Austria Goes Back Into Full Pandemic Lockdown

Notes/Observations

• Pandemic continues to rage in Germany as emergency is declared; Austria moved back in full lockdown mode for both vaccinated and unvaccinated people.
• ECB chief Lagarde continued to push back against expectations of policy tightening in the Euro Zone.
• UK Oct Retail sales registered its 1st month rise in six months.
• US Fed Chair announcement in focus.

Asia

• South Korea Oct PPI registers its fastest annual pace since 2008 (Y/Y: 8.9% v 7.5% prior).
• BOK expected to raise inflation forecasts at next week’s policy meeting.
• Japan Oct National CPI Y/Y: 0.1% v 0.2%e; CPI Ex-food (core) Y/Y: 0.1% v 0.1%e.
• Japan PM Kishida stated that had compiled a strong economic package with ¥56T spending and ¥79T overall size for the post coronavirus environment (Note: size of package in-line with press speculation).

Europe

• Compromise on EU judges could be within reach in Northern Ireland Protocol talks.
• France Maritime Min stated that was still short around 150 post-Brexit fishing licenses; talks were continuing.
• UK Nov GfK consumer Confidence: -14 v -18e (1st improvement in 4 months).

Americas

• CBO released estimate that full Biden Build Back Better bill would add $367B to deficit over 10 years.
• Fed’s Evans (dove, voter) stated that expected good momentum for US economy into 2022. Rate hikes could start next year [2022] or in 2023, depending on inflation.
• Labor Dept Chief Economist Jones stated that Fed should run economy hot to boost jobs. Should not pump the brakes on the economy.
• House Rep Beatty (D-OH) stated that the House would not vote on Biden Agenda bill on Thursday; aimed to have a vote on Friday, Nov 19th.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.01% at 487.74, FTSE -0.06% at 7,251.90, DAX -0.09% at 16,206.98, CAC-40 -0.17% at 7,129.72, IBEX-35 -0.56% at 8,826.67, FTSE MIB -0.61% at 27,490.00, SMI +0.20% at 12,585.36, S&P 500 Futures +0.04%].
• Market Focal Points/Key Themes: European indices open higher across the board but later turned negative following updates on covid situation; better performing sectors include financials and consumer discretionary; while industrials and materials sectors among the underperforming sectors; Telenor and CP Group looking to merge units in Thailand; Swiss Re partners with Baidu on EV insurance; GB Group to acquire Acuant; earnings expected during the upcoming US session include Foot Locker and Buckle.

Equities

• Consumer discretionary: Kingfisher [KGF.UK] -5% (trading update).
• Industrials: GESCO [GSC1.DE] +4% (earnings).
• Technology: GB Group [GBG.UK] -17% (acquisition; placement).

Speakers

• ECB chief Lagarde reiterated view that saw inflation picking up into year-end and fade over the medium term. Must not rush into premature tightening as need to reach the 2% target on a durable basis.
• EU’s Sefcovic stated that engagement with UK to continue to ensure positive outcome of Northern Ireland Protocol.
• UK Brexit Min Frost stated that Article 16 remained an option; significant gaps remained between EU and UK.
• Germany Health Min Spahn stated that the country was in an national emergency as pandemic situation iwas now more serious than last week. Not ruling out a lockdown (**Reminder: Germany reported over 60K new COVID-19 daily cases (record high) on Thursday, Nov 18th).
• Austria Chancellor Schallenberg confirmed a national lockdown for both vaccinated and unvaccinated people from Monday, Nov 22nd.
• Russia Dep Fin Min Oreshkin stated that CPI might return to 4%target only in 2023.
• Japan Cabinet formally approved thes ¥78.9T stimulus package which included fiscal spending of ~¥55.7T (as speculated). To complie extra budget of ¥31.9T. Saw the fiscal package lifting Japan’s GDP by 5.6% in FY2021/22. To set aside ¥5T of reserves for next fiscal year emergency spending to combat the pandemic. To prepare for the resumption of the domestic travel discount campaign.
• Japan PM Kishida stated that would employ all funding options including bonds for stimulus and would review 2025 primary balance target if needed. Saw the stimulus adding GDP by 5.6%.
• Japan govt official Miyazawa (tax policy chief) stated that was not in a position to rales the sales tax.
• China Premier Li stated that saw new downward pressure in domestic economy but would meet the annual economic targets. Reiterated to take targeted measures on economic adjustment.

