EU Market Update: Greek concerns intensify ahead on parliament votes on austerity set for next week; US payroll eyed for potential impact on outcome of the US Presidential election


Economic Data

- (RU) Russia Narrow Money Supply w/e Oct 29th (RUB): 7.19T v 7.27T prior

- (EU) ECB: €408M borrowed in overnight loan facility €7.8B prior; €258.3B parked in deposit facility vs. €271.1B prior

- (ES) Spain Oct PMI Manufacturing: 43.5 v 44.1e; lowest level since July

(AT) Austria Oct unemployment rate: 6.7% v 6.1% prior

- (IT) Italy Oct PMI Manufacturing: 45.5 v 45.5e

- (FR) France Oct Final PMI Manufacturing: v 43.5e; 8th straight month of contraction but off 41 month lows

- (GE) Germany Oct Final PMI Manufacturing: 46.0 v 45.7e

- (EU) Euro Zone Oct Final PMI Manufacturing: 45.4 v 45.3e

- (ZA) South Africa Oct Naamsa Vehicle Sales Y/Y: % v 1.4% prior

- (NO) Norway Oct Unemployment Rate: % v 2.4% prior

- (UK) Oct PMI Construction: 50.9 v 49.0e (first expansion since July)

Fixed Income:

- (IN) India sold total INR130B vs. INR130B indicated in 2017, 2026 and 2030 bonds


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Notes/Observations***

- US jobs data eyed for potential impact on the outcome of the US Presidential election Tuesday

- Green spouts aid growing optimism over the global economy

- European Manufacturing PMIs confirm bounce from 3+ year lows


Equities

Indices: FTSE 100 -0.10% at 5855, DAX -0.10% at 7327, CAC-40 -0.25% at 3466, IBEX-35 -0.20% at 7870, FTSE MIB -0.60% at 15,704, SMI +0.10% at 6668, S&P 500 Futures -0.10% at 1421

- European equity indices are trading mixed ahead of the release of the monthly US payrolls data. Most of the final European manufacturing PMI figures were slightly above expectations, although the indices continued to show contraction. Spain's Oct manufacturing PMI was weaker than expected, as the figure hit the lowest level since July.

In the UK, PMI data for the construction sector, which has been a drag on the economy, showed expansion for the first time since July. European banks are mostly lower and undperformers include Deutsche Bank. Resource related companies are mixed, amid the declines being seen in commodity prices.

- In the UK, shares of RBS [RBS.UK] have traded between gains and losses, as the firm reported better than expected Q3 results, driven by revenue growth in the fixed/income and currencies unit. Bumi PLC [BUMI.UK] is higher by over 5% on speculation that shareholder Nat Rothschild could present the firm with a proposal to counter the offer from Bakrie. Motor insurance provider Admiral Group [ADM.UK] has moved lower by over 4%, following the release of its interim management statement. In Germany, Beiersdorf [BEI.DE] has gained over 6%, as the company raised its FY sales forecast. BMW [BMW.DE] has outperformed the DAX index, after the firm reported that its Oct US vehicle sales rose by 21% y/y. Commerzbank [CBK.DE] has outperformed most of its European peers, amid reports that the firm could be removed from the list of systemically important financial institutions (SIFIs). In France, Alcatel-Lucent [ALU.FR] is lower by over 5% on weaker than expected Q3 results.

- FTSE 100 movers (Aberdeen Asset Management +1.9%, Tullow Oil +1.6%, Schroders +1.3%, IAG +1.1%, Land Securities +1%; Admiral Group -5%, Pennon Group -2%, Croda -1.8%, Glaxo -1.6%, Weir Group -1.5%)

- CAC-40 movers (Alcatel-Lucent -6.5%, Veolia Environmental -1.5%, Sanofi -1.5%, EADS -1.2%, Bouygues -1%)

- DAX movers (Beiersdorf +6%, Henkel +1.7%, BMW +1.6%, Continental +1.2%, Siemens +1.2%; Deutsche Telekom -3.5%, K+S -1.7%, Deutsche Bank -1.2%, E.ON -1%)

- IBEX-35 movers (Sacyr +1.8%, Gamesa +1.3%; Acciona -1.9%, Telefonica -1%)

- FTSE MIB movers (Autogril +1.5%,; Mediaset -2%, Telecom Italia -1.9%, Fiat Industrial -1.5%, Enel Green Power -1.4%)

- SMI movers (UBS +1.9%, SGS +1.2%, Swatch +1.1%)

Speakers:

- German Fin Min Schaeuble commented that negotiations on financial aid between the Troika and Cyprus would notstart before 2013 and suggested that Cyprus would miss the Nov 12th deadline to apply for aid. Cyprus may run out of money by the end of the year. Missing the Nov 12th deadline could cause their aid package to be separated from a possible 'group' bailout of troubled Euro countries

- German Fin Min Schaeuble commented that G20 needed structural reforms and he considered debt reduction a global task. Direct recap on Eurozone bank by ESM on was possible with banking oversight. He saw no risk of delay in introduction of Basel III rules and expected the US and UK to sign up. He added that US and Japan beared the same responsibility as Europe in pursuing stable policies and welcomed broad global consensus on regulation of non-bank financial institutions

- ECB's Liikanen (speaking on panel in Latvia) stated that Europe needed supervision and resolution in parallel. Europe had time to set up deposit insurance. He noted that a bail in would be rule while bail out would be the exception.

