Notes/Observations
- US markets closed for Thanksgiving Day holiday
- Session saw various EU Nov confidence reading decline month-on-month after restrictions were implement (Germany, France and Sweden all missed expectations)
- Sweden Central Bank (Riksbank) keeps policy steady but expands it QE bond buying purchases by SEK200B with program extended until end of 2021 to help fight against the impact of a second wave of Covid-19 infections
- Progress in Brexit talks seemed to have stalled
Asia:
- Bank of Korea (BoK) left Repo Rate unchanged at 0.50% (as expected)
- New Zealand Oct Trade Balance (NZD): -0.5B v -0.5Be
- New Zealand PM Ardern stated that increasing housing prices was not a plan for growth; Not content with housing experience in the country
- China analysts said to note that China would end some stimulus as economy improves, however may not increase interest rates yet as market isn’t ready
Coronaviurs:
- Total global cases 60.4M (+1.0% d/d); total deaths: 1.42M (+0.8% d/d)
- Financial press report noted that some concerns emerged surrounding efficacy of the Oxford/AZN vaccine after age profile of their results were not disclosed
Europe:
- Germany Chancellor Merkel: confirmed that govt to extend Nov COVID measures by 3 weeks until to Dec 20th; Measures would continue afterwards in Jan unless it reached infection target
Americas:
- FOMC Nov Minutes: Participants recognized that circumstances could shift to warrant adjustment to pace and composition of asset purchases. Many favored enhancing bond buying guidance; Most favored linking bond buying to economic outcomes. Most Fed officials favored tapering purchases before liftoff
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.05% at 391.90, FTSE -0.47% at 6,360.98, DAX +0.05% at 13,296.75, CAC-40 -0.02% at 5,570.42, IBEX-35 -0.67% at 8,110.00, FTSE MIB +0.02% at 22,307.50, SMI +0.27% at 10,516.50, S&P 500 Futures +0.11%]
- Market Focal Points/Key Themes: European indices open modestly higher across the board but later turned to trading mixed in relatively quiet day; better performing sectors include consumer discretionary and technology; financials and energy sectors among underperformers; German Chancellor says most restrictions will likely remain in place to early January; Castellum confirms offer for Elekta; Orange denies press speculation was considering ATOS; reportedly Bayer looking into divesting some smaller assets; UK to update details on new tier system later today; US closed for holiday
Equities
- Consumer discretionary: Remy Cointreau [RCO.FR] -1.5% (earnings), Delivery Hero [DHER.DE] -1.5% (South Korea investigation)
- Energy: Repsol [REP.ES] -4% (CMD)
- Financials: Atlas Mara [ATMA.UK] +17% (divestment), Aviva [AV.UK] -1% (trading update)
- Technology: STMicroelectronics [STM.FR] +3% (JV), Allegro [ALEP.PL] -4% (earnings), PayPoint [PAY.UK] -2% (earnings)
Speakers
- Sweden Central Bank (Riksbank) Policy Statement noted that members Breman and Floden dissented on QE extension. Reiterated Repo Rate to remain at current level in coming years and reiterated stance that Repo Rate could be cut if necessary and deemed effective, particularly if confidence in inflation target were to be threatened. CPIF inflation not likely to lastingly attain 2.0% until 2023
- Sweden Central Bank (Riksbank) Staff Forecasts cut its inflation outlook for the horizon period with 2020 Avg CPI cut from 0.6% to 0.4%, 2021 Avg CPI cut from 1.1% to 0.8% and 2022 Avg CPI cut from 1.3% to 1.2%. Riksbank also cut the 2020 Avg GDP from -3.6% to -4.0% and cut 2021 Avg GDP growth from 3.7% to 2.6%
- Sweden Central Bank (Riksbank) Gov Ingves post rate decision press conference stated that the domestic economy still needed additional support. Still had room to increase QE significantly if necessary. Believed that when restrictions are lifted the economy can recovery and do so quite quickly
- ECB’s Holzmann (Austria) stated that the Pandemic bond purchases (PEPP) have worked and lowered bond yields. Could not rule out new tools being implement at the Dec meeting
- Germany Chancellor Merkel stated in Parliament that COVID-19 cases were still much too high and any easing restrictions at this time would not be responsible. Restriction measures had stopped the virus from exponential growth and prevented a worst-case scenario . Curbs likely to remain in place until early Jan 2021
- Italy PM Conte adviser Fraccaro urged ECB to consider cancelling public debt or consider rolling over bonds forever. EU should exclude green investment from budget deficit rules. Believed that monetary policy must Germany Chancellor Merkel support member states’ expansionary fiscal policy in every possible way which includes cancelling sovereign debt or perpetually extending their maturity
- Finland PM Marin stated that the pandemic situation had worsened rapidly in the country
- EU Chief Negotiator Barnier was said to see further negotiations on Brexit as pointless if UK refused to compromise within 48 hours on key cornerstone issues
- Ireland Foreign Min Coveney reiterated that Brexit talks were at a sensitive point and did recognize that UK also had red lines too
- EU’s Hahn stated that If EU budget and Recovery Fund were not approved in Dec it would create a lot of difficulties; still confident of a deal
- Hungary PM Chief of Staff stated that govt would again veto EU budget as no new proposal had been received. Hungary govt maintained its position on EU budget and unacceptable that EU funds should be tied to political criteria
- Chancellor of the Exchequer Sunak (Fin Min) commented that Brexit negotiating teams were working hard; prefer to have a Brexit agreement. Regarding his recent budget speech he noted that the UK could not have a situation where debt was going up but would not get drawn into speculation on taxation
- China PBoC Quarterly Monetary Policy Report reiterated stance to maintain prudent monetary policy that was more flexible and targeted
Currencies/ Fixed Income
- USD maintained a soft tone and was at a 3-month low compared to a basket of currencies. The latest headwind for the greenback came after Wed’s FOMC Mnutes which suggested policymakers might be considering additional stimulus via asset purchases. The USD was re-approaching some key support levels in numerous pairs.
