Notes/Observations
- Risk aversion flows finding some traction during the session as tighter restrictions to control the pandemic was curbing appetite
- Markets currently downplaying its recent optimism about COVID-19 vaccine and concerned about rising infections and risks to the fragile global economic recovery.
- Surprise rate cuts from Indonesia and Philippines during the session
- EU Leaders meet to discuss EU 7-year budget and Brexit matters
Asia:
- Australia Oct Employment Change handily beat expectations as Victoria Lockdown lifts numbers (+178.8K v -27.5Ke); Unemployment Rate: 7.0% v 7.1%e
- Japan Fin Min Aso stated that the gvot was not thinking about second round of cash handouts; Conditions were different from when cash handouts were previously given, JPY currency (Yen) gains are due to dollar weakness
Coronaviurs:
- Daily coronavirus cases hit fresh highs in Japan and South Korea; South Australia has commenced six days of stay-at-home restrictions
Europe:
- EU leaders said to plan to request the EU Commission publish no-deal plans, due to concerns that Brexit negotiations were dragging on without businesses knowing what they need to prepare for in the worst scenario.
- ECB’s Weidmann (Germany) op-ed article called on Eurosystem to consider climate related financial risks before making monetary policy decisions. Should consider only purchasing securities or accepting them as collateral for monetary policy purposes if their issuers meet certain climate-related reporting obligations
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.84% at 387.24, FTSE -0.89% at 6,328.35, DAX -1.01% at 13,068.65, CAC-40 -0.89% at 5,462.40, IBEX-35 -0.91% at 7,909.00, FTSE MIB -0.32% at 21,552.50, SMI -0.75% at 10,484.98, S&P 500 Futures -0.42%]
- Market Focal Points/Key Themes: European indices open lower across the board and slipped further into the red as the session progressed; risk sentiment impacted over concerns of further anti-covid measures in Europe; better performing sectors include technology and health care; financials and energy sectors among underperformers; FreshDirect takes stake in Ahold Delhaize; ABB announces strategic view, looking to spin off units; ThyssenKrupp to cut 11K jobs, Vallourec to cut over 1K jobs; Norwegian Air files for bankruptcy in Ireland; reportedly BT considering selling stake in Openreach; focus on continuing European Council meeting; events expected in the upcoming US session include Macy’s, Altice and Brunello Cucinellli
Equities
- Consumer discretionary: Royal Mail Group [RMG.UK] +6% (earnings), Naked Wines [WINE.UK] +2% (earnings)
- Industrials: Thyssenkrupp [TKA.DE] -7% (earnings; job cuts; no dividend), Kingfisher [KGF.UK] -4% (earnings), Vallourec [VK.FR] -6% (earnings), ABB [ABBN.CH] -3% (CMD)
Speakers
- ECB chief Lagarde address the EU Parliament and stated that Europe continued to be confronted by serious circumstances; Reiterated stance that monetary and fiscal policy needed to keep working together. Latest surveys and indicators suggested that region had lost economic momentum. Region to be severely affected by the rapid rise of coronavirus infections. Stressed that EU fiscal package must be operational without delay. ECB to address the current phase of crisis with the same approach and determination
- EU diplomat stated that was not sure if EU Leaders will find a solution to the 7-year budget at today’s summit
- Hungary PM Chief of Staff: reiterated view that could not accept EU budget in its present form
- UK Trade Sec Truss stated that was determined to reach a trade deal with Canada before end of year
