oct Foreign Tourist Arrivals Y/Y: -59.4% v -59.4% prior
- (CH) Swiss Oct M3 Money Supply Y/Y:5.6 % v 4.2% prior
- (TW) Taiwan Oct Industrial Production Y/Y: 7.1% v 7.8%e
- (TW) Taiwan Oct Unemployment Rate: 3.8% v 3.8%e
- (FR) France Nov Preliminary Manufacturing PMI: 49.1 v 49.9e (1st contraction in 3 months); Services PMI: 38.0 v 39.0e; Composite PMI: 39.9 v 39.5e
- (DE) Germany Nov Preliminary Manufacturing PMI: 57.9 v 56.0e (5th month of expansion); Services PMI: 46.2 v 46.3e; Composite PMI: 52.0 v 50.5e
- (EU) Euro Zone Nov Preliminary Manufacturing PMI: 53.6 v 53.3e 0e (5th month of expansion); Services PMI: 41.3 v 42.0e; Composite PMI: 45.1 v 45.6e
- (CH) Swiss weekly Total Sight Deposits (CHF): 707.3B v 707.9B prior; Domestic Sight Deposits: 643.3B v 644.5B prior
- (IS) Iceland Oct Wage Index M/M: 0.7% v 0.8% prior; Y/Y: 7.1% v 6.7% prior
- (PL) Poland Oct Retail Sales M/M: 2.3% v 2.9%e; Y/Y: -2.1% v -1.4%e; Real Retail Sales Y/Y: -2.3% v -0.8%e
- (PL) Poland Oct Construction Output Y/Y: -5.9% v -7.6%e
- (SL) Sri Lanka Oct National CPI (NCPI) Y/Y: 5.5% v 6.4% prior
- (UK) Nov Preliminary PMI Manufacturing: 55.2 v 50.5e (6th straight expansion); Services PMI: 45.8 v 42.8e; Composite PMI: 47.4 v 42.5e
Fixed income Issuance
- None seen
Looking Ahead
- 05:30 (DE) Germany to sell combined €3.0B in 6-month and 12-month BuBills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.3-1.5B in 2025 and 2033 OLO bonds – 06:00 (IL) Israel Oct Unemployment Rate: No est v 4.7% prior
- 06:00 (RO) Romania to sell RON300M in 3.65% 2031 Bonds
- 06:00 (IL) Israel to sell bonds
- 06:25 (BR) Brazil Central Bank Weekly Economists Survey
- 06:45 (US) Daily Libor Fixing
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 08:30 (US) Oct Chicago Fed National Activity Index: 0.27e v 0.27 prior
- 09:00 (FR) France Debt Agency (AFT) to sell €5.8-7.0B in 3-month, 6-month and 12-month bills
- 09:45 (US) Nov Preliminary Markit Manufacturing PMI: 53.0e v 53.4 prior; Services PMI: 55.0e v 56.9 prior; Composite PMI: No est v 56.3 prior
- 09:45 (EU) ECB weekly QE bond buying update
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
- 13:00 (US) Treasury to sell 2-year and 5-year notes
- 14:00 (CA) Bank of Canada’s Gravelle
- 15:00 (US) Fed’s Evans participates in moderated Q&A on the Economy
- 16:00 (KR) South Korea Nov Consumer Confidence: No est v 91.6 prior
- 16:00 (US) Weekly Crop Progress Report
- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 106.6 prior
- 19:30 (AU) Australia Oct Preliminary Merchandise Trade
- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years; 5~10 Years
- 22:00 (KR) South Korea Q3 Household Credit (KRW): No est v 1637.3T prior
- 22:00 (TH) Thailand Central Bank to sell THB40B in 3-month bills
- 22:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills
- 22:30 (JP) Japan to sell 6-Month Bills
