Boeing tables 35% pay increase

EU Mid-Market Update: Boeing tables 35% pay increase; Moldova's EU referendum leans towards joining; Eyes ahead for Q3 results from EU banks and US industrials this week.

Notes/observations

- Subdued volatility during EU session; European indices are mixed, with outperformance in oil & gas and weakness in insurance. Crude is higher as conversation revolves around Middle East and the upcoming Israel attack on Iran, as well as fading hopes of Gaza ceasefire after Hamas leader was killed; USD/JPY again approaches 150 handle.

- German PPI and UK Rightmove house prices declined from prior month.

- Moldova narrowly votes to join EU with 50.3% majority. Vote went down to the last minute as speculation had mounted in recent days of Russian interference with paid votes.

- Weekend news was light with main focal news from China cutting Monthly LPR more than consensus, and Boeing’s offer of 35% pay increase to IAM Union (vote on Wed, same day as earnings).

- Taiwan Export Orders growth seen to decelerate in Oct as China orders drag, while South Korea’s Oct 1-20th accelerated from prior month.

- Two weeks until US election as Trump poll lead maintains momentum. Republican advocate Elon Musk, has announced a handout program that will award a random backer of a Free Speech and Right to Bear arms petition $1M, every day until the election.

- Asia closed mixed with Hang Seng underperforming -1.6%. EU indices are -0.5% to +0.1%. US futures are -0.1% to +0.1%. Gold +0.4%, DXY +0.1%; Commodity: Brent +1.2%, WTI +1.5%; Crypto: BTC -0.1%, ETH +2.6%.

Asia

- China PBoC cut the 1-year and 5-year Loan Prime Rate (LPR) by 25bps to 3.10% and 3.60% respectively in it monthly setting (as foreshadowed but more than market consensus).

- More reports circulated that Japan LDP might not likely to win [outright] majority in general election but is likely to remain in power alongside its coalition partners.

- RBA Dep Gov Hauser noted that RBA was not certain on level of neutral rate but most models show between 3-4%.

- RBA rate will not fall as much or as early as other central bank.

- BOJ said to see 'little need' to rush rate hike in Oct, but remain on track to hike at a later stage with inflation staying in line with forecasts.

Europe

- ECB’s Holzmann (Austria, hawk): On track to get inflation under control, though inflation is set to tick higher in coming months. Reiterates that Dec rate decision will be data dependent.

- S&P affirmed UK sovereign rating at AA; Outlook Stable.

- S&P affirmed Italy sovereign rating at BBB; Outlook Stable.

- Fitch affirmed Italy sovereign rating at BBB; Outlook revised to Positive from Stable.

- UK Oct Rightmove House Prices M/M: 0.3% v 0.8% prior; Y/Y: 1.0% v 1.2% prior.

Americas

- Boeing [BA] reached a tentative wage agreement with IAM union after raising offer to a 35% pay increase spread over 4 years (from 25% prior offer). Union to request a membership vote to end the machinist strike on Wed, Oct 23rd.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.08% at 524.54, FTSE +0.05% at 8,362.71, DAX -0.29% at 19,600.95, CAC-40 -0.24% at 7,594.70, IBEX-35 -0.40% at 11,877.55, FTSE MIB -0.06% at 35,183.00, SMI -0.08% at 12,324.50, S&P 500 Futures -0.04%].

Market focal points/key themes: European indices open generally lower, but quickly reverted to trade slightly higher through the early part of the session; Israel closed for holiday; among sectors inclined to the upside are consumer discretionary and industrials; sectors trending lower include financials and materials; oil & gas subsector supported following increase in China oil imports; Sanofi confirms sale of controlling stake in Opella to CD&R; Ricardo announces intention to sell its defense unit; XLMedia sells its NA unit to Sportradar; earnings expected in the upcoming US session include Metro, SAP and Nucor.

Equities

- Consumer discretionary: JDE Peet's [JDEP.NL] +15.5% (new CEO, affirms FY24 outlook; JAB acquires Mondelez’s 86M shares stake in JDE Peet’s), Aryzta [ARYN.CH] -5.0% (Q3 results).

