EcoFin meeting today with discussions on SRM likely to be not conclusive

Notes/Observations

- Shanghai Composite +1.7% in session rises on policy optimism despite higher yields. Hopes are on market-oriented reforms being formally announced

- China: money market rate continue to move higher. Daily Shibor fixings: O/N: 4.4540% v 4.1880% prior (3rd consecutive rise, highest since Oct 30th); 1-week: 5.3110% v 4.1930% prior (3rd consecutive rise, highest since Oct 29th

- Reports that Chinese policymakers will be detailing reforms over the next week from its 3rd plenum

- Hong Kong Q3 GDP registers a slight miss in expectations with back-month downward revision (QoQ: 0.5% vs. 0.7%e)

- EcoFin meeting today with discussions on SRM likely to be not conclusive

- Italy gets several warnings on its budget (EU Commission and Canada rating agency DBRS)

Economic Data

- (RU) Russia Narrow Money Supply w/e Nov 11th (RUB): 7.80T v 7.81T

- (UK) Retailer John Lewis reports weekly LFL sales for week ending Nov 8th (y/y): +7.1% v +8.0% prior

- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 170.6K v 177.9K prior

- (FI) Finland Sept Current Account Balance: -€200M v €0M prior

- (HU) Hungary Sept Final Industrial Production M/M: 1.8% v 1.8% prelim; Y/Y: 3.1% v 3.1% prelim

- (CZ) Czech Sept Export Price Index Y/Y: 1.1 v 0.3% prior; Import Price Index Y/Y: -0.3% v -1.4% prior

- (CZ) Czech Oct PPI Industrial M/M: -0.4% v 0.0%e; Y/Y: 0.0% v 0.4%e

- (TR) Turkey Aug Unemployment Rate: 9.8% v 9.5%e

- (DK) Denmark Oct Wholesale Price Index M/M: -0.5 v -0.3% prior; Y/Y: -1.7 v -1.8% prior

- (EU) ECB €4M borrowed in overnight loan facility vs. €2M prior; €46.4B parked in deposit facility vs. €45.4B prior - Daily Eurosystem Liquidity Conditions

- (HK) Hong Kong Q3 GDP Q/Q: 0.5% v 0.7%e; Y/Y: 2.9% v 3.2%e

- (SE) Sweden Q3 Industry Capacity: 86.9% v 86.1% prior

- (IT) Italy Sept Total Trade Balance: €0.8B v €1.1B; Trade Balance EU: €0.5B v €0.5B

- (AT) Austria Oct CPI M/M: -0.1% v +0.7% prior; Y/Y: 1.4 v 1.7% prior

- (NO) Norway Oct Trade Balance (NOK): 26.7B v 21.7B prior

- (TR) Turkey Sept budget Balance (TRY): -4.7B v -5.8B y/y

- (RU) Russia Oct YTD Budget Balance (RUB): 608.7B v 591.3B prior

- 05:00 (EU) Euro Zone Oct CPI M/M: -0.1% v -0.1%e; Y/Y: 0.7% v 0.7%e;; CPI Core Y/Y: 0.8% v 0.8%e

- (MY) Malaysia Q3 Current Account Balance (MYR): 9.8B v 2.6B prior

- (MY) Malaysia Q3 GDP Y/Y: 5.0% v 4.7%e

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities**

Indices [Stoxx50 -0.3%, FTSE 100 +0.3% at 6,685, DAX flat at 9,150, CAC-40 flat at 4,284, IBEX-35 -0.2% at 9,696, FTSE MIB -0.70% at 18,628, SMI +0.10% at 8,316, S&P 500 Futures +0.10% at 1,790

- Market Focal Points: European equity markets trade mixed as the banking sector continues to weigh on Italy's FTSE MIB. Shares of Vivendi and Salvatore Ferragamo rise following earnings reports, Julius Baer lower after release of interim statement, China interest rates and money market rates remain elevated as Shanghai equities close sharply higher

By Sector

- Industrials [Cape CIU.UK -9% (profit warning), Safran SAF.FR -3.5% (share placement); Boskalis BOKA.NL +4.5% (raised outlook)]

