Congress now races to find a stopgap government funding bill before Friday's deadline

EU mid-market update: Congress now races to find a stopgap government funding bill before Friday's deadline after Moody's fired a warning shot on US sovereign rating.

Notes/observations

-US futures lower after Moody’s downgrade of US sovereign outlook from stable to negative. Moody’s remains last major credit rating agency to hold a AAA rating for US. Opposingly EU equity indices higher, paring some of Fridays losses.

-Dubai Airshow underway with sizeable orders expected to be weighted towards front-end of the week.

-In political landscape, US govt shutdown deadline looms this Fri, Nov 17th; In the UK, a cabinet reshuffle this morning saw Home Sec Braverman sacked (for second time) and a shock return of ex-PM Cameron into role of Foreign Sec.

-Quiet session for data.

-Asia closed mixed with Hang Seng outperforming at +1.6%. EU indices are +0.3-1.2%. US futures are -0.1% to -0.3%. Gold 0.0%, DXY -0.1%; Commodity: Brent -0.1%, WTI -0.1%, TTF -3.4%; Crypto: BTC -0.2%, ETH +0.2%.

Asia

- Japan Oct PPI (Domestic CGPI) registered its slowest annualized pace since Feb 2021 (M/M: -0.4% v 0.0%e; Y/Y: 0.8% v 0.9%e).

- RBA Acting Assistant Gov Kohler noted that bringing inflation back to target was likely to be more drawn out.

- President Biden and China Pres Xi said to meet on Wed, Nov 15th at APEC Summit.

- Chinese officials’ recent meeting with Yellen raised concerns about investment restrictions; China and US agreed to avoid escalation of frictions.

- China said to be considering ending its freeze on Boeing with a 737 Max deal; a possible deal could be announced during APEC summit in San Francisco.

Global conflict/tensions

- Israel PM Netanyahu stated that there “could be” a potential hostage deal with Hamas ( no further details provided).

- Sec of Defense Austin: Military forces conducted precision strikes on facilities in eastern Syria used by Iran's Islamic Revolutionary Guard Corps (IRGC) and Iran-affiliated groups.

- UAE said to plan to maintain diplomatic ties with Israel; hoped to moderate Israel's Gaza campaign.

Europe

- UK Nov Rightmove House Prices saw the monthly reading largest decline in 5 years (M/M: -1.7% v +0.5% prior; Y/Y: -1.3% v -0.8% prior).

- Fitch affirmed Italy sovereign rating at BBB; Outlook Stable (**Reminder: Moody's set to update on Italy's sovereign ratings on Nov 17th).

- Germany seen backing Spain Econ Min Calvino as European Investment Bank (EIB) head.

Americas

- House speaker Johnson floated two-step temporary funding measure to avert government shutdown. Would provide funding for some segments of the federal government until Jan. 19th and for other agencies until Feb. 2nd.

- Senate said to be considering a 'clean' stopgap spending bill that would fund the govt through mid-January.

- Moody's cut United States sovereign outlook to Negative from Stable; Affirms AAA rating.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.57% at 445.82, FTSE +0.77% at 7,417.07, DAX +0.50% at 15,310.25, CAC-40 +0.70% at 7,094.18, IBEX-35 +0.78% at 9,444.73, FTSE MIB +0.92% at 28,768.00, SMI +0.54% at 10,612.40, S&P 500 Futures -0.17%].

Market focal points/key themes: European indices open generally higher; sectors among those leading the way higher are industrials and financials; lagging sectors include utilities and consumer discretionary; press reports on Friday suggested SocGen looking to offload its German consumer finance unit; focus on release of OPEC monthly report later in the day; earnings expected in the upcoming US session include Tyson Foods.

Equities

- Consumer discretionary: Icelandair Group [ICEAIR.IS] -2.0% (Iceland declares state of emergency ahead of potential Fagradalsfjall volcanic system eruption).

- Healthcare: Novo Nordisk [NOVOB.DK] +3.5% (new Wegovy trial data), Valneva [VLA.FR] +2.0% (positive phase 3 data for Chikungunya).

- Industrials: Continental [CON.DE] +1.5% (job cuts), Airbus [AIR.FR] +1.5% (Turkish Airlines order speculation), BAE Systems [BA.UK] +0.5% (trading update), Bilfinger [GBF.SE] +2.5% (earnings).

- Real Estate: British Land [BLND.UK] +6.5% (earnings).

Speakers

- ECB's Guindos (Spain) reiterated that policy rates would be set at sufficiently restrictive levels for as long as necessary. Likely Euro Area economy would remain subdued in near term. Expect temporary rebound in inflation in coming months. Would be in a better position to reassess inflation outlook at the Dec meeting.

- UK PM Sunak confirmed thwe firing of Home Secretary Braverman.

- Indonesia Central Bank (BI) Gov Warjiyo stated that saw both 2023 and 2024 GDP growth at 5.0%. Saw 2024 CPI at 3.2%.