Currencies/Fixed Income

• The USD continued its firm tone and on track for a 4th week of gains aided by the rate divergence theme. Safe haven flows also aided the greenback as renewed lockdown fears in Europe simmered.
• EUR/USD at fresh 16-month lows as the pair probed the lower end of the 1.13 handle. A fresh wave of the coronavirus concerns prompted an emergency from Germany and a fresh full lockdown conditions in Austria. ECB chief Lagarde continued to push back against expectations of policy tightening in the Euro Zone.

Economic data

• (FR) France Q3 ILO Unemployment Rate: 8.1% v 7.9%e; Mainland Unemployment Rate: 7.9% v 7.6%e.
• (DE) Germany Oct PPI M/M: 3.8% v 1.9%e; Y/Y: 18.4% v 16.2%e.
• (UK) Oct Retail Sales (ex-auto/fuel) M/M: 1.6% v 0.6%e; Y/Y: -1.9% v -2.8%e.
• (UK) Oct Retail Sales (including auto/fuel) M/M: 0.8% v 0.5%e; Y/Y: -1.3% v -1.9%e.
• (UK) Oct Public Finances (PSNCR): £61.5B v £6.1B prior; PSNB (ex-banking groups): £18.8B v £14.0Be; Public Sector Net Borrowing: £18.0B v £12.4Be; Central Government NCR: £2.6B v £14.6B prior.
• (NO) Norway Q3 Overall GDP Q/Q: 3.8% v 1.0% prior; GDP Mainland Q/Q: 2.6% v 2.6%e.
• (NO) Norway Sept Overall GDP M/M: 2.2% v 1.9% prior; GDP Mainland M/M: 0.6% v 0.4%e.
• (CN) Weekly Shanghai copper inventories (SHFE): 34.9K v 38.0K tons prior.
• (RU) Russia Narrow Money Supply w/e Nov 12th (RUB):14.33 T v 14.31T prior.
• (TW) Taiwan Q3 Current Account: $26.1B v $28.8B prior.
• (SE) Sweden Q3 Industry Capacity: 90.4% v 91.1% prior.
• (SE) Sweden Q3 Total No. of Employees Y/Y: 2.7% v 1.5% prior.
• (EU) Euro Zone Sept Current Account: €18.7B v €17.1B prior.
• (IT) Italy Sept Industrial Sales M/M: 0.1% v 0.5% prior; Y/Y: 15.2% v 12.4% prior.
• (PL) Poland Oct Employment M/M: 0.1% v 0.0%e; Y/Y: 0.5% v 0.4%e.
• (PL) Poland Oct Average Gross Wages M/M: 1.3% v 1.6%e; Y/Y: 8.4% v 8.9%e.
• (PL) Poland Nov Consumer Confidence: -23.3 v -18.8e.
• (IT) Italy Sept Current Account Balance: €4.7B v €5.0B prior.
• (GR) Greece Sept Current Account Balance: -€0.2B v +€1.4B prior.
• (PT) Portugal Sept Current Account Balance: -€0.1B v +€0.5B prior.

Fixed income Issuance

• (ZA) South Africa sold total ZAR375M vs. ZAR1.2B indicated in I/L 2025, 2038 and 2046 Bonds.

Looking ahead

• UK Brexit Min Frost and and EU’s Sefcovic meet in Brussels.
• 05:25 (EU) Daily ECB Liquidity Stats.
• 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).
• 06:30 (IN) India Weekly Forex Reserve w/e Nov 12th: No est v $640.9B prior.
• 06:45 (US) Daily Libor Fixing.
• 07:00 (UK) BOE Pill (chief economist).
• 07:30 (IS) Iceland to sell 2024 and 2033 RIKB Bonds.
• 08:00 (DE) ECB’s Weidmann (Germany).
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (CA) Canada Sept Retail Sales M/M: -1.7%e v +2.1% prior; Retail Sales (ex-auto) M/M: -1.0%e v 2.8% prior.
• 10:45 (US) Fed’s Waller on Economic Outlook.
• 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Greece and South Africa Sovereign Debt ; S&P on Slovakia and South Africa Sovereign Debt; Fitch on Switzerland Sovereign Debt; Canadian rating agency DBRS on Denmark, Latvia and Lithuania Sovereign Debt.
• 12:15 (US) Fed’s Clarida on Global Monetary Policy Coordination.
• 13:00 (US) Weekly Baker Hughes Rig Count.