- Swiss Econ Min Schneider-Ammann reiterated that the CHF currency continued to remain overvalued

- ECB Q4 SME Lending Survey noted that small business expected a further deterioration in access to bank loans citing worsening economic. It noted that the highest percentage of small business bank loans were rejected since 2009

- Japan PM Noda commented that additional economic measures were not a condition for dissolution of Diet and call snap elections. On the situation over disputed waters he hoped for a cool down with China and currently had communication via various channels

- China's foreign ministry spokesman Hong Lei confirmed press reports that Chinese ships had entered waters around disputed islands

- Philippines set limits on foreign ownership of property, lending, and investment in healthcare

Currencies:

- Although the overall atmosphere was quiet ahead of the US Oct payroll report the USD saw some strength ahead of the release. The EUR/USD elected minor stops below the 1.2880 level to test 3-week lows while the EUR/GBP cross hits 1-month low at 0.8000 area. The Euro failed to respond to improvement in the major European Manufacturing PMIs. Dealers noted that yesterday's Greek court ruling that pension reform demanded by foreign lenders mighty be unconstitutional had raised concerns about Greece's ability to implement the austerity measures needed to secure EU/IMF/ECB bailout money. Thus Greek concerns had intensified ahead on parliament votes on austerity and budget set for next week.

- The GBP received a boost from the better PMI construction data to test 1.6133. The currency did consolidate afterwards as the new order component fell for the 5th straight month, the longest period of decline since the 2008-2009 recession.

- The JPY currency was mixed with the USD/JPY holding above the 80 handle towards 1-week highs while EUR/JPY moved lower to test below 103.30 ahead of the NY morning.

Political/ In the Papers:

- (EU) EU President Van Rompuy said to be considering a compromise with UK PM Cameron over the EU's budget - FT

-(EU) BBVA and Standard Chartered have been added to the list of global systemically important financial institutions (SIFIs) - FT

- (FR) Telegraph's Ambrose Evans-Pritchard reiterates that President Hollande's measures have raised concerns among local business officials and foreign investors

- (FR) Growing sentiment in Germany that France President Hollande is afraid to make unpopular reforms and if he does not make them France may become the next Spain/Greece - Bild-Zeitung

- (GR) Greece construction industry has seen 50% of all jobs lost since 2008; at least 37 construction companies have closed - ekathimerini; In the same period 33% of manufacturing jobs have been lost and 20% of retail.

- (ES) Institute of International Finance (IIF) chief Dallara: Bailout request from Spain would benefit the country and Europe - Spanish press

-(ES) Spain banks to be combined into 9 banking groups- ABC; Santander, BBVA, Caixabank, Popular, Sabadell, Kutxabank, Unicaja, Bankinter and Ibercaja will remain; Santander, BBVA, Caixabank, Popular, Sabadell, Kutxabank, Unicaja, Bankinter and Ibercaja will remain

- (US) Fed's Rosengren (dovish, alternate): Supports bond purchases until unemployment declines to 7.25%; Supports main rate at zero until employment at 6.5%.

- (CN) China seeks talks with Japan on the joint management of the Senkaku islands


Looking Ahead

***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (RO) Romania Central Bank Interest Rate Decision: Expected to leave Interest Rates unchanged at 5.25%

- 06:00 (EU) Daily Euribor Fixing

- 06:30 (ZA) South Africa to Sell I/L Bonds

- 07:10 (UK) DMO to sell combined £2.5B in 1-month, 3-month and 6-month bills

- 07:30 (US) Daily Libor Fixing

- 07:30 (US) Weekly India Forex Reserves

- 08:30 (US) Oct Change in Nonfarm Payrolls: 125Ke v 114K prior; Change in Private Payrolls: 123Ke v 104K prior; Change in Manufacturing Payrolls: -54Ke v -16K prior

-08:30 (US) Oct Unemployment Rate: 7.9%e v 7.8% prior; Underemployment Rate: No est v 14.7% prior; Change in Household Employment: No est v +873K prior

- 08:30 (US) Oct Avg Hourly Earning M/M: 0.2%e v 0.3% prior; Y/Y: 1.7%e v 1.8% prior; Avg Weekly Hour: 34.5e v 34.5 prior

- 08:30 (CA) Canada Oct Net Change in Employment: +10.0Ke v +52.1K prior; Unemployment Rate: 7.4%e v 7.4% prior; Full Time Employment Change: No est v +44.1K prior; Part Time Employment Change: No est v +8K prior; Participation Rate: No est v 66.8% prior

- 09:45 (US) Oct ISM New York: No est v 52.9 prior

- 10:00 (US) Sept Factory Orders M/M: +4.6%e v -5.2% prior

- 10:00 (US) Durable Goods Revisions

- 11:00 (DK) Denmark Oct Foreign Currency Reserves (DKK): No est v 513.5B prior

- 12:40 (US) Fed's Tarullo on foreign banking regulation

- 13:00 (IT) Italy Oct New Car Registrations Y/Y: No est v -25.7% prior

- 14:00 (IT) Italy Oct Budget Balance: No est v -€11.4B prior; Budget Balance YTD: No est v -€45.5B prior

- 14:25 (US) Fed Williams

- 16:00 (CO) Colombia Oct Producer Price Index M/M: No est v 0.7% prior; Y/Y: No est v 0.1% prior


Weekend:

03-04 NOV (MX) G20 Finance and Central Bank Deputies' Meeting in Mexico

04-05 NOV (MX) G20 Finance Ministers and Central Bankers Meet in Mexico

04-06 NOV (MX) G20 Trade & Investment Promotion Summit in Mexico