Focus Remains On Inflation Data To Gauge Whether The Trend Is Transitory

Notes/Observations

• Focus remains on inflation data.
• China PPI data at 26-year highs and added to stagflation concerns.
• Germany Oct CPI YoY confirmed at its highest level since the 1993 unification.
• Dealers note faster rise in CPI could add to Treasury yield upside and spur financial markets to reprice for a swifter pace of Fed normalization.

Asia

• China Oct CPI registered its [fastest annual pace since Sept 2020 (Y/Y: 1.5% v 1.4%e); PPI at 26-year high (Y/Y: 13.5% v 12.3%e).
• China President Xi and US President Biden to have virtual summit during week of Nov 15th (next week). No details given.

Europe

• BOE’s Broadbent stated that he expected participation in the labor market would go up, strains to lesson over time. Higher wages would be seen in some sectors fueling short-term inflation.
• UK Chancellor of the Exchequer Sunak (Fin Min) said to seek to repeal EU laws on the UK financial system and give the FCA more room to set its own rules – financial press.

Americas

• Fed’s Kashkari (dove, non-voter) noted that prices had been elevated longer than expected; Did not know how long supply chain disruptions would last. Keeping an open mind regarding monetary policy stance.
• Fed’s Daly (non-voter, dove) noted that by summer 2022 should get more clarity, in the meantime it could be a challenging time for consumers.
• Treasury Sec Yellen reiterated that Biden’s Build Back Better plan was anti-inflationary in the medium term; Inflation to be watched carefully. Reiterated concern that a recession could happen if debt limit not raised.

Energy

• Weekly API Crude Oil Inventories: -2.5M v +3.6M prior (1st drawn down in 7 weeks).

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.06% at 482.96, FTSE +0.55% at 7,313.87, DAX 0.00% at 16,039.75, CAC-40 -0.15% at 7,032.48, IBEX-35 +0.47% at 9,117.50, FTSE MIB +0.18% at 27,490.00, SMI +0.25% at 12,398.72, S&P 500 Futures -0.17%].
• Market Focal Points/Key Themes: European indices open modestly higher across the board but later slipped to trade generally mixed; sectors among those leading to the upside include financials and energy; while laggards include consumer discretionary and health care; industrials sector getting a boost after Alstom beats expectations; Scopia divests its stake in Indivior; EQT acquires LDP; Nobile and Maersk Drilling to merge; Vodacom to take majority stake in Vodafone Egypt; ICA to be taken private; earnings expected during the upcoming US session include Affimed, Energizer and Perrigo.

Equities

• Consumer discretionary: Adidas [ADS.DE] -6% (earnings; trims gross margin outlook), Marks & Spencer [MKS.UK] +14% (earnings), Asos [ASC.UK] +2% (CMD).
• Consumer staples: ICA Gruppen [ICA.SE] +11% (to be taken private), Ahold Delhaize [AD.NL] +3% (earnings).
• Energy: Electricite de France [EDF.FR] -1% (earnings).
• Financials: Allianz [ALV.DE] +1% (earnings), Credit Agricole [AC.FR] -1.5% (earnings).
• Industrials: Alstom [ALO.FR] +10% (earnings), Maersk Drilling [DRLCO.DK] +18% (merger with Noble), Leoni [LEO.DE] -8% (earnings).
• Technology: Infineon [IFX.DE] +1% (earnings).

Speakers

• Sweden Central Bank (Riksbank) Financial Stability Report: Strong domestic recovery underway but vulnerabilities remain in financial sector.
• German Council of Economic Advisers updated its 2021 and 2022 outlook. Cut the 2021 GDP growth forecast from 3.1% to 2.7% while raising 2022 GDP growth forecast from 4.0% to 4.6%. It forecasted 2021 CPI at 3.1% and 2022 CPI at 2.6%.
• Poland Central Bank member Kochalski stated that rates might rise if the MPC saw no chance of keeping CPI within the target range in mid-term.
• Russia Energy Min Shulginov: 2021 oil production seen at 517M tons and gas production seen at 777B CM.
• Thailand Central bank Policy Statement noted that the decision to keep rates steady was unanimous. Monetary policy to remain accommodative and to focus on recovery. Reiterated stance prepared to use all policy levers. Headline inflation remained in target range. To closely monitor THB currency (Baht) movements; FX to remain volatile. Economy continued to be fragile. Fiscal measures should support economy; GDP to expand close to prior predictions.