- Japan Fin Min Suzuki reiterated view that sudden FX moves were undesirable but would not comment on current levels, Reiterated FX moves should be determined by fundamentals. Japan to monitor and respond with sense of urgency.

Currencies/fixed income

- USD was lackluster against the major pairs in quiet session on Monday. Greenback not showing any concerns following Moody’s lowering of the US sovereign outlook to negative. Congress now needs to race to pass a stopgap government funding bill before Friday's deadline. Focus on upcoming US inflation data with CPI set for release on Tuesday. Dealers note reading could confirm that Fed policy tightening was near an end.

- EUR/USD staying below the 1.07 level.

- USD/JPY was at a 1-year high as Japanese officials just reiterate that they were watching the markets carefully.

Economic data

- (SE) Sweden Nov SEB Swedish Housing-Price Indicator: 0 (flat) v 4 prior.

- (JP) Japan Oct Preliminary Machine Tool Orders Y/Y: -20.6% v -11.2% prior.

- (TR) Turkey Sept Current Account Balance: $1.9B v $1.4Be.

- (TR) Turkey Sept Retail Sales Y/Y: 13.8% v 17.3% prior.

- (RO) Romania Oct CPI M/M: 0.6% v 0.6%e; Y/Y: 8.1% v 8.2%e.

- (DE) Germany Sept Current Account: €28.1B v €22.8B prior.

- (CH) Swiss weekly Total Sight Deposits (CHF): 476.3B v 474.6B prior; Domestic Sight Deposits: 467.5B v 465.0B prior.

- (CZ) Czech Sept Current Account Balance (CZK): +33.4B v -15.0Be.

- (CN) China Oct New Yuan Loans (CNY): 738.4B v 655.0Be.

- (CN) China Oct Aggregate Financing (CNY): 1.850T v 1.950Te.

- (CN) China Oct M2 Money Supply Y/Y:10.3% v 10.3%e; M1 Money Supply: Y/Y: 1.9% v 2.5%e; M0 Money Supply Y/Y: 10.2%t v 10.7% prior.

Fixed income issuance

- (DK) Denmark sold total DKK500M in 3-month bills; Avg Yield: 3.510% v 3.520% prior; Bid-to-cover: 1.92x v 1.00x prior.

Looking ahead

- (MX) Mexico Oct ANTAD Same-Store Sales Y/Y: No est v 4.8% prior.

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

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

- 06:00 (PT) Portugal Oct Final CPI M/M: No est v -0.2% prelim; Y/Y: No est v 2.1% prior.

- 06:00 (PT) Portugal Oct Final CPI EU Harmonized M/M: No est v -0.4% prelim; Y/Y: No est v 3.3% prelim.

- 06:00 (IL) Israel Oct Trade Balance: No est v -$1.9B prior.

- 06:00 (IL) Israel to sell bonds.

- 06:00 (RO) Romania to sell RON500M in 7.20% 2026 bonds.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (IN) India Oct CPI Y/Y: 4.8%e v 5.0% prior.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 OPEC Monthly Oil Report (MOMR).

- 07:00 (UK) BOE’s Breeden.

- 07:00 (SE) Sweden Central Bank (Riksbank) Bunge.

- 08:00 (PL) Poland Sept Current Account Balance: -€0.1Be v -€0.2B prior; Trade Balance: €0.6Be v €0.5B prior; Exports: €27.6Be v €25.7B prior; Imports: €27.2Be v €25.2B prior v €0.5B prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills (4 tranches).

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

- 10:30 (US) Weekly EIA Natural Gas Inventories (delayed from last week).

- 11:00 (US) Weekly DOE Oil Inventories (delayed from last week).

- 11:00 (UK) BOE’s Mann.

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

- 14:00 (US) Oct Monthly Budget Statement: -$65.0Be v -$171.0B prior.

- 15:00 (AR) Argentina Oct National CPI M/M: 9.4%e v 12.7% prior; Y/Y: 145.1%e v 138.8% prior.

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

- 16:00 (KR) South Korea Oct Import Price Index M/M: No est v 2.9% prior; Y/Y: No est v -9.6% prior.

- 16:00 (KR) South Korea Oct Export Price Index M/M: No est v 1.7% prior; Y/Y: No est v -8.9% prior.

- 16:45 (NZ) New Zealand Oct Food Prices M/M: No est v -0.4% prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: No est v 77.8 prior.

- 18:30 (AU) Australia Nov Westpac Consumer Confidence: No est v 82.0 prior.

- 19:30 (AU) Australia Oct NAB Business Confidence: No est v 1 prior; Business Conditions: No est v 11 prior.

- 21:35 (CN) China to sell 3-year and 7-year Bonds.

- 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 0.2% prior; “L” Money Supply M/M: No est v 0.1% prior.