Notes/Observations
- UK said to be prepared to water down PM Johnson’s controversial lawbreaking Brexit legislation as it moves through the House of Lords ; move that could revive failing talks with the EU
- Risk-on sentiment aid by hopes US stimulus talks achieve a breakthrough
Asia:
- China Q3 GDP Q/Q: 2.7% v 3.3%e; Y/Y: 4.9% v 5.5%e. China still in process of economic recovery; most indicators were not yet back to normal but gave good reason to believe in sustained recovery. Most growth drivers remain relatively weak but saw good reasons to have growth for the whole year (2020). Reiterated stance that International environment remained complex and severe citing international uncertainties; China to continue to face uncertainties from external environments in Q4
- China Sept Industrial Production Y/Y: 6.9% v 5.8%e – China Sept Retail Sales Y/Y: 3.3% v 1.6%e
- China PBOC Gov Yi Gang said China GDP to expand by ~2% in 2020. Mains risks for economy were increasing macro leverage and possible increase in non-performing loans (NPLs)
- China top legislature passed a new export control law which could potentially ban exports of rare earth metals; the law takes effect on Dec 1st 2020
- BoJ Gov Kuroda reiterated that the central bank had no plan to change inflation target nor forward guidance; reiterated stance that would not hesitate to take additional measures to support the economy
- BOJ Deputy Gov Wakatabe stated that was not ruling out the use of negative rates, but that should be judged against a backdrop of the Yield Curve Control program – New Zealand Ruling Labour Party on election with large enough margins to rule without a coalition govt (as expected)
Europe:
- ECB chief Lagarde stated that the new coronavirus-related restrictions currently being introduced across Europe to add to uncertainty, clear that both fiscal and monetary support had to remain in place for as long as needed; reiterates ‘cliff effects’ must be avoided
- ECB’s Panetta (Italy): 2nd virus wave risks were delaying recovery in region; reiterated stance that stand ready to adjust all of our instruments, as appropriate
- BoE Gov Bailey stated that economic risks were skewed ‘very heavily’ to downside’. Expected UK GDP would likely be 10% below pre-crisis level at the end of Q3
- German Econ Min Altmaier: Govt unlikely to make significant changes to its autumn economic forecasts
- Italy govt approved a new €39B stimulus package in its 2021 budget to foster an economic rebound. Italy Econ Min Gualtieri: later added that budget included €15B of grants from the European Union’s Recovery Fund
- Britain could rewrite parts of its Internal market Bill in a move that could get talks going again with the EU. Bill was proceeding to House of Lords who would not reject the Bill but could likely to remove the bits that would break international laws – Moody’s cut United Kingdom (UK) sovereign rating one notch to Aa3 from Aa2; outlook revised to Stable from Negative
- Canadian ratings agency DBRS cut France sovereign rating to AA (high); trend now Stable
Americas:
- US House Speaker Pelosi (D) said to have given the Trump administration a deadline of Tuesday (Oct 20th) to reach a stimulus deal before the election
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.53% at 369.42, FTSE +0.06% at 5,923.25h, DAX +0.34% at 12,952.90, CAC-40 +0.82% at 4,976.15, IBEX-35 +0.35% at 6,874.00, FTSE MIB +0.51% at 19,489.50, SMI +0.54% at 10,262.64, S&P 500 Futures +0.88%]
- Market Focal Points/Key Themes: European indices opened broadly higher but later moderated gains as the session progressed; better performing sectors led by financials; underperforminsers include energy and health care; Telefonica and Allianz enter fiberoptic JV; Hochtief sold stake in Tiess to Elliott; AstraZeneca/Oxford vaccine might be available as early as December; earnings expected in the upcoming US session include IBM, Simmons First National and Hlliburton
Equities
- Consumer discretionary: Danone [BN.FR] +1.5% (sales; new CFO), boohoo.com [BOO.UK] -11% (statement on auditor)
- Financials: Craneware [CRW.UK] +3% (trading update)
- Healthcare: Koninklijke Philips [PHIA.NL] +3% (earnings)
- Industrials: Saab [SAAB.SE] -10% (earnings)
Speakers:
- ECB chief Lagarde reiterated ECB long-time stance that Euro was irreversible. Should discuss making the Recovery Fund a permanent tool
- ECB’s De Guindos (Spain) stated that recent data was showing a loss of momentum of the economic recovery.
