Better German and Eurozone PMI Manufacturing data aids risk appetite in session

Better German and Eurozone PMI Manufacturing data aids risk appetite in session; Corp earnings mixed

Notes/Observations

- Japan Manufacturing PMI: 52.8 v 52.0e (5th straight month of expansion, highest since March)

- China HSBC Manufacturing PMI 3-month high (50.4 vs. 50.2e)

- Global dis-inflation remains a theme; New Zealand inflation slows to a 5-quarter low giving RBNZ scope to prolong its current pause during its tightening phase; Singapore Sept CPI MoM turns negative

- Major European PMI data comes in mixed (France missed, Germany and Euro Zone beat on Manufacturing)

- UK Retails sales miss expectations with sales deflator registering its largest drop since July 2009

Key Economic Data in session

- (SG) Singapore Sept CPI M/M: -0.1% v +0.2%e; Y/Y: 0.6% v 0.9%e

- (FR) France Oct Business Confidence: 91 v 91e; Manufacturing Confidence: 97 v 95e

- (ES) Spain Q3 Unemployment Rate: 23.7% v 24.1%e

- (FR) France Oct Preliminary Manufacturing PMI: 47.3 v 48.5e (6th straight contraction); Services PMI: 48.1 v 48.3e (2nd straight contraction)

- (DE) Germany Oct Preliminary Manufacturing PMI: 51.8 v 49.5e; Services PMI: 54.8 v 55.0e

- (SE) Sweden Sept Unemployment Rate: 7.2% v 7.5%e; Unemployment Rate (Seasonally Adj): 7.7% v 7.9%e

- (EU) Euro Zone Oct Preliminary Manufacturing PMI: 50.7 v 49.9e (15th straight month of expansion); Services PMI: 5 v 52.0e

- (NO) Norway Central Bank (Norges) leaves Deposit Rate unchanged at 1.50%, as expected

- (PH) Philippines Central Bank (BSP) leaves Overnight Borrowing Rate at 4.00% (as expected)

- (UK) Sept Retail Sales Ex Auto M/M: -0.3% v 0.0%e; Y/Y: 3.1% v 3.4%e

- (UK) Sept Retail Sales (Incl Auto) M/M: -0.3% v -0.1%e; Y/Y: 2.7% v 2.9%e

- (UK) Sept BBA Loans for House Purchase: 39.3K v 41.5Ke (lowest since July 2013)

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities***

Indices [Stoxx50 +0.3%, FTSE 100 -0.5% at 6,368, DAX +0.4% at 8,975, CAC-40 +0.3% at 4,116, IBEX-35 -0.1% at 10,241, FTSE MIB flat at 19,237, SMI flat at 8,503, SP 500 Futures +0.5% at 1,935]

- Market Focal Points/Themes: Equity markets open lower amid mixed corporate earnings, Markets pare losses after better German PMI, Earnings recap (Credit Suisse above ests, Daimler beats ests, Publicis cuts sales forecast, Tesco declines after withdrawing outlook, Unilever sales below ests, UK real estate broker Foxtons warns on outlook, Michelin weighed down by weaker than expected sales, Nokia beats ests), US morning earnings (Potash, Eli Lilly, Under Armour, GM, Caterpillar, 3M, United Continental, American Airlines)

By Sector

- Consumer Discretionary [Premier Foods PFD.UK -7% (cautious outlook),Tesco TSCO.UK -4% (withdrew FY outlook), Unilever ULVR.UK -3% (Q3 sales below ests), Publicis PUB.FR -3% (cut FY sales outlook); Pernod Ricard RI.FR +1.5% (Q1 organic growth +2%)]

- Technology [Gemalto GTO.NL -3% (reaffirmed outlook); Logitech LOGN.CH +5% (Q2 profits above ests), Nokia NOK1V.FI +3% (Q3 results above ests)]

- Telecom [Orange ORA.FR +2% (Q3 results above ests)]

- Healthcare [Morphosys MOR.DE +2% (raised outlook)]

- Financials [Foxtons FOXT.UK -15% (profit warning); Credit Suisse CSGN.CH flat (Q3 results above ests)]

- Industrials [Safran SAF.FR +2% (reaffirmed outlook), MTU Aero Engines MTX.DE +2% (raised outlook); Michelin ML.FR -4% (Q3 sales below ests), Daimler DAI.DE -0.5% (reaffirmed outlook)]

- Basic Materials/Resources [Anglo American AAL.UK -1% (Q3 copper production -15%)]