- Financials: Caixabank [CABK.ES] -1.5% (Barclays cuts to equal weight), Icade [ICAD.FR] +0.5% (9M results, raises FY guidance) - Healthcare: Sanofi [SAN.FR] -0.5% (confirms exclusive talks with CD&R to transfer 50% controlling stake in Opella) - Industrials: Forvia [EO.FR] +9.5% (Q3 results, affirms guidance; comments on BYD plant in Turkey), Airbus [AIR.FR] -0.5% (Boeing reached tentative wage agreement with IAM union) - Technology: Midwich [MIDW.UK] -16.5% (trading update), Infineon [IFX.DE] -1.5% (Morgan Stanley cuts to equal weight), XLMedia [XLM.UK] +38.5% (divestment).

Speakers

- ECB's Simkus (Lithuania): Disinflation trend on stable track but services inflation remains high. Didn ot see need for rate cuts larger than 25bps; Rates likely to settle at 2-3% area in longer-term.

- ECB's Kazaks (Latvia, voter, hawk) stated that inflation continued to fall while economy is weak. Stressed that rates were still inhibiting growth.

Currencies/fixed income

- FX markets were quiet in dull trading on Monday.

- USD held onto its recent gains among the G3 aided by higher US rates and solid economic outlook for the US compared to its peers.

- EUR/USD at 1.0850 area as ECB members continued to view concerns over the economic outlook for the region.

- GBP/USD steady at 1.3020 area.

- USD/JPY continued to probe the 150 level with 152-55 area viewed as key resistance.

Economic data

- (DE) Germany Sept PPI M/M: -0.5% v -0.2%e; Y/Y: -1.4% v -1.1%e.

- (CH) Swiss Sept M3 Money Supply Y/Y: 2.0% v 1.2% prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 462.3B v 467.1B prior; Domestic Sight Deposits: 454.1B v 459.4B prior.

- (PL) Poland Sept Sold Industrial Output M/M: 9.0% v 10.1%e; Y/Y: -0.3% v +0.3%e.

- (PL) Poland Sept Construction Output Y/Y: -9.0% v -9.5%e.

- (PL) Poland Sept Employment M/M: -0.1% v -0.2%e; Y/Y: -0.5% v -0.5%e.

- (PL) Poland Sept Average Gross Wages M/M: =-.06% v +0.2%e; Y/Y: 10.3% v 11.0%e.

- (PL) Poland Sept PPI M/M: -0.5% v -0.4%e; Y/Y: -6.3% v -5.7%e.

- (TW) Taiwan Sept Export Orders Y/Y: 4.6% v 5.6%e.

- (FR) France Sept Retail Sales Y/Y: -0.5% v +0.1% prior.

Fixed income issuance

- Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.46% v 4.34% prior; bid-to-cover: 2.47x v 2.88x prior.

Looking ahead

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

- 05:30 (DE) Germany to sell combined €4.0B in 6-month and 12-month BuBills.

- 05:30 (EU) European Union to sell combined €5.0B in 2030 and 2052 NGEU bonds).

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell €2.2-2.5B in 2029, 2034 and 2057 OLO bonds.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:30 (TR) Turkey to sell bonds (2 tranches).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (MX) Mexico Aug Gold Production: No est v 5.1K kg prior; Silver Production: No est v 315.7K prior; Copper Production: No est v 39.6K prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:55 (US)( Fed’s Logan.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.9-8.5B in 3-month, 6-month and 12-month bills.

- 09:45 (UK) BOE gilt sale operation.

- 10:00 (US) Sept Leading Index: -0.3%e v -0.2% prior.

- 11:00 (CO) Colombia Aug Trade Balance: -$1.2Be v -$0.6B prior; Total Imports: $5.4Be v $5.2B prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 13:00 (US) Fed’s Kashkari.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Sept PPI Y/Y: No est v 1.6% prior.

- 17:05 (US) Fed’s Schmid.

- 17:45 (NZ) New Zealand Sept Trade Balance (NZD): No est v -2.2B prior; Exports: No est v 5.0B prior; Imports: No est v 7.2B prior.

- 19:00 (NZ) RBNZ Assistant Gov Silk on Financial Markets.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 83.5 prior (Oct 7th).

- 23:35 (JP) Japan to sell 10-Year Climate Transition Bonds.