- Consumer Discretionary [Salvatore Ferragamo SFER.IT +4% (9-month profits and sales rose y/y), Vivendi VIV.FR +3.5% (affirmed FY outlook)]

- Financials [Julius Baer BAER.CH -1.5% (gross margins declined)]

- Telecom [Iliad ILD.FR -3.5% (mobile customers added slowed q/q)]

- Basic Resources/Materials [Talvivaara Mining -42% (corporate reorganization), Vedanta Resources VED.UK -3.5% (H1 profits declined y/y); Avocet Mining AVM.UK +6% (completed gold hedging transaction)]

- Technology [Ultra Electronics ULE.UK -5% (profit warning); Atos ATO.FR +2.5% (issued 2016 targets)]-

- Stoxx 50 sectors [Utilities -1%, Consumer Cyclical -0.6%, Consumer Non-Cyclical -0.5%, Industrials -0.5%, Financials -0.2% ;Telecom +1.1%, Technology +0.5%, Energy +0.2%, Basic Materials +0.1%]

Speakers:

- EU Commission Italy 2014 budget at risk of non-compliance, as the debt reduction benchmark had not been respected

- Canada rating agency DBRS: To look at Italy sovereign rating in six months' time; country is one of the weakest in EMU. Recent ECB rate cut was not panacea for Italy but further political crisis could lead to downgrade. Primary surplus must rise in order to maintain its sovereign rating. Non-performing loans are a serious concern for the country's banking sector

- Various EU Finance Ministers makes comments ahead of EcoFin meeting

- France Fin Min Moscovici: Direct bank recap still possible as a last resort. Today's discussions on SRM will not be conclusive

- Netherlands Fin Min Dijsselbloem saw no conclusion position on SRM today

- Sweden Fin Min Borg noted that there had to be some kind of backstop Luxembourg Fin Min Frieden saw SRM decision by year end

- EU's Rehn: ball back in court of Euro Area govt regarding budgets

- ECB's Asmussen (Germany) congratulated Spain and Ireland on program exit plans and stressed that reforms did work. He did not expect to finalize SRM at today's Ecofin but key to have an agreement by end 2013

- Sweden Central Bank (Riksbank) Dep Gov Ekholm: Monetary policy is the most effective way to influence inflation. Sweden house prices reflect housing shortage not a bubble. Wouldn't be surprised if the repo rate was cut in Dec nor if it was left unchanged

- Japan PM Abe's Econ Adviser Hamada commented that USD breach of the 100 level was an effect from BOJ's current easing program. He called for BOJ Gov Kuroda to properly implement policy as sales tax was raised in next fiscal year

- China Pres Xi Jinping: To push forward with reforms; reiterates country to maintain sustained and healthy growth

- US Treasury Sec Lew commented from Beijing that China Plenum strategy showed ambition

Currencies/Fixed Income:

- Risk appetite theme continued to weigh upon the JPY currency in the session. Dealers noted that Fed chairman-elect Yellen Senate testimony was a key factor. Comments from Japan Econ Adviser Hamada also cited after he noted that USD breaching the 100 level was an effect from BOJ's current easing program. USD/JPY continued to hit fresh 2-month highs above 100.40 while Sterling/yen cross at 4-year highs above 161 level. Lots of option plays at 100 at today's expiration.

- Otherwise the USD was slightly firmer against the major pairs. EUR/USD contained within 1.3420-1.3500 range with little conviction to break out at this time

- The 10-year Italy/German Gov't bond spread at approx 240bps, wider by almost 5bps warning from both DBRS amd EU Commission in session

Political/In the Papers:

- (EU) Eurogroup Chief Dijessbloem: Supports Spain's decision for a 'clean' exit from the bailout. Greece needs to deliver on its commitments urgently

- delays in the review of Greece could push back any decision on the €1B disbursement until next year

-(IT) Italy Tesoro debt office to conduct bond exchange transaction, repurchasing 5 year bonds in order to exchange for new issue

- (PT) Portugal Fin Min Albuquerque: Planning to restart regular bond sales

- (CH) SNB's Danthine: Reiterates EUR/CHF floor is still essential policy floor, easy monetary policy will continue

- (UK) BoE's Miles: Rate hike would not be warranted if the rest of the economy was not overheating, interest rates are a blunt instrument; monetary policy is the housing sector's last line of defense

-(US) Fed's Yellen: Will continue to promote strong economic recovery, unemployment remains too high - Senate confirmation hearing Q&A; reiterates QE remains data dependent and is not to run forever; Prices have risen robustly in stock markets, but not seeing 'bubble like' conditions in the stock market.