- Russia Central Bank (CBR) Monetary policy to remain accommodative in 2021. Reiterated that had limited space for additional rate cuts. Saw the neutral level for rates seen between 5.0-6.0% area. Forecasted Q4 GDP around -5.0%
- Indonesia Central Bank (BI) Policy Statement noted that today’s rate cut took into account low inflation and external stability to support the economic recovery . To monitor economy, markets and pandemic in policy. To continue accommodative macroprudential policy and accelerate digitization of financial system
- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference stated that it would continue with its accommodative policy. Domestic economy had improved and supported by govt spending with GDP to further improve in 2021. Saw current account and Balance of Payment (BOP) surplus in Q3. Reiterated stance that IDR currency (Rupiah) was undervalued; appreciation had potential to continue. Reiterated stance to continue stabilizing FX to be in-line with fundamentals
- Indonesia Central Bank Staff Forecasts maintained 2020 GDP between 0.9-1.9% range while cutting its 2020 CPI from lower end of 2.0-4.0% range to below target range. For 2021 BI maintained 2021 GDP growth from between 4.8-5.8% range and maintained 2021 CPI between 2.0-4.0% range
- Philippines Central Bank Policy Statement noted that its policy stance remained data-dependent
- Philippines Central Bank Staff Forecasts: raised its 2020 CPI from 2.3% to 2.4% while cutting the 2021 CPI from 2.8% to 2.7% and also cutting the 2022 CPI from 3.0% to 2.9% (**Note: Central Bank has an Inflation target between 2.0-4.0%)
- Japan Chief Cabinet Sec Kato: To take effective measures on virus based upon experts. To hold virus meeting on Friday, Nov 20th
- Japan govt said to be considering extending special employment subsidies beyond the current deadline of Dec
Currencies/Fixed Income
- USD was a tad firmer in its price action as dealers noted some isk aversion flows finding some traction during the session.
- EUR/USD lower by 0.2% to test 1.1825 as tighter restrictions to control the pandemic was raising concerns about rising infections and risks to the fragile global economic recovery.
- Some pessimism crept back into Brexit negotiations after a report circulated that EU Leaders to press the EU Commission to publish no-deal plans over concern that businesses had little clarity on how to prepare for a worst-case scenario. GBP/USD at 1.3220 area by mid-session
Economic Data
- (NL) Netherlands Oct Unemployment Rate: 4.3% v 4.5%e
- (CH) Switzerland Oct Trade Balance (CHF): 3.9B v 3.1B prior; Real Exports M/M: -0.5% v -1.8% prior; Real Imports M/M: -3.4% v +3.2% prior; Watch Exports Y/Y: -7.1% v -11.6% prior
- (ID) Indonesia Central Bank (BI) cuts 7-Day Reverse Repo by 25bps to 3.75% (not expected)
- (CH) Swiss Q3 Industrial Output Y/Y: -7.9% v -12.8% prior; Industry & Construction Output Y/Y: -6.3% v -11.2% prior
- (PH) Philippines Central Bank (BSP) cut the Overnight Borrowing Rate by 25bps to 2.00% (not expected)
- (SE) Sweden Oct Unemployment Rate: 7.8% v 8.3% prior; Unemployment Rate (Seasonally Adj): 8.6% v 9.0%e; Trend Unemployment Rate Trend: 8.9% v 9.0% prior
- (SE) Sweden Total Number of Employees Y/Y: -1.9% v -1.9% prior
- (EU) Euro Zone Sept Current Account Balance: €25.2B v €20.9B prior
- (IT) Italy Sept Current Account Balance: €7.6B v €6.1B prior
- (GR) Greece Sept Current Account Balance: €B v €0.1B prior
- (ES) Spain Sept Trade Balance: -€1.5B v -€1.7B prior
- (PL) Poland Oct Employment M/M: 0.1% v 0.0%e; Y/Y: -1.0% v -1.1%e
