Notes/Observations
- Fears of a no-deal Brexit grows
- England wakes up to life after lockdown
- Tsy Sec Mnuchin and House Speaker Pelosi held stimulus talks for the first time since the Nov. 3rd election
Asia:
- South Korea Nov CPI YoY: 0.6% v 0.7%e
- Australia Q3 GDP data beats expectations and ended its technical recession (Q/Q: 3.3% v 2.4%e; Y/Y: -3.8% v -4.5%e)
- RBA Gov Lowe reiterated stance that addressing the high rate of unemployment is a priority. Reiterated stance that RBA would not adjust rates until inflation was in 2-3% target range
- BOJ Dep Gov Amamiya stated that would not hesitate to add easing if needed. Carefully watching impacts of coronavirus
- RBNZ Gov Orr stressed that economic risks are skewed to the downside
Coronaviurs:
- Total global cases 63.8M (+0.9% d/d); total deaths: 1.48M (+0.8% d/d)
Europe:
- ECB’s Kazaks (Latvia) stated that he would not oppose Pandemic Bond Fund (PEPP) extension by 12-months and saw an €500B increase to the Fund as not very off the mark (Note: Current size of PEPP is €1.35T with program currently in place until Jun 2021). ECB should consider other assets in TLTRO collateral and consider extending TLTRO to 5 year (from current 3)
- UK PM Johnson wins Parliamentary backing for England COVID restrictions with vote was 291 to 78
Americas:
- Treasury Sec nominee Yellen reiterates we face great challenges as a country and essential that we move with urgency
- President-elect Biden NYT Op Ed noted that he would not ‘immediately’ remove Phase 1 Tariffs imposed on China by President Trump, would not sign trade deals before investing at home. Separately Biden reaffirmed his view that if Iran returned to the strict compliance with the deal the US would rejoin the Iranian nuclear deal and lift sanctions
- Fed’s Evans (dove, non-voter): economic downturn screams out for remedies; likely that rates would stay near zero into 2023 and perhaps beyond. More fiscal support would help
- McConnell pushing to lock down GOP support for new Covid relief plan as pressure grows to cut a deal
Energy:
- Weekly API Crude Oil Inventories: +4.1M v +3.8M prior
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.22% at 391.00, FTSE +0.13% at 6,392.97, DAX -0.26% 13,347.65, CAC-40 -0.19% 5,570.84, IBEX-35 +0.21% at 8,158.00, FTSE MIB -0.57% at 21,974.50, SMI -0.03% at 10,445.85, S&P 500 Futures -0.13%]
- Market Focal Points/Key Themes: European indices open lower across the board but moderated losses to trade mixed later in the session; better performing sectors include telecom and real estate; sectors trading to the downside include industrials and materials; UK approves Pfizer-BioNTech vaccine; GardaWorld improves offer for G4S; Stoxx announces new compositions to index; earnings expected during the US session include Guess?, PVH and National Bank of Canada
Equities
- Consumer discretionary: Zalando [ZAL.DE] -1% (Cyber week sales)
- Consumer staples: Tesco [TSCO.UK] -1.5% (to repay business relief)
- Healthcare: Astrazeneca [AZN.UK] +1% (Pfizer/BioNTech COVID-19 vaccine candidate receives world first approval in UK), Targovax [TRVX.NO] +35% (trial results)
- Industrials: Volkswagen [VOW3.DE] -2% (selling bonds in CNY; talks on CEO term), Nordex [NDX1.DE] -9% (capital increase)
Speakers
- EU chief Brexit Barnier said to have told EU ambassadors that a trade deal mighty not be concluded with the UK as the 3 key hurdles remained unresolved.
- EU diplomat stated that it was still unclear if negotiators could bridge the gaps on 3 key issues
- BBC political correspondent Adler tweeted that Barnier was ‘in good spirits’ when reported back to EU ambassadors this morning on state of play in negotiations ongoing in London BUT that he has ‘reached the edges of his mandate’ and has little more room for manoeuvre in talks with U.K.
- Italy Health Min Speranza reiterated stance that govt aimed to avoid nationwide lockdown and would prolong its 3-tier system on virus
- Czech Central Bank Vice Gov Mora stated that recent FX developments reduced the likelihood of raising interest rates
- Japan Econ Min Nishimura: To summarize economic measures during week of Dec 7th. Pandemic response to be a pillar of stimulus measures
Currencies/Fixed Income
- USD began the session on continued soft footing as unwinding of safe-haven flows continued. Risk on appetite has been aided in recent sessions over optimism of the Covid-19 vaccines and better prospects of US stimulus spending being passed.
