UK Oct Retail Sales Beat Expectations, Brexit Talks Continue With Same Hurdles Remaining

Notes/Observations

• UK Oct Retail Sales best expectations and suggested the economy was in better-shape when the Covid-19 tiered restrictions were being implemented
• Brexit talks continue with 3 main hurdles remaining but negotiators said to be making progress

Asia

• Japan Oct National CPI data in-line (YoY: -0.4% v -0.4%e; CPI Ex-fresh food (core) Y/Y: -0.7% v -0.7%e)
• Japan Nov Preliminary PMI Manufacturing registered its 19th month of contraction) (48.3 v 48.7 prior)
• Australia Preliminary Oct Retail Sales M/M: +1.6% v -1.1% prior
• China Monthly LPR Rate Setting leaves LPR unchanged (1-Year Loan Prime Rate unchanged at 3.85% and 5-Year Loan Prime Rate unchanged at 4.65%)

Europe

• UK-EU trade deal reportedly could be announced next Monday, Nov 23rd. EU diplomatic source said to note that trade deal was 90% done. Warned a crucial breakthroughs on fishing, level-playing-field (LPF) guarantees, and protocols around the deal’s enforcement remained elusive
• Chancellor of the Exchequer Sunak (Fin Min) set to announce a public sector ‘pay restraint’ at the upcoming spending review next week
• EU Leaders met for summit on Thursday. EU Council President Michel stated that a vast majority of EU countries agreed with compromise on rule of law and would continue to try to find a solution acceptable to all

Americas

• Treasury Sec Mnuchin sent letter to Fed’s Powell requesting 90 day extension of Fed’s Commercial Paper Funding Facility, Primary Dealer Credit Facility, Money Market Liquidity Facility, and Paycheck Protection
• Program Liquidity Facility. Called on Fed to return unused stimulus funds to the Treasury
• Treasury Sec Mnuchin; Financial conditions are quite strong; hopes $580B in leftover funds [from Fed] are used to help the economy (returned to treasury). Companies that are hurting from COVID need grants not debt
• Fed Bostic (dove, non-voter): Given where economy was he saw it as being prudent to keep emergency facilities open; Was a bit surprised by US Treasury decision [related to unused Fed stimulus funds]. As federal relief expired, it would leave people at risk
• Moody’s affirmed Canada AAA sovereign rating; outlook Stable

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.49% at 389.48, FTSE +0.50% at 6,366.05, DAX +0.35% at 13,132.40, CAC-40 +0.45% at 5,499.20, IBEX-35 +0.39% at 7,961.00, FTSE MIB +0.70% at 21,687.50, SMI +0.17% at 10,509.00, S&P 500 Futures -0.15%]
• Market Focal Points/Key Themes: European indices open modestly lower but quickly turned around to trade higher across the board; better performing sectors include energy and consumer discretionary; telecom and financials sectors among underperformers; Telit confirms receipt of non-binding offer from u-blox; reportedly Liberbank and Unicaja reach agreement on merger; BBVA and Sabadell will hold board meetings on their merger in early Decmber; Amazon France agrees to delay Black Friday; Bootz beings trading in Denmark; earnings expected in the upcoming US session include Foot Locker and Buckle

Equities

• Consumer discretionary: Europcar [EUCAR.FR] +14% (creditors talks)
• Industrials: Costain [COST.UK] +7% (new CFO), Sage Group [SGE.UK] -9% (earnings)
• Materials: Bekaert [BEKB.BE] +11% (sales)
• Telecom: Telit Communications [TCM.UK] +17% (new takeover offer), Helios Towers [HTWS.UK] -11% (placement)

Speakers

• ECB chief Lagarde reiterated stance that decisive policy actions were needed to sustain growth
• Italy Econ Min Gualtieri stated that he hoped that Hungary/Poland vetoes on Recovery Fund would be resolved at the Dec Leader Summit
• EU envoys were told that all three main Brexit hurdles remained unresolved; negotiations to continue and saw signs of progress emerging. UK had yet to move sufficiently to overcome the three main obstacles to a post-Brexit trade deal an that time was running out and talks may go into December
• Hungary PM Orban stated that EU must continue to negotiate on its 7-year budget plan; deal was a matter of political will. Could be several options to unlock the deadlock on budget
• Turkey President Erdogan stated that the CBRT interest rate hike was part of bitter pill policy; rates would fall as inflation slowed. Reiterated stance that high interest rates were the cause of high inflation

Currencies/ Fixed Income

• USD was mixed in the session. The greenback did exhibit some initial weakness during Asia after reports circulated that the US Treasury sent the Fed a letter requesting the return of unused stimulus aid.
• EUR/USD at 1.1855 area by mid-session and off the Asian high of 1.1890
• GBP/USD was near its best levels with some choppiness exhibited over Brexit talks. Cabled aided by UK Oct Retail Sales that beat expectations and suggested the economy was in better-shape when the Covid-19 tiered restrictions were being implemented. Some weakness in price action emerged after reports circulated that Brexit talks continue with 3 main hurdles remaining. However, the Pound curreny found some momentum as negotiators were said to be making progress. GBP/USD trying to test above the 1.33 level.

