Notes/Observations
Euro Zone PMI Manufacturing complements ECB view of a robust and broad-based recovery (Beats: Euro Zone, France, UK, Swiss, Sweden, Norway, Poland; miss: Spain, Russia, Czech, Hungary; In-line: Germany, Italy)
US tax-reform vote was put off by the Senate until at least Friday perhaps due to sufficient votes could not be secured; Budget hawks still seem reluctant to vote
Asia:
Japan core CPI rises for the 10th straight month to 0.8%; result could add to recent speculation over an early tightening move by the BOJ as it heads a little closer to its 2% inflation target
Japan Oct Jobless rate matches lowest rate since Jun 1994 (2.8% v 2.8%e); Job-to-Applicant ratio at a fresh 43-year high (1.55 v 1.52e)
Japan Nov Final Manufacturing PMI: 53.6 v 53.8 prelim (highest final reading since March 2014)
China Nov Caixin Manufacturing PMI 50.8 v 50.9e (5-month low)
Europe:
SPD official Weil ( PM of Lower Saxony): coalition talks with Germany Chancellor Merkel’s CDU/CSU could extend until at least Feb as a best case scenario
EU official: EU and UK reach agreement over Brexit divorce bill regards to on future commitments. London has committed to paying a set share of EU budgets after leaving EU. No discussion of numbers, but Britain agrees on formula for calculating British divorce bill
Greece Debt Agency (PDMA) said to plan 2 to 3 bond offerings in H1 2018
Americas:
Senate did not vote on the Republican tax bill on Thursday and debate to continue on Friday
US Senate Majority Leader McConnell: Next floor vote on tax reform will be at 11 AM on Friday, Dec 1st
Joint Committee on Taxation (JCT): Senate tax bill pays for less than half of its cost. Overall, the budgetary effects of changes in economic growth are projected to reduce the deficit by $407 billion during the budget window.
Congressional Budget Office (CBO): Government could run out of cash in late March, early April unless debt limit raised
Fed’s Mester (hawk, non-voter): tax plan unlikely to have major impact on growth; inflation expectations remain reasonably well anchored
Energy:
OPEC delegate: OPEC and non-OPEC agree to extend output cuts agreement to end of 2018
OPEC+ Communique: To review duration of oil cuts based on fundamentals at next OPEC meeting in June; Libya, Nigeria had informed OPEC they won’t produce above 2017 levels in 2018
Economic Data:
(PE) Peru Nov CPI M/M: -0.2% v 0.0%e; Y/Y: 1.5% v 1.7%e
(IE) Ireland Nov Manufacturing PMI: 58.1 v 54.4 prior (54th month of expansion and highest since Dec 1999)
(RU) Russia Nov Manufacturing PMI: 51.5 v 51.8e (16th month of expansion)
(FI) Finland Q3 GDP Q/Q: 0.4% v 0.8% prior; Y/Y: 3.0% v 3.6% prior
(TR) Turkey Nov Manufacturing PMI: 52.9 v 52.8 prior (9th month of expansion)
(SE) Sweden Nov Manufacturing PMI: 63.3 v 60.2e
(CZ) Czech Q3 Preliminary GDP (2nd reading) Q/Q: 0.5% v 0.5%e; Y/Y: 5.0% v 5.0%e
(NO) Norway Nov Manufacturing PMI: 57.1 v 55.0e
(PL) Poland Nov Manufacturing PMI: 54.2 v 54.0e (37th month of expansion)
(HU) Hungary Nov Manufacturing PMI: 58.6 v 59.5e (24th month of expansion)
(ES) Spain Nov Manufacturing PMI: 56.1 v 56.5e (49th month of expansion and highest since Feb 2007)
(CZ) Czech Nov Manufacturing PMI: 58.7 v 59.0e (16th month of expansion and highest since Apr 2011)
(CH) Swiss Nov Manufacturing PMI: 65.1 v 62.5e (23 month without a contraction)
(IT) Italy Nov Manufacturing PMI: 58.3 v 58.3e (15th month of expansion and highest since Feb 2011)
(FR) France Nov Final Manufacturing PMI: 57.7 v 57.5e (confirmed its 14th month of expansion and highest since Nov 2010)
