Notes/Observations
- Spanish Ibex trades lower after Catalan referendum, Catalonia says on track towards declaration of independence
- Concert shooting in Las Vegas leaves at least 20 dead
- PMI data in Europe saw Spain beat, while Italy and the UK missed estimates
Overnight
Asia:
- PBOC cut reserve requirement ratio (RRR) for some banks that meet certain requirements for lending to small business and agricultural sector (1st cut since Feb 2016); affirms prudent and neutral monetary policy
- China Sep CAIXIN Manufacturing PMI fell short of estimates after the official Government Manufacturing PMI rose to a 5 year high
- Japan business confidence comes in ahead of estimates, hitting a 10 year high ahead of the elections
Europe:
- UK PMI comes slightly shy of forecasts but still marks 14th month of expansion, weighs on Sterling.
- UK FinMin Hammond acknowledges business fears over Brexit, reiterates support for PM May
- Euro country PMIs generally in line with forecasts, Spain strong beat, Italy slight miss, Swiss PMI was a 6 year high. Eurozone PMI confirms highest reading since Feb 2011
- Spain’s Catalonia is now on track towards a declaration of independence. According to regional officials, results showed 90% of voters backed independence (with a turnout of 2.3M vote, 42%). The government in Madrid will hold talks with Spanish parties to discuss a response.
- Low cost Airlines Monarch Airlines ceases to trade, Easyjet, Ryanair gain
Americas
- 20 reported dead in Las Vegas shooting, over 100 said to be injured at concert
Economic data
- (UK) SEPT PMI MANUFACTURING: 55.9 V 56.2E (14th month of expansion)
- (EU) EURO ZONE SEPT FINAL MANUFACTURING PMI: 58.1 V 58.2E (confirms 49th straight month of growth)
- (DE) GERMANY SEPT FINAL MANUFACTURING PMI: 60.6 V 60.6E (CONFIRMS 34TH MONTH OF EXPANSION)
- (FR) FRANCE SEPT FINAL MANUFACTURING PMI: 56.1 V 56.0E (Confirms 12th month of expansion)
- (IT) ITALY SEPT MANUFACTURING PMI: 56.3 V 56.8E
- (ES) SPAIN SEPT MANUFACTURING PMI: 54.3 V 53.0E (47th month of expansion)
- (IE) IRELAND SEPT MANUFACTURING PMI: 55.4 V 56.1 PRIOR (52nd month of expansion)
- (SE) Sweden Sept Manufacturing PMI: 63.7 v 57.0e
- (RU) RUSSIA SEPT MANUFACTURING PMI: 51.9 V 52.1E (14th month of expansion)
- (EU) EURO ZONE AUG UNEMPLOYMENT RATE: 9.1%V 9.0%E
Fixed Income Issuance:
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices [Stoxx50 +0.2% at 3,591, FTSE +0.5% at 7,407, DAX +0.3% at 12,871, CAC-40 flat at 5,330, IBEX-35 -1.2% at 10,261, FTSE MIB -0.1% at 22,682, SMI +0.4% at 9,194, S&P 500 Futures +0.1%]
Market Focal Points/Key Themes: European stocks opened slightly higher and performed mixed as the session progressed; Spanish stocks impacted by Catalan referendum over weekend, dragging on banking; political uncertainty lead to peripheral indices lagging; risk sentiment slightly off; airlines supported following bankruptcy of Monarch in the UK; home builders in the UK supported by PM May’s comments regarding Brexit; upcoming earnings in US session include TerraForm Power and Cal-Main Foods; reminder this week both South Korea and China markets to be closed for holidays
Equities
- Consumer discretionary: BIC BB.FR % (cuts outlook), Bonduelle BON.FR -9.3% (results), Roularta ROU.BE +27.9% (analyst action)
- Energy: Trevi TFI.IT -17.4% (extension on Friday’s results), Neste Oil NES1V.FI +2.8% (analyst action)
- Financials: Nex Group NXG.UK 7.1% (results), UBI Banca UBI.IT +2.7% (analyst action)
- Healthcare: Ablynx ABLX.BE -3.6% (study results), Pharming Group PHARM.NL +5.7% (study results)
- Industrials: Carillion CLLN.UK -9.3% (extension on Friday’s results)
- Materials: Avocet Mining AVM.UK 4.1% (results)
Speakers
- (UK) Chancellor of Exchequer Hammond (Fin Min): Reiterates support for PM May in what is a complex negotiation with the EU
- (EU) ECB’s Georghadji (Cyprus): Euro area inflation dependent on ECB policy, to early to declare success
- (RU) Russian Energy Min Novak: Oil Stabilizing between $50-60/barrel, which is a ‘suitable’ level – Saudi Tv
- (ES) Spain Justice Minister: Spain could use constitutional power to suspend Catalan autonomy if independence is claimed – press
Currencies
- EUR/USD traded lower following the violence-marred independence vote in Spain’s Catalonia region and as higher US Treasury yields drove the dollar up across the board.
- GBP/USD trades at over 2 week lows approaching 1.32 handle. A break below 1.33 targets 1.3269.
Fixed Income
- Bund futures trade at 160.97 down 4 ticks following the Catalonia vote that pressured the euro and Spanish stocks. Continued downside targets 160.25 while upside resistance stands initially at 162.07, followed by 163.27.
- Gilt futures trade at 123.58 down 3 ticks following the move lower from Treasuries. Continued downside eyeing 123.26. Upside targets 124.90 then 125.24.
- Monday’s liquidity report showed Friday’s marginal lending facility rose to €169M from €122M.
- Corporate issuance saw $20B last week via 31 tranches, bringing YTD issuance to above $1.06T. For the week ahead analysts forecast around $15-20B to come to market.
In Euro denominated issuance ~€25.5B came to market via 38 issuers and 44 tranches
Looking Ahead
- 07:00 (CA) Canada Aug MLI Leading Indicator M/M: No est v 0.2% prior
- 07:25 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (CZ) Czech Sept Budget Balance (CZK): No est v 15.6 prior
- 08:00 (BR) Brazil Sept PMI Manufacturing: No est v 50.9 prior
- 08:05 (UK) Baltic Dry Bulk Index
- 09:00 (SG) Singapore Sept Purchasing Managers Index: No est v 51.8 prior
- 09:30 (CA) Canada Sept Canada Manufacturing PMI: No est v 54.6 prior
- 09:45 (US) Sept Final Markit Manufacturing PMI: 53.0e v 53.0 prelim
- 10:00 (US) Aug Construction Spending M/M: +0.4%e v -0.6% prior
- 10:00 (US) Sept ISM Manufacturing: 57.9e v 58.8 prior; Prices Paid: 64.0e v 62.0 prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:00 (MX) Mexico Aug Total Remittances: No est v $2.5B prior
- 10:00 (BR) Brazil Aug CNI Capacity Utilization: No est v 77.4% prior
- 10:30 (MX)Mexico Sept PMI Manufacturing: No est v 52.2 prior
- 12:00 (IT) Italy Sept New Car Registrations Y/Y: No est v 15.8% prior
- 13:00 (MX) Mexico Sept IMEF Manufacturing Index: No est v 54.0 prior; Non-Manufacturing Index: No est v 54.0 prior
