Europe endures another quiet session as analysts' measure up Chinese GDP data

Notes/Observations

- China Q3 GDP slightly beats expectations but annual reading hits a 5 1/2 year low (Q/Q: 1.9% v 1.8%e; Y/Y: 7.3% v 7.2%e; GDP YTD Y/Y: 7.4% v 7.4%e); still bolsters case for stimulus restraint

- China Sept Industrial Production rebounds from 6-year lows (Y/Y: 8.0% v 7.5%e)

- RBA minutes noted that: a period of stability for interest rates might be the most prudent course

- Japan Cabinet Office (Govt) again lowered its overall economic assessment for the 2nd straight month

- The start of the ECB's covered bond purchase program failed to halt the recent widening of Eurozone spreads

Key Economic Data in session

- (CH) Swiss Sept Trade Balance (CHF): 2.5B v 2.5Be; Real Exports M/M: -3.3% v -0.2% prior; Real Imports M/M: -7.4% v +7.8% prior

- (FI) Finland Sept Unemployment Rate: 8.2% v 7.9%e

- (GR) Greece Aug Current Account Balance: €1.8B v €1.2B prior

- (UK) Sept Public Finances (PSNCR): £17.7B v £1.9B prior; Public Sector Net Borrowing: £11.1B v £9.4Be v £10.9B prior

- (HK) Hong Kong Sept CPI Composite Y/Y: 6.6%% v 6.2%e

Fixed Income:

- (EU) ESM opened the book to sell 2-year bonds; Yield guidance seen around 0.04%

- (RO) Romania opened the books to sell EUR benchmarked 10-year bonds; guidance seen at 200bps over mid-swaps

- (ES) Spain Debt Agency (Tesoro) auction results decent; sold total €4.05B vs. €3.0-4.0B indicated range in 3-Month and 9-Month Bills

- Sold €1.05B in 3-month Bills; Avg Yield: 0.130% v 0.056% prior; Bid-to-cover: 3.3x v 2.34x prior

- Sold €3.0B in 9-month Bills; Avg Yield: 0.359% v 0.146% prior; Bid-to-cover: 2.08x v 1.53x prior

- (RU) Russia Finance Ministry again cancelled its planned OFZ bond auction scheduled for Wed, Oct 22nd

- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 3.0% 2024 bond; Avg Yield: 2.12% v 2.24% prior; Bid-to-cover:2.3 x v 2.08x prior

- (EU) ECB allotted €92.9B in 7-Day Main Refinancing Tender at 0.05% vs. €82.7Be (€82.5B with 132 bids recd)

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities

Indices [Stoxx50 +0.7%, FTSE 100 +0.6% at 6,302, DAX +0.8% at 8,784, CAC-40 +0.9% at 4,027, IBEX-35 +0.6% at 9,972, FTSE MIB +1.1% at 18,760, SMI +0.7% at 8,340, S&P 500 Futures flat at 1,900]

- Market Focal Points/Key Themes: Equity markets open lower following Monday's losses amid ongoing growth concerns for China, Markets later pare losses, Swedbank kicks off Q3 for Swedish banks, Swiss biotech Actelion raises outlook, ARM Holdings Q3 results mixed, US morning earnings (Harley-Davidson, Verizon, Coca-Cola, McDonalds, Lockheed Martin)

By Sector

- Financials [Swedbank SWEDA.SE +3% (Q3 profits above ests)]

- Industrials [Deutz DEZ.DE -6% (profit warning), BMW BMW.DE -0.5% (share placement), Deutsche Post DPW.DE -0.5% (broker commentary); Akzo Nobel AKZA.NL +3% (Q3 profits above ests)]

- Healthcare [Reckitt Benckiser RB.UK -2% (cautious sales outlook); Actelion ATLN.CH +4% (raised outlook)]

- Technology [Arm Holdings ARM.UK flat (positive analyst commentary after Q3 results, Apple results)]

