Notes/Observations
FOMC expected to keep policy steady with door open for a possible 3rd hike in Dec
Participation light in Europe due to all-souls day holiday (Austria, Hungary, Lithuania, Poland, Slovakia, Slovenia)
UK PMI Manufacturing registers a slight beat; focus on BOE rate decision on Thursday with consensus for a dovish hike
Overnight
Asia:
China Oct Caixin Manufacturing PMI: 51.0 v 51.0E (4-month low)
Japan Oct Final Manufacturing PMI revised higher (52.8 v 52.5 prelim)
New Zealand Unemployment at lowest level since financial crisis (4.6% v 4.7%e)
South Korea Oct CPI below forecast and under BOK’s 2% inflation target.
South Korea Oct Trade Balance and components miss expectations
Europe:
UK Brexit Sec Davis: seek to strategically accelerate the Brexit negotiation process. ‘Basic’ EU deal likely even if trade talks failed. A ‘no deal’ Brexit would mean no free trade customs accords, no accords on aviation
National Institute of Economic and Social Research (NIESR): Expects UK inflation to peak at 3.2% in Q4, BoE rates to peak at 2% in 2021
Greece said to plan to swap €29.7B in 20 bonds issued following the 2012 private debt restructuring for up to 5 new fixed-coupon bonds; could be launched in mid-Nov
Americas:
US House Tax Committee Chairman Brady: Republican tax bill text to be released on Thursday (one day delay)
NYC ‘terror’ attack leaves 8 dead, several injured- At least eight people are dead after a driver barreled into a bike path and crashed a rental pickup truck into a crowd in Lower Manhattan
Bank of Canada (BOC) Gov Poloz: We are at a crucial spot in the economic cycle, and significant uncertainties are clouding the way forward
Energy:
Weekly API Oil Inventories: Crude: -5.1M v +0.5M prior
Economic Data
(IN) India Oct Manufacturing PMI: 50.3 v 51.2 prior (3rd month of expansion)
(IE) Ireland Oct Manufacturing PMI: 54.4 v 55.4 prior (53rd month of expansion)
(RU) Russia Oct Manufacturing PMI: 51.1 v 52.3e (15th month of expansion)
(UK) Oct Nationwide House Prices M/M: 0.2% v 0.2%e; Y/Y: 2.5% v 2.2%e
(TR) Turkey Oct Manufacturing PMI: 52.8 v 53.5 prior
(SE) Sweden Oct Manufacturing PMI: 59.3 v 63.5e
(NL) Netherlands Oct Manufacturing PMI: 60.4 v 60.0 prior (50th month of expansion and highest since Feb 2011)
(NO) Norway Oct Manufacturing PMI: 54.5 v 54.0e
(CZ) Czech Oct Manufacturing PMI: 58.5 v 57.0e (14th month of expansion)
(CH) Swiss Oct Manufacturing PMI: 62.0 v 61.3e (6-year high)
(DE) Germany Oct CPI Brandenburg M/M: -0.1% v +0.2% prior; Y/Y: 1.3% v 1.6% prior
(GR) Greece Oct Manufacturing PMI: 52.1 v 52.8 prior (5th straight expansion)
(ZA) South Africa Oct Manufacturing PMI: 47.8 v 45.5e (4th straight contraction)
(UK) Oct Manufacturing PMI: 56.3 v 55.9e (15th month of expansion)
Fixed Income Issuance:
(IN) India sold total INR110B vs. INR110B indicated in 3-month, 6-month and 12-month Bills
(DK) Denmark sold total DKK3.08B in 2020 and 2027 DGB bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 +0.6% at 397.7, FTSE +0.4% at 7523, DAX 1.3% at 13400, CAC-40 +0.5% at 5532, IBEX-35 +0.4% at 10570, FTSE MIB +1.1% at 23031, SMI +0.6% at 9296, S&P 500 Futures +0.3%]
Market Focal Points/Key Themes:
European Indices trade higher once again with continued risk on sentiment bought about by strong earnings globally. UK retail giant Next did report underwhelming 3rd quarter results, with shares down sharply as a result, Marks and Spencer also trades lower in sympathy. Elsewhere Standard Chartered trades over 4% lower after missing on the top and bottom line, Novo Nordisk after missing on Rev trades lower in Denmark.
Looking ahead notable earnings include Groupon, Allergan, Bunge
Equities
Consumer discretionary [Next [NXT.UK] -6% (Earnings), Marks and Spencer [MKS.UK] -3.4% (Sympathy with Next), Paddy Power Betfair [PPB.UK] +3.9% (Earnings)]
Industrials: [Morgan Sindell [MGNS.UK] +3.3% (Earnings)]
Financials: [ Standard Chartered [STAN.UK] -4% (Earnings)]
Healthcare: [Novo Nordisk [NOVOB.DK] -2.8% (Earnings), Indivior [INDV.UK] +11.1% (Confirms FDA Advisory Committees Recommend Approval of Indivior’s RBP-6000)]
Energy: [Lundin Petroleum [LUPE.SE] +4.0% (Earnings)]
Speakers
Greece and EU officials said to be negotiating a bailout exit that would involve Greece getting debt relief in exchange for carrying out new reforms. A clean bailout exit with no new financing or a fourth bailout program were less likely post-program scenarios that are on the table
Turkey Central Bank Gov Cetinkaya: Monetary policy stance has become more cautious, pledges continuation of such stance
Japan Abe re-elected as PM during special Parliamentary session (as expected)
Currencies
GBP/USD was higher by 0.2% ahead of Thursday BOE rate decision. The strength in Cable attributed to reports that the UK signaled it was preparing to compromise in its stand-off with the European Union over the Brexit bill, with new talks scheduled next week in an effort to break the deadlock. In addition NIESR expects BoE rates to peak at 2% in 2021.
