Awaiting the Nov US jobs report; OPEC+ decision on production cuts

Notes/Observations

- Continued weak German industrial data to keep hopes of fiscal stimulus to come over concerns of looming recession

- China to implement tariff waivers for some soybean and pork purchases from US (as speculated) - Focus turns to US jobs report

Asia:

- Japan Oct Household Spending saw its fastest fall sine Mar 2016) (YoY: -5.1% v -3.2%e)

- Japan's largest bank (MUFJ) said to consider placing fees on certain accounts amid the negative interest rate environment

- China might set 2020 GDP growth target at 'around 6.0%' at Central Economic Work Conference due to take place later during Dec; officials were expected to allow 'modest' expansion of fiscal and monetary policies and continue to resist 'massive' stimulus

- Global Times citing an expert close to trade talks: phase 1 trade deal still on track despite Washington's erratic statements

- RBNZ Deputy Gov Bascand: reiterated economy looked close to turning point; downside risks persist but were more balanced; strong commodity prices were supporting economy; fiscal stimulus could boost growth next year

- CNN reported that satellite imagery showed activity at missile site in North Korea (previously claimed as dismantled)

Americas:

- Pres Trump: Something could happen with regard to tariffs on Dec 15th but we're not discussing that yet; talks are going well; US is having meetings and discussions with China now that are going well

- Treasury Sec Mnuchin: US-China talks are 'on track' but not bound to any specific deadline; US and China deputy officials held a call Thurs night and are 'actively working' towards a deal

- National Security Advisor O'Brien: Close on phase 1 deal with China; spoke with Treas Sec Mnuchin and USTR Lighthizer earlier today; monitoring Hong Kong situation very closely

Energy:

- OPEC delegate reiterated that there was agreement for a 500K bpd cut with OPEC+; still needed to discuss final details with OPEC+ on Friday

- Russia Energy Min Novak: OPEC+ committee recommended 500K bpd in additional cuts in Q1 and 100% compliance with previous quotas through April 1st. Confirmed looking at 500K barrels in additional cuts through March, in addition to the current 1.2M bpd in OPEC+ production cuts. Would revisit the situation at JMCC meeting in March

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.4% at 404.3, FTSE +0.7% at 7190, DAX +0.2% at 13081, CAC-40 +0.5% at 5827, IBEX-35 +0.6% at 9296, FTSE MIB +0.3% at 23042, SMI +0.4% at 10409, S&P 500 Futures +0.2%]

Market Focal Points/Key Themes: European indices in the green following indices in Asia higher and higher US futures on continued trade optimism. Associated British Foods up slightly after trading update and affirmed FY outlook; Marks & Spencer and Sports Direct up in sympathy. Berkeley Group also up a tad on earnings. Carl Zeiss Meditec down after reporting earnings results and issuing FY20 guidance. Tarkett down 12% after cutting FY19 profit outlook yesterday after market close, SMCP dives 20% after issuing profit margin downgrade mainly reflecting market deterioration in Hong Kong. On the M&A front, Swiss Re trading up after confirming it is selling subsidiary ReAssure to Phoenix Group in cash and stock deal valued at £3.25B. Phoenix shares also up. Ipsen tanks 21% after initiating a partial clinical hold for drug candidate Palovarotene after discussions with the US FDA. Looking ahead notable earners include Big Lots and Genesco.

 

Equities

- Consumer discretionary: AB Foods [ABF.UK] +0.5% (AGM statement), Lufthansa [LHA.DE] +1.5% (analyst action), Marks & Spencer [MKS.UK] +3.5% (analyst action), SMCP [SMCP.FR] -20% (profit warning)

- Financials: Swiss Re [SREN.CH] +2.5% (divestment)

- Healthcare: Ipsen [IPN.FR] -20% (puts study on hold)

- Technology: Carl Zeiss Meditec [AFX.DE] -5% (earnings), Siemens Healthineers [SHL.DE] -1.5% (analyst actions)

 

Speakers

- Italy Stats Agency (Istat) Monthly Economic Note: Leading indicators point to continued economic weakness

- Sweden Central Bank (Riksbank) Nov Business Survey: Domestic economy continued to slow down

