UK CPI Keeps Door Open For A December BOE Rate Hike

• UK Oct inflation data saw CPI register its 3rd month above target and highest annual pace since Dec 2011; boosts BOE rate-hike expectations.
• Euro Zone Final CPI for Oct confirmed its 4th month above ECB target and the highest annual pace since 2008; ECB continues to backpedal on any concern.

Asia

• Japan Oct Trade Balance: -¥67.4B v -¥350Be; Exports Y/Y: 9.4% v 10.5%e; Imports Y/Y: 26.7% v 31.9%e.

Americas

• Fed’s Daly (non-voter, dove) stated that expected to have more clarity on economy by next summer. If today’s inflation was in mid-2022 then it would be a different conversation. If the country did not have Delta variant then would be thinking about raising rates, but not where we were at this time.
• Treasury Dept stated that the new deadline for dealing with debt ceiling was Dec 15th (prior Dec 3rd) (Insight: New deadline would give Congress more time to strike a deal on how to lift or suspend the debt ceiling).
• US Senator Shelby (R-AL) stated that had no plans to meet with Fed Brainard but did meet with Powell earlier on Tues (Nov 16th).
• Pres Biden stated that would announce news on Fed Chair nomination in about four days.
• Senate Maj Leader Schumer (D-NY) stated that the goal was to pass the President’s BBB plan before Christmas.
• President Biden said to back US diplomatic boycott of Beijing Olympics (Reminder: President Biden and Xi held a virtual summit on Monday, Nov 15th and the Olympics did not come up in the talks).

Energy

• Weekly API Crude Oil Inventories: +0.7M v -2.5M prior.
• US asked China to release oil from reserves as part of discussion on economic cooperation. President Biden asked China President Xi to join the US in releasing oil reserves to help stabilize soaring international crude prices.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.11% at 489.80, FTSE -0.37% at 7,299.70 , DAX +0.13% at 16,269.70, CAC-40 +0.03% at 7,155.02, IBEX-35 -0.32% at 9,011.42, FTSE MIB +0.13% at 27,841.00, SMI +0.17% at 12,578.16, S&P 500 Futures -0.03%].
• Market Focal Points/Key Themes: European indices open generally mixed and failed to gain direction as the session wore on; sectors trending toward the upside are industrials and materials; while laggard sectors include financials and consumer discretionary; travel and liesure subsector under pressure following new reports of covid case increases in Europe; Czechia and Slovakia closed for holiday; Glencore sells Ernest Henry Minding to Evolution Mining; reportedly SSE looking to sell stake in power network portfolio; focus on plethora of central bank speakers scheduled for the rest of the day; earnings expected during the upcoming US session include Nvidia, Target and Cisco Systems.

Equities

• Consumer discretionary: Home24 [H24.DE] +7% (analyst action), McColl’s Retail Group [MCLS.UK] -24% (trading update).
• Financials: Barclays [BARC.UK] +1% (UK CPI data), Experian [EXPN.UK] -2% (earnings), CMC Markets [CMCX.UK] -3% (earnings).
• Technology: Sage Group [SAGE.UK] +3% (earnings), Auto1 Group [AG1.DE] +6% (earnings; raises outlook).
• Utilities: SSE [SSE.UK] -4% (earnings).

Speakers

• ECB Financial Stability Review stated that near-term pandemic-related risks to financial stability had declined as economy rebounded. It noted growing vulnerabilities in housing markets and stretched financial asset valuations.
• ECB De Guindos (Spain) noted in the Stability Review that equity, risky assets were susceptible to corrections. – Risks of high rates of corporate defaults and bank losses were now significantly lower than six months ago. But risks from the pandemic had not disappeared entirely.
• ECB’s Rehn (Finland) reiterated Council stance that Inflation was accelerating due to bottlenecks and energy; CPI should easing during 2022. Inflation was not showing any 2nd round effects; not showing up in wages.
• UK Brexit Min Frost expressed hope that would be able to bring protocol talks to conclusion, but if not – Article 16 remained real option.
• Iceland Central Bank (Sedibanki) Policy Statement noted that Inflation outlook had deteriorated somewhat since August, owing in part to more persistent global price increases, a more rapid rebound in domestic economic activity, and rising wage costs. Added that is saw the inflation outlook continuing rising in coming months while inflationary expectations would remain anchored. Underlying inflation was lower and had declined in recent months. Maintained 2021 GDP growth at 4.0% and 2022 GDP growth over 5.0%.
• Turkey President Erodogan reiterated stance that interest rates was the reason and inflation the the result. To lift the interest rate burden from the people and not have them be crushed.
• Japan Industry Ministry (METI) stated that Japan was unlikely to release oil from reserves.

Currencies/Fixed Income

• USD continued its form tone aided by central bank policy divergence as perceived Fed normalization to take place faster compared to BOJ and ECB where rates seen lower for longer.
• GBP/USD moved higher after UK Oct inflation data saw CPI register its 3rd month above target and highest annual pace since Dec 2011. BOE Gov Bailey did note earlier in the week that the Dec MPC was a ‘live’ meeting. Data did boost BOE rate-hike expectations.
• EUR/USD hovering around the 1.13 area as ECB official continue to dismiss concerns over the pick-up in in flation.
• USD/JPY approaching the 1.15 level for its highest level since spring 2017.
• TRY currency (Lira) at fresh record lows against USD near 10.50 as Turkey President Erdogan vowed to take on interest rates.

