- EU leaders begin 2-day meeting; likely to discuss energy.
- UK public-sector net borrowing data for Sept showed improvement ahead of next week’s budget speech from Sunak.
- Bond yields stabilizing after recent volatility.
- Focus remains on Chinese property sector (Evergrande [3333.HK] resumed trading after a multi-week halt).
- Companies due to report during the NY morning include American Airlines, AutoNation, Blackstone, Crocs, Quest Diagnostics, Dow, Freeport McMoran, Interpublic, Southwest Airlines, Nucor, Pool Corp, AT&T, Valero.
Asia
- New Zealand reached 15 year free trade agreement (FTA) with the UK. FTA to remove all tariffs on exports to the UK over time.
- China PBOC stated to continue to monitor financial risks in key sectors; sought to provide more financial support in green and innovative sectors.
- China’s Evergrande planned HK$20B transaction for the Property Services unit did not take place; No guarantee the group could meet some obligation. Additionally, the company said to have secured an extension on its Jumbo Fortune bond.
Coronavirus
- UK Health Min Javid urged people to get a Covid-19 booster shot in order to avoid restrictions over Christmas. Warned cases might reached 100K per day.
Europe
- ECB said to be asking banks to up capital and staff to their post Brexit ops in the EU.
Americas
- President Biden advisers said to discussed new minimum tax on corporations and tax on stock buybacks; Democratic Senator Sinema (D-AZ) said to be opposed to raising the corporate tax rate to 28% [vs 21% currently].
- White House said to have told Democratic lawmakers that a plan to raise the corp tax rate was unlikely to make it into the reconciliation Bill.
- Federal Reserve Beige Book: Employment increased at a modest to moderate pace in recent weeks as demand for workers was high. Labor growth dampened by low supply of workers.
- Fed’s Mester (non-voter, hawk): Rate hikes are not coming any time soon.
- Port of Los Angeles processed 903,865 containers in September, the busiest September ever in the Port’s 114-year history.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 -0.19% at 469.20, FTSE -0.36% at 7,197.40, DAX -0.18% at 15,495.65, CAC-40 -0.44% at 6,676.38, IBEX-35 -0.83% at 8,943.50, FTSE MIB -0.30% at 26,502.00, SMI +0.11% at 12,026.85 , S&P 500 Futures -0.26%].
- Market Focal Points/Key Themes: European indices trade modestly lower; better performing sectors include materials and consumer staples; underperformers include financials and industrials; Skanska to sell logistics portfolio; Tag Immobilien plans to delist; earnings expected during the upcoming US session include Atlas Copco, Danaher, KeyCorp and Quest Diagnostics.
Equities
- Consumer discretionary: Unilever [UNA.NL] +2.5% (earnings), Just Eat Takeaway [JET.UK] -3.5% (CMD).
- Financials: Barclays [BARC.UK] -1% (earnings).
- Healthcare: bioMerieux [BIM.FR] +3% (earnings).
- Industrials:Volvo [VOLVA.SE] +1% (earnings), ABB [ABBN.CH] -5.5% (earnings; outlook cut).
- Technology: ATOS [ATO.FR] +2% (earnings), SAP SE [SAP.DE] +1% (final results).
- Real Estate: TLG Immobilien [TLG.DE] +15% (plans delisting).
Speakers
- ECB’s Visco (Italy) reiterated Council view that EU monetary policy should go hand in hand with fiscal policy; growth is the only true way to reduce the debt burden.
- Czech Central Bank’s Holub (chief economist): Favor a Nov rate hike of more than 25bps (**Reminder: Czech Central Bank hiked by 75bps at the Sept policy meeting).
- Hungary Central Bank Dep Gov Virag stated that needed to tighten more than what was done in Sept.
- Philippines Central Bank (BSP) Gov Diokno stated that c Continued monetary policy support remained crucial.
- China Commerce Ministry (MOFCOM) reiterated that China and US should work together to create conditions for implementation of the phase-1 trade agreement.
- China Banking and Insurance Regulatory Commission (CBIRC) reiterated to keep stability and consistency of property finance rules. Evergrande would not cause industry-wide impact.
Currencies/Fixed Income
- GBP/USD was back above the 1.38 level after Wed’s decline. Markets remain convinced that the BoE would raise interest rates as soon as next month to curb inflation.
- Commodity currencies stood near multi-month highs on Thursday on strong raw material prices.
- Focus on TRY currency (Lira) as the Turkey Central Bank was expected to again cut interest rates despite elevated inflation.
- Bitcoin tested above $67K after EFT launch.
Economic data
- (NL) Netherlands Oct Consumer Confidence Index: -10 v -5 prior.
- (NL) Netherlands Sept Unemployment Rate: 3.1 v 3.2% prior.
- (NL) Netherlands Aug Consumer Spending Y/Y: 5.8% v 4.7% prior.
- (UK) Sept Public Finances (PSNCR): £4.7B v £5.8B prior; Net Borrowing: £21.0B v £23.2Be; PSNB (ex-banking groups): £21.8B v £22.6Be; Central Government NCR: £14.6B v £8.5B prior.
- (DK) Denmark Oct Consumer Confidence Indicator: 3.3 v 8.2 prior.
- (JP) Japan Sept Final Machine Tool Orders Y/Y: 71.9% v 71.9% prelim.
- (FR) France Oct Business Confidence: 113 v 110e; Manufacturing Confidence: 107 v 105e; Production Outlook Indicator: 21 v 17e; Own-Company Production Outlook: 17 v 15e.
- (FR) France Oct Overall Business Demand Survey: 20 v 22 prior.
- (CH) Swiss Sept M3 Money Supply Y/Y: 3.2% v 3.2% prior.
