Inflation appears to be easing in Europe

Notes/Observations

- Safe haven flows unravel with equities carrying Asia momentum on back of China opening optimism amid COVID restrictions easing, despite China Manufacturing PMI missing to register 2nd straight contraction.

- European CPI and PPI dials back with increasing evidence of passing peak inflation; Euro Zone flash CPI much cooler than expected but core remained stubborn. YoY readings pulled off highs for Poland CPI, Hungary PPI, Austria CPI/PPI, Portugal CPI. France and Italy bucked the trend and remained at highs.

- Focus on upcoming US jobs data and Fed Chair Powell speech; Market to look for hints on whether readings show any additional deceleration in US net job creation and change in MPC stance on pace of rate hikes.

- Recession early indicators continue to show, France consumer spending and German unemployment miss. Iceland GDP tips into contraction QoQ.

- Thailand hiked Benchmark Interest Rate by 25bps, as expected; Noted hikes to be gradual and measured but will adjust as needed.

- Asia closed higher with Hang Seng outperforming at +2.2%. EU indices are 0.5% higher on average. US futures are 0.1% to 0.3%. Gold +1.6%, DXY -0.3%; Commodity: Brent +1.9%, WTI +2.1%, UK Nat Gas +3.8%; Crypto: BTC +2.1%, ETH +3.9%.

Asia

- China Nov Manufacturing PMI (Govt Official) registered its 2nd straight contraction (48.0 v 49.0e).

- Australia Oct CPI Y/Y: 6.9% v 7.6%e.

- South Korea Oct Industrial Production M/M: -3.5% v -1.0%e; Y/Y: -1.1% v +0.1%e.

- Japan Oct Preliminary Industrial Production M/M: -2.6% v -1.8%e; Y/Y: 3.7% v 5.1%e.

- Japan cut its assessment of industrial production noting that the sector was recovering but some weakness seen.

Americas

- Fed Discount Minutes noted that 9 of 12 Fed Bank Boards wanted 75bps discount rate rise ahead of Fed’s Nov rate decision (3 boards favored 50bps).

Energy

- Weekly API Crude Oil Inventories: -7.9M v -4.8M prior.

- OPEC+ upcoming Dec 4th monthly meeting to be virtually and said to signal little likelihood of changes to policy]; Expected to put focus on Russia oil price cap decision (**Note: EU meets Monday on issue).

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.86% at 441.04, FTSE +0.57% at 7,555.07, DAX +0.56% at 14,435.95, CAC-40 +0.77% at 6,720.08, IBEX-35 +0.26% at 8,343.85, FTSE MIB +0.66% at 24,628.00, SMI +0.86% at 11,173.30, S&P 500 Futures +0.29%].

Market Focal Points/Key Themes: European indices trended higher through the early part of the session; consumer discretionary and real estate sectors among those leading to the upside while lagging sectors included materials and telecom; Argenx acquires an FDA PRV; reportedly ING in talks to divest its stake in Fintoni; focus on upcoming speech by Fed’s Powell; earnings expected during the upcoming Americas session include Salesforce and National Bank of Canada.

Equities

- Consumer discretionary: SAS [SAS.SE] -1% (earnings), Asos [ASC.UK] +1% (analyst action), Mulberry Group [MUL.UK] -11% (earnings).

- Energy: Seadrill [SDRL.NO] -1.5% (earnings), Borders & Southern Petroleum [BOR.UK] -35% (placement).

- Industrials: Renault [RNO.FR] +5.5% (partnership with Airbus), Rolls-Royce [RR.UK] +2.5% (contract award).

- Technology: TietoEVRY [TIETO.FI] +3% (targets; review), Future plc [FUTR.UK] +1% (earnings), Adyen [ADYEN.NL] +2% (analyst action).

Speakers

- BOE’s Pill (chief economist) reiterated majority MPC view that inflation expected to fall rapidly in H2 2023. UK labor market remained very tight. Reiterated stance that had more to do on rates in coming MPC meetings but the base case did not envision rates hitting 5.25% (**Note: Bank Rate currently at 3.00%).

- Sweden Central Bank (Riksbank) Dep Gov Floden noted that its monetary policy was restrictive at the moment.

- Thailand Central Bank Policy Statement noted that the decision to hike by 25bps was unanimous. Gradual normalization was appropriate with hikes to be gradual and measured but would adjust as needed. Saw inflation in target in 2023. Medium-term inflation expectations were within target. Tourism and consumption to support economy and closely monitoring THB currency (Baht) volatility.

