Notes/Observations
- Emerging central bank rate decisions in focus (Turkey expected to cut while South Africa looks to embark on tightening).
Asia
- New Zealand Q4 Inflation Expectation Survey (2-year outlook): 3.0% v 2.3% prior [10-year high].
- Japan economic stimulus spending said to require ¥55.7T [~¥78.9T when including spending by the private sector]; confirms the package will be approved by Cabinet on Fri. (Nov 19th).
- Japan LDP Official Motegi stated that an extra Budget of >¥30T and would send a big message.
Europe
- EU and UK said to be near an agreement on Northern Ireland medical supplies. EU Sefcovic said to be more upbeat on securing a deal and said to have informed member states to dial down threats of a trade war if Article 16 was triggered.
Americas
- Fed’s Evans (dove, voter) noted that it would take until mid-2022 to complete the Fed’s wind-down of its bond buying program. High fuel prices were hitting household budgets and would be a headwind; On the other hand the stock market was high and financial conditions were good. Would not be surprised to see unemployment fall to 4.5% by year end.
- Fed’s Waller (hawk, voter) had no objections to the idea of banks issuing both payment stablecoins and bank deposits, given the economic similarities between them.
- Fitch affirmed Mexico sovereign rating at BBB-; Outlook Stable.
Energy
- US said to be considering asking other countries to coordinate a release of oil reserves. US said to raise the matter with Japan/China/South Korea and India.
- China National Food and Strategic Reserves Admin (SRB) stated that was working on release of crude reserves. Declined to comment on US request for China to release reserves to help ease global prices.
- South Korea and Japan also confirmed they received US request to release oil reserves.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
- Indices [Stoxx600 -0.04% at 489.78, FTSE -0.11% at 7,283.35, DAX -0.06% 16,240.94, CAC-40 +0.14% at 7,167.14, IBEX-35 +0.13% at 9,009.45, FTSE MIB -0.06% at 27,808.00, SMI -0.09% at 12,589.19, S&P 500 Futures +0.27%].
- Market Focal Points/Key Themes: European indices open generally mixed but took on a positive biase as the session progressed; better performing sectors include financials and materials; laggard sectors include industrials and real estate; Carlyle and Metro Bank terminate takeover; Recticel sells its bedding business; Cosmo completes takeover of Cassiopea; Playtech confirms has received takeover ofer from JKO Play; earnings expected during the upcoming US session include Macy’s, Coty and Applied Materials.
Equities
- Consumer discretionary: Royal Mail [RMG.UK] +5% (earnings).
- Financials: Metro Bank [MTRO.UK] -18% (terminates talks with Carlyle).
- Healthcare: AstraZeneca [AZN.UK] -1% (additional vaccine trial results).
- Industrials: ThyssenKrupp [TKA.DE] +5% (earnings).
- Technology: Micro Focus International [MCRO.UK] -2% (trading update).
Speakers
- ECB’s Centeno (Portugal) reiterated Council stance that pick-up in inflation was seen as a temporary phenomenon.
- ECB’s Panetti (Italy) stated that expected to narrow CBDC design decision by early 2023.
- EU Competition Commissioner Vestager announced the extension of State Aid rules until Jun 2022 (six-month extension).
- Norway Central Bank (Norges) 4Q Household Expectations Survey raised its 12-months inflation expectations from 2.3% to 3.0% and raised the 2-3-year inflation expectations from 3.5% to 3.9%.
- Hungary Central Bank Gov Matolcsy stated that needed to balance growth concerns and debt risks.
- Russia Central Bank (CBR) Gov Nabiullina stated that accelerating inflation was alarming symptom and that food inflation was already in double-digit figures.
- Russia govt spokesperson Peskov stated that Nord Stream 2 fulfilling all bureaucratic requirements to receive German license.
- Philippines Central Bank Policy Statement noted it would prioritize policy support on economy. There did remain risks to monetary settings but would be patience in policy levers to keep economic recovery more sustainable. It did stand ready to respond to 2nd round effects. Inflation expectations were firmly anchored. Economic growth was showing traction but delays in lifting virus curbs and more virulent outbreak could dampen prospects.
- Indonesia Central Bank Policy Statement noted that its rate policy was in-line with efforts to increase growth and support recovery from pandemic.
- China PBoC Gov Yi Gang stated that global economic recovery had slowed since mid-2021 while inflation had sharply increased. Soaring energy prices had led to energy shortages in many countries.
- PBoC Sun Tianq stated that should pay continued attention to existing financial risks.
- US Commerce Sec Raimondo stated that was confident on developing framework with Indo-Pacific partners to strengthen business and workforce.
Currencies/Fixed income
- USD retraced some of its recent gains in a quiet EU session as markets’ reassess the divergence of global central banks to rising inflation. The question now was whether the sustainability of the current dollar strength was intact.
- GBP/USD was higher and above the 1.35 level following the hotter CPI data from Wed. Dealers attributed the strength to BOE rate hike bets for Dec.
- The NZD currency (kiwi) was former after central bank survey showed near-term inflation was expected to rise and likely sealed a 25bps hike by the RBNZ next week.
- Focus on emerging market currencies with rate decisions by Turkey and South Africa later today. The TRY currency moved off its recent record lows.
Economic data
- (NL) Netherlands Oct Unemployment Rate: 2.9% v 3.1% prior.
- (EU) EU27 Oct New Car Registrations: -30.3% v -23.1% prior.