(DE) Germany Nov Final Manufacturing PMI: 62.5 v 62.5e (confirmed its 36th month of expansion and highest since Feb 2011)
(EU) Euro Zone Nov Final Manufacturing PMI: 60.1 v 60.0e (confirmed 52nd month of expansion and highest since Apr 2000)
(GR) Greece Nov Manufacturing PMI: 52.2 v 52.1 prior (6th month of expansion)
(ZA) South Africa Nov Manufacturing PMI: 48.6 v 47.8 prior (6th straight contraction)
(NL) Netherlands Nov Manufacturing PMI: 62.4 v 60.4 prior (highest since series began in 1960)
(NO) Norway Nov Unemployment Rate: 2.3% v 2.4%e
(IT) Italy Q3 Final GDP Q/Q: 0.4% v 0.5%e; Y/Y: 1.7% v 1.8%e
(UK) Nov Manufacturing PMI: # v 56.5e (16th month of expansion and highest since Aug 2013)
Fixed Income Issuance:
None seen
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx600 -0.6% at 384.4, FTSE -0.2% at 7315, DAX -1.0% at 12898, CAC-40 -0.9% at 5325, IBEX-35 -0.4% at 10175, FTSE MIB -0.9% at 22158, SMI -0.3% at 9293, S&P 500 Futures -0.3%]
Market Focal Points/Key Themes: European Indices trade sharply lower across the board with near 1% declines in Germany and France being attributed to a stronger Euro as well as uncertainty spillover in the US over the delay in Senate tax reform vote. Shares of Indivior trades sharply higher after the FDA approved its Buprenorphine injection, whilst on the earnings front Games Workshop trades higher following strong Revenue growth. UK mailing giant Royal Mail trades over 3.5% lower after an analyst downgrade; RBS trades lower after announces the closure of further branches as it continues its digital push. Looking ahead notable earners include Big Lots, Genesco and American Woodwork.
Equities
Consumer discretionary [ Games Workshop [GAW.UK] +7% (Trading update), Royal Mail [RMG.UK] -3.9% (Analyst downgrade)]
Financials: [Barclays [BARC.UK] -2% (Reduces stake in BAGL),
Healthcare: [Basilea [BSLN.CH] +1.2% (Extends licence agreement with Pfizer), Indivior [INDV.UK] +10% (US FDA approved first once-monthly Buprenorphine injection)]
Speakers
Sweden Central Bank (Riksbank) Dep Gov Floden reiterated inflation is near target but too early to make policy less expansionary
EU official: Hope to reach staff-level agreement on Greece bailout review on Monday, Dec 4th. Next Greek tranche payment could be disbursed by mid-Feb if all goes well
Thailand Central Bank: Inflation to return to within the 1.0-4.0% target range in Q1 (previously saw it occurring in Q2) if oil prices remain at high levels
Currencies
USD maintained a soft tone heading into the end of the trading week as the tax-reform vote was put off by the Senate until at least Friday perhaps due to sufficient votes could not be secured
EUR/USD was firmer throughout the session as various Euro Zone PMI Manufacturing data complemented ECB view of a robust and broad-based recovery. France and Germany levels were at 7-year highs while the Euro Zone data hit its highest since 2000.
Fixed Income
Bund futures trade 163.09 up 40 ticks, as European stocks slide and major European PMIs’ come in line, while reaching record or multi-year highs. Continued downward pressure sees 162.10 followed by 161.50. A reversal targets 163.40 then 163.75.
Gilt futures trade at 124.74 up 39 ticks, rebound after the mid-week decline. Continued upside eyeing 125.15 then 125.65. Downside targets include 124.01 then 123.75.
Friday’s liquidity report showed Thursday’s excess liquidity rose to €1.886T from €1.858T. Use of the marginal lending facility fell to €65M from €286M prior.