USD/JPY was higher and probing the 114 neighborhood. JPY currency (Yen) weakness aided by Japan Abe being re-elected as PM during special Parliamentary session
Fixed Income
Bund futures trade at 162.71 up 1 ticks as core euro-bonds are little changed during a public holiday for Austria, Belgium, France, Portugal and Spain. Support lies at 161.00, followed by 160.38. Resistance stands initially at 163.51, followed by 164.25.
Gilt futures trade at 124.31 down 4 ticks, with the focus remaining on the BOE meeting on Thursday. Continued downside eyeing 123.26. Upside targets 124.90 then 125.24.
Wednesday’s liquidity report showed Tuesday’s excess liquidity fell to €1.8225T from €1.833T and use of the marginal lending facility dropped to €172M from €431M
Corporate issuance saw 6 issuers raise $12.3B in the primary market
Looking Ahead
(AR) Argentina Oct Government Tax Revenue (ARS): No est v 224.1B prior
(IL) Israel Sept Leading ‘S’ Indicator M/M: No est v 0.3% prior
(IT) Italy Oct Budget Balance: No est v -€15.8B prior
(RO) Romania Oct International Reserves: No est v $37.0B prior
05:50 (EU) ECB allotment in 7-day USD Liquidity Tender
06:00 (DK) Denmark Oct Manufacturing PMI: No est v 60.3 prior
06:00 (UK) BOE’s Cunliffe in Parliament
06:00 (EU) Daily Euribor Fixing
06:00 (NO) Norway to sell Bonds
06:00 (GR) Greece Debt Agency (PDMA) to sell €875M in 26-Week Bills
06:00 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
07:00 (US) MBA Mortgage Applications w/e Oct 27th: No est v -4.6% prior
07:00 (BR) Brazil Sept Industrial Production M/M: +0.7%e v 0.8% prior; Y/Y: 3.2%e v 4.0% prior
07:00 (CA) Canada Sept MLI Leading Indicator M/M: No est v 0.2% prior
07:00 (IE) Ireland Oct Unemployment Rate: No est v 6.1%e
08:00 (ZA) South Africa Oct Naamsa Vehicle Sales Y/Y: No est v 7.0% prior
08:00 (BR) Brazil Oct PMI Manufacturing: No est v 50.9 prior
08:00 (UK) PM May weekly question time in House of Commons
08:00 (RU) Russia to sell combined RUB25B in 2021 and 2027 OFZ bonds
08:15 (US) Oct ADP Employment Change: +200Ke v +135K prior
09:00 (BR) Brazil Sept CNI Capacity Utilization: No est v 77.8% prior
09:00 (CZ) Czech Oct Budget Balance (CZK): No est v 17.4B prior
09:05 (UK) Baltic Dry Bulk Index
09:30 (CA) Canada Oct Manufacturing PMI: No est v 55.0 prior
09:45 (US) Oct Final Markit Manufacturing PMI: 54.5e v 54.5 prelim
10:00 (US) Oct ISM Manufacturing: 59.5e v 60.8 prior; Prices Paid: 67.8e v 71.5 prior
10:00 (US) Sept Construction Spending M/M: -0.2%e v +0.5% prior
10:00 (BR) Brazil to sell 2023 LFT bills
10:00 (BR) Brazil to sell 2018, 2019 and 2021 LTN Bills
10:30 (US) Weekly DOE Crude Oil Inventories
11:00 (CO) Colombia Sept Exports: $3.2Be v $3.1B prior
11:00 (MX) Mexico Central Bank Economist Survey
11:00 (MX) Mexico Sept Total Remittances: $2.4Be v $2.5B prior
11:00 (US) Treasury announcement for upcoming 3-year, 10-year and 30-year bonds during week of Nov 5th
11:30 (MX) Mexico Oct Manufacturing PMI: No est v 52.8 prior
12:00 (NZ) New Zealand Oct QV House Prices Y/Y: No est v 4.3% prior
13:00 (IT) Italy Oct New Car Registrations Y/Y: No est v 8.1% prior
13:00 (BR) Brazil Oct Trade Balance: $5.3Be v $5.2B prior; Total Exports: $19.4Be v $18.7B prior; Total Imports: $14,.0Be v $13/.5B prior
13:15 (CH) SNB’s Zurbruegg speaks in Bern
14:00 (US) FOMC Interest Rate Decision: Expected to leave Interest Rates unchanged
14:00 (MX) Mexico Oct IMEF Manufacturing Index: 52.0e v 52.9 prior; Non-Manufacturing Index: 52.0e v 52.5 prior
16:15 (CA) Bank of Canada (BOC) Gov Poloz with member Wilkins in Parliament