Currencies/Fixed income

• USD was steady ahead of key US CPI data for Oct. Dealers note faster rise in CPI could add to Treasury yield upside and spur financial markets to reprice for a swifter pace of Fed normalization. Markets have been questioning whether the pickup in inflation was transitory. The recent PPI data for the US did increase solidly in October.
• EUR/USD steady at 1.1565 despite Germany Oct CPI YoY confirmed at its highest level since the 1993 unification area. German Council of Economic Advisers stated that ECB should focus on fostering price stability. It it acts too late it could hurt the economy.
• USD/JPY moved back above the 113 handle.

Economic data

• (NL) Netherlands Sept Manufacturing Production M/M: +1.0 v -2.2% prior; Y/Y: 10.9% v 9.4% prior; Industrial Sales Y/Y: 13.8%e v 15.9% prior.
• (FI) Finland Sept Industrial Production M/M: 0.5% v 1.3% prior; Y/Y: 6.6% v 4.3% prior.
• (DE) Germany Oct Final CPI M/M: 0.5% v 0.5% prelim; Y/Y: 4.5% v 4.5% prelim (confirmed the highest annual pace since 1993 reunification).
• (DE) Germany Oct Final CPI EU Harmonized M/M: 0.5% v 0.5% prelim; Y/Y: 4.6% v 4.6% prelim.
• (NO) Norway Oct CPI M/M: -0.3% v 0.0%e; Y/Y: 3.5% v 3.8%e.
• (NO) Norway Oct CPI Underlying M/M: -0.3% v 0.0%e; Y/Y: 0.9% v 1.2%e.
• (NO) Norway Oct PPI M/M: 6.2% v 8.0% prior; Y/Y:60.8% v 57.8% prior.
• (DK) Denmark Oct CPI M/M: 0.9% v 0.3% prior; Y/Y: 3.0% v 2.2% prior.
• (DK) Denmark Oct CPI EU Harmonized M/M: 1.0% v 0.4% prior; Y/Y: 3.2% v 2.4% prior.
• (RO) Romania Oct CPI M/M: 1.8% v 1.2%e; Y/Y: 7.9% v 7.1%e (6th month above target range).
• (TR) Turkey Sept Unemployment Rate: 11.5% v 12.1% prior.
• (TH) Thailand Central Bank (BoT) left the Benchmark Interest unchanged at 0.50% (as expected).
• (AT) Austria Sept Industrial Production M/M: -2.3% v -1.2% prior; Y/Y: 3.3% v 7.8% prior.
• (CZ) Czech Oct CPI M/M: 1.0% v 0.7%e; Y/Y: 5.8% v 5.5%e.
• (CZ) Czech Sept Export Price Index Y/Y: 7.5% v 8.6% prior; Import Price Index Y/Y: 8.8% v 9.4% prior.
• (CN) China Oct Aggregate Financing (CNY): 1.590T v 1.700Te.
• (CN) China Oct New Yuan Loans (CNY): 800B v 700Be.
• (CN) China Oct M2 Money Supply Y/Y: 8.7% v 8.3%e.
• (IT) Italy Sept Industrial Production M/M: +0.1% v -0.1%e; Y/Y: 4.4% v 4.0%e; Industrial Production NSA (unadj) Y/Y: 4.5% v 2.9% prior.
• (GR) Greece Sept Industrial Production Y/Y: 9.7% v 10.1% prior.
• (GR) Greece Oct CPI Y/Y: 3.4% v 2.2% prior; CPI EU Harmonized Y/Y: 2.8% v 1.9% prior.
• Fixed income Issuance
• (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.
• (ES) Spain Debt Agency (Tesoro) sold total €5.133B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.
• (IT) Italy Debt Agency (Tesoro) sold €5.0B vs. €5.0B indicated in 12-month Bills; Avg Yield: -0.533% v -0.474% prior; Bid-to-cover: 1.53x v 1.30x prior.
• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 1.5% Feb 2026 Bonds; Avg Yield: 1.50% v 1.45% prior; Bid-to-cover: 3.67x v 4.22x prior.
• (SE) Sweden sold SEK10.0B vs. SEK10.0B indicated in 3-month Bills; Avg Yield: -0.3643% v -0.3875% prior; bid-to-cover: 2.74x v 1.75x prior.
• 05:00 (UK) DMO sold £900M in 0.125% Aug 2031 Inflation-linked Gilts (UKei); Real Yield: -3.242% v -3.009% prior, bid-to-cover: 2.25x v 2.33x prior.