Economic Data

• (NE) Netherlands Nov Consumer Confidence Index: -26 v -30 prior
• (UK) Oct Retail Sales (ex-auto/fuel) M/M: 1.3% v 0.0%e; Y/Y: 7.8% v 5.9%e
• (UK) Oct Retail Sales (including auto/fuel) M/M: +1.2% v -0.3%e; Y/Y: 5.8% v 4.1%e
• (UK) Oct Public Finances (PSNCR): £19.8B v £33.4B prior; PSNB (ex-banking groups): £22.3B v £30.0Be; Public Sector Net Borrowing: £21.6B v £31.5Be; Central Government NCR: £14.4B v £25.2B prior
• (DE) Germany Oct PPI M/M: 0.1% v 0.1%e ; Y/Y: -0.7% v -0.8%e
• (NE) Netherlands Oct House Price Index M/M: 1.1% v 1.0% prior; Y/Y: 9.1% v 8.6% prior
• (DK) Denmark Nov Consumer Confidence Indicator: -7.6 v -6.2 prior
• (MY) Malaysia Mid-Nov Foreign Reserves: $B104.9 v $104.6B prior
• (CN) Weekly Shanghai copper inventories (SHFE): 96.8K v 118.0K tons prior
• (RU) Russia Narrow Money Supply w/e Nov 13th (RUB): T v 13.41T prior
• (TW) Taiwan Oct Export Orders Y/Y: 9.1% v 9.0%e
• (TW) Taiwan Q3 Current Account Balance: $28.7B v $20.5B prior
• (SE) Sweden Q3 Industry Capacity: 86.8% v 82.8% prior
• (HK) Hong Kong Oct CPI Composite Y/Y: -0.2% v -1.6%e
• (PL) Poland Oct Sold Industrial Output M/M: 3.2% v 2.5%e; Y/Y: 1.0% v 0.6%e
• (PL) Poland Oct PPI M/M: 0.4% v 0.2%e; Y/Y: -0.4% v -0.9%e
• (IT) Italy Sept Industrial Sales M/M: -3.2% v +5.6% prior; Y/Y: -4.6% v -3.6% prior
• (IT) Italy Sept Industrial Orders M/M: -6.4% v +13.5% prior; Y/Y: 3.2% v 5.8% prior
• (BE) Belgium Nov Consumer Confidence Index: -15 v -17 prior
• Fixed income Issuance
• (IN) India sold total INR220B vs. INR220B indicated in 2023, 2033, 2035 and 2050 bonds
• (ZA) South Africa sold total ZAR2.0B vs. ZAR2.0B indicated in I/L 2029, 2033 and 2046 Bonds

Looking Ahead

• 06:00 (IE) Ireland Oct PPI M/M: No est v 0.5% prior; Y/Y: No est v -12.4% prior
• 06:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)
• 06:30 (IS) Iceland to sell 2023, 2031 and 2033 RIKB Bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (IN) India announces upcoming bill issuance (held on Wed)
• 06:30 (IN) India Weekly Forex Reserve w/e Nov 13th: No est v $568.5B prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (DE) ECB’s Weidmann (Germany) at European Banking Congress
• 08:30 (CA) Canada Sept Retail Sales M/M: 0.2%e v 0.4% prior; Retail Sales (ex-auto) M/M: 0.0%e v 0.5% prior
• 08:30 (US) Fed’s Kaplan
• 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -18.0e v -15.5 prior
• 11:00 (RU) Russia Oct Unemployment Rate: 6.4%e v 6.3% prior
• 11:00 (RU) Russia Sept Real Wages Y/Y: 0.1%e v 0.1% prior
• 11:00 (RU) Russia Oct Real Retail Sales Y/Y: -3.6%e v -3.0% prior
• 11:00 (EU) Potential sovereign ratings after European close (Fitch on Portugal sovereign rating; Moody’s on Ukraine sovereign rateing; S&P on South Africa sovereign rating)
• 13:00 (US) Weekly Baker Hughes Rig Count
• (MX) Citibanamex Survey of Economists