(US) Moody's concludes review of 8 large banks, lowers some senior holding company ratings, affirms others

- (US) Fed's Plosser (hawk, non-voter): It is not obvious that mild deflation is a bad thing, personally would have preferred a lower inflation target

- (JP) Japan Econ Min Amari: Japan will strive to avoid new debt issues for extra budget; Inappropriate for ministers related with economy to comment on weakening Yen

-(JP) Japan upper house passes bill on amendment of special accounts - financial press; Bill will amend the law on managing govt special account (incl fx reserve account)

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- (PE) Peru Sept Economic Activity Y/Y: 4.2%e v 4.3% prior

- (PE) Peru Oct Unemployment Rate: 5.8%e v 5.9% prior

- (IT) Italy Sept Current Account Balance: No est v €425M prior

- 06:00 (FI) ECB's Liikanen (Finland)

- 06:00 (EU) Weekly ECB 3-year LTRO Funds repayment announcement; €4.0Be

- 06:10 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month Bills

- 06:30 (IN) India Forex Reserves w/e Nov 8th: No est v $281.0B prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (IL) Israel Oct CPI M/M: 0.0%e v 0.0% prior; Y/Y: 1.5%e v 1.3% prior

- 07:00 (IS) Iceland Oct Unemployment Rate: No est v 3.8% prior

- 07:15 (EU) ECB's Mersch (Luxembourg) speaks in London

- 08:00 (PL) Poland Oct CPI Core M/M: +0.3%e v -0.1% prior; Y/Y: 1.4%e v 1.3% prior

- 08:00 (ES) Spain Debt Agency (Tesoro) announces specific bonds in its upcoming action on Thursday, Nov 21st

- 08:30 (EU) Press conference for second round of EU-US trade talks (Nov 11-15th) in Brussels

- 08:30 (US) Oct Import Price Index M/M: -0.5%e v +0.2% prior; Y/Y: -1.6%e v -1.0% prior

- 08:30 (US) Nov Empire Manufacturing: 5.00e v 1.52 prior

- 08:30 (CA) Canada Sept Manufacturing Sales M/M: +0.5%e v -0.2% prior

- 08:30 (US) Weekly USDA Net Export Sales

- 09:00 (PL) Poland Oct YTD Budget Balance Level (PLN): No est v -29.6B prior; Budget Balance Performance YTD: no est v 83.2% prior

- 09:00 (CA) Canada Oct Existing Home Sales M/M: No est v 0.8% prior

- 09:15 (US) Oct Industrial Production M/M: 0.2%e v 0.6% prior; Capacity Utilization: 78.3%e v 78.3% prior; Manufacturing Production: 0.2%e v 0.1% prior

- 09:15 (EU) EU President Van Rompuy in Brussels

- 09:30 (UK) BOE's Weale in London

- 10:00 (US) Sept Wholesale Inventories M/M: 0.4%e v 0.5% prior; Wholesale Trade Sales M/M: 0.3%e v 0.6% prior

- 11:00 (EU) EU's Barroso with German Foreign Min Westerwelle at Berlin conference

- 11:00 (US) Fed to purchase $0.75-1.0B in bonds

- 13:30 (DE) German Chancellor Merkel

- 14:00 (AR) Argentina Oct CPI M/M: 0.8%e v 0.8% prior; Y/Y: 10.5%e v 10.5% prior

- 14:00 (AR) Argentina Oct Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 13.8% prior

- 14:00 (AR) Argentina Oct Economic Activity Index M/M: No est v 0.4% prior; Y/Y: No est v 4.0% prior

- 16:30 (EU) EU Finance Ministers (EcoFin) press conference