Notes/Observations
- Presidential Election proves to be closer than expected; if current majorities hold Trump would win 270 delegates to 254 for Biden; key battleground States remain with 73 delegates remaining (Wisconsin, Nevada, Michigan, Pennsylvania, North Carolina, Georgia too close to call)
- Another loss of credibility for polls
- Blue wave derailed as Republicans appear to win a net gain in the House
- Another loss of credibility for polls
Asia:
- China Oct Caixin PMI Services registered its 6th month of expansion and highest reading since Jun (56.8 v 54.8 prior)
- Australia Oct Final PMI Services confirmed move back into expansion (53.7 v 53.8 prelim)
- Australia M/M: -1.1% v -1.5% prelim; Q/Q: 6.5% v 6.0%e
- New Zealand Q3 Unemployment Rate: 5.3% v 5.3%e
- Japan Fin Min Aso stated that govt not concretely considering a 3rd extra budget at this time; wanted to firmly implement existing economic measures
- BOJ Sept Monetary Policy Meeting Minutes (2 meetings ago) noted that most members saw easing as exerting intended effects. Added that should further examine appropriate monetary policy conduct during coronavirus pandemi
Europe:
- EU’s chief Brexit Negotiator Barnier said to signal lack of breakthrough in discussions on key issues
- UK Negotiator Frost and EU Negotiator Barnier said to be expected to recommend a new round of talks between the parties in London this weekend
Energy:
- Weekly API Crude Oil Inventories: -8M v +4.6M prior
- Saudi Arabia and others in OPEC said to considering deeper production cuts amid oil turmoil; further cuts among several possibilities being considered
- OPEC and Russia said to be studying deeper cuts as one of the options to address weaker oil markets in early 2021
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.72% 358.68, FTSE +0.52% at 5,816.87, DAX +0.61% at 12,162.80, CAC-40 +0.85% at 4,846.55, IBEX-35 -0.48% at 6,719.00, FTSE MIB +0.51% at 19,082.50, SMI +1.54% at 10,158.09, S&P 500 Futures +0.77%]
- Market Focal Points/Key Themes: European indices open lower across the board but later turned around to trade substantially in the green (IBEX being notable exception); better performing sectors include health care; financials and energy among sectors trading to the downside; Russia closed for holiday; Brexit negotiations to pause until Sunday; Alfa Laval withdraws offer for Neles; reportedly Ferguson looking to sell plumbing business; focus on pending results of US elections; earnings expected during the upcoming US session include Endsa, Alstria, Qualcomm and Intesa Sanpaolo
Equities
- Consumer discretionary: Marks & Spencer [MKS.UK] +4% (earnings), Mitie Group [MTO.UK] +6% (trading update), Ahold Delhaize [AD.NL] -3% (earnings; buyback)
- Financials: Credit Agricole [ACA.FR] +1.5% (earnings), Provident Financial [PFG.UK] +3% (trading update)
- Industrials: BMW [BMW.DE] -2% (earnings)
- Telecom: Cellnex Telecom [CLNX.ES] +4% (earnings)
Speakers
- President Trump commented from the White House overnight that as far as he was concerned he won the election and would go to Supreme Court if needed. To petition the Supreme Court to stop ballot counting because the election has been ridden with fraud
- Biden campaign official: If Trump went to court to prevent proper tabulation of votes then Democrats to send legal teams to resist that effort
- ECB’s Muller (Estonia) stated that was possible to discuss all asset buying programs at the Dec policy meeting
- ECB’s de Cos (Spain) stated that new measures to curb COVID-19 could lead to significant slowdown or even economic contraction in some EU states in Q4
- UK Foreign Min Raab stated that the national lockdown to definitely end on Dec 2nd
Currencies/ Fixed Income
- Heightened risk aversion was the sentiment as the session began after Trump’s victory in the swing states of Florida, Texas and Ohio which again too many analysts/pundits by surprise. The election remains too close to call but Trump commented that he would take the results to the Supreme Court if needed added to uncertainty.
- EUR/USD at 1.1680 by mid-session after testing 1.1605 just before the session began.