- Thailand Central Bank updated its Staff Projections which cut 022 GDP growth forecast from 3.3% to 3.2% and cut 2023 GDP growth outlook from 3.8% to 3.7%. BOT maintained 2022 Headline CPI forecast at 6.3% while raising the 2023 Headline CPI forecast from 2.6% to 3.0% (within target).

- Panyu District in Guangzhou (China) lifted lockdown restrictions.

Currencies/fixed income

- USD was basically steady for the most part in a data-filled session. Greenback faced some headwinds as optimism over a possible loosening in China's COVID restrictions prompted some unwinding of safe haven flows.

- EUR/USD drifted higher despite recent slowing inflation in Spain and Germany and Euro Zone. The inflation picture painting a supportive of a possible downshift in the pace of the ECB rate hike in December.

Economic data

- (NL) Netherlands Nov Preliminary CPI EU Harmonized M/M: -4.0% v +1.3% prior; Y/Y: 11.2% v 16.8% prior.

- (NL) Netherlands Oct Retail Sales Y/Y: 2.9% v 6.0% prior.

- (FI) Finland Q3 GDP Q/Q: -0.3% v +0.7% prior; Y/Y: 1.0% v 2.6% prior.

- (FI) Finland Oct House Price Index M/M: -0.6% v -1.1% prior; Y/Y: -1.9% v 0.1% prior.

- (FI) Finland Oct Preliminary Retail Sales Volume Y/Y: -3.5% v -2.4% prior.

- (SE) Sweden Sept Non-Manual Workers’ Wages Y/Y: 3.1% v 3.0% prior.

- (FI) Finland Sept Final Trade Balance: -€0.3B v -€0.3B prelim.

- (DK) Denmark Q3 Preliminary GDP Q/Q: 0.5% v 0.8% prior; Y/Y: % v 3.8% prior.

- (DK) Denmark Oct Unemployment Rate: 2.2% v 2.2% prior; Gross Unemployment Rate: 2.6% v 2.6% prior.

- (TR) Turkey Q3 GDP Q/Q:-0.1 % v -0.5%e; Y/Y: 3.9% v 4.4%e.

- (TH) Thailand Central Bank (BOT) raised Benchmark Interest Rate by 25bps to 1.25% (as expected).

- (TH) Thailand Oct Current Account: $0.8B v $1.0Be; Overall Balance of Payments (BOP): +$B v -$5.9B prior; Trade Account Balance: $1.7B v +$1.9B prior; Exports Y/Y: -3.6% v +8.4% prior; Imports Y/Y: 5.4% v 20.5% prior.

- (FR) France Q3 Final GDP Q/Q: 0.2% v 0.2% prelim; Y/Y: 1.0% v 1.0% prelim.

- (FR) France Nov Preliminary CPI M/M: 0.4% v 0.3%e; Y/Y: 6.2% v 6.1%e.

- (FR) France Nov Preliminary CPI EU Harmonized M/M: 0.5% v 0.4%e; Y/Y: 7.1% v 7.0%e.

- (FR) France Oct PPI M/M: -0.1%v +1.0% prior; Y/Y: 24.7% v 28.7% prior.

- (FR) France Oct Consumer Spending M/M: -2.8% v -1.0%e; Y/Y: -5.9% v -5.5%e.

- (ES) Spain Oct Adjusted Retail Sales Y/Y: 1.0% v 0.1% prior; Retail Sales (unadj) Y/Y: 1.4% v 0.6% prior.

- (ES) Spain Sept Total Mortgage Lending Y/Y: 9.2% v 12.7% prior; Mortgage Approvals Y/Y: 4.0% v 10.5% prior.

- (CH) Swiss Nov KOF Leading Indicator: 89.5 v 91.8e.

- (AT) Austria Nov Preliminary CPI M/M: 0.3% v 1.0% prior; Y/Y: 10.6% v 11.0% prior.

- (AT) Austria Oct PPI M/M: 0.0% v 1.9% prior; Y/Y: 18.4% v 22.1% prior.

- (HU) Hungary Oct PPI M/M: 3.7% v 1.8% prior; Y/Y: 41.7% v 42.7% prior.

- (HK) Hong Kong Oct Budget Balance (HKD) -22.8B v -70.0B prior.

- (DE) Germany Nov Net Unemployment Change: +17.0K v +13.5Ke; Unemployment Claims Rate: 5.6% v 5.5%e.

