Notes/Observations
- Brexit talks continue keeping hope alive for any possible breakthrough on trade agreement
- Major European PMI Services data in contraction territory (beats: Euro Zone, France, Spain; Misses: Germany, Italy)
- OPEC+ ministers meet to find a way forward to remove production cuts; talks of small production increase from Jan
Asia:
- Australia Nov Final PMI Services confirmed its 3rd month of expansion (55.1 v 54.9 prelim)
- Australia Oct Trade Balance: A$7.5B v A$5.8Be
- Japan Nov Final PMI Services confirmed its 10th straight contraction (47.8 v 46.7 prelim)
- China Nov Caixin PMI Services registered its 7th month of expansion and highest since June (57.8 v 56.4e)
- Hong Kong Nov PMI (whole economy) moved into expansion for the 1st time in 33 months (50.1 v 49.8 prior
Coronaviurs:
- Total global cases 64.5M (+1.1% d/d); total deaths: 1.49M (+0.9% d/d)
Europe:
- France told EU Brexit Negotiator Barnier there’s risk they would veto the Brexit deal over concerns he’s giving up too much ground in negotiation
Americas:
- Democrat leaders Pelosi and Schumer back the $908B bipartisan relief bill as a base for starting new stimulus talks
- President-elect Biden endorsed the $908b Covid-19 relief package adding congress should pass a robust relief bill; the congressional bill went to place doing well, a bipartisan aid plan would offer some help
Energy:
- Russia, Saudi Arabia and the UAE oil talks focusing on the proposals for gradually easing the OPEC+ production cuts across several months. Not clear when the unwinding of production cuts would begin start in Jan or later in Q1
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.31% at 390.48, FTSE -0.21% at 6,449.65, DAX -0.50% at 13,247.15, CAC-40 -0.43% at 5,559.04, IBEX-35 -0.51% at 8,179.00, FTSE MIB -0.20% at 21,928.50, SMI -0.55% at 10,377.50, S&P 500 Futures -0.13%]
- Market Focal Points/Key Themes: European indices open mixed but later moved to trade down across the board; technology and industrials sectors among better performers; sectors trading to the downside include energy and financials; Italy and Germany extend covid restrictions; Fortum considering divestment of consumer solutions unit; XPO Logistics to spin off logistics business; focus on upcoming OPEC+ meeting; earnings expected in the upcoming US session include Michaels, Dollar General and Kroger
Equities
- Consumer discretionary: Go-Ahead [GOG.UK] +4% (trading update), SAS [SAS.SE] -3% (earnings)
- Consumer staples: Sainsbury [SBRY.UK] +1.5% (trading update)
- Healthcare: Pharma Mar [PHM.ES] -12% (study results)
- Industrials: Daimler [DAI.DE] -1% (new Chairman)
- Telecom: Orange Belgium [OBEL.BE] +35% (offer)
Speakers
- ECB said to be considering allowing bank dividends of 15-25%
- EU’s Dombrovskis (trade chief): Intensively engaged with US regarding aircraft aid talks. Also intensively working on EU budget and Recovery Fund issues with Hungary and Poland
- Ireland Foreign Min Coveney expressed hope Brexit negotiations were drawing to a close; there would be no extensions. Saw a good chance of a Brexit deal in the coming days
- Italy Stats Agency (Istat) Monthly Economic Note cuts both 2020 and 2021 GDP outlook. Cut its 2020 GDP from -8.3% to -8.9% and cut its 2021 GDP growth forecast from 4.6% to 4.0%
- China Foreign Ministry spokesperson Hua Chunying: have not seen NYT report on visa requirements. Reiterates opposition to escalation by US; urges US to give up hatred of Communist Party
- Former China PBOC official Sheng Songcheng: PBoC should not rush to raise interest rates and believed that PBoC should delay any action until at least the second half of 2021
- OPEC+ said to be close in on agreement to allow for small production increase of no more than 500K bpd from Jan 2021 as oil prices recovered in recent weeks
- Russia govt spokesperson: Too soon to comment on OPEC+; outcome to depend on talks
Currencies/Fixed Income
- The same catalysts that has weakened the USD over the past 10 sessions remained in effect. Dealers continued to cite that unwinding of safe-haven flows from rising risk appetite was occurring. Recent sessions saw optimism of the Covid-19 vaccines and better prospects of US stimulus spending being passed.
- EUR/USD was holding above the 1.21 level early on for its highest level since April 2018. Dealers noted that ECB chief economist Lane did not mention FX in his remarks on Wed, thus providing the green light for further USD weakness. The 1.24/1.25 neighborhood is currently achievable technically.