- (CH) Swiss Oct Trade Balance (CHF): 5.7B v 5.0B prior; Real Exports M/M: -1.5% v +0.6% prior; Real Imports M/M: -4.4% v -0.8% prior; Watch Exports Y/Y: 12.5% v 16.6% prior.
- (PH) Philippines Central Bank (BSP) left Overnight Borrowing Rate unchanged at 2.00% (as expected).
- (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo unchanged at 3.50% (as expected).
- (CH) Swiss Q3 Industrial Output Y/Y: 8.3% v 16.1% prior; Industry & Construction Output Y/Y: 7.3% v 14.5% prior.
- (SE) Sweden Oct Unemployment Rate: 7.6% v 8.2% prior; Unemployment Rate (seasonally adj): 8.5% v 8.4%e; Trend Unemployment Rate: 8.7% v 8.8% prior.
- (NG) Nigeria Q3 GDP Y/Y: 4.0% v 5.0% prior.
Fixed income issuance
- (IN) India sold total INR240B vs. INR240B indicated in 2031, 2034 and 2061 bonds.
- (ES) Spain Debt Agency (Tesoro) sold total €4.115B vs. €4.0-5.0B indicated range in 2027, 2029 and 2031 SPGB bonds.
- Sold €1.49B in 0.00% Jan 2027 SPGB bonds; Avg yield: -0.114% v -0.089% prior; bid-to-cover: 1.62x v 1.35x prior.
- Sold €865M in 0.60% Oct 2029 SPGB bonds; Avg Yield: 0.178% v 0.279% prior, bid-to-cover: 2.32x v 2.69x prior.
- Sold €1.76B in 0.50% Oct 2031 SPGB bonds; Avg Yield: 0.465% v 0.483% prior; bid-to-cover: 1.40x v 1.32x prior.
- (FR) France Debt Agency (AFT) sold total €7.494B vs. €6.5-7.5B indicated range in 2024 and 2027 bonds (3 tranches).
- Sold €3.047B in 0.00% Mar 2024 Oat; Avg Yield: -0.69% v -0.71% prior; Bid-to-cover: 2.86x v 3.38x prior.
- Sold €2.598B in 0.00% Feb 2027 Oat; Avg Yield: -0.37% v -0.42% prior; bid-to-cover: 2.56x v 2.51x prior.
- Sold €1.849B in 2.75% Oct 2027 Oat; Avg yield: -0.37% v -0.42% prior, Bid-to-cover: 2.92x v 2.39x prior.
- 00 (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month bills; Avg Yield: -0.700% v -0.641% prior; Bid-to-cover: 2.4x v 2.45x prior.
Looking ahead
- (PE) Peru Q3 GDP Y/Y: 10.8%e v 41.9% prior.
- 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, 2028 and 2030 bonds (Oatei).
- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 100bps to 15.00%.
- 06:00 (RO) Romania to sell 4.85% 2029 Bonds; Avg Yield: %; bid-to-cover: x prior.
- 06:00 (CZ) Czech Republic to sell 1-month Bills; Avg Yield: % v 1.73% prior; Bid-to-cover: x v 4.12x prior.
- 06:30 (CL) Chile Q3 GDP Q/Q: 5.3%e v 1.0% prior; Y/Y: 17.6%e v 18.1% prior.
- 06:30 (CL) Chile Q3 Current Account Balance: No est v -$2.7B prior.
- 06:45 (US) Daily Libor Fixing.
- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to raise Interest Rate by 25bps to 3.75%.
- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 12th: No est v $622.1B prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (US) Fed’s Bostic on Regional Outlook.
- 08:30 (US) Nov Philadelphia Fed Business Outlook: 24.0e v 23.8 prior.
- 08:30 (US) Initial Jobless Claims: 260Ke v 267K prior; Continuing Claims: 2.120Me v 2.160M prior.
- 08:30 (CA) Canada Sept Int’l Securities Transactions (CAD): No est v 26.3B prior.
- 08:30 (US) Weekly USDA Net Export Sales.
- 09:30 (US) Fed’s Williams.
- 09:30 (IE) ECB’s Lane (Ireland, chief economist).
- 10:00 (US) Oct Leading Index: 0.8%e v 0.2% prior.
- 10:30 (US) Weekly EIA Natural Gas Inventories.
- 11:00 (US) Nov Kansas City Fed Manufacturing Activity: 28e v 31 prior.
- 13:00 (US) Treasury to sell 10-Year TIPS Reopening.
- 14:00 (US) Fed’s Evans.
- 15:30 (US) Fed’s Daly.
- 16:00 (KR) South Korea Oct PPI Y/Y: No est v 7.5% prior.
- 18:30 (JP) Japan Oct National CPI Y/Y: 0.2%e v 0.2% prior; CPI Ex-food (core) Y/Y: 0.1%e v 0.1% prior; CPI Ex-food/energy (core-core) Y/Y:- 0.7%e v -0.5% prior.
- 19:01 (UK) Nov GfK Consumer Confidence: -18e v -17 prior.
- 21:00 (NZ) New Zealand Oct Credit Card Spending M/M: No est v -3.3% prior; Y/Y: No est v -12.9% prior.
- 22:00 (ID) Indonesia Q3 Current Account Balance: $3..2Be v -$2.2B prior.
- 22:30 (JP) Japan to sell 3-Month Bills.