- (ES) Spain Sept Current Account: +€0.4B v -€0.1B prior.

- (IT) Italy Q3 Final GDP Q/Q: 0.5% v 0.5% prelim; Y/Y: 2.6% v 2.6% prelim.

- (CH) Swiss Nov Expectations Survey: -57.5 v -53.1 prior.

- (NO) Norway Central Bank (Norges) Dec Daily FX Purchases (NOK): 1.9B v 3.7B prior.

- (PL) Poland Q3 Final GDP Q/Q: 1.0% v 0.9% prelim; Y/Y: 3.6% v 3.5% prelim.

- (PL) Poland Nov Preliminary CPI M/M: 0.7% v 1.1%e; Y/Y: 17.4% v 18.0%e.

- (CZ) Czech Oct M2 Money Supply Y/Y: 5.9% v 5.5% prior.

- (IS) Iceland Q3 GDP Q/Q: -0.5% v +3.7% prior; Y/Y: 7.3% v 6.6% prior.

- (IS) Iceland Oct Final Trade Balance (ISK): -58.3B v -52.7B prelim.

- (EU) Euro Zone Nov CPI Estimate Y/Y: 10.0% v 10.4%e; CPI Core Y/Y: 5.0% v 5.0%e.

- (IT) Italy Nov Preliminary CPI M/M: 0.5% v 0.3%e; Y/Y: 11.8% v 11.3%e.

- (IT) Italy Nov Preliminary CPI Harmonized M/M: 0.6% v 0.4%e; Y/Y: 12.5% v 12.1%e.

- (GR) Greece Sept Retail Sales Value Y/Y: 1.4% v 5.2% prior; Retail Sales Volume Y/Y: 10.5% v 14.1% prior.

- (BE) Belgium Q3 Final GDP Q/Q: +0.2% v -0.1% prelim; Y/Y: 1.9% v 1.6% prelim.

Fixed income issuance

- (IN) India sold total INR220B vs. INR220B in 3-month, 6-month and 12-month.

- (SE) Sweden sold total SEK2.0B vs. SEK2.0B indicated in 2025 and 2033 Bonds.

Looking ahead

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

- 05:30 (IN) India Oct Fiscal Deficit (INR): No est v 78.2B prior.

- 05:30 (DE) Germany to sell €3.0B in 1.7% Aug 2032 Bunds.

- 05:30 (GR) Greece Debt Agency (PDMA) to sell 26-week Bills.

- 05:30 (EU) ECB allotment in 3-month LTRO tender.

- 06:00 (IE) Ireland Nov Unemployment Rate: No est v 4.3% prior.

- 06:00 PT) Portugal Q3 Final GDP Q/Q: No est v 0.4% prelim; Y/Y: No est v 4.9% prelim.

- 06:00 (PT) Portugal Oct Retail Sales M/M: No est v -2.0% prior; Y/Y: No est v 2.1% prior.

- 06:00 (RU) Russia OFZ Bond auction (if any).

- 06:30 (IN) India Oct Eight Infrastructure (key) Industries: No est v 7.9% prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (US) MBA Mortgage Applications w/e Nov 25th: No est v 2.2% prior.

- 07:00 (ZA) South Africa Oct Trade Balance (ZAR): 12.4Be v 19.7B prior.

- 07:00 (ZA) South Africa Oct Monthly Budget Balance (ZAR): -43.0Be v -3.3B prior.

- 07:00 (CL) Chile Oct Manufacturing Production Y/Y: -4.3%e v -3.4% prior; Industrial Production Y/Y: -3.9%e v -1.6% prior; Copper Production: No est v 439.3K prior.

- 07:00 (CL) Chile Oct Retail Sales Y/Y: -15.3%e v -14.3% prior; Commercial Activity Y/Y: No est v -12.3% prior.

- 07:00 (BR) Brazil Oct National Unemployment Rate: 8.5%e v 8.7% prior.

- 07:00 (IN) India Q3 GDP Y/Y: 6.2%e v 13.5% prior; GVA Y/Y: 5.9%e v 12.7% prior.

- 07:30 (BR) Brazil Oct Nominal Budget Balance (BRL): -13.8Be v -60.6B prior; Primary Budget Balance: 23.5Be v 10.7B prior; Net Debt to GDP Ratio: 58.2%e v 58.3% prior

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

- 08:15 (US) Nov ADP Employment Change: +200Ke v +239K prior.

- 08:30 (US) Q3 Preliminary GDP Annualized: Q/Q: 2.8%e v 2.6% advance; Personal Consumption: 1.5%e v 1.4% advance.