- GBP/USD clawing its was back above the 1.34 level as Brexit talks continue. As long as negotiations continue there is always hops of a breakthrough. The 1.36 level viewed as pivotal resistance and possible catalyst for any move back toward pre-Brexit range above 1.50 area
Economic Data
- (RU) Russia Nov PMI Services: 48.2 v 46.0e (2nd straight contraction); PMI Composite: 47.8 v 47.1 prior
- (TR) Turkey Nov CPI M/M: 2.3% v 1.1%e; Y/Y: 14.0% v 12.7%e; CPI Core Index Y/Y: 13.3% v 12.3%e
- (TR) Turkey Nov PPI M/M: 4.1% v 3.6% prior; Y/Y: 23.1% v 18.9%e
- (UK) Nov Official Reserves Changes: $1.0B v $0.9B prior
- (ZA) South Africa Nov PMI (whole economy): 50.3 v 51.5e (2nd straight expansion)
- (SE) Sweden Nov PMI Services: 58.6v 51.0e (6th month of expansion); PMI Composite: 58.7 v 56.2 prior
- (HU) Hungary Oct Retail Sales Y/Y: -1.9% v +0.4%e
- (ES) Spain Nov Services PMI: 39.5 v 36.6e (4th straight contraction); Composite PMI: 41.7 v 40.0e
- (NG) Nigeria Nov PMI (whole economy): 50.9 v 53.5 prior
- (IT) Italy Nov Services PMI: 39.4 v 40.8e (4th month of contraction); Composite PMI: 42.7 v 43.7e
- (FR) France Nov Final PMI Services: 38.8 v 38.0e (confirmed 3rd straight contraction); PMI Composite: 40.6 v 39.9e
- (DE) Germany Nov Final PMI Services: 46.0 v 46.2e; (confirmed 2nd straight contraction) PMI Composite: 51.7 v 52.0e
- (EU) Euro Zone Nov Final PMI Services: 41.7 v 41.3e (confirmed 3rd straight contraction); PMI Composite: 45.3 v 45.1e
- (UK) Nov Final PMI Services: 47.6 v 45.8e (confirmed 1st contraction in 5 months); PMI Composite: 49.0 v 47.4e
- (EU) Euro Zone Oct Retail Sales M/M: 1.5% v 0.7%e; Y/Y: 4.3% v 2.6%e
Fixed income Issuance
- (FR) France Debt Agency (AFT) sold total €6.499B vs. €5.5-6.5B indicated range in 2032, 2036, 2041 and 2048 Bonds
- Sold €1.59B in 5.75% Oct 2032 Oat; Avg Yield: -0.26% v +1.10% prior; Bid-to-cover: 2.08x v 1.86x prior
- Sold €1.991B in 1.25% May 2036 Oat; Avg Yield: -0.04% v +0.09% prior; Bid-to-cover: 2.35x v 1.92x prior
- Sold €1.085B in 4.50% Apr 2041 Oat; Avg yield: 0.10% v 1.43% prior; Bid-to-cover: 2.82x v 1.56x prior
- Sold €1.833B in 2.00% May 2048 Oat; Avg Yield: 0.29% v 1.60%prior, Bid-to-cover: 1.87x v 1.72x prior
Looking Ahead
- OPEC+ meeting
- (UR) Ukraine Nov Foreign Reserves: No est v $26.1B prior
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
- 05:50 (HU) Hungary Central Bank weekly One-Week Deposit Tender
- 06:00 (ZA) South Africa Oct Electricity Production Y/Y: No est v -3.1% prior; Electricity Consumption Y/Y: No est v -2.1% prior
- 07:00 (BR) Brazil Q3 GDP Q/Q: +8.7%e v -9.7% prior; Y/Y: -3.5%e v -11.4% prior; GDP 4Quarters Accumulated: -3.5%e v -2.2% prior
- 07:30 (US) Nov Challenger Job Cuts: No est v +80.7K prior; Y/Y: No est v 60.4% prior
- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 27th: No est v $584.9B prior
- 08:00 (BR) Brazil Nov PMI Services: No est v 52.3 prior; PMI Composite: No est v 55.9 prior
- 08:00 (SG) Singapore Nov Purchasing Managers Index: No est v 50.5 prior; Electronics Sector Index: No est v 51.0 prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Initial Jobless Claims: 775Ke v 778K prior; Continuing Claims: 5.80Me v 6.071M prior
- 08:30 (US) Weekly USDA Net Export Sales
- 09:45 (US) Nov Final Markit PMI Services: 57.5e v 57.7 prelim; PMI Composite: No est v 57.9 prelim
- 10:00 (US) Nov ISM Services Index: 55.9e v 56.6 prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
- 12:00 (CA) Canada to sell 3-year notes
- 16:45 (NZ) New Zealand Q3 Volume of All Buildings Q/Q: +31.5%e v -22.4% prior
- 18:00 (KR) South Korea Oct Current Account Balance: No est v $10.2B prior; Balance of Goods (BOP): No est v $12.0B prior
- 19:30 (AU) Australia Oct Retail Sales M/M: +0.5%e v -1.1% prior
- 20:00 (PH) Philippines Nov CPI Y/Y: 2.6%e v 2.5% prior
- 20:00 (PH) Philippines Oct Unemployment Rate: No est v 10.0% prior
- 20:30 (UK) Nov Construction PMI: No est v 53.1 prior
- 22:30 (TH) Thailand Nov CPI M/M: -01%e v +0.1% prior; Y/Y: -0.4%e v -0.5% prior; CPI Core Y/Y: 0.2%e v 0.2% prior
- 22:30 (HK) Hong Kong to sell HKD0.8B in 1-month Bills
- 23:30 (JP) Japan to sell 3-Month Bills
