Notes/Observations
UK FTSE rises on weaker cable after UK Q2 GDP was revised lower
EU flash CPI comes short of expectations, while French CPI was a slight beat and Italy misses
German jobless rates hits new record low in Sep
Overnight
Asia:
Raft of data out of Japan, prelim Industrial Production, National CPI comes ahead of expectations while Retail Sales, Household spending misses and Jobless rate comes inline.
BoJ Sept Meeting Minutes: One member said more easing is necessary to stimulate demand**Note: At the Sept BoJ meeting, the incoming member Kataoka was the lone dissenter (8 to 1 vote). The official said then that the yield curve control is not enough to meet the inflation target; Also, the official saw a low chance of CPI increasing from 2018.
Europe:
UK Q2 Final GDP Y/Y revised lower to 1.5% from 1.7% prior, Cable falls Gilts rise
Eurozone prelim CPI comes in softer then forecast, Core CPI misses estimates and falls m/m
French CPI comes in slightly firmer then forecasts, Italy CPI misses
German Unemployment rate at fresh record low at 5.6%
ECBs Praet Economic recovery is not yet translating into higher inflation; ECB has to take economic improvement into account
Economic data
(UK) Q2 FINAL GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.5% V 1.7%E
(EU) EURO ZONE SEPT ADVANCE CPI ESTIMATE Y/Y: 1.5% V 1.6%E; CPI CORE Y/Y: 1.1% V 1.2%E
(UK) AUG NET CONSUMER CREDIT: £1.6B V £1.4BE; NET LENDING: £3.6B V £3.6BE
(UK) Q2 CURRENT ACCOUNT: -£23.2B V -£15.9BE
(DE) GERMANY SEPT UNEMPLOYMENT CHANGE: -23K V -5KE; UNEMPLOYMENT RATE: 5.6% (record low) V 5.7%E
(FR) FRANCE SEPT PRELIMINARY CPI M/M: -0.1% V -0.2%E; Y/Y: 1.0% V 1.0%E
(FR) FRANCE AUG CONSUMER SPENDING M/M: -0.3% V 0.2%E; Y/Y: 1.2% V 1.7%E
(IT) ITALY SEPT PRELIMINARY CPI (NIC INCLUDING TOBACCO) M/M: -0.3% V -0.2%E; Y/Y: 1.1% V 1.3%E
(DE) GERMANY AUG RETAIL SALES M/M: -0.4% V +0.5%E; Y/Y: 2.8% V 3.2%E
(UK) SEPT NATIONWIDE HOUSE PRICE INDEX M/M: 0.2% V 0.1%E; Y/Y: 2.0% V 1.9%E
(CH) SWISS SEPT KOF LEADING INDICATOR: 105.8 V 105.5E
Fixed Income Issuance:
Non seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.2% at 3,567, FTSE +0.5% at 7,361, DAX +0.2% at 12,732, CAC-40 flat at 5,292, IBEX-35 -0.4% at 10,292, FTSE MIB flat at 22,591, SMI +0.2% at 9,128, S&P 500 Futures -0.05%]
Market Focal Points/Key Themes: European stocks opened higher and maintained momentum; oil slightly higher, but not supporting energy stocks much; Spanish stocks underperforming leading into the weekend with expected vote in Catalonia; Israel closed for holiday; attention turning to personal income and spending data as well as PCE deflator from the US, to be released later in the session; upcoming earnings in the US session include Marine Products and City Holding; reminder that next week both South Korea and China markets to be closed for holidays
Equities
Consumer discretionary: Vivendi EX.FR +0.7% (analyst action), Volkswagen VOW3.DE -1.6% (increases impairment)
Energy: Electricite de France EDF.FR -2.3(analyst action), Lundin Petroleum LUPE.SE -1.1% (dry well), Rubis RUI.FR +1.9% (analyst action)
Financials: Beazley Group BEZ.UK +3.2 (trading update), Fonciere Des Regions FDR.FR +1.9% (analyst action)
Industrials: Advanced Metallurgical Group AMG.NL +8.2% (operations update), Carillion CLLN.UK -11.3% (results)
Materials: Covestro 1COC.DE +0.6% (Bayer sell stake) – Telecom: Telecom Italia TIT.IT -0.8% (new CEO)
Speakers
(EU) EU’s Juncker: Not in favour of a Euro budget; Sees EU reform program stretching through next 7 years
(EU) EU’s Tusk: To present schedule for reform of EU in two weeks; EU needs to take step by step approach with EU reform – speaking ahead of Summit in Estonia
(EU) ECB’s Nouy (SSM Chief): Banking union headed in right direction
(CN) China Banking Regulator (CBRC): China to prevent fast rise in household leverage ratio
(UK) PM May: We are making progress on citizen’s rights negotiations
(IT) Italy PM Gentiloni: EU reforms must boost economic growth
Currencies
GBPUSD trades lower after Q2 GDP was revised lower y/y, trading down to 1.3363. EURGBP rises to 0.8815 a 4 day high.
