EU inflation readings continues to climb

Notes/Observations

- Plethora of EU inflation and GDP data in session; Markets now pricing 20bps ECB hike in Oct 2022 compared to prior Dec 2022 hike before Thurs’s (yesterday) ECB decision and press conference.

- EU GDP registers growth in Q3 and edging back to pre-pandemic levels (Beats: Euro Zone, France, Italy, Portugal; Misses: Germany, Spain).

- Various EU inflation data remaining above ECB target (Euro Zone, France, Austria).

- Companies due to report during the NY morning include AbbVie, Booz Allen Hamilton, CBOE, Cameco, Charter Communications, Colgate, Carter’s, Chevron, W.W Grainger, Huntsman, Lazard, L3Harris, LyondellBasell, Newell, Phillips 66, Royal Caribbean, Weyerhaeuser, Exxon.

Asia

- Japan Oct Tokyo CPI Y/Y: 0.1% v 0.4%e; CPI (ex-fresh food) Y/Y: 0.1% v 0.3%e.

- Japan Sept Jobless Rate: 2.8% v 2.8%e.

- Japan Sept Preliminary Industrial Production M/M: -5.4% v -2.7%e; Y/Y: -2.% v +0.2%e.

- Australia Sept Retail Sales M/M: 1.3% v 0.4%e.

- South Korea Sept Industrial Production M/M: -0.8% v -0.3%e; Y/Y: -1.8% v +2.0%e.

- China property developer Evergrande [3333.HK] said to have made another debt payment ahead of deadline on Friday.

- China State Planner (NDRC) noted that coal production prices were significantly below current spot prices.

- Australia Apr 2024 govt bond yield moved above 0.75%; over 65bps above RBA YCC target (Note: RBA meets next week with analysts noting it could eliminate Apr 2024 YCC target.

Europe

- ECB Policymakers said to be split about 2nd round effect of inflation, some doubted CPI would ease below 2% target in 2023. ECB officials said to be advised not to say market is wrong.

- EU Commission President Von der Leyen stated that the ECJ role in Northern Ireland was not negotiable; EU demanded full respect for the Northern Ireland Protocol.

- UK PM Johnson said to summons French ambassador as Brexit fishing row escalated (Reminder: France detained a British scallop trawler in a dispute over fishing licenses).

- UK govt said to be preparing to convene committee to look at the fallout from triggering Article 16 and suspending Northern Ireland cooperation.

Americas

- House Speaker Pelosi noted it would postpone a vote on a $1.0T infrastructure bill after progressive Democrats said that they would not vote for it unless they were able to also vote on a separate $1.75T social spending and climate package.

- Democrats removed the proposal that would have required banks to report additional information about certain accounts to the IRS.

Energy

- Draft OPEC+ report said to note that OPEC+ now sees some more room for its crude in the market.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.49% at 472.82, FTSE -0.24% at 7,232.40, DAX -0.72% at 15,583.70, CAC-40 -0.30% at 6,783.96, IBEX-35 -0.07% at 9,019.50, FTSE MIB -0.37% at 26,788.00, SMI -0.60% at 12,079.24, S&P 500 Futures -0.46%].

Market Focal Points/Key Themes: European indices open lower across the board and slipped further into the red as the session progressed; better performing sectors include financials and energy; while sectors leading to the downside include telecom and consumer; earnings expected during the upcoming US session include AON, Huntsman, L3Harris and LyondellBasell.

Equities

- Consumer discretionary: Ubisoft [UBI.FR] +5% (earnings), Air France-KLM [AF.FR] +4% (earnings; raises outlook).

- Energy: Eni [ENI.IT] +2% (earnings).

- Financials: BNP Paribas [BNP.FR] +1.5% (earnings), BBVA [BBVA.ES] +5% (earnings), NatWest [NWG.UK] -4% (earnings), Danske Bank [DANSKE.DK] -5% (earnings).

- Industrials: Daimler [DAI.DE] +2% (earnings; affirms outlook), Yit [YIT.FI] +10% (earnings), Safran [SAF.FR] +3% (earnings).

- Technology: Signify [LIGHT.NL] -6% (earnings; cuts outlook).

Speakers

- ECB’s Muller (Estonia) reiterates ECB council stance that PEPP program could end in spring 2022.

- France Fin Min Le Maire stated that had reached pre-pandemic growth levels in Oct.

- EU's Breton stated that completely understood French position regarding fishing licenses with UK.

- Thailand Central Bank noted that the economy improved in Sept following easing of virus restrictions.

- OPEC+ JMMC ministerial committee said to slightly trims 2021 oil demand growth forecast to 5.7Mbpd from 6.0Mbpd.

- Treasury Sec Yellen stated she expected Congress to pass both of President Biden bills (infrastructure and social/climate). Would still say inflation was temporary, but did not mean month or two.

Currencies/Fixed Income

- USD at 1-month lows in a data-laden EU session.

- EUR/USD at 1.1670 as markets continued to bet on earlier European interest rate increases. Markets now pricing 20bps ECB hike in Oct 2022 compared to the prior Dec 2022 hike. EUR currency stronger and EU bond yield higher as Lagarde were interpreted as not going far enough in affirming the central bank's dovish stance.

