USD Holds Onto Recent Strength

Notes/Observations

• No breakthroughs from US-China virtual meeting.
• Germany suspends certification process for Nord Stream 2; energy prices spike higher.
• UK jobs data seen as likely enough to seal the deal for a potential Dec BoE rate hike.
• RBA Minutes continued to show central bank pushback against market pricing for a 2022 rate hikes.
• Awaiting for US retail sales data for more clarity regarding Fed interest rate outlook.

Asia

• China stated that President Xi and US President Biden had full and deep communication on development and bilateral issues, Stressed that US should take responsible macroeconomic policies. Told US to watch for spillover effect from macro policy; President Biden had indicated that the US did not support Taiwan independence.
• RBA Nov Minutes reiterated stance to remain committed to maintaining highly supportive monetary conditions to achieve a return to full employment in Australia and inflation consistent with the target. A further pick-up in inflation was expected but added global inflationary forces were seen moderating over next 18 months.
• RBA Gov Lowe stated that had yet to see broad based pick up in wages and needed wages to grow 3.0% or more to hit CPI midpoint. Reiterated its forward guidance that the 1st rate increase was not likely before 2024. Current situation did not warrant rate hike in 2022; Economy would have to turn out very different for board to consider hike next year.
• Japan Fin Min Suzuki stated that expected the domestic economy to pick up during Q4; Stimulus to have real impact in 2022.
• BOJ is revisiting scheme aimed at revitalizing regional banks and sought to avoid excessive payouts to banks.

Europe

• France Fin Min Le Maire said to want to advance the discussion on an overhaul of euro-area debt rules during its EU council presidency in the first half of next year.

Americas

• President Biden signed the $1.1T infrastructure bill on Monday, Nov 15th (as expected).
• White House stated that President Biden discussed complex nature of bilateral relations, US remained committed to “One China” policy, but opposed to efforts to change status of Taiwan; Pressed Xi to fulfill Phase 1 trade commitments.
• Fed’s Barkin (FOMC voter, hawk) stated that did not think the infrastructure bill would provide any near term stimulus. Expected supply chain issues to last well into 2022.
• Fed’s Kashkari (dove, non-voter) stated that Fed would never allow price expectations to become unanchored. Paying close attention to the data and added that higher prices were real but the key was not to over-react.
• US Senate Banking Chair: President Biden pick for Fed Chair is imminent.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.23% at 489.56, FTSE -0.05% at 7,348.40, DAX +0.32% at 16,199.60, CAC-40 +0.27% at 7,148.02, IBEX-35 -0.28% at 9,070.38, FTSE MIB +0.07% at 27,889.00, SMI +0.13% at 12,533.72, S&P 500 Futures -0.03%].
• Market Focal Points/Key Themes: European indices open generally higher and traded broadly sideways as the session wore on; among better performing sectors are financials and industrials; while to the downside we find materials and consumer discretionary sectors; Danone divests Aqua d’Or to Royal Unibrew; Stagecoach and Next disclose due diligence is ongoing; earnings expected during the upcoming US session includes Home Depot, Nasdaq and Walmart.

Equities

• Consumer discretionary: Homeserve [HSV.UK] +3% (earnings).
• Consumer staples: Imperial Brands [IMB.UK] -1.5% (earnings).
• Healthcare: Molecular Partners [MOLN.CH] -29% (trial results).
• Industrials: Diageo [DGE.UK] +2.5% (mid-term targets).
• Telecom: Vodafone [VOD.UK] +5% (earnings; raises outlook), Bouygues SA [EN.FR] -2% (earnings).

Speakers

• Sweden Central Bank (Riksbank) Dep Gov Breman expressed confidence that inflation would fall back after reaching its expected peak.
• Poland Central Bank’s Gatner stated that CPI would continue rising in the upcoming 2-3 months. Says he would vote for two rate hikes of 50bps each at the upcoming two MPC meeting (Dec and Jan).
• German regulator said to temporarily suspended Nord Stream 2 pipeline certification process. Consortium had planned to just form a German subsidiary within the territory and this was not sufficient. Suspension to last until such time that the operating company arranged German company status compliant with national law.
• German VCI (Chemical Industry Association) Q3 Production +0.8% q/q; prices +2.9% q/q due to logistics, raw material and energy costs.
• China Communist Party resolution vowed to achieve national reunification. To maintain Hong Kong and Macau prosperity.
• Russia Dep PM Novak stated that was too early to predict what the OPEC+ decision would be at the upcoming Dec monthly meeting:
• Nigerian National Petroleum Corporation (NNPC): $100 oil is within sight.
• OPEC Sec Gen Barkindo stated that saw oversupply in market in 2022; had signals that OPEC needs to be careful. OPEC+ wants to make sure the global economy did not falter.
• IEA Monthly Oil Report (OMR) maintained its 2021 global oil demand growth at 5.5M bpd while raising the 2022 global oil demand growth from 3.3M bpd to 3.4M bpd.

