- Notes/Observations
- German Q3 Final GDP revised higher and confirmed move out of its 3 quarter recession; outlook was clouded by a second wave of coronavirus infections
- German Nov IFO Survey shows current lockdown restriction having a less of an economic impact compared to the spring
- US government started a formal transition process to President-elect Joe Biden aiding risk appetite
Asia:
- BOJ Gov Kuroda reiterated its overall assessment that domestic economy has picked up but remained in a severe state. Reiterated BOJ stance to firmly continue with monetary easing and would not hesitate to add easing if needed
- RBNZ Gov Orr stated in a letter that MPC already gave consideration to asset prices. Stressed that monetary and financial policy alone could not fix housing issues. House prices were important channel that affected inflation.
- New Zealand Fin Min Robertson Letter to RBNZ Gov Orr noted that he was seeking advice on more measures to curb housing. Called on RBNZ to give earliest possible consideration to adding house prices to RBNZ remit and a consideration in monetary policy
Coronaviurs:
- Total global cases 59.1M; total deaths: 1.40M
Europe:
- ECB’s Rehn (Finland) reiterates that the General Council mighty need to consider recalibration of TLTROS; Must maintain current financing conditions for as long as needed. Reiterates stance that Pandemic Bond purchases (PEPP) and bank loans are top tools for stimulus
- UK PM Johnson confirmed that national lockdown to end on Dec 2nd; winter virus plan to get us safely to spring
- BOE Gov Bailey stated that long term effects of a no-deal Brexit would be worse for the UK economy than pandemic – EU’s Barnier said to be expected to be given the all clear to return to London for talks with UK chief negotiator Frost
Americas:
- US General Services Administration (GSA) informed Joe Biden that the administration was ready to begin transition; Trump authorized federal agencies to work on the transition (signaled that Biden is the apparent winner of the election)
- President-elect Biden said to nominate former Fed Chair Yellen for Treasury Sec
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 % at #, FTSE % at #, DAX % at #, CAC-40 % at #, IBEX-35 % at #, FTSE MIB % at #, SMI % at #, S&P 500 Futures %]
- Market Focal Points/Key Themes: European indices open broadly higher and stayed upbeat as the session progressed (SMI notable exception struggling to turn positive); risk appetite attributed to potential of easing covid restrictions and progress on vaccines; energy and financials sectors leading to the upside; unerperforming sectors include consumer discretionary and health care; UK announces new tiered system to replace lockdown ending on Dec 2; DAX expanded to 40 components; earnings expected in the upcoming US session include Dell, Autodesk, Best Buy and HP
Equities
- Consumer discretionary: Compass Group [CPG.UK] +5% (earnings), AO World [AO.UK] -5% (earnings)
- Consumer staples: Cranswick [CWK.UK] +2% (earnings)
- Utilities: Pennon Group [PNN.UK] -3% (earnings)
- Healthcare: Novartis [NOVN.CH] +1% (CMD)
- Industrials: Continental [CON.DE] +4% (analyst upgrade)
- Materials: CRH [CRH.UK] +2.5% (trading update)
- Telecom: Royal KPN [KPN.NL] -1% (CMD)
Speakers
- ECB’s Villeroy (France) reiterated stance that ECB to keep favorable financial conditions in crisis
- German IFO Economists: noted that the Industry had resisted the downward trend in the economy; impact not so affected by lockdown measures. Expected Q4 GDP to be slightly negative. Vaccine prospects were not yet reflected in the Expectation Survey
- Portugal to hold Presidential election on Jan 24th 2021
- Turkey Banking Regulator (BDDK) said to have abandon its asset ratio rule (**Note: Move viewed to support TRY currency (Lira) and make it more attractive for commercial banks to hold TRY currency (Lira) deposits to foster confidence in the currency)
- Russia govt spokesperson: Too early to comment on Russia’s position for the upcoming OPEC+ meeting. President Putin had no plans at this time to talk to Saudis on OPEC+
Currencies/Fixed Income
- Risk-on appetite continued to the catalyst for unwinding of safe-haven flows. Sentiment had been aided by recent vaccine news on multiple fronts and got some additional momentum as the US transition process was poised to begin.
- EUR/USD drifted higher in the session as more European data showed that the current lockdown restriction were having a less of an economic impact compared to the spring. Pair at 1.1875 by mid-session.
- Continued optimism for the prospect of a trade deal between the UK and EU also helped the GBP currency stay at 2-month highs.