- EUR/USD approached the 1.21 level early on for its highest level since April 2018
- GBP/USD began the session above the 1.34 level but concerns growing over the possibility of a no-deal Brexit outcome sent the Pound Sterling lower
Economic Data
- (DE) Germany Oct Retail Sales M/M: 2.6% v 1.2%e; Y/Y: 8.2% v 5.8%e
- (NO) Norway Q3 Current Account Balance (NOK): 9.9 v 2.9B prior
- (CH) Swiss Nov CPI M/M: -0.2% v -0.1%e; Y/Y: -0.7% v -0.5%e; CPI Core Y/Y: -0.2% v -0.1%e
- (CH) Swiss Nov CPI Harmonized M/M: -0.4% v -0.2%e; Y/Y: -0.8% v -0.9% prior
- (ES) Spain Nov Unemployment Change: +25.3K v +55.0Ke
- (BR) Brazil Nov FIPE CPI (Sao Paulo) M/M: 1.0% v 1.0%e
- (HU) Hungary Sept Final Trade Balance: €1.1B v €1.1B prelim
- (IT) Italy Oct Preliminary Unemployment Rate: 9.8% v 9.9%e
- (EU) Euro Zone Oct Unemployment Rate: 8.4% v 8.4%e
- (EU) Euro Zone Oct PPI M/M: 0.4% v 0.2%e; Y/Y: -2.0% v -2.3%e
- (BE) Belgium Oct Unemployment Rate: 5.1% v 5.2% prior
Fixed income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK3.95B in 2022 and 2029 DGB bonds
- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2023 and 2031 Bonds
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.75% Mar 2025 Bonds; Avg Yield: 0.52% v 0.42% prior; bid-to-cover: 1.62x v 2.63x prior
- (UK) DMO sold £1.00B in 0.125% Index-Linked Aug 2028 Gilts; Real Yield: % v -2.977% prior; bid-to-cover: x v 2.32x prior
Looking Ahead
- (PL) Poland Central Bank (NBP) Interest Rate Decision: expected to leave Base Rate unchanged at 0.10% (no set time)
- (RO) Romania Nov International Reserves: No est v $39.1B prior
- (AR) Argentina Nov Government Tax Revenue (ARS): No est v 642.1B prior
- (PT) Portugal Debt Agency (IGCP) to hold switch auction
- 05:30 (DE) Germany to sell €2.0B in 0.00% Oct 2025 BOBL; Avg Yield: % v -0.85% prior; bid-to-cover: x v 1.29x prior (Nov 4th 2020)
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 26-week bills; Avg Yield: % v -0.12% prior; bid to cover: x v 1.70x prior (Oct 27th 2020)
- 06:00 (IE) Ireland Nov Unemployment Rate: No est v 7.3% prior
- 06:00 (PT) Portugal Oct Industrial Production M/M: No est v -3.8% prior; Y/Y: No est v 2.9% prior
- 06:30 (CL) Chile Central Bank Traders Survey
- 06:30 (UK) DMO to sell £2.75B in 0.25% July 2031 Gilts; ; Avg Yield: % v 0.496% prior; bid-to-cover: x v 2.51x prior; Tails: bps vs. 0.2bps prior (Nov 12th 2020)
- 07:00 (US) MBA Mortgage Applications w/e Nov 27th: No est v 3.9% prior
- 07:00 (BR) Brazil Oct Industrial Production M/M: 1.4%e v 2.6% prior; Y/Y: 1.0%e v 3.4% prior
- 07:00 (MX) Mexico Oct Leading Indicators M/M: No est v 0.31 prior
- 07:00 (MX) Mexico Nov Vehicle Domestic Sales: No est v 84.3K prior
- 07:00 (UK) Weekly PM Question time in House
- 08:00 (HU) Hungary Central Bank (MNB) Nov Minutes
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:15 (US) Nov ADP Employment Change: +430Ke v +365K prior
- 08:30 (CA) Canada Q3 Labor Productivity Q/Q: -7.0%e v +9.8% prior
- 08:30 (CA) Canada Oct MLI Leading Indicator M/M: No est v 3.4% prior
- (PL) Poland Central Bank (NBP) Interest Rate Decision: expected to leave Base Rate unchanged at 0.10% (no set time)
- 09:45 (UK) BOE buy £1.47B in APF Gilt purchase operation (7-20 years)
- 10:00 (US) Fed chair Powell before House banking panel
- 10:00 (PL) Poland Central Bank (NBP) Gov Glapinski post rate decision press conference
- 10:30 (US) Weekly DOE Oil Inventories
- 11:00 (DK) Denmark Nov Foreign Reserves (DKK): No est v 461.4B prior
- 12:00 (IE) ECB’s Lane (Ireland, chief economist)
- 12:00 (CA) Canada to sell 30-year bonds
- 13:00 (US) Fed’s Williams
- 14:00 (US) Federal Reserve Beige Book
- 16:00 (KR) South Korea Nov Foreign Reserves: No est v $426.5B prior
- 16:30 (AU) Australia Nov Performance of Construction Index: No est v 52.7 prior
- 16:45 (NZ) New Zealand Oct Building Permits M/M: No est v 3.6% prior
- 17:00 (AU) Australia Nov Final PMI Services: No est v 54.9 prelim; PMI Composite: No est v 54.7 prelim
- 18:50 (JP) Japan Oct Loans & Discounts Corp Y/Y: No est v 7.5% prior
- 19:00 (NZ) New Zealand Nov Commodity Price Index: No est v 1.9% prior
- 19:30 (AU) Australia Oct Trade Balance: A$5.8Be v A$5.6B prior; Exports M/M: 4%e v 4% prior; Imports M/M: +4%e v -6% prior
- 19:30 (JP) Japan Nov Final PMI Services: No est v 46.7 prelim; PMI Composite: No est v 47.0 prelim
- 19:30 (HK) Hong Kong Nov PMI (whole economy): No est v 49.8 prior
- 19:30 (SG) Singapore Nov PMI (whole economy): No est v 48.6 prior
- 20:01 (IE) Ireland Nov PMI Services: No est v 48.3 prior; PMI Composite: No est v 49.0 prior
- 22:30 (TH) Thailand Nov Consumer Confidence: No est v 50.9 prior; Economic Confidence: No est v 43.9 prior
- 20:45 (CN) China Nov Caixin PMI Services: 56.4e v 56.8 prior; PMI Composite: No est v 55.7 prior
- 22:35 (JP) Japan to sell 30-Year JGB Bonds
- 23:30 (TW) Taiwan to sell TWD35.0B in 5-year Bonds
- 23:30 (TW) Taiwan to sell TWD170B in 12-month Certificate of Deposits (NCD)