Currencies/Fixed Income

• USD maintained its form tone after hitting fresh 16-month highs during the Asian session. Greenback strength has been aided by anticipate faster monetary-policy tightening by the Fed and reinforced by recent US economic data. Dealers also noted that the protracted Covid-19 wave in Europe providing greater demand for safe havens.
• EUR/USD probing 1.1350 area in the session as ECB officials continued to tout that tightening monetary policy at this time to rein in inflation could choke off the eurozone’s recovery.
• GBP/USD higher at 1.3460 after Sept ILO Jobless data seen as likely enough to seal the deal for a Dec BoE rate hike. Some dealers point out that BOE rarely acts boldly or hastily when raising rates and rarely even does in Dec when year-end liquidity and participant dry up.
• Other central bank continue to pushback against market pricing for a 2022 rate hikes (RBA, ECB being the most recent over the past day).

Economic data

• (NO) Norway Q4 Consumer Confidence: 13.7 v 11.0 prior.
• (FI) Finland Sept GDP Indicator Y/Y: 5.0% v 4.3% prior.
• (UK) Q3 Preliminary Output Per Hour Y/Y: -4.8% v +4.3% prior.
• (UK) Oct Jobless Claims Change: -14.9K v -85.9K prior; Claimant Count Rate: 5.1%v 5.2% prior.
• (UK) Sept Average Weekly Earnings 3M/Y: 5.8% v 5.6%e; Weekly Earnings (ex-bonus) 3M/Y: 4.9% v 5.0%e.
• (UK) Sept ILO Unemployment Rate: 4.3% v 4.4%e; Employment Change 3M/3M: +247K v +190Ke.
• (RO) Romania Q3 Advance GDP Q/Q: 0.3% v 0.9%e; Y/Y: 7.2% v 9.7%e.
• (FR) France Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 2.6% v 2.6% prelim; CPI (ex-tobacco) Index: 106.42 v 106.42e.
• (FR) France Final CPI EU harmonized M/M: 0.4% v 0.5% prelim; Y/Y: 3.2% v 3.2% prelim.
• (CZ) Czech Oct PPI Industrial M/M: 1.9% v 0.8%e; Y/Y: 11.6% v 10.3%e.
• (HU) Hungary Q3 Preliminary GDP Q/Q: 0.7% v 1.0%e; Y/Y: 6.1% v 7.3%e.
• (HK) Hong Kong Oct Unemployment Rate: 4.3% v 4.4%e.
• (NL) Netherlands Q3 Preliminary GDP Q/Q: 1.9% v 1.6%e; Y/Y: 5.0% v 3.7%e.
• (NL) Netherlands Sept Consumer Spending Y/Y: 4.6% v 3.1% prior.
• (NE) Netherlands Sept Trade Balance: €5.3B v €4.4B prior.
• (IT) Italy Oct Final CPI M/M: 0.7% v 0.6% prelim; Y/Y: 3.0% v 2.9% prelim.
• (IT) Italy Oct Final CPI EU Harmonized M/M: 0.9% v 0.8% prelim; Y/Y: 3.2% v 3.1% prelim.
• (EU) Euro Zone Q3 Preliminary GDP (2nd reading) Q/Q: 2.2% v 2.2%e; Y/Y: 3.7% v 3.7%e.
• (EU) Euro Zone Q3 Preliminary Employment Q/Q: 0.9% v 0.7% prior; Y/Y: 2.0% v 1.9% prior.

Fixed income Issuance

• (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2030, 2032 and 2035 bonds.
• (ES) Spain Debt Agency (Tesoro) sold total €1.895B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.
• (UK) DMO sold £1.75B in 0.875% Jan 2046 Gilts; Avg Yield: 1.178% v 0.940% prior; bid-to-cover: 2.03x v 2.38x prior; Tail: 1.0bps v 0.2bps prior.

