TradeTheNews.com Staff
TradeTheNews.com
Notes/Observations
- Focus on upcoming central bank meetings and debate policy in the face of higher yields.
- Companies earnings season heating up. Companies due to report during the NY morning include Asbury Automotive, Archer-Daniels Midland, Arch Resources, Armstