EU Confidence Readings Hampered By COVID-19 Restrictions

Notes/Observations

• EU Confidence data misses expectations German Confidence falls for the 8th straight month; France Business misses expectations with climate fatigue pinned on fears of a second lockdown amid
• Resumption of face-to-face Brexit negotiations seen increasing the chance of a Brexit deal
• EU bond issuance this week remains strong as Italy syndicates a 30-year BTP
• Continued hope for a US stimulus package but some doubts creeping in
• Companies expected to report results during the NY morning include American Airlines, Quest Diagnostics, Dow Chemical, Freeport McMoran, W.W. Grainger, Kimberly-Clark, Coca-Cola, Southwest Airlines, Northrop Grumman, Nucor, PulteGroup, SiriusXM, AT&T, Union Pacific, Valero Energy

Asia:

• South Korea Fin Min Hong stated that it was closely monitoring FX Markets; To take actions if one sided movements occur in market to stabilize currency

Europe:

• UK PM Johnson office announced that UK agreed to restart Brexit trade talks with EU to see if it’s possible to bridge significant gaps that remain in the most difficult areas
• UK Fin Min Sunak said to soon announce a 4th support package for businesses in as many months; focus to be on hospitality business

Americas:

• US Director of Intelligence Ratcliffe: US has determined that Iran has sent emails to Democrats; Russia and Iran have taken action to interfere with election

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.64% at 358.48, FTSE -0.36% at 5,755.55, DAX -0.78% at 12,460.05, CAC-40 -0.70% at 4,819.80, IBEX-35 -0.73% at 6,762.00, FTSE MIB -0.62% at 18,968.50, SMI -0.36% at 9,953.50, S&P 500 Futures -0.28%]
• Market Focal Points/Key Themes: European indices open lower across the board and stay in the red as the session wore on; risk sentiment under pressure as covid cases across Europe continue to spike; better performing sectors include materials and consumer discretionary ; industrials and technology sectors among those leading to the downside; reportedly Germany expands diesel probe including Continental; Countrywide announces investment from AlchemyUK Chancellor to announce fourth support package for businesses earnings expected in the upcoming US session include Coca-Cola, Dow Chemical, Michelin and American Airlines

Equities

• Consumer discretionary: Unilever [UNA.NL] +1% (trading update), Hermes [RMS.FR] +1% (sales)
• Energy: Neste Oil [NESTE.FI] +4% (earnings)
• Healthcare: Ipsen [IPN.FR] +5% (sales)
• Industrials: Schneider Electric [SU.FR] +3% (sales; raises outlook), Continental [CON.DE] -1% (prelim sales), Thales [HO.FR] -1% (earnings), Dassault Systemes [DSY.FR] -4% (earnings)
• Technology: STMicroelectronics [STM.FR] +2% (earnings)

Speakers

• BOE’s Haldane (chief economist): Household spending has been remarkably resilient. 2nd wave of coronavirus in US had little impact on spending but could have implications for the UK. It was right that more of the heavy lifting to be done via fiscal policy
• Swiss KOF Institute Autumn Economic Forecast raised 2020 GDP growth from -5.1% to -3.6%while cutting its 2021 GDP growth from 4.3% to 3.2%
• Sweden Central Bank (Riksbank) Business Survey: outlook has brightened but concerns remain
• South Africa to form National Economic Recovery Council to monitor implementation of recovery plan (**Reminder: On Oct 15th South Africa President Ramaphosa presented his economic reconstruction and recovery plan with the main focus being on job creation)
• China Commerce Ministry (MOFCOM) spokesperson Gao Feng: To improve the export control list and release it in due course
• China Foreign Ministry spokesperson Zhao Lijoan reiterated US arm sales to Taiwan violated the One-China policy. Would make necessary response against US on Media designation of 6 China media outlets as foreign missions

Currencies/Fixed Income

• USD was steady in a quiet EU session. Continued hopes of a US stimulus agreement before the Nov 3rd election had provided some unwinding of safe-haven flows in recent days.
• EUR/USD steady at 1.1850 area and well-contained within the 1.15-1.20 trading range. Upside capped as dealer note the Euro Zone was in the grip of a second wave of Covid-19 infections and thus putting economic activity in an increasingly precarious position
• GBP consolidated some of its recent gains as UK-EU resumed Brexit negotiations. The recent olive branch by EU keeping hopes alive of an agreement. Dealer do caution that any deal may not be reached until mid-November
• TRY current (Lira) has firmed for the past 5 sessions on anticipation of another rate hike from the Turkey Central Bank. USD/TRY at 7.82

Economic Data

• (NL) Netherlands Aug Consumer Spending Y/Y: -5.8%v -6.4% prior
• (NL) Netherlands Oct Consumer Confidence Index: -30 v -28 prior
• (DE) Germany Nov GfK Consumer Confidence: -3.1 v -3.0e
• (DK) Denmark Oct Consumer Confidence Indicator: -6.2 v -7.4 prior
• (NO) Norway Aug AKU Unemployment Rate: 5.3% v 5.1%e
• (NO) Norway Q3 Industrial Confidence: +1.7 v -9.6 prior
• (FR) France Oct Business Confidence: 90 v 92e; Manufacturing Confidence: 93 v 96e; Production Outlook Indicator: -12 v -4e; Own-Company Production Outlook: 4 v 5e
• (FR) France Oct Business Survey on Overall Demand: +6 v -44 prior
• (MY) Malaysia Mid-Oct Foreign Reserves: $105.2B v $105.0B prior
• 04:00 (CH) Swiss KOF Institute Autumn Economic Forecast
• (TW) Taiwan Sept Unemployment Rate: 3.8% v 3.8%e
• (HK) Hong Kong Sept CPI Composite Y/Y: -2.2% v -0.3%e
• (EU) Euro Zone 2019 Govt Debt/GDP Ratio: 84.0% v 84.1% prior
• (IS) Iceland Sept Wage Index M/M: 0.8% v 0.2% prior; Y/Y: 6.7% v 6.4% prior

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) opened book to sell EUR-denominated 30-year BTP bond via syndicate; guidance seen +7bps to mid-swaps
• (UK) DMO sold £2.25B in new 0.625% July 2035 Gilts; Avg Yield: 0.618%, bid-to-cover: 2.41x; Tail: 0.2bps (issue was previously syndicated on Sept 8th 2020)

Looking Ahead

• (IT) Italy Debt Agency (Tesoro) Exchange auction results
• (AR) Argentina Oct Consumer Confidence Index: No est v 40.3 prior
• 05:25 (UK) BOE Gov Bailey
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
• 05:30 (PL) Poland exchange auction
• 06:00 (UK) Oct CBI Industrial Trends Total Orders: -50e v -48 prior; Selling Prices: No est v -1 prior; Business Optimism: -17e v -1 prior
• 06:00 (IE) Ireland Sept PPI M/M: No est v -0.9% prior; Y/Y: No est v -8.4% prior
• 06:00 (RO) Romania to sell RON600M in 4% 2023 Bonds 3.7% 2024 Bonds
• 06:00 (CZ) Czech Republic to sell CZK10B in 2-month Bills
• 06:30 (UK) DMO to sell £1.75B in 0.625% Oct 2050 Gilts; Avg Yield: % v 0.826% prior; bid-to-cover: x v 2.22x prior; Tail: bps v 0.3bps prior (Sept 10th 2020)
• 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 6.00%
• 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to raise One-Week Repo Rate by 175bps to 12.00%
• 08:00 (PL) Poland Sept M3 Money Supply M/M: 0.2%e v 0.2% prior; Y/Y: 16.1%e v 16.2% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Initial Jobless Claims: 870Ke v 898K prior; Continuing Claims: 9.63Me v 10.018M prior
• 08:30 (US) Weekly USDA Net Export Sales
• 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base rate unchanged at 0.10%
• 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 16th: No est v $585.3B prior
• 10:00 (US) Sept Existing Home Sales: 6.30Me v 6.00M prior
• 10:00 (US) Sept Leading Index: 0.6%e v 1.2% prior
• 10:00 (EU) Euro Zone Oct Advance Consumer Confidence: -15.0e v -13.9 prior
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:00 (US) Oct Kansas City Fed Manufacturing Activity: 11e v 11 prior
• 11:00 (NO) Norway Central Bank (Norges) Gov Olsen
• 11:00 (IT) Italy Debt Agency (Tesoro) announcement on upcoming CTZ and BTPei issuance
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 12:00 (CA) Canada to sell 2-year notes
• 13:00 (US) Treasury to sell 5-Year TIPS
• 15:00 (CO) Colombia Aug Economic Activity Index (Monthly GDP) Y/Y: -10.0%e v -9.6% prior
• 15:00 (AR) Argentina Aug Economic Activity Index (Monthly GDP) M/M: No est v 1.1% prior; Y/Y: -12.0%e v -13.2% prior
• 15:00 (AR) Argentina Sept Trade Balance: No est v $1.4B prior
• 17:45 (NZ) New Zealand Q3 CPI Q/Q: +0.9%e v -0.5% prior; Y/Y: 1.7%e v 1.5% prior
• 18:00 (AU) Australia Oct Preliminary PMI Manufacturing: No est v 55.4 prior; PMI Services: No est v 50.8 prior; PMI Composite: No est v 51.1 prior
• 19:01 (UK) Oct GfK Consumer Confidence: -28e v -25 prior
• 19:30 (JP) Japan Sept National CPI Y/Y: 0.0%e v 0.2% prior; CPI Ex Fresh Food (core) Y/Y: -0.4%e v -0.4% prior; CPI Ex Fresh Food/Energy (core-core) Y/Y: -0.1%e v -0.1% prior
• 20:30 (JP) Japan Oct Preliminary PMI Manufacturing: No est v 47.7 prior; PMI Services: No est v 46.9 prior; PMI Composite: No est v 46.6prior
• 23:00 (CN) China to sell 30-Yr Upsized Government Bond
• 23:30 (JP) Japan to sell 3-Month Bills