Corporate issuance saw 3 issuers raise $2.3B in the primary market. For the week ending Nov 29th Lipper fund flows reported IG fund net inflows of $2.4B.
Looking Ahead
06:00 (BR) Brazil Q3 GDP Q/Q: 0.3%e v 0.2% prior; Y/Y: 1.3%e v 0.3% prior, GDP 4-quarters accumulated: -0.3%e v -1.4% prior
06:00 (UK) DMO to sell combined £3.5B in 1-month, 3-month and 6-month Bills (£1.0B, £1.0B and £1.5B respectively)
06:30 (IN) India Weekly Forex Reserves – 06:45 (US) Daily Libor Fixing
07:00 (CA) Canada Oct MLI Leading Indicator M/M: No est v 0.1% prior
07:00 (CL) Chile Oct Retail Sales Y/Y: 3.7%e v 3.5% prior
07:00 (ZA) South Africa Nov Naamsa Vehicle Sales Y/Y: No est v 4.6% prior
07:00 (DE) Germany Fin Min official Spahn at event
(US) Nov Wards Domestic Vehicle Sales; Total Vehicle Sales
08:00 (BR) Brazil Nov PMI Manufacturing: No est v 51.2 prior
08:00 (CZ) Czech Nov Budget Balance (CZK): No est v 26.5B prior
08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
08:00 (IN) India announces upcoming Bill auction (held on Wed)
08:30 (CA) Canada Sept GDP M/M: +0.1%e v -0.1% prior; Y/Y: 3.3%e v 3.5% prior; Quarterly GDP Annualized: 1.6%e v 4.5% prior
08:30 (CA) Canada Nov Net Change in Employment: +10.0Ke v +35.3K prior; Unemployment Rate: 6.2%e v 6.3% prior,
09:05 (US) Fed’s Bullard (non-voter, Dove) in Aransas
09:30 (CA) Canada Nov Manufacturing PMI: No est v 54.3 prior
09:30 (US) Fed’s Kaplan (moderate, voter) in Tx
09:45 (US) Nov Final Markit Manufacturing PMI: 54.0e v 53.8 prelim
10:00 (US) Oct Construction Spending M/M: 0.5%e v 0.3% prior
10:00 (US) Nov ISM Manufacturing: 58.3e v 58.7 prior; Prices Paid: 67.0e v 68.5 prior
10:00 (MX) Mexico Central Bank Economist Survey
10:00 (MX) Mexico Oct Total Remittances: $2.4Be v $2.3B prior
10:00 (CO) Colombia Oct Exports: $3.1Be v $3.3B prior
10:15 (US) Fed’s Harker (voter, hawk) on economic growth
10:30 (MX) Mexico Nov Manufacturing PMI: No est v 49.2 prior
11:00 (EU) Potential sovereign ratings after EU close (Cyprus Sovereign Debt to be rated by DBRS; Ireland Sovereign Debt to be rated by S&P and Sweden Sovereign Debt to be rated by Moody’s)
12:00 (IT) Italy Nov New Car Registrations Y/Y: No est v 7.1% prior
12:00 (BR) Brazil Nov Trade Balance: $4.5Be v $5.2B prior; Total Exports: $18.1Be v $18.9B prior; Total Imports: $13.6Be v $13.7B prior
13:00 (MX) Mexico Nov IMEF Manufacturing Index: 52.2e v 52.4 prior; Non-Manufacturing Index: 51.7e v 51.9 prior
13:00 (US) Weekly Baker Hughes Rig Count data
(AR) Argentina Nov Government Tax Revenue (ARS): No est v 219.7B prior
(BR) Brazil Nov CNI Consumer Confidence: No est v 101.2 prior
(IT) Italy Nov Budget Balance: No est v -€5.0B prior
(RU) Russia Nov Sovereign Wealth Funds: Reserve Fund: No est v $16.9B prior; Wellbeing Fund: No est v $69.4B prior
