Focus On Upcoming US Inflation Data Later This Week

Notes/Observations

• Focus on upcoming US inflation data (PPI on Tues, CPI on Wed) and various Fed speakers.
• Brexit issues continue to fester with UK said to threaten Article 16 soon.

Asia

• China Oct Trade Balance registered a record surplus ($84.5B v $64.0Be); Exports Y/Y: 27.1% v 22.4%e; Imports Y/Y: 20.6% v 26.0%e.
• China Oct Foreign Reserves: $3.218T v $3.202Te.

Coronavirus

• No COVID deaths reported in Japan for 1st time in 15 months.
• New Zealand PM announced that Auckland’s lockdown settings would ease from midnight Wednesday (Nov 10th) with retailers allowed to open.

Europe

• EU’s Sefcovic stated that was trying intensely to find common ground with the UK but had not seen any movement at all from the UK side, urged UK side to engage with EU sincerely. Stressed that UK triggering Article 16 would be a serious matter for EU/UK relations. The agreement was clear on fishing rights and that all French vessels seeking a license should get one. To meet with UK Brexit Min Frost in London on Friday, Nov 12th.

Americas

• House passed bipartisan $1.2T infrastructure bill, clearing the way for President Biden’s signature Reminder: The second bill, the “Build Back Better Act” now has $1.75T in planned expenditure).

Energy

• UAE Energy Min Mazrouei stated that OPEC+ was working to balance market and must incentive investments.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 -0.05% at 483.20, FTSE -0.03% at 7,301.70, DAX -0.11% at 16,036.25, CAC-40 +0.09% at 7,046.77, IBEX-35 -0.02% at 9,128.50, FTSE MIB -0.21% at 27,738.00, SMI +0.10% at 12,333.66, S&P 500 Futures +0.04%].
• Market Focal Points/Key Themes: European indices open mixed with slight downward bias and failed to gain traction as the session wore on; sectors among those trending higher are materials and utilities; while sectors trending lower include industrials and consumer discretionary; Alcon Acquires Ivantis; focus on continuing EuroGroup meeting; Playtech confirms takeover approach from Gopher; Richemont discloses Third Point is building stake; earnings during the upcoming US session include RadNet, Astronics and CECO Environment.

Equities

• Healthcare: Coloplast [COLOB.DK] +4% (acquisition).
• Industrials: Henkel [HEN3.DE] -5% (earnings; outlook cut).
• Technology: Sonova [SOON.CH] -2% (implants recall).
• Materials: Covestro [1COV.DE] +1% (earnings), Kingspan [KGP.UK] +1% (trading update).

Speakers

• ECB’s Lane (Ireland, chief economist) stated that the current level of inflation was very unusual but not chronic; reiterated Council view of expecting inflation rate to fall in 2022 and that it must not overreact to temporary rise in inflation.
• Ireland Foreign Min Coveney stated that evidence suggested UK govt was preparing to trigger Article 16 of the Northern Ireland Protocol. He saw this as a very severe and something the EU would want to prevent.
• German govt said to be eyeing up to €10B in additional tax revenue per year.
• EU Commission Pres Von der Leyen stated at a budget conference that the region needed €470B investment for the 2030 climate targets.
• Poland Central Bank’s Gatner stated that CPI projections might be out of date. CPI might reach 7% already in Nov while the projection probably saw it at that level in 1Q. Did not rule out CPI reaching 9% in Jan.
• Poland Central Bank (NBP) Quarterly Inflation Report (QIR) raised the 2021 CPI forecast from 4.2% to 4.9% and raised the 2022 CPI forecast from 3.3% to 5.8% (both above target range). It tweaked the 2023 CPI from 3.4% to 3.6%. QIR raised the 2021 GDP growth forecast from 5.0% to 5.3% while cutting the 2022 GDP growth outlook from 5.4% to 4.9%.
• Japan PM Kishida stated to support investment into high-end semi-conductors. To create new IPO system to support start-ups.
• Japan New Capitalism Panel said to recommend tax breaks for companies that raise wages. Considering review of quarterly reporting system and consider SPACs to help startups.

Currencies/Fixed Income

• USD steady with focus on upcoming US inflation data (PPI on Tues, CPI on Wed) and Fed speakers.
• EUR/USD at 1.1560 in quiet trading while USD/JPY drifted lower to test 113.40.
• GBP/USD was initially softer as rising tensions continued to percolate between the UK and EU over the Norther Ireland protocol. Pair tested 1.3450 before rebounding back towards the 1.35 area.