- Telecom [Portugal Telecom PTC.PT -8% (follow-through selling)]

- Consumer Discretionary [Asos ASC.UK +13% (FY pretax profit above ests)]

- Stoxx50 sectors [Consumer Cyclical +0.8%, Consumer Non-Cyclical +0.7%, Financials +0.6%, Energy +0.6%, Basic Materials +0.6%, Telecom +0.5%, Industrials +0.5%, Utilities +0.4%, Technology +0.4%]

Speakers

- Japan Cabinet Office (Govt) again lowered its overall economic assessment for the 2nd straight month. Govt now saw soft spots spreading in the current moderate recovery

- RBA Dep Gov Lowe stated that low global interest rates to stay for some time. He reiterates that Australia's rates were appropriate to support the recovery and rebalance the economy

Currencies/Fixed Income:

- Overall the USD continued to consolidate its summer gains against the major pairs.

- The start of the ECB's covered bond purchase program failed to halt the recent widening of Eurozone spreads. ECB was said to have bought French and German covered bonds on Monday and Italian covered bonds today.

- The GBP/USD was approaching some key technical resistance seen at 1.6210 area, which corresponded the summer downtrend line in the pair.

- The USD/JPY moved off its Asian session lows of 106.30 area as the Nikkei-225 Index gave back half of Monday's gains. The yen firmed after a Japanese official played down recent speculation over the pension fund GPIF plans to purchase more domestic equities and overseas investments.

- Dealers noting that EUR/CHF cross quietly moving back towards 1.2050 area and perhaps testing the SNB resolve on the floor.

Political/In the Papers:

- (EU) German Fin Min Schaeuble: France and Germany have discussed ways to boost investment, to present common position paper on investment and reform in December

- (IT) Italy Fin Min Padoan: Could be possible upside growth surprises, there is no conflicts or alliances among eurozone member states; There is no plan B for Italy or for Europe

- (JP) Japan Health Min Shiozaki stated that he had no knowledge of recent reports of GPIF allocation up did confirme of speeding up review of GPIF was being discussed

Looking Ahead

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

- (EU) EU General Affairs Ministers met in Luxembourg

- (ZA) South Africa to sell combined ZAR2.35B in 2030, 2032 and 2048 Bonds

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills

- 05:30 (UK) DMO to sell £3.0B in 2.75% 2024 Gilts

- 06:00 (HK) HK govt meets with Student leaders

- 06:00 (FI) Finland to sell €1.0B in 2.75% 2028 bonds

- 06:00 (TR) Turkey to sell 2015 Zero Coupon Bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Oct IBGE Inflation IPCA-15 M/M: 0.5%e v 0.4% prior; Y/Y: 6.7%e v 6.6% prior

- 07:45 (US) Weekly ICSC Chain Store Sales

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (DE) German Fin Min Schaeuble with Econ Min Gabriel at Machinery Makers' Conference

- 08:55 (US) Weekly Redbook Retail Sales

- 09:00 (EU) Weekly ECB Forex Reserves

- 10:00 (US) Sept Existing Home Sales: 5.10Me v 5.05M prior

- 11:00 (US) Fed to purchase $1.4-1.7B in notes

- 11:30 (US) Treasury to sell $34B in 4-Week Bills

- 12:00 (CH) SNB's Zurbruegg speech at ICMB in Geneva

- 16:00 (NZ) RBNZ Dep Gov Spencer

- 16:30 (US) Weekly API Oil Inventories

- 19:50 (JP) Japan Sept Trade Balance: -¥780.0Be v -¥949.7B prior (revised from -¥948.5B); Adj Trade Balance: -¥918.5Be v -¥924.2B prior

- 20:30 (AU) Australia Q3 CPI Q/Q: 0.4%e v 0.5% prior; Y/Y: 2.3%e v 3.0% prior

- (MX) Mexico Banamex Survey of Economists