- China to implement tariff waivers for some soybean and pork purchases from US [as speculated in Sept] . Govt to begin applications for the previously announced tariff exemptions related to US soybeans and pork

- China reportedly took corresponding countermeasures against new US rules requiring advance notice of visits by Chinese diplomats to specified organizations in the US

- HKMA official Yu: Financial situation had been stable over the past month; still had room to further cut the capital buffer

- Indonesia Central Bank (BI) reiterated view that still had room to ease monetary policy; expected to see impact of prior cuts in Q1

- OPEC+ proposed additional 500K Oil output cut said to be split roughly 2/3 OPEC, 1/3 Non-OPEC producers (same ratio as under prior agreement)

- Iraq Oil Min Ghadhban: Will comply with whatever the upcoming decision by OPEC+ on production

- Saudis Arabia said to hold its oil production at current level in adjusted OPEC+ deal

 

Currencies/Fixed Income

- USD having its worst week since October with focusing turning to upcoming payroll data for November.

- EUR/USD steady in session as continued weak German industrial data to keep hopes of fiscal stimulus on the burner to counter concerns of looming recession

- Continued optimism over the potential for US-China to cement its 1st phase of a trade agreement remained intact but did little to unwind safe-haven flows, USD/JPY steady at 108.60 area

 

Economic Data

- (ZA) South Africa Nov Gross Reserves: $54.9B v $54.5B prior; Net Reserves: $44.4B v $44.3Be

- (DE) Germany Oct Industrial Production M/M: -1.7% v +0.1%e; Y/Y: -5.3% v -3.6%e

- (NO) Norway Oct Industrial Production M/M: +3.6% v -0.2% prior; Y/Y: -5.7% v -8.1% prior

- (NO) Norway Oct Manufacturing Production M/M: 0.0% v 0.3%e; Y/Y: 1.9% v 2.9% prior

- (DK) Denmark Oct Industrial Production M/M: -0.6% v +1.5% prior

- (MY) Malaysia End-Nov Foreign Reserves: $103.2B v $103.2B prior

- (CN) Weekly Shanghai copper inventories (SHFE): 112.7K v 120.2K tons prior

- (FR) France Oct Trade Balance: -€4.7B v -€5.0Be

- (FR) France Oct Current Account Balance: -€2.4B v -€2.9B prior

- (CZ) Czech Oct Retail Sales Y/Y: 2.4% v 2.8%e; Retail Sales (ex-auto) Y/Y: 3.4% v 3.8%e

- (RU) Russia Narrow Money Supply w/e Nov 29th (RUB):10.54 T v 10.62T prior

- (CH) Swiss Nov Foreign Currency Reserves (CHF): 782.9B v 779.5B prior

- (HU) Hungary Oct Industrial Production M/M: -0.4% v +3.1% prior; Y/Y: 6.4% v 6.7%e

- (AT) Austria Nov Wholesale Price Index M/M: 0.0% v -0.4% prior; Y/Y: -2.7% v -2.8% prior

- (SE) Sweden Oct Private Sector Production M/M: 0.2% v 0.0%e; Y/Y: 0.4% v 0.6% prior

- (SE) Sweden Oct Industrial Orders M/M: -1.9% v -0.2% prior; Y/Y: -5.4% v -1.4% prior

- (SE) Sweden Oct Industry Production Value Y/Y: -3.0% v 0.0% prior; Service Production Value Y/Y: 1.1% v 0.8% prior

- (SE) Sweden Nov Budget Balance (SEK): 25.2B v 31.9B prior

- (UK) Nov Halifax House Prices M/M: +1.0% v -0.1% prior; 3M/Y: +2.1% v 0.9% prior

- (IT) Italy Oct Retail Sales M/M: -0.2% v +0.6% prior; Y/Y: 1.0% v 1.1%e

- (IS) Iceland Nov Preliminary Trade Balance (ISK): -3.1B v +0.4B prior

**Fixed Income Issuance**

- (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2025, 2029 and 2046 I/L bonds

- (IN) India sold total INR160B vs. INR160B indicated in 2021, 2026, 2039 and 2059 bonds