- Markets continued to whittled back pricing for central bank cuts especially those edging near negative territory. AUD, NZD and GBP all benefiting from the reassessment
Economic Data
- (FI) Finland Oct PPI M/M: -0.2% v -0.7% prior; Y/Y: -5.4% v -5.3% prior
- (FI) Finland Oct Unemployment Rate: 7.4% v 7.6% prior
- (DE) Germany Q3 Final GDP Q/Q: 8.5% v 8.2%e; Y/Y: -4.0% v -4.3%e; GDP NSA (unadj) Y/Y: -3.9% v -4.1%e
- (DE) Germany Q3 Private Consumption Q/Q: 10.8% v 9.0%e; Government Spending Q/Q: 0.8% v 1.1%e; Capital Investment Q/Q: 3.6% v 6.0%e
- (ZA) South Africa Sept Leading Indicator: 105.3 v 103.6 prior
- (TR) Turkey Nov Real Sector Confidence (seasonally adj): 103.9 v 109.7 prior; Real Sector Confidence NSA (unadj): 103.9 v 108.1 prior
- (TR) Turkey Nov Capacity Utilization: 75.8% v 75.4% prior
- (FR) France Nov Business Confidence: 79 v 84e; Manufacturing Confidence: 92 v 91e; Production Outlook Indicator: -39 v -13e; Own-Company Production Outlook: -10 v +2e
- (CZ) Czech Nov Consumer Confidence Index: -22.5 v -19.8 prior; Business Confidence: -7.2 v -1.8 prior; Composite Confidence (Consumer & Business): -10.2 v -5.4 prior
- (TW) Taiwan Oct M2 Money Supply Y/Y: 7.1% v 7.2% prior; M1 Money Supply Y/Y: 12.9% v 12.1% prior
- (HK) Hong Kong Oct Trade Balance (HKD): -36.8B v -12.5Be; Exports Y/Y: -1.1% v +9.0%e; Imports Y/Y: 0.6% v 3.6%e
- (DE) Germany Nov IFO Business Climate Survey: 90.7 v 90.2e; Current Assessment Survey: 90.0 v 87.5e; Expectations Survey: 91.5 v 93.5e
Fixed income Issuance
- (EU) European Union opened book to sell EUR-denominated July 2035 SURE Social bonds; guidance seen -2bps to mid-swaps
- (ID) Indonesia sold total IDR10.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk)
- (RO) Romania opened book to sell EUR-denominated 9-year and 20-year bonds
- (IC) Ivory Coast opened it book to sell EUR-denominated Jan 2032 bond; yield guidance seen 5.50% area
- (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2026, 2030 and 2035 bonds
- (NL) Netherlands Debt Agency (DSTA) sold €1.64B vs. €1.5-2.5B indicated range in 0% Jan 2027 DSL Bonds; Avg Yield: -0.001% v -0.624% prior
- (UK) DMO sold £2.75B in 1.25% July 2027 Gilts; Avg Yield: 0.125% v 0.032% prior; bid-to-cover: 1.99x v 2.61x prior; Tail: 0.4bps v 0.2bps prior
Looking Ahead
- (RO) Romania Oct M3 Money Supply Y/Y: No est v 15.1% prior
- (NG) Nigeria Central Bank Interest Rate Decision: Expected to leave Interest Rates unchanged at 11.50%
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
- 06:00 (UK) Nov CBI Retailing Reported Sales: -35e v -23 prior; Total Distribution: No est v-23 prior
- 06:00 (IL) Israel Sept Manufacturing Production M/M: No est v 0.6% prior
- 06:30(UK) DMO to sell £1.25B in 1.75% July 2057 Gilts
- 07:00 (MX) Mexico Oct Unemployment Rate NSA (unadj): No est v 5.1% prior
- 07:00 (BR) Brazil Mid-Nov IBGE Inflation IPCA-15 M/M: 0.7%e v 0.9% prior; Y/Y: 4.2%e v 3.5% prior
- 07:00 (CL) Chile Oct PPI M/M: No est v 0.9% prior
- 07:00 (TR) Turkey to sell 2027 and 2030 Bonds
- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 08:00 (PL) Poland Oct M3 Money Supply M/M: 1.2%e v 1.0% prior; Y/Y: 17.0%e v 17.0% prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (US) Sept FHFA House Price Index M/M: 0.5%e v 1.5% prior; Q/Q: No est v 0.8% prior
- 09:00 (US) Sept S&P/Case-shiller House Price Index (20-City) M/M: 0.60%e v 0.47% prior; Y/Y: 4.80%e v 5.18% prior; House Price Index (HPI): No est v229.35 prior
- 09:00 Sept S&P/Case-shiller House Price Index (overall) YoY: No est v 5.71% prior; HPI: No est v 223.97 prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (MX) Mexico Weekly International Reserve data
- 10:00 (US) Nov Consumer Confidence: 97.9e v 100.9 prior
- 10:00 (US) Nov Richmond Fed Manufacturing Index: 21e v 29 prior
- 13:00 (US) Treasury to sell 2-Year FRN
- 13:00 (US) Treasury to sell 7-Year Notes
- 14:00 (AR) Argentina Sept Economic Activity Index (Monthly GDP) M/M: No est v 1.1% prior; Y/Y: -8.6%e v -11.6% prior
- 14:00 (AR) Argentina Trade Balance: $0.8Be v $0.6B prior
- 15:00 (NZ) RBNZ Financial Stability Report
- 16:00 (KR) South Korea Dec Business Manufacturing Survey: No est v 76 prior; Business Non-Manufacturing Survey: No est v 69 prior
- 16:30 (US) Weekly API Oil Inventories
- 18:50 (JP) Japan Oct PPI Services Y/Y: -0.5%e v +1.3% prior
- 19:30 (AU) Australia Q3 Construction Work Done: -2.0%e v -0.7% prior
- 22:35 (JP) Japan to sell 40-Year JGB Bonds
- 23:00 (MY) Malaysia Oct CPI Y/Y: -1.4%e v -1.4% prior