- 08:30 (US) Q3 Preliminary GDP Price Index: 4.1%e v 4.1% advance; Core PCE Q/Q: 4.5%e v 4.5% advance.

- 08:30 (US) Oct Advance Goods Trade Balance: -$90.6Be v -$92.2B prior.

- 08:30 (US) Oct Preliminary Wholesale Inventories M/M: 0.5%e v 0.6% prior; Retail Inventories M/M: 0.5%e v 0.4% prior.

- 08:50 (US) Fed’s Bowman.

- 09:45 (US) Nov Chicago Purchase Manager’s Index (PMI): 47.0e v 45.2 prior.

- 10:00 (US) Oct Pending Home Sales M/M: -5.3%e v -10.2% prior; Y/Y: -35.0%e v -30.4% prior.

- 10:00 (US) Oct JOLTS Job Openings: 10.300Me v 10.717M prior.

- 10:00 (MX) Mexico Oct Net Outstanding Loans (MXN): No est v 5.30T prior.

- 10:00 (CO) Colombia Oct National Unemployment Rate: No est v 10.7% prior; Urban Unemployment Rate: 10.2%e v 10.4% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (NZ) New Zealand Nov Corelogic House Prices Y/Y: No est v -0.6% prior.

- 11:00 (RU) Russia Oct Unemployment Rate: 4.1%e v 3.9% prior; Aug Real Wages Y/Y: No est v -1.2% prior.

- 11:00 (RU) Russia Oct Real Retail Sales Y/Y: -12.0%e v -9.8% prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to Sell 2 Year Bonds.

- 12:25 (US) Fed’s Cook.

- 13:30 (US) Fed chief Powell.

- 13:00 (AU) Australia Nov Corelogic House Price Index M/M: No est v -1.1% prior.

- 13:30 (MX) Mexico Central Bank (Banxico) Inflation Report.

- (MX) Mexico Oct YTD Budget Balance (MXN): No est v -396.3B prior.

- 14:00 (US) Federal Reserve Beige Book.

- 16:00 (NZ) New Zealand Government 4-Month Financial Statements.

- 17:00 (AU) Australia Nov Final PMI Manufacturing: No est v 51.5 prelim.

- 18:00 (KR) South Korea Q3 Preliminary GDP (2nd reading) Q/Q: 0.3%e v 0.3% advance; Y/Y: 3.1%e v 3.1% advance.

- 18:50 (JP) Japan Q3 Capital Spending (Capex) Y/Y: 6.4%e v 4.6% prior; Capital Spending (Ex-Software): 6.2%e v 3.5% prior; Company profits: 16.1%e v 17.6% prior; Company Sales: 10.8%e v 7.2% prior.

- 19:00 (KR) South Korea Nov Trade Balance: -$4.3Be v -$6.7B prior; Exports Y/Y: -11.2%e v -5.7% prior; Imports Y/Y: 0.4%e v 9.9% prior.

- 19:30 (JP) Japan Nov Final PMI Manufacturing: No est v # prelim.

- 19:30 (KR) South Korea Nov PMI Manufacturing: No est v 48.2 prior.

- 19:30 (TW) Taiwan Nov PMI Manufacturing: No est v 41.5 prior.

- 19:30 (ID) Indonesia Nov PMI Manufacturing: No est v 51.8 prior.

- 19:30 (TH) Thailand Nov PMI Manufacturing: No est v 51.6 prior.

- 19:30 (MY) Malaysia Nov PMI Manufacturing: No est v 48.7 prior.

- 19:30 (PH) Philippines Nov PMI Manufacturing: No est v 52.6 prior.

- 19:30 (VN) Vietnam Nov PMI Manufacturing: No est v 50.6 prior.

- 19:30 (AU) Australia Q3 Private Capital Expenditure Q/Q: +1.5%e v -0.3% prior.

- 20:01 (IE) Ireland Nov PMI Manufacturing: No est v 51.4 prior.

- 20:30 (JP) BOJ’s Noguchi.

- 20:45 (CN) China Nov Caixin PMI Manufacturing: 48.9e v 49.2 prior.

- 22:35 (JP) Japan to sell 10-Year JGB Bonds.

- 23:00 (ID) Indonesia Nov CPI M/M: +0.2%e v -0.1% prior; Y/Y: 5.5%e v 5.7% prior; CPI Core Y/Y: 3.4%e v 3.3% prior.