 

Looking Ahead

- 06:00 (CL) Chile Nov CPI M/M: 0.1%e v 0.8% prior; Y/Y: 2.7%e v 2.5% prior

- 06:00 (UK) DMO to sell €6.0B in 1-month, 3-month and 6-month bills (£0.5B, £2.5B and £3.0B respectively)

- Sells £0.5B in 1-month bills; Yield: % v 0.7503% prior; bid to cover: x v 2.91x prior

- Sells ££2.5B in 3-month bills; Yield: % v 0.7412% prior; bid to cover: x v 2.93x prior

- Sells £3.0B in 6-month bills; Yield: % v 0.7686% prior; bid to cover: x v 2.13x prior

- To sell combined £6.0B in 1-month, 3-month and 6-month Bills on Fri, Dec 13th (£0.5B, £2.5B and £3.0B respectively) http://www.dmo.gov.uk/data/pdfdatarheport?reportCode=D2.2A

- 06:30 (CL) Chile Nov Trade Balance: $0.0Be v -$0.3B prior; Total Exports: No est v $5.3B prior; Total Imports: No est v $5.6B prior

- 06:30 (IN) India Weekly Forex Reserve w/e Nov 29th: No est v $448.6B prior

- 06:30 (IS) Iceland sells ISK in 3.5% 2021 RIKB bonds; Avg Yield: % v 3.19% prior; Bid-to-cover: x v 1.09x prior

- 07:00 (BR) Brazil Nov IBGE Inflation IPCA M/M: 0.5%e v 0.1% prior; Y/Y: 3.2%e v 2.5% prior

- 07:00 (MX) Mexico Nov Vehicle Production: No est v 311.2K prior; Vehicle Exports: No est v 252.3K prior

- 07:00 (MX) Mexico Sept Gross Fixed Investment: -7.0%e v -4.3% prior

- 07:00 (IN) India announces upcoming bill issuance (held on Wed)

- 08:00 (PL) Poland Nov Official Reserves: No est v $121.9B prior

- 08:00 (RU) Russia Nov CPI M/M: 0.3%e v 0.1% prior; Y/Y: 3.6%e v 3.8% prior

- 08:00 (RU) Russia Nov CPI Core M/M: 0.3%e v 0.2% prior; Y/Y: 3.6%e v 3.7% prior

- 08:00 (RU) Russia Nov Official Reserve Assets: $543.0Be v $540.9B prior

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

- 08:30 (US) Nov Change in Nonfarm Payrolls: +185Ke v +128K prior; Change in Private Payrolls: +179Ke v +131K prior; Change in Manufacturing Payrolls: +40K v -36K prior

- 08:30 (US) Nov Unemployment Rate: 3.6%e v 3.6% prior; Underemployment Rate: No est v 7.0% prior; Labor Force Participation Rate: No est v 63.3% prior

- 08:30 (US) Nov Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: 3.0%e v 3.0% prior; Average Weekly Hours: 34.4e v 34.4 prior

- 08:30 (CA) Canada Nov Net Change in Employment: +10.0Ke v -1.8 K prior; Unemployment Rate: 5.5%e v 5.5% prior; Full Time Employment Change: +10.0Ke v -16.1K prior; Part Time Employment Change: +15.0Ke v +14.3 K prior; Participation Rate: 65.7%e v 65.7% prior; Hourly Wage Rate Y/Y: 4.5%e v 4.4% prior

- 09:30 (YR) Turkey Nov Cash Budget Balance (TRY): No est v B prior

- 10:00 (US) Oct Final Wholesale Inventories M/M: 0.2%e v 0.2% prelim; Wholesale Trade Sales M/M: No est v 0.0% prior

- 10:00 (US) Dec Preliminary University of Michigan Confidence: 97.0e v 96.8 prior

- 11:00 (EU) Potential sovereign ratings after European close (Moody's on Turkey sovereign rating; S&P on Estonia sovereign rating; Canadian rating agency DBRS on Germany, Poland, Sweden and Denmark sovereign rating)

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

- 15:00 (US) Oct Consumer Credit: $16.0Be v $9.5B prior