- GBP/USD edged back to 1.38 area with focus turning to next week’s BOE rate decision. More analysts joining the chorus that BOE would hike rates next week.

Economic data

- (NL) Netherlands Sept Retail Sales Y/Y: 4.7% v 2.2% prior.

- (FR) France Q3 Preliminary GDP Q/Q: 3.0% v 2.2%e; Y/Y: 3.3% v 2.4%e.

- (FR) France Sept Consumer Spending M/M: -0.2% v 0.5%e; Y/Y: -2.3% v -1.3%e.

- (FI) Finland Aug Final Trade Balance: -€0.6B v -€0.6B prelim.

- (NO) Norway Sept Credit Indicator Growth Y/Y: 5.3% v 5.3% prior.

- (DK) Denmark Sept Gross Unemployment Rate: 3.3% v 3.5% prior; Unemployment Rate (seasonally adj):2.9 % v 3.1% prior.

- (ZA) South Africa Sept M3 Money Supply Y/Y: 4.0% v 3.2%e; Private Sector Credit Y/Y: 1.6% v 2.1%e.

- (FR) France Oct Preliminary CPI M/M:0.4 % v 0.3%e; Y/Y: 2.6% v 2.5%e.

- (FR) France Oct Preliminary CPI EU Harmonized M/M: 0.5% v 0.3%e; Y/Y: 3.2% v 3.1%e.

- (ES) Spain Q3 Preliminary GDP Q/Q: 2.0% v 2.9%e; Y/Y: 2.7% v 3.9%e.

- (ES) Spain Sept Adjusted Retail Sales Y/Y: -0.1% v 0.0%e; Retail Sales (unadj) Y/Y: 0.0% v -0.1% prior.

- (CH) Swiss Oct KOF Leading Indicator: 110.7 v 108.0e.

- (AT) Austria Q3 GDP Q/Q: 3.3 v 4.0% prior; Y/Y: 4.8% v 12.6% prior.

- (AT) Austria Oct Preliminary CPI M/M: 0.5% v 0.5% prior; Y/Y: 3.6% v 3.3% prior.

- (AT) Austria Sept PPI M/M: 1.1% v 0.8% prior; Y/Y: 10.5% v 9.5% prior.

- (CZ) Czech Q3 Advance GDP (1st reading) Q/Q: 1.4% v 1.8%e; Y/Y: 2.8% v 3.2%e.

- (HU) Hungary Aug Average Gross Wages Y/Y: 8.9% v 9.5%e.

- (SE) Sweden Aug Non-Manual Workers Wages Y/Y: 3.1% v 3.4% prior.

- (TH) Thailand Sept Current Account Balance: -$1.4B v -$1.8Be; Overall Balance of Payments (BOP): -$3.4B v +$3.8B prior; Trade Account Balance: $4.0B v $1.9B prior; Exports Y/Y: 17.8% v 8.2% prior; Imports Y/Y: 20.4% v 39.6% prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 49.3K v 39.8K tons prior.

- (TW) Taiwan Q3 Advance GDP (1st reading) Y/Y: 3.8% v 4.3%e.

- (DE) Germany Q3 Preliminary GDP Q/Q: 1.8% v 2.2%e; Y/Y: 2.5% v 2.6%e; GDP WDA (unadj) Y/Y: 2.5% v 2.5%e.

- (IT) Italy Q3 Preliminary GDP Q/Q: 2.6% v 2.0%e; Y/Y: 3.8% v 3.0%e.

- (ES) Spain Aug Current Account Balance: €1.0B v €2.5B prior.

- (NO) Norway Central Bank (Norges) Nov Daily FX Purchases (NOK): -700M v -1.7B prior.

- (NO) Norway Oct Unemployment Rate: 2.2% v 2.3%e.

- (PL) Poland Oct Preliminary CPI M/M: 1.0% v 0.6%e; Y/Y: 6.8% v 6.4%e.

- (RU) Russia Narrow Money Supply w/e Oct 22nd (RUB): 14.36T v 14.42T prior.

- (UK) Sept Net Consumer Credit: £0.2B v £0.5Be; Net Lending: £9.5B v £6.0Be.

- (UK) Sept Mortgage Approvals: 72.6K v 71.0Ke.

- (UK) Sept M4 Money Supply M/M: 0.6% v 0.5% prior; Y/Y: 7.0% v 7.1% prior; M4 (ex-IOFCs) 3M Annualized: 5.5% v 6.2% prior.

- (PT) Portugal Q3 Preliminary GDP Q/Q: 2.9% v 1.6%e; Y/Y: 4.2% v 16.1% prior.

- (PT) Portugal Oct CPI M/M: 0.5% v 0.9% prior; Y/Y: 1.8% v 1.5% prior.

- (PT) Portugal Oct CPI EU Harmonized M/M: %0.4 v 0.8% prior; Y/Y: 1.8% v 1.3% prior.