Economic data

• (SE) Sweden Oct SEB Housing-Price Indicator: No est v 38 prior.
• (ZA) South Africa Oct Gross Reserves: $57.5B v $57.1B prior; Net Reserves: $55.4B v $55.2Be.
• (CH) Swiss Oct Unemployment Rate: 2.5% v 2.6%e; Unemployment Rate (seasonally adj): 2.7% v 2.7%e.
• (FI) Finland Sept Preliminary Trade Balance: +€0.1B v -€0.6B prior.
• (NO) Norway Sept Industrial Production M/M: 3.3% v 2.7% prior; Y/Y: 7.9% v 2.7% prior.
• (NO) Norway Sept Manufacturing Production M/M: 0.6% v 0.0% prior; Y/Y: 3.6% v 2.2% prior.
• (MY) Malaysia end-Oct Foreign Reserves: $116.1B v $115.6B mid-month reading.
• (CZ) Czech Sept National Trade Balance (CZK): -13.3B v -3.5Be.
• (CZ) Czech Sept Industrial Output Y/Y: -4.0% v -1.7%e; Construction Output Y/Y: 2.2% v 1.2% prior.
• (HU) Hungary Sept Preliminary Trade Balance: €0.0B v -€0.8B prior.
• (TW) Taiwan Oct Trade Balance: $6.1B v $6.6Be; Exports Y/Y: 24.6% v 25.0%e; Imports Y/Y: 37.1% v 38.0%e.
• (CZ) Czech Oct Unemployment Rate: 3.4% v 3.5% prior.
• (CH) Swiss weekly Total Sight Deposits (CHF): 718.4B v 717.1B prior; Domestic Sight Deposits: 643.7B v 645.3B prior.
• (EU) Euro Zone Nov Sentix Investor Confidence: 18.3 v 15.0e.

Fixed income Issuance

• None seen.

Looking Ahead

• (EU) European Finance Ministers (Eurogroup).
• (RU) Russia Oct Light Vehicle Car Sales Y/Y: No est v -22.6% prior.
• (IT) Bank of Italy (BOI) Balance-Sheet Aggregates.
• (CO) Colombia Oct Consumer Confidence Index: No est v -3 prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 ((DE) Germany to sell €4.0B in 6-month BuBills.
• 06:00 (IL) Israel to sell bonds.
• 06:00 (IE) Ireland Sept Industrial Production M/M: No est v -2.8% prior; Y/Y: No est v 24.3% prior.
• 06:00 (CL) Chile Oct CPI M/M: 0.9%e v 1.2% prior; Y/Y: 5.6%e v 5.3% prior.
• 06:00 (BR) Brazil Oct FGV Inflation IGP-DI M/M: 1.3%e v -0.6% prior; Y/Y: 20.7%e v 23.4% prior.
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 06:30 (CL) Chile Oct Trade Balance: -$0.3Be v +$0.1B prior; Total Exports: No est v $7.4B prior; Total Imports: No est v $7.4B prior; Copper Exports: No est v $4.2B prior.
• 06:30 (CL) Chile Oct International Reserves: No est v $53.3B prior.
• 06:55 (US) Daily Libor Fixing.
• 07:00 (MX) Mexico Aug Gross Fixed Investment: 11.8%e v 15.7% prior.
• 07:00 (MX) Mexico Oct Vehicle Production: No est v 208.1K prior; Vehicle Exports: No est v 195.3K prior.
• 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 5th: No est v $621.6B prior (Oct 22nd week).
• 08:00 (BR) Brazil Oct Vehicle Production: No est v 173.3K prior; Vehicle Sales: No est v 155.1K prior; Vehicle Exports: No est v 195.3K prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
• 09:00 (FR) France Debt Agency (AFT) to sell €5.1-6.3B in 3-month, 6-month and 12-month bills.
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation.
• 10:30 (US) Fed Chair Powell opening remarks at conference.
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
• 13:00 (US) Treasury to sell 3-Year Notes.
• 14:00 (US) Fed’s Harker.
• 14:00 (US) Fed’s Bowman.
• 15:30 (US) Fed’s Evans.
• 16:00 (NZ) New Zealand Oct Heavy Truckometer M/M: No est v 13.4% prior.
• 16:45 (NZ) New Zealand Oct Total Card Spending M/M: No est v 1.6% prior; Retail Card Spending M/M: No est v 0.9% prior.
• 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 108.4 prior.
• 18:30 (JP) Japan Sept Labor Cash Earnings Y/Y: 0.6%e v 0.6% prior (revised from 0.7%); Real Cash Earnings Y/Y: -0.1%e v +0.1% prior (revised from 0.2%).
• 18:50 (JP) Japan Oct Bank Lending: No est v 0.6% prior ; Bank Lending (ex-trusts): No est v 0.4% prior.
• 18:50 (JP) Japan Current Account Balance: ¥1.050Te v ¥1.666T prior; Adjusted Current Account Balance: ¥847.2Be v ¥1.043T prior; Trade Balance (BoP Basis): -¥360.1Be v -¥372.4B prior.
• 19:01 (UK) Oct BRC Sales Like-For-Like Y/Y: No est v -0.4% prior.
• 19:30 (AU) Australia Oct Business Confidence: No est v -1 prior; Business Conditions: No est v 17 prior.
• 21:00 (PH) Philippines Q3 GDP Q/Q: +1.5%e v -1.3% prior; Y/Y: 5.0%e v 11.8% prior.
• 22:30 (HK) Hong Kong to sell 3-month Bills.
• 22:30 (JP) Japan to sell 6-Month Bills.
• 22:35 (JP) Japan to sell 30-Year Bonds.
• 23:00 (MY) Malaysia Sept Industrial Production Y/Y: +4.0%e v -0.7% prior; Manufacturing Sales Value Y/Y: No est v 6.8% prior.
• 23:30 (JP) Japan Oct Bankruptcies Y/Y: No est v -10.6% prior.
• 23:30 (TW) Taiwan to sell NT$30B in 20-year Bonds.