Notes/Observations
- Risk appetite continued to build upon numerous factors (recent vaccine announcement, calming of US political tensions; Former Fed Chair Yellen as next Treasury Sec)
- Plethora of US data release in session due to upcoming Thanksgiving holiday
- Fed to also release Nov Minutes
Asia:
- Japan PM Suga stated that was extremely important to properly protect jobs; Paying full attention to impact of coronavirus on employment
- RBNZ Gov Orr stated that the domestic economy performed as well as possible; low interest rates were necessary and would ensure NZ$ remained competitive
Coronaviurs:
- Total global cases 59.8M (+1.1 d/d%); total deaths: 1.41M
Europe:
- UK Chancellor of the Exchequer Sunak (Fin Min) said to unveil new £4.3B support to help the jobless find work as covid-triggered collapse in economy will leave deep scars on labor market
- France President Macron stated that the peak of second COVID wave was over and the country had avoided the worst. Would take several weeks to achieve COVID objectives. lockdown measures to gradually ease from Saturday (Nov 28th) with lockdown ending from Dec 15th but curfews to remain in place
- UK Gov Official Gove stated that he believed all wanted a Brexit deal but added that the EU side needed to move and to acknowledge that the UK voted to take back control
- ECB Mersch (Luxembourg) said to signal possibility of lifting ban on bank dividends next year. Did not see a scenario of a severe economic situation for the region. Believed an obvious candidate for re-calibration of ECB policy in Dec is to extend the timeline. Some instruments had a higher amount of traction than others. Reiterated ECB view that Pandemic Bond Buying Fund (PEPP) and TLTROS have had a rather good amount of traction
Americas:
- US Administration Official: The White House approved Joe Biden receiving the Presidential daily briefing and the collection of the Presidents intelligence reports
Energy:
- Weekly API Crude Oil Inventories: +3.8M v +4.2M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.19% at 391.64, FTSE -0.34% at 6,410.25, DAX -0.14% at 13,273.95, CAC-40 +0.01% at 5,559.21, IBEX-35 -0.27% at 8,121.00, FTSE MIB 0.00% at 22,144.50, SMI +0.19% at 10,511.50, S&P 500 Futures -0.04%]
- Market Focal Points/Key Themes: European indices open higher across the board but later turned around to trade generally lower; better performing sectors include financials and utilities; materials and consumer discretionary sectors among underperformers; ECB to allow banks to pay dividends next year; France announces plan to relieve lockdowns; AO world recieves takeover offer; Goco group offered to be acquired by Future; Castellum confirms in merger discussions with Entra; events expected in the upcoming US session include Deere and Endesa’s strategic plan
Equities
- Financials: AA plc [AA.UK] +7% (to be acquired), GoCo Group [GOCO.UK] +18% (offer)
Healthcare:
- Industrials: MTU Aero Engines [MTX.DE] +1.5% (analyst action), ThyssenKrupp [TKA.DE] +4% (analyst action), Babcock International Group [BAB.UK] -3% (earnings)
- Technology: Sopra Steria Group [SOP.FR] +1% (update on cyber accident), De La Rue [DLAR.UK] -7% (earnings)
- Utilities: United Utilities [UU.UK] +3% (earnings)
Speakers
- ECB Financial Stability Review noted that rising debt levels created risks in the longer term. Saw growing vulnerability of asset prices to correction. Banking sector profitability to remain weak and added that the banks might have to set aside more provisions for non-performing loans (NPLs) as current levels looked optimistic
- ECB’s De Guindos (Spain) stated that he hoped the EU Recovery Fund standoff was resolved soon
- BOE’s Saunders stated that businesses would shake off effect of coronavirus as they were temporary; impacts of Brexit could be long term and more permanent
- EU Commission chief Von der Leyen reiterated stance that large differences remained in Brexit talks; could not say if there would be a deal. Coming days to be decisive and would do all in our power for an agreement. She noted that some progress was being made but EU was prepared for a no-deal outcome. Stressed that serious issues in State aid remained
- Sweden FSA Financial Stability Report: Household debt remains a risk to the domestic economy. Maintained counter-cyclical buffer at 0%. Banking sector dividends only relevant after recovery
- Thailand Fin Min Arkhom stated that monetary and fiscal policies must go hand-in-hand. Hoped the central bank (BOT) would continue to make the THB currency (Baht) competitive
- Japan Cabinet Office (Govt) Nov Monthly Economic Report: Maintains overall economic assessment. Reiterated that domestic economy remained in a severe situation despite signs of improvement. It raised its view on production while cutting its view on capex
- China PBoC and Hong Kong Monetary Authority (HKMA) renewed and expand currency swap agreement to CNY500B
- Iran President Rouhani stated that other issues could be pursued if nuclear issue is resolved
Currencies/ Fixed Income
- USD continued to be on the defensive as risk appetite continued to build upon numerous factors (recent vaccine announcement, calming of US political tensions). Dealers also cited that President-elect choice of Janel Yellen for Treasury Sec also reduced much uncertainty. Yellen is a noted dove and her selection would likely maximize fiscal impact by ensuring cheap funding – hence USD negative.
- EUR/USD tested as high as 1.1930 before retreating. ECB Financial Stability Review stressed that NPLs could rise for the region’s banking sector and provided caution for the pair. The 1.20 level likely to bring about more verbal intervention from ECB members on the potential inflationary headwinds a stronger currency could bring.
- GBP/USD drifted from multi-month highs after EU Commission chief von der leyen reiterated stance of several key issues remain unresolved and time was running short. Pair at 1.3330 after testing 1.3385 earlier in the session.