- US Treasury yields were broadly lower in electronic session with the 10-year Note Yield at 0.78%, lower by 12bps and the 30-year Bond Yield: 1.53%, lower by 15bps
Economic Data
- (NO) Norway Q3 Average Monthly Earnings Y/Y: 2.4 v 4.2% prior
- (ZA) South Africa Oct PMI (whole economy): 51.0 v 49.4 prior (1st expansion in 18 months)
- (SE) Sweden Oct PMI Services: 55.0 v 55.0 prior (5th month of expansion); PMI Composite: 59.1 v 54.9 prior
- (ES) Spain Oct Net Unemployment Change: +49.6 v -26.3K prior
- (BR) Brazil Oct FIPE CPI (Sao Paulo) M/M: 1.2% v 1.1%e
- (ES) Spain Oct Services PMI: 41.4 v 40.0e (3rd straight contraction); Composite PMI: 44.1 v 43.0e
- (IT) Italy Oct Services PMI: 46.7 v 47.0e (3rd month of contraction); Composite PMI: 49.2 v 49.2e
- (NG) Nigeria Oct PMI (whole economy): 53.5 v 52.5 prior (4th month of expansion)
- (FR) France Oct Final PMI Services: 46.5 v 46.5e(confirmed 2nd straight contraction); PMI Composite: 47.5 v 47.3e
- (DE) Germany Oct Final PMI Services: 49.5 v 48.9e (confirmed 1st contraction in 4 months); PMI Composite: 55.0 v 54.5e
- (EU) Euro Zone Oct Final PMI Services: 46.9 v 46.2e (confirmed 2nd straight contraction); PMI Composite: 50.0v 49.4e
- (UK) Oct Final PMI Services: 51.4 v 52.3e (confirmed 4th month of expansion); PMI Composite: 52.1 v 52.9e
- (UK) Oct Official Reserves Changes: $0.9B v $0.1B prior
- (EU) Euro Zone Sept PPI M/M: 0.3% v 0.3%e; Y/Y: -2.4% v -2.4%e
- (NO) Norway Oct House Prices M/M: 1.1% v 0.4% prior; Y/Y: 7.1% v 5.8% prior
Fixed Income Issuance
- (IN) India sold total INR160B vs. INR160B indicated in 3-month, 6-month and 12-month bills
- (DK) Denmark sold total DKK4.77B in 2022 and 2052 bonds
- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2025 and 2029 Bonds
- (UK) DMO sold £3.0B in 0.125% Jan 2026 Gilts; ; Avg Yield: 0.000% v 0.013% prior; bid-to-cover: 2.41x v 2.45x prior; Tail: 0.3bps v 0.2bps prior
Looking Ahead
- 05:30 (DE) Germany to sell €5.0B in new 0% Oct green 2025 BOBL
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 13-week bills
- 06:00 (IE) Ireland Oct Unemployment Rate:
- 06:00 (PT) Portugal Q3 Unemployment Rate: No est v 5.6% prior
- 06:00 (FI) Finland to sell €1.0B in Sept 2030 RFGB bonds; Avg Yield: %; bid-to-cover: x (no history)
- 06:30 (TR) Turkey Oct Real Effective Exchange Rate (REER): No est v 62.21 prior
- 07:00 (US) MBA Mortgage Applications w/e Oct 30th: No est v 1.7% prior
- 07:00 (MX) Mexico Sept Leading Indicators M/M: No est v 0.2 prior
- 07:00 (BR) Brazil Sept Industrial Production M/M: 2.4%e v 3.2% prior; Y/Y: +2.6%e v -2.7% prior
- 07:00 (UK) Weekly PM Question time in House
- 08:00 (HU) Hungary Central Bank Oct Minutes
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10% (delayed until Friday)
- 08:15 (US) Oct ADP Employment Change: +650Ke v +749K prior
- 08:30 (US) Sept Trade Balance: -$63.9Be v -$67.1B prior
- 08:30 (CA) Canada Sept Int’l Merchandise Trade (CAD): -2.3Be v -2.5B prior
- 09:45 (US) Oct Final Markit PMI Services: 56.0e v 56.0 prelim; PMI Composite: No est v 55.5 prelim
- 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (7-20 years)
- 10:00 (US) Oct ISM Services Index: 57.5e v 57.8 prior
- 10:00 (DE) ECB’s Schnabel (Germany)
- 10:30 (US) Weekly DOE Oil Inventories
- 18:00 (KR) South Korea Sept Current Account Balance: No est v $6.6B prior; Balance of Goods (BOP): No est v $7.0B prior
- 19:00 (NZ) New Zealand Nov Preliminary Business Confidence: No est v # prior; Outlook Activity: No est v # prior
- 19:30 (AU) Australia Sept Trade Balance (AUD): 3.7Be v 2.6B prior; Exports M/M: +35e v -4% prior; Imports Y/Y: -1%e v +2% prior
- 19:30 (JP) Japan Oct Final PMI Services: No est v 46.6 prelim; PMI Composite: No est v 46.7 prelim
- 20:00 (PH) Philippines Oct CPI Y/Y: 2.3%e v 2.3% prior
- 23:00 (ID) Indonesia Q3 GDP Q/Q: +5.6%e v -4.2% prior; Y/YU: -3.2%e v -5.3% prior
- 23:00 (TH) Thailand Oct CPI M/M: +0.1%e v -0.1% prior; Y/Y: -0.55e v -0.7% prior; CPI Core Y/Y: 0.25e v 0.3% prior