Looking ahead

• (MX) Mexico Oct ANTAD Same-Store Sales Y/Y: No est v 10.1% prior.
• (MX) Mexico Oct Nominal Wages: No est v 4.1% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (NL) ECB’s Elderson (Netherlands, SSM member).
• 05:30 (DE) Germany to sell €3.0B in 0.0% Aug 2031 Bunds.
• 05:30 (PT) Portugal Debt Agency (IGCP) to sell €0.75-1.0B in 2031 and 2037 OT bonds.
• 06:00 (PT) Portugal Q3 Unemployment Rate: No est v 6.7% prior.
• 06:00 (IL) Israel Oct Consumer Confidence: No est v 126 prior.
• 06:00 (RU) Russia to sell 2031 and 2036 OFZ Bonds.
• 06:30 (CL) Chile Central Bank Economist Survey.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (US) MBA Mortgage Applications w/e Nov 5th: No est v -3.3% prior.
• 07:00 (IS) Iceland Oct Unemployment Rate: No est v 5.0% prior.
• 07:00 (BR) Brazil Oct IBGE Inflation IPCA M/M: 1.1%e v 1.2% prior; Y/Y: 10.5%e v 10.3% prior.
• 07:00 (CZ) Czech Central Bank to comment on CPI data.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:15 (IE) ECB’s Lane (Ireland, chief economist).
• 08:30 (US) Oct CPI M/M: 0.6%e v 0.4% prior; Y/Y: 5.9%e v 5.4% prior.
• 08:30 (US) Oct CPI (ex-food/energy) M/M: 0.4%e v 0.2% prior; Y/Y: 4.3%e v 4.1% prior.
• 08:30 (US) Oct CPI Index NSA: 275.808e v 274.310 prior; CPI Core Index SA: 280.991e v 280.017 prior.
• 08:30 (US) Oct Real Avg Hourly Earning Y/Y: No est v -0.8% prior; Real Avg Weekly Earnings Y/Y: No est v -0.8% prior.
• 08:30 (US) Initial Jobless Claims: 260Ke v 269K prior; Continuing Claims: 2.05Me v 2.105M prior (**Note: Nov 11th is veterans Day).
• 08:30 (US) Weekly USDA Net Export Sales.
• 09:00 (UK) BOE’s Tenreyro.
• 10:00 (US) Sept Final Wholesale Inventories M/M: 1.1%e v 1.1% prelim; Wholesale Trade Sales M/M: No est v -1.1% prior.
• 10:30 (US) Weekly DOE Oil Inventories.
• 11:00 (RU) Russia Q3 Advance GDP (1st reading) Y/Y: 4.5%e v 10.5% prior.
• 11:30 00 (US) Treasury to sell 4-week and 8-week bills.
• 12:00 (DE) ECB’s Schnabel (Germany).
• 12:00 (SE) Sweden Central bank (Riksbank) Breman.
• 13:00 (US) Treasury to sell 30-Year bonds.
• 14:00 (US) Oct Monthly Budget Statement: -$179.0Be v -$62.0B prior.
• 16:45 (NZ) New Zealand Oct Food Prices M/M: No est v 0.5% prior.
• 18:50 (JP) Japan Oct PPI M/M: 0.4%e v 0.3% prior; Y/Y: 7.0%e v 6.3% prior.
• 19:00 (AU) Australia Nov Consumer Inflation Expectation Survey: No est v 3.6% prior.
• 19:01 (UK) Oct RICS House Price Balance: 65%e v 68% prior.
• 19:30 (AU) Oct Employment Change: +50.0Ke v -138K prior; Unemployment Rate: 4.8%e v 4.6% prior; Full Time Employment Change: No est v +26.7K prior; Part Time Employment Change: No est v -164.7K prior; Participation Rate: 64.8%e v 64.5% prior.
• 21:00 (JP) Japan Oct Tokyo Avg Office vacancies: No est v 6.4 prior.
• 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 12.5% prior; “L” Money Supply M/M: No est v 10.3% prior.