Economic Data
- (DK) Denmark Oct Retail Sales MM: +8.2% v -1.1% prior; Y/Y: 13.6% v 4.2% prior
- (NO) Norway Sept AKU Unemployment Rate: 5.2% v 5.3%e
- (ES) Spain Oct PPI M/M: -0.4% v +0.4% prior; Y/Y: -4.1% v -3.3% prior
- (ZA) South Africa Oct CPI M/M:0.3 % v 0.0%e; Y/Y: 3.3% v 3.0%e
- (ZA) South Africa Oct CPI Core M/M: 0.2% v 0.0%e; Y/Y: 3.4% v 3.2%e
- (AT) Austria Sept Industrial Production M/M: 2.0% v 0.6% prior; Y/Y: -1.4% v -2.6% prior
- (CH) Swiss Nov Expectations Survey: 30.0 v 2.3 prior
- (PL) Poland Oct Unemployment Rate: 6.1% v 6.1%e
- (PL) Poland Q3 Unemployment Rate: 3.4% v 3.2%e
- (ZA) South Africa Q4 BER Business Confidence: 40 v 24 prior
Fixed income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (SE) Sweden sold total SEK20.0B vs. SEK20.0B indicated in 3-month and 6-month bills
- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Sept 2022 CTZ Bonds; Avg Yield: -0.369% v -0.265% prior; bid-to-cover: 1.77x v 1.56x prior
- (IT) Italy Debt Agency (Tesoro) solds €1.25B vs. €0.75-1.25B indicated range in 0.10% May 2023 Inflation-linked Bonds (BTPei); Avg Yield: -0.84% v -0.50% prior; Bid-to-cover: 1.57x v 1.84x prior
Looking Ahead
- (BR) Brazil Oct Total Federal Debt (BRL): No est v 4.527T prior
- (CO) Colombia Oct Retail Confidence: No est v 22.2 prior; Industrial Confidence: No est v 6.1 prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills
- 06:00 (BR) Brazil Nov FGV Construction Costs M/M: 1.4%e v 1.7% prior
- 06:00 (BR) Brazil Nov FGV Consumer Confidence: No est v 82.4 prior
- 06:00 (CZ) Czech Republic to sell 2027, 2029 and 2040 bonds
- 07:00 (US) MBA Mortgage Applications w/e Nov 20th: No est v -0.3% prior
- 07:00 (MX) Mexico Sept Retail Sales M/M: 2.2%e v 2.5% prior; Y/Y: -8.7%e v -10.8% prior
- 07:00 (UK) Weekly PM Question time in House
- 07:30 (BR) Brazil Oct Current Account Balance: $1.3Bev $2.3B prior; Foreign Direct Investment (FDI): $1.1Be v $1.6B prior – 07:30 (UK) Chancellor of the Exchequer Sunak (Fin Min) presents spending plan review
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Q3 Preliminary GDP Annualized (2nd reading) Q/Q: 33.1%e v 33.1% advance; Personal Consumption: 40.9%e v 40.7% prior
- 08:30 (US) Q3 Preliminary GDP Price Index: 3.6%e v 3.6% advance; Core PCE Q/Q: 3.5%e v 3.5% advance
- 08:30 (US) Initial Jobless Claims: 730Ke v 742K prior; Continuing Claims: 6.00Me v 6.372M prior
- 08:30 (US) Oct Advance Goods Trade Balance: -$80.5Be v -$79.4B prior
- 08:30 (US) Oct Preliminary Wholesale Inventories M/M: 0.4%e v 0.4% prior; Retail Inventories M/M: No est v 1.6% prior
- 08:30 (US) Oct Preliminary Durable Goods Orders: 0.9%e v 1.9% prior; Durables (ex-transportation): 0.5%e v 0.9% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.6%e v 1.0% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.3%e v 0.5% prior
- 10:00 (US) Oct Personal Income: 0.0%e v 0.9% prior; Personal Spending: 0.4%e v 1.4% prior; Real Personal Spending (PCE): 0.2%e v 1.2% prior
- 10:00 (US) Oct PCE Deflator M/M: 0.0%e v 0.2% prior; Y/Y: 1.2%e v 1.4% prior
- 10:00 (US) Oct PCE Core Deflator M/M: 0.0%e v 0.2% prior; Y/Y: 1.4%e v 1.5% prior
- 10:00 (US) Nov Final University of Michigan Confidence: 77.0e v 77.0 prelim
- 10:00 (US) Oct New Home Sales: 975Ke v 959K prior
- 10:00 (MX) Mexico Q3 Current Account Balance: $14.2Be v $0.0B prior
- 10:30 (US) Weekly DOE Oil Inventories
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
- 12:00 (US) Weekly EIA Natural Gas Inventories
- 13:00 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report (QIR)
- 13:00 (US) Weekly Baker Hughes Rig Count
- 14:00 (US) FOMC Nov Minutes
- 16:45 (NZ) New Zealand Oct Trade Balance (NZD): -0.5Be v -1.0B prior; Exports: 4.8Be v 4.0B prior; Imports: 5.3Be v 5.0B prior
- 20:00 (KR) Bank of Korea (BoK) Interest Rate Decision: Expected to leave Repo Rate unchanged at 0.50%
- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years; 10~25 Years
- 21:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision Expected to cut key Rates by 25bps Current Standing Deposit Rate at 4.50%; Current Standing Lending Rate at 5.50%
- 22:00 (TH) Thailand Central Bank to sell THB20B in 2022 Bonds