Economic data

• (UK) Oct CPI M/M: 1.1% v 0.8%e; Y/Y: 4.2% v 3.9%e (3rd month above target and highest annual pace since Dec 2011); CPI Core Y/Y: 3.4% v 3.1%e; CPIH Y/Y: 3.8% v 3.6%e.
• (UK) Oct RPI M/M: 1.1% v 0.8%e; Y/Y: 6.0% v 5.7%e; RPI-X (ex-mortgage interest payments) Y/Y: 6.1% v 5.9%e; Retail Price Index: 312.0 v 311.2e.
• (UK) Oct PPI Input M/M: 1.4% v 1.1%e; Y/Y: 13.0% v 12.1%e.
• (UK) Oct PPI Output M/M: 1.1% v 0.7%e; Y/Y: 8.0% v 7.3%e.
• (AT) Austria Oct Final CPI M/M: 0.6% v 0.5% prelim; Y/Y: 3.7% v 3.6% prelim.
• (ZA) South Africa Oct CPI M/M: 0.2% v 0.2%e; Y/Y: 5.0% v 5.0%e (8th straight reading within target band).
• (ZA) South Africa Oct CPI Core M/M: 0.2% v 0.2%e; Y/Y: 3.2% v 3.2%e.
• (IS) Iceland Central Bank (Sedibanki) raised the 7-Day Term Deposit Rate by 50bps to 2.00%.
• (IT) Italy Sept Total Trade Balance: €2.5B v €1.3B prior; Trade Balance EU: +€0.8B v -€0.3B prior.
• (UK) Sept ONS House Price Index Y/Y: 11.8% v 10.2% prior.
• (EU) Euro Zone Oct Final CPI Y/Y: 4.1% v 4.1%e; CPI Core Y/Y: 2.0% v 2.1%e.
• (EU) Euro Zone Sept Construction Output M/M: +0.9% v -1.4% prior; Y/Y: +1.5% v -2.6% prior.
• (GR) Greece Sept Unemployment Rate: 13.0% v 13.9% prior.
• (CY) Cyprus Oct CPI Harmonized M/M: +0.9% v -0.5% prior; Y/Y: 4.4% v 3.6% prior.

Fixed income Issuance

• (IN) India sold total INR vs. INR200B indicated in 3-month, 6-month and 12-month bills.
• (IT) Italy Debt Agency (Tesoro) opened its book to sell USD-denominated May 2051 bond via syndicate; guidance seen +185bps to Libor mid-swaps.
• (DK) Denmark sold total DKK2.24B in 2024, 2031 and 2052 DGB bonds.
• (SE) Sweden sold total SEK2.5B vs. SEK2.5B indicated in 2026 and 2032 bonds.

Looking Ahead

• (IL) Israel Nov 12-month CPI Forecast: No est v 1.8% prior.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 05:30 (DE) Germany to sell €1.0B in 0% Aug 2052 Bunds.
• 05:30 (PT) Portugal Debt Agency (IGCP) cancelled planned 6-month and 12-month bill auction.
• 06:00 (IE) Ireland Sept Trade Balance: No est v €5.7B prior.
• 06:00 (ZA) South Africa Sept Retail Sales M/M: 2.6%e v 4.9% prior; Y/Y: +0.7%e v -1.3% prior.
• 06:00 (PT) Portugal Oct PPI M/M: No est v 2.1% prior; Y/Y: No est v 13.3% prior.
• 06:00 (EU) EU Commission to sell combined €2.0B in 3-month and 6-month Bills.
• 06:00 (RU) Russia combined RUB30.1B in 2031 and 2032 OFZ bonds.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (US) MBA Mortgage Applications w/e Nov 12th: No est v 5.5% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Oct Housing Starts: 1.579Me v 1.555M prior; Building Permits: 1.630Me v 1.586M prior (revised 1.589M).
• 08:30 (CA) Canada Oct CPI M/M: 0.7%e v 0.2% prior; Y/Y: 4.7%e v 4.4% prior; Consumer Price Index 143.8e v 142.9 prior; CPI Core- Common Y/Y: 1.9%e v 1.8% prior; CPI Core- Median Y/Y: 2.9%e v 2.8% prior; CPI Core- Trim Y/Y: 3.4%e v 3.4% prior.
• 08:30 (CA) Canada Oct Teranet House Price Index (HPI) M/M: No est v 0.1% prior; Y/Y: No est v 17.3% prior; HPI: No est v 284.96 prior.
• 09:00 (DE) ECB’s Schnabel (Germany).
• 09:00 (UK) BOE’s Mann.
• 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (7-20 years).
• 10:30 (US) Weekly DOE Oil Inventories.
• 11:00 (RU) Russia Q3 Advance GDP Y/Y: 4.5%e v 10.5% prior.
• 11:00 (US) Fed’s Bowman at Dallas Fed roundtable.
• 11:20 (US) Fed’s Mester and Waller speak at financial-stability conference.
• 12:00 (CA) Canada to sell C$3.5B in 0.75% 2024 Bonds.
• 12:40 (US) Fed’s Daly at New York Fed’s Treasury Market Conference.
• 12:40 (US) Fed’s Waller on Stablecoins.
• 13:00 (US) Treasury to sell 20-Year Bonds.
• 14:00 (AR) Argentina Sept Capacity Utilization: No est v 64.4% prior.
• 16:05 (US) Fed’s Evans.
• 16:10 (US) Fed’s Bostic.
• 21:00 (NZ) New Zealand Q4 2-year Inflation Expectation Survey: No est v 2.27% prior.
• 21:05 (AU) RBA’s Richards gives online speech.
• 22:00 (TH) Thailand Central Bank to sell THB25B in 2023 Bonds.
• 22:30 (JP) Japan to sell 12-Month Bills.
• 22:35 (JP) Japan to sell 20-Year JGB Bonds.
• 23:00 (AU) RBA’s Ellis gives online speech.