- (EU) Euro Zone Q3 Advance GDP (1st reading) Q/Q: 2.2% v 2.1%e; Y/Y: 3.7% v 3.5%e.

- (EU) Euro Zone Oct Advance CPI Estimate Y/Y: 4.1% v 3.7%e; CPI Core Y/Y: 2.1% v 1.9%e.

- (IT) Italy Oct Preliminary CPI M/M: 0.6% v 0.4%e; Y/Y: 2.9% v 2.9%e.

- (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.8% v 0.8%e; Y/Y: 3.1% v 3.2%e.

- (GR) Greece Aug Retail Sales Value Y/Y: 6.6% v 11.4% prior; Retail Sales Volume Y/Y: 8.8% v 13.1% prior.

- (IS) Iceland Sept Final Trade Balance (ISK): -18.4B v -18.8B prelim.

Fixed income Issuance

- None seen.

Looking Ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India to sell combined INR240B in 2028, 2031 and 2061 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.2B in I/L 2033, 2038 and 2046 Bonds.

- 06:00 (PT) Portugal Sept Industrial Production M/M: No est v -1.4% prior; Y/Y: No est v -9.0% prior.

- 06:00 (PT) Portugal Sept Retail Sales M/M: No est v 0.3% prior; Y/Y: No est v 3.1% prior.

- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).

- 06:30 (IN) India Sept Fiscal Deficit (INR): No est v 1.469T prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (MX) Mexico Q3 Preliminary GDP Q/Q: 0.1%e v 1.5% prior; Y/Y: 6.1%e v 19.6% prior.

- 07:30 (IN) India Weekly Forex Reserve w/e Oct 22nd: No est v $641.0B prior.

- 08:00 (ZA) South Africa Sept Trade Balance (ZAR): 35.3Be v 42.4B prior.

- 08:00 (ZA) South Africa Sept Monthly Budget Balance (ZAR): -10.3Be v -39.3B prior.

- 08:00 (IN) India Sept Eight Infrastructure (key) Industries: No est v 11.6% prior.

- 08:00 (CL) Chile Sept Unemployment Rate: 8.3%e v 8.5% prior.

- 08:00 (CL) Chile Sept Retail Sales Y/Y: 20.8%e v 25.1% prior; Commercial Activity Y/Y: No est v 22.2% prior.

- 08:00 (CL) Chile Sept Manufacturing Production Y/Y: 3.1%e v 10.6% prior; Industrial Production Y/Y: No est v 4.2% prior; Total Copper Production: No est v 467.0K tons prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (IN) India announces upcoming bill issuance (held on Wed); to sell combined INR200B in 3-month, 6-month and 12-month Bills on Nov 3rd.

-08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance.

- 08:30 (US) Sept Personal Income: -0.2%e v +0.2% prior; Personal Spending: 0.6%e v 0.8% prior; Real Personal Spending (PCE): 0.3%e v 0.4% prior.

- 08:30 (US) Sept PCE Deflator M/M: 0.3%e v 0.4% prior; Y/Y: 4.4%e v 4.3% prior.

- 08:30 (US) Sept PCE Core Deflator M/M: 0.2%e v 0.3% prior; Y/Y: 3.7%e v 3.6% prior.

- 08:30 (US) Q3 Employment Cost Index (ECI): 0.9%e v 0.7% prior.

- 08:30 (CA) Canada Aug GDP M/M: +0.7%e v -0.1% prior; Y/Y: 4.3%e v 4.7% prior.

- 08:30 (CA) Canada Sept Industrial Product Price M/M: +1.0%e v -0.3% prior; Raw Materials Price Index M/M: +2.5%e v -2.4% prior.

- 08:30 (BR) Brazil Sept Primary Budget Balance (BRL): -1.8Be v +16.7B prior; Nominal Budget Balance: -47.3Be v -29.7B prior; Net Debt to GDP Ratio: 59.1%e v 59.3% prior.

- 09:45 (US) Oct Chicago Purchase Managers Index (PMI): 63.5e v 64.7 prior.

- 10:00 (US) Oct Final University of Michigan Confidence: 71.4e v 71.4 prelim.

- 10:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 4.640T prior.

- 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 12.3% prior; Urban Unemployment Rate: 13.8%e v 14.2% prior.

- 11:00 (EU) Potential sovereign ratings after European close.

- 12:00 (RU) Russia Sept Unemployment Rate: 4.4%e v 4.4% prior.

- 12:00 (RU) Russia Sept Real Retail Sales Y/Y: 5.8%e v 5.3% prior.

- 12:00 (RU) Russia Aug Real Wages Y/Y: 2.6%e v 2.2% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to raise Overnight Lending Rate by 25bps to 2.00%.

- 15:00 (AR) Argentina Aug Wages M/M: No est v 4.9% prior.

- (MX) Mexico Sept YTD Budget Balance (MXN): No est v -262.4B prior.

- 21:00 (CN) China Oct Manufacturing PMI: 49.7e v 49.6 prior; Non-manufacturing PMI: 53.0e v 53.2 prior; Composite PMI: No est v 51.7 prior.