- EUR/USD tested the 1.1940 level during Asia and was close to the key 1.20 verbal intervention area. Pair at 1.1925 by mid-session.
- GBP/USD at 1.3380 and holding steady despite some talks that progress in Brexit talks seemed to have stalled. The 1.36 level remains pivotal resistance in the pair
- SEK currency was softer after the Sweden Central Bank (Riksbank) expanded it QE bond buying purchases by SEK200B with program extended until end of 2021 to help fight against the impact of a second wave of Covid-19 infections
Economic Data
- (FI) Finland Oct Preliminary Retail Sales Volume Y/Y: 4.6% v 3.7% prior
- (DE) Germany Dec GfK Consumer Confidence: -6.7 v -4.9e (9th straight negative reading)
- (FR) France Nov Consumer Confidence: 90 v 92e
- (SE) Sweden Nov Consumer Confidence: 88.3 v 88.0e; Manufacturing Confidence: 110.6 v 106.0e ; Economic Tendency Survey: 97.5 v 96.3 prior
- Sweden Central Bank (Riksbank) leaves Repo Rate unchanged at 0.00% (as expected) but expanded its QE Bond buying scheme by SEK200B to total SEK700B and run through Dec 2021
- (SE) Sweden Oct PPI M/M: 0.4% v 0.4% prior; Y/Y: -4.2% v -4.2% prior
- (SE) Sweden Oct Household Lending Y/Y: 5.3% v 5.2% prior
- (EU) Euro Zone Oct M3 Money Supply Y/Y: 10.5% v 10.3%e
- (AT) Austria Nov Manufacturing PMI: 51.7 v 54.0 prior (5th straight expansion)
- (IS) Iceland Oct Final Trade Balance (ISK): -7.1B v -0.4B prelim
- (ZA) South Africa Oct PPI M/M: 0.4% v 0.2%e; Y/Y: 2.7% v 2.5%e
Fixed income Issuance
- (IT) Italy Debt Agency (Tesoro) sold€6.0B vs. €6.0B indicated in 6-month bills; Avg Yield: -0.518% v -0.478% prior; Bid-to-cover: 2.22x v 1.66x prior
- (SE) Sweden sold SEK1.0B vs. SEK1.0B indicated in 0.125% Dec Inflation-Linked 2027 Bonds; Avg Yield: -1.4731% v -1.387% prior; bid-to-cover: 2.25x v 3.64x prior
Looking Ahead
- (AR) Argentina Nov Consumer Confidence Index: No est v 38.8 prior
- (BR) Brazil Oct Total Formal Job Creation: No est v 313.6K prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
- 05:30 (PL) Poland to sell Bonds
- 05:50 (HU) Hungary Central bank Weekly One-Week Deposit Tender
- 06:00 (IL) Israel Oct Chain Store Sales M/M: No est v 1.4% prior
- 06:00 (CA) Canada Nov CFIB Business Barometer: No est v 53.3 prior
- 06:00 (RO) Romania to sell RON500M in bonds
- 07:00 (BR) Brazil Oct PPI Manufacturing M/M: No est v 2.3% prior; Y/Y: No est v 14.9% prior
- 07:00 (MX) Mexico Q3 Final GDP Q/Q: 12.0%e v 12.0% prelim; Y/Y: -8.6%e v -8.6% prior; GDP Nominal Y/Y: -8.1%e v -18.0% prior
- 07:00 (MX) Mexico Sept IGAE Economic Activity Index (Monthly GDP) M/M: 0.9%e v 1.1% prior; Y/Y: -7.0%e v -9.5% prior
- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 20th: No est v $583.9B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (BR) Brazil Oct Total Formal Job Creation: No est v 313.6K prior
- 10:00 (MX) Mexico Central Bank (Banxico) Nov Minutes
- 12;30 (BR) Brazil Oct Central Govt Budget balance (BRL): -20.0Be v -76.2B prior
- 14:00 (AR) Argentina Sept SuperMarket Sales Y/Y: No est v -5.7% prior; Shop Center Sales Y/Y: No est v -79.0% prior
- 16:00 (NZ) New Zealand Nov Consumer Confidence Index: No est v 108.7 prior
- 18:30 (JP) Japan Nov Tokyo CPI Y/Y: -0.5%e v -0.3% prior; CPI (ex-fresh food) Y/Y: -0.6%e v -0.5% prior; CPI (ex-fresh food/energy) Y/Y: -0.2%e v -0.2% prior
- 20:30 (CN) China Oct Industrial Profits Y/Y: No est v 10.1% prior
- 22:30 (TH) Thailand Oct ISIC Manufacturing Production Index Y/Y: -1.9%e v -2.8% prior; Capacity Utilization: No est v 63.1 prior
- 22:30 (JP) Japan to sell 3-Month Bills
- 22:35 (JP) Japan to sell 2-Year JGB Bonds