- Region being impacted by 2nd wave of pandemic but not likely to see strict lockdown conditions as experienced back in March
- UK Housing Min Jenrick reiterated UK govt stance that EU was not showing flexibility in Brexit talks
- Spain Econ Min Calvino Forecasts Q3 GDP growth around 13% q/q
- Czech Central Bank Dep Gov Nidetzky: Stable rates are the likely scenario
- Poland Fin Min Koscinski: Weaker PLN currency (Zloty) to help exporters
- South Korea President Moon stated that needed steps to help revive consumption and exports
- Japan PM Suga stated that he opposed any steps that would heighten tensions in South China Sea
Currencies/Fixed Income
- USD was on slightly softer footing as the trading week began. Dealers noted that hopes that US stimulus talks could still achieve a breakthrough was aiding risk appetite.
- GBP/USD was trading higher by 0.7% to re-approach the 1.30 area. Dealers noted hopes that a trade deal would be reached and are not overly concerned by the latest political posturing. Also aiding sentiment was reports that UK was prepared to water down PM Johnson’s controversial lawbreaking Brexit legislation; move that could revive failing talks with the EU
Economic Data
- (CH) Swiss weekly Total Sight Deposits (CHF): 705.1B v 704.6B prior; Domestic Sight Deposits: 632.2B v 633.1B prior
- (PL) Poland Sept Employment M/M: 0.3% v 0.4%e; Y/Y: -1.2% v-1.1%e
- (PL) Poland Sept Average Gross Wages M/M:+0.6% v -0.6%e; Y/Y: 5.6% v 4.4%e
- (ES) Spain Aug Trade Balance: -€1.7B v -€0.3B prior
- (EU) Euro Zone Aug Construction Output M/M: 2.6% v 0.3% prior; Y/Y: -0.9% v -3.4% prior
Fixed Income Issuance
- (EU) ESM opened its book to sell EUR-denominated Dec 2024 bonds; guidance seen -6bps to mid-swaps
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 0.07% v 0.04% prior; bid-to-cover: 1.73x v 2.15x prior
Looking Ahead
- (SK) Slovakia Debt Agency (Ardal) to sell 2027, 2030, 2031 and 2037 bonds
- 05:30 (DE) Germany to sell combined €3.0B in 6-month and 12-month BuBills
- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.4-1.8B in 2030 and 2037 OLO bonds
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 6-month Bills
- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
- 06:00 (IL) Israel Sept Consumer Confidence: No est v 58 prior
- 06:00 (RO) Romania to sell RON300M in 3.65% Sept 2031 Bonds
- 06:00 (IL) Israel to sell combined ILS2.4B in 2023, 2029, 2030, 2037 and 2047 bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (US) Fed Chief Powell on panel
- 08:30 (CA) Canada Aug Wholesale Trade Sales M/M: 0.1%e v 4.3% prior
- 08:45 (EU) ECB chief Lagarde
- 09:00 (FR) France Debt Agency (AFT) to sell €4.3-5.5B in 3-month, 6-month and 12-month bills
- 09:45 (EU) ECB weekly QE bond buying update
- 10:00 (US) Oct NAHB Housing Market Index: 83e v 83 prior
- 10:00 (SE) Sweden Central bank (Riksbank) Skingsley
- 10:00 (UK) BOE’s Cunliffe
- 10:30 (CA) Bank of Canada (BOC) Q3Overall Business Outlook Survey: No est v -7 prior; Business Outlook Future Sales: No est v -35 prior
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
- 11:45 (US) Fed Vice Cahir Clarida
- 13:00 (NO) Norway Central Bank (Norges) Gov Olsen
- 14:20 (US) Fed’s Bostic
- 15:00 (US) Fed’s Harker
- 16:00 (US) Weekly Crop Progress Report
- 17:00 (NZ) NZIER Business Opinion Survey
- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 97.7 prior
- 19:00 (AU) RBA’s Kent speech
- 20:30 (AU) RBA Oct Minutes
- 21:30 (CN) China Sept New Home Prices M/M: 0.5%e v 0.6% prior
- 21:30 (CN) China PBoC Monthly LPR announcement: Current 1-Year Loan Prime Rate at 3.85%; Current 5-Year Loan Prime Rate at 4.65%
- 23:30 (HK) Hong Kong to sell 3-month and 6-month Bills
- 23:35 (JP) Japan to sell 20-Year JGB Bonds