Looking Ahead

• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell HUF15B in 3-Month Bills.
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
• 06:00 (IL) Israel Q3 Advance GDP Annualized: 4.1%e v 16.6% prior.
• 06:00 (BR) Brazil Nov FGV Inflation IGP-10 M/M: +1.6%e v -0.3% prior.
• 06:00 (FI) Finland to sell combined €1.0B in 2031 and 2047 RFGB Bonds.
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey.
• 06:30 (EU) ESM to sell €1.5B in 6-month Bills.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (BR) Brazil Sept Economic Activity Index (Monthly GDP) M/M: -0.3%e v -0.2% prior; Y/Y: 1.8%e v 4.7% prior.
• 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to raise Base Rate by 30bps to 2.10%.
• 08:00 (PL) Poland Oct CPI Core M/M: 0.7%e v 0.7% prior; Y/Y: 4.5%e v 4.2% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
• 08:15 (CA) Canada Oct Annualized Housing Starts: 255.0Ke v 251.2K prior.
• 08:30 (US) Oct Advance Retail Sales M/M: 1.3%e v 0.7% prior; Retail Sales (ex-auto) M/M: 1.0%e v 0.8% prior; Retail Sales (ex-auto/energy): 0.7%e v 0.7% prior; Retail Sales (Control Group): 0.9%e v 0.8% prior.
• 08:30 (US) Oct Import Price Index M/M: 1.0%e v 0.4% prior; Y/Y: 10.2%e v 9.2% prior; Import Price Index (ex-petroleum) M/M: 0.3%e v 0.1% prior.
• 08:30 (US) Oct Export Price Index M/M: 1.0%e v 0.1% prior; Y/Y: No est 16.3% prior.
• 08:55 (US) Weekly Redbook LFL Sales data.
• 09:00 (EU) Weekly ECB Forex Reserves.
• 09:00 (HU) HU) Hungary Central Bank (MNB) Gov post rate decision statement.
• 09:00 (EU) ECB weekly QE bond buying update.
• 09:15 (US) Oct Industrial Production M/M: +0.8%e v -1.3% prior; Capacity Utilization: 75.9%e v 75.2% prior; Manufacturing Production: +0.8%e v -0.7% prior.
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (20+ years).
• 10:00 (US) Nov NAHB Housing Market Index: 80e v 80 prior.
• 10:00 (US) Sept Business Inventories: 0.6%e v 0.6% prior.
• 10:00 (CO) Colombia Sept Trade Balance: -$1.6Be v -$1.6B prior; Total Imports: $5.6Be v $5.4B prior.
• 11:00 (CO) Colombia Q3 GDP Q/Q: +5.0%e v -2.4% prior; Y/Y: 12.5%e v 17.65 prior.
• 11:00 (CO) Colombia Sept Economic Activity Index (Monthly GDP) Y/Y: 11.2%e v 13.2% prior.
• 11:00 (EU) ECB chief Lagarde.
• 12:00 (US) Fed’s Barkin, Bostic and George at event.
• 13:00 (CA) Bank of Canada (BOC) Schembri.
• 15:30 (US) Fed’s Daly at Commonwealth Club.
• 16:00 (US) Sept Total Net TIC Flows: No est v $91.0B prior; Net Long-term TIC Flows: No est v $79.3B prior.
• 16:30 (US) Weekly API Oil Inventories.
• 16:45 (NZ) New Zealand Q3 PPI Input Q/Q: No est v 3.0% prior; PPI Output Q/Q: No est v 2.6% prior.
• 18:30 (AU) Australia Oct Leading Index M/M: No est v -0.02% prior.
• 18:50 (JP) Japan Oct Trade Balance: -¥350Be v -¥624.1B prior (revised from -¥622.8B); Adjusted Trade Balance: -¥609.2Be v -¥624.8B prior; Exports Y/Y: 10.5%e v 13.0% prior; Y/Y: 31.9%e v 38.6% prior.
• 18:50 (JP) Japan Sept Core Machine Orders M/M: +1.5%e -2.4% prior; Y/Y: 17.7%e v 17.0% prior.
• 19:30 (AU) Australia Q3 Wage Price Index Q/Q: 0.6%e v 0.4% prior; Y/Y: 2.2%e v 1.7% prior.
• 19:30 (SG) Singapore Oct Non-oil Domestic Exports M/M: 0.6%e v 1.2% prior; Y/Y: 18.0%e v 12.3% prior; Electronic Exports Y/Y: No est v 14.4% prior.
• 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 5~10 Years and 25 Years~ maturities.
• 20:20 (EU) ECB Lagarde at event.
• 20:30 (KR) Bank of Korea (BOK) to sell KRW1.0T in 3-Year Bonds.
• 21:35 (CN) China to sell 1-year and 10-year Bonds.
• 22:00 (TH) Thailand Finance Ministry to sell THB17B in 2042 Bonds.