- Energy [Neste Oil NES1V.FI +8% (Q3 results above ests)]

- Stoxx50 sectors [Utilities +1.6%, Telecom +1.5%. Consumer Cyclical +1.4%, Financials +1.2%, Basic Materials +0.7%, Industrials +0.6%, Consumer Non-Cyclical +0.6%, Technology +0.4%, Energy +0.2%]

Speakers

- BOE's Broadbent touted the MPC majority view that any rate increase would likely to be limited and gradual. Rates would rise when headwinds dissipate

- ECB's Weidmann (Germany) reiterated Council view that deflation risk was low and that it was more concerned about too prolong period of low inflation. He added that ECB had taken measures to address the risk

- Norway Central Bank Gov Olsen post rate decision comments noted that it had a consensus to keep rates on hold and did not discuss a rate cut.

- EU Commission might tell France to add another €6.0B in budget cuts for 2015. It could ask for an addition €4-6B in cuts on top of the planned €21B in cuts

- EU said to be seeking clarification on Italy's 2015 budget plans including a query on funding and taxes

- Hong Kong Police: Road protests at Mong Kok turning into a riot

- Philippines Central Bank post rate statement noted that risks to inflation outlook were broadly balanced and domestic demand conditions continued to be resilient.

Currencies/Fixed Income:

- EUR/USD managed to overcome initial losses and off 2-week lows in the session aided by beats in the German and Euro Zone PMI Manufacturing data. Hoever, most traders stilll believed the outlook for the EUR currency remained bearish

- The GBP exhibited a soft tone after Sept retail sales data missed expectations and hit a 1-week low just below the 1.60 handle

Political/In the Papers:

- (EU) ECB's Mersch (Luxembourg): EMU economy is still in the danger zone; recovery still a way off

- (JP) Japan Treasury sells 3-month bills at -0.0037% (first negative yield on record for an auction)

Looking Ahead

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

- (EU) EBA Direcor Farkas Speaks at OMFIF

- (EU) EU Leaders begin 2-day Summit in Brussels

- 05:30 (EU) EU's Ashton press conference

- 06:00 (UK) Oct CBI Industrial Trends Total Orders: -3e v -4 prior; Selling Prices: 0e v +1 prior; Business Optimism: 15e v 19 prior

- 06:00 (IE) Ireland Sept PPI M/M: No est v 0.3% prior; Y/Y: No est v -2.0% prior

- 06:00 (RO) Romania to sell bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (PL) Poland to sell combined PLN2.0-6.0B in 2016 and 2019 Bonds

- 07:00 (RU) Russia Gold and Forex Reserve w/e Oct 17th: No est v $451.7B prior

- 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave Benchmark Repurchase Rate unchanged at 8.25%; Expected to leave Overnight Lending Rate unchanged at 11.25%; Expected to leave Overnight Borrowing Rate unchanged at 7.50%

- 07:00 (BR) Brazil Sept Unemployment Rate: 5.1%e v 5.0% prior

- 07:00 (EU) EU Conservative leaders hold pre-summit meeting in Brussels

- 08:00 (PL) Poland Central Bank (NBP) Oct Minutes

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Sept Chicago Fed National Activity Index: +0.15e v -0.21 prior

- 08:30 (US) Initial Jobless Claims: 281Ke v 264K prior; Continuing Claims: 2.38Me v 2.389M prior

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

- 09:00 (US) Aug FHFA House Price Index M/M: 0.3%e v 0.1% prior

- 09:45 (US) Oct Preliminary Markit Manufacturing PMI: 57.0e v 57.5 prior

- 10:00 (US) Sept Leading Index: 0.7%e v 0.2% prior

- 10:00 (EU) Euro Zone Oct Advance Consumer Confidence: -12.0e v -11.4 prior

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 10:30 (CA) Bank of Canada (BOC) Gov Poloz with Dep Gov Wilkins in Senate Committee

- 11:00 (US) Oct Kansas City Fed Manufacturing Activity Index: 6e v 6 prior

- 11:00 (US) Fed to purchase $1.35-1.65B in notes

- 13:00 (US) Treasury to sell $7.0B in 30-Year TIPS Reopening

- 15:00 (AR) Argentina Aug Economic Activity Index M/M: No est v 0.1% prior; Y/Y: No est v 0.0% prior

- 19:00 (KR) South Korea Q3 Preliminary GDP Q/Q: 0.9%e v 0.5% prior; Y/Y: 3.3%e v 3.5% prior