- (TR) Turkey Oct Consumer Confidence: 76.8 v 79.7 prior.
- (SE) Sweden Sept Unemployment Rate: 8.2% v 8.5% prior; Unemployment Rate (seasonally adj): 8.8% v 8.6%e; Trend Unemployment Rate: 8.8% v 8.9% prior.
- (IT) Italy Aug Industrial Sales M/M: 0.8% v 0.8% prior; Y/Y: 13.8% v 19.0% prior.
- (PL) Poland Sept Real Retail Sales M/M: -2.4% v -2.5%e; Y/Y: 5.1% v 5.2%e; Retail Sales Y/Y: 11.1% v 10.4%e.
- (PL) Poland Sept Construction Output Y/Y: 4.3% v 8.0%e.
- (HK) Hong Kong Sept Unemployment Rate: 4.5% v 4.6%e.
- (EU) Euro Zone 2020 Govt Debt to GDP Ratio: 97.3% v 98.0% prior.
- (BE) Belgium Oct Consumer Confidence Index: 4 v 8 prior.
Fixed income Issuance
- (UK) DMO opened its book to sell 1.50% July 2053 green Gilt; guidance seen -1 bp to UK Treasuries (2052 Gilt); order book over £59B.
- (ES) Spain Debt Agency (Tesoro) sold total €5.053B vs.€4.5-5.5B indicated range in 2027 and 2037 bonds.
- Sold €3.37B in new 0.00% Jan 2027 SPGB; Avg yield: -0.089% v -0.371% prior; Bid-to-cover: 1.35x v 2.55x prior.
- Sold €1.68B in 0.85% July 2037 SPGB bonds; Avg Yield: 0.942% v 0.972% prior; bid-to-cover: 1.42x v 1.55x prior.
- (FR) France Debt Agency (AFT) sold total €7.487B vs. €6.5-7.5B indicated range in 2025 and 2026 bonds.
- Sold €3.196B in 0.00% Mar 2025 Oat; Avg Yield: -0.50% v -0.57% prior; Bid-to-cover: 2.83x v 1.79x prior.
- Sold €2.611B in 1.00% Nov 2025 Oat; Avg Yield: -0.44% v -0.33% prior; Bid-to-cover: 2.88x v 3.06x prior.
- Sold €1.685B in 0.50% May 2026 Oat; Avg Yield: -0.36% v -0.62% prior; Bid-to-cover: 3.86x v 2.70x prior.
- (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: -0.641% v -0.640% prior; Bid-to-cover: 2.45x v 2.40x prior.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
- 05:50 (FR) France Debt Agency (AFT) to sell €1.25-1.75B in inflation-linked 2026, 2032 and 2047 Bonds (Oatei).
- 06:00 (UK) Oct CBI Industrial Trends Total Orders: 17e v 22 prior; Selling Prices: 40e v 41 prior; Business Optimism: 20e v 27 prior.
- 06:00 (CZ) Czech Republic to sell CZK5.0B in 1-month Bills.
- 06:00 (RO) Romania to sell 3.25% 2026 Bonds.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 100bps to 17.00%.
- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 8.50%.
- 07:00 (MX) Mexico Aug Retail Sales M/M: -0.5%e v -0.4% prior; Y/Y: 6.6%e v 9.9% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Oct Philadelphia Fed Business Outlook: 25.0e v 30.7 prior.
- 08:30 (US) Initial Jobless Claims: 297Ke v 291K prior; Continuing Claims: 2.55Me v 2.593M prior.
- 08:30 (US) Weekly USDA Net Export Sales.
- 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 15th: No est v $615.4B prior.
- 09:00 (US) Fed’s Waller.
- 10:00 (US) Sept Existing Home Sales: 6.09Me v 5.88M prior.
- 10:00 (US) Sept Leading Index: 0.4%e v 0.9% prior.
- 10:00 (EU) Euro Zone Oct Advance Consumer Confidence: -5.0e v -4.0 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 10-year notes.
- 13:00 (US) Treasury to sell 5-Year TIPS.
- 15:00 (AR) Argentina Sept Trade Balance: No est v $2.3B prior.
- 15:00 (AR) Argentina Aug Economic Activity Index (Monthly GDP) M/M: No est v 0.8% prior; Y/Y: No est v 11.7% prior.
- 15:00 (AU) RBA Gov Lowe participates in online panel.
- 18:01 (NL) Netherlands Sept House Price Index M/M: No est v 2.1% prior; Y/Y: No est v 17.8% prior.
- 19:00 (AU) Australia Oct Preliminary PMI Manufacturing: No est v 56.8 prior; PMI Services: No est v 45.5 prior; PMI Composite: No est v 46.0 prior.
- 19:01 (UK) Oct GfK Consumer Confidence: -16e v -13 prior.
- 19:30 (JP) Japan Sept National CPI Y/Y: +0.2%e v -0.4% prior; CPI ex-fresh food (core) Y/Y: 0.1%e v 0.0% prior; CPI ex-fresh food/energy (core-core) Y/Y: -0.4%e v -0.5% prior.
- 20:30 (JP) Japan Oct Preliminary PMI Manufacturing: No est v 51.5 prior; PMI Services: No est v 47.8 prior; PMI Composite: No est v 47.9 prior.
- 22:30 (KR) South Korea to sell KRW100B in 10-Year Bonds.
- 22:30 (JP) Japan to sell 3-Month Bills.
- 23:30 (TH) Thailand Sept Customs Trade Balance: -$0.9Be v -$1.2B prior; Exports Y/Y: 11.6%e v 8.9% prior; Imports Y/Y: 33.3%e v 47.9% prior.