EURUSD trades slightly lower after weaker prelim CPI, the range remains narrow in quiet trade
(IN) India INR currency (rupee) off session lows on suspected dollar sales by RBI – dealers
Fixed Income
Bund futures trade at 161.20 up 28 ticks as euro are inflation data came in weaker than expected. Continued downside targets 160.25 while upside resistance stands initially at 162.07, followed by 163.27.
Gilt futures trade at 124.00 up 18 ticks after UK second quarter final GDP YoY was revised down to 1.5%. Continued downside eyeing 123.06. Upside targets 124.90 then 125.24.
Friday’s liquidity report showed Thursday’s excess liquidity fell to €1.712T from €1.723T and use of the marginal lending facility dropped to €48M from €131M.
Corporate issuance saw $2.2B come to market via 2 issuers headlined by Canadian Imperial Bank $1.75B 2-part senior notes offering. Which brings weekly issuance to $20.4B.
For the week ending Sep 27th Lipper US fund flows reported IG Funds net inflows of $1.19B bringing YTD inflows to $92.5B, High Yield funds reported net inflows of $432.6M bringing YTD outflows to $7.98B.
Looking Ahead
05:30 (SL) Sri Lanka Sept CPI Y/Y: No est v 6.0% prior
06:00 (IT) Italy Aug PPI M/M: No est v 0.0% prior; Y/Y: No est v 0.9% prior
06:00 (PT) Portugal Aug Industrial Production M/M: No est v 2.0% prior; Y/Y: No est v 6.4% prior
07:30 (IN) India Weekly Forex Reserves
08:00 (BR) Brazil Aug National Unemployment Rate: 12.7%e v 12.8% prior
08:00 (CL) Chile Aug Total Copper Production: No est v 473.5K tons prior
08:00 (CL) Chile Aug Manufacturing Production Y/Y: 1.8%e v 2.6% prior; Industrial Production Y/Y: 3.3%e v 3.3% prior
08:00 (CL) Chile Aug Unemployment Rate: 6.8%e v 6.9% prior
08:00 (PL) Poland Sept Preliminary CPI M/M: 0.2%e v -0.1% prior; Y/Y: 2.0%e v 1.8% prior
08:00 (ZA) South Africa Aug South Africa Budget Balance (ZAR): No est v -92.2B prior
08:00 (ZA) South Africa Aug Trade Balance (ZAR): 2.1Be v 9.0B prior
08:05 (UK) Baltic Dry Bulk Index
08:30 (CA) Canada July GDP M/M: 0.1%e v 0.3% prior; Y/Y: 3.9%e v 4.3% prior
08:30 (CA) Canada Aug Industrial Product Price M/M: 0.5%e v -1.5% prior; Raw Materials Price Index M/M: 0.3%e v -0.6% prior
08:30 (US) Aug PCE Core M/M: 0.2%e v 0.1% prior; Y/Y: 1.4%e v 1.4% prior
08:30 (US) Aug PCE Deflator M/M: 0.3%e v 0.1% prior; Y/Y: 1.5%e v 1.4% prior
08:30 (US) Aug Personal Income: 0.3%e v 0.4% prior; Personal Spending: 0.2%e v 0.3% prior
09:00 (RU) Russia Q2 Final Current Account: No est v -$0.3B prelim
09:30 (BR) Brazil Aug Primary Budget Balance: No est v -16.1B prior; Nominal Budget Balance: No est v -44.6B prior
09:45 (US) Sept Chicago Purchasing Manager: 58.7e v 58.9 prior
10:00 (MX) Mexico Aug Net Outstanding Loans: No est v 3.823T prior
10:00 (US) Sept Final University of Michigan Confidence: 95.3e v 95.3 prelim
11:00 (CO) Colombia Aug Exports: No est v $3.1B prior
11:00 (CO) Colombia Aug National Unemployment Rate: No est v 9.7% prior; Urban Unemployment Rate: No est v 11.3% prior
12:00 (US) USDA World Agricultural Supply and Demand Estimate (WASDE) Crop Report
13:00 (US) Weekly Baker Hughes Rig Count data
15:30 (MX) Mexico Aug YTD Budget Balance (MXN): No est v 119.3B prior