- (PL) Poland Oct Average Gross Wages M/M: 1.6% v 1.5%e; Y/Y: 4.7% v 4.8%e
- (PL) Poland Nov Consumer Confidence: 29.2 v -25.0e
- (EU) Euro Zone Sept Construction Output M/M: -2.9% v 3.2% prior; Y/Y: -2.5% v +0.4% prior
Fixed income Issuance
- (ES) Spain Debt Agency (Tesoro) sold total €B vs. €1.5-2.5B indicated range in 2026 and 2027 Bonds
- Sold €1.36B in 0.00% Jan 2026 SPGB; Avg Yield: -0.414% v -0.345% prior; bid-to-cover: 2.00x v 2.33x prior
- Sold €487M in 0.8% July 2027 SPGB; Avg yield: -0.273% v -0.040% prior; Bid-to-cover: 7.22x v 3.43x prior
- (FR) France Debt Agency (AFT) sold total €B vs. €7.5-8.5B indicated range in 2023, 2026 and 2027 Bonds
- Sold €2.890B in 1.75% May 2023 Oat; Yield: -0.71% v -0.53% prior; bid-to-cover: 2.05x v 2.80x prior
- Sold €4.120B in 0.00% Feb 2026 Oat; Avg Yield: -0.62% v -0.64% prior; bid-to-cover: 1.89x v 1.72x prior
- Sold €1.485B in 2.75% Oct 2027 Oat; Avg yield: -0.57% v -0.59% prior, Bid-to-cover: 2.20x v 1.54x prior
- (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month Bills; Avg Yield: -0.570% v -0.580% prior; Bid-to-cover: 2.20x v 2.10x prior
Looking Ahead
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year Bonds
- 05:50 (FR) France Debt Agency (AFT) to sell €1.0-1.5B in I/L 2026, 2036 and bonds (Oatei)
- 05:50 (HU) Hungary Central Bank One-Week Deposit Rate Setting (current stands at 0.75%)
- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to raise One-Week Repo Rate by 475bps to 15.00%
- 06:00 (UK) Nov CBI Industrial Trends Total Orders: -40e v -34 prior; Selling Prices: 0e v 4 prior
- 06:00 (PT) Portugal Sept Current Account Balance: No est v €0.7B prior
- 06:00 (RO) Romania to sell RON300M in 4.15% 2030 Bonds
- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 13th: No est v $587.6B prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Nov Philadelphia Fed Business Outlook: 23.0e v 32.3 prior
- 08:30 (US) Initial Jobless Claims: 700Ke v 709K prior; Continuing Claims: 6.40Me v 6.786M prior
- 08:30 (CA) Canada Oct ADP Payroll Estimates: No est v -240.0K prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision Expected to leave Interest Rates unchanged at 3.50%
- 10:00 (US) Oct Leading Index: 0.7%e v 0.7% prior
- 10:00 (US) Oct Existing Home Sales: 6.46Me v 6.54M prior
- 10:00 (FR) ECB’s Villeroy (France)
- 10:00 (EU) ECB chief Lagarde
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Nov Kansas City Fed Manufacturing Activity Index: 11e v 13 prior
- 11:00 (DE) ECB’s Schnabel (Germany)
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
- 13:00 (US) Treasury to sell 10-Year TIPS Reopening
- 16:00 (KR) South Korea Oct PPI Y/Y: No est v -0.4% prior
- 18:30 (JP) Japan Oct National CPI Y/Y: -0.4%e v 0.0% prior; CPI Ex-fresh food (core) Y/Y: -0.7%e v -0.3% prior; CPI Ex-fresh food/energy (core-core) Y/Y: -0.3%e v 0.0% prior
- 19:01 (UK) Nov GfK Consumer Confidence: No est v -31 prior
- 19:30 (AU) Australia Preliminary Oct Retail Sales M/M: No est v -1.1% prior
- 19:30 (JP) Japan Nov Preliminary PMI Manufacturing: No est v 48.7 prior; PMI Services: No est v 47.7 prior; PMI Composite: No est v 48.0 prior
- 20:30 (CN) China Monthly LPR Rate Setting: Expected to leave 1-Year Loan Prime Rate unchanged at 3.85% and leave 5-Year Loan Prime Rate unchanged at 4.65%
- 21:00 (NZ) New Zealand Oct Credit Card Spending M/M: No est v 1.0% prior; Y/Y: No est v -9.9% prior
- 22:00 (ID) Indonesia Q3 Current Account Balance: +$1.4Be v -$2.9B prior
- 22:30 (HK) Hong Kong to sell HKD1.2B in 2-Year Note
- 23:30 (JP) Japan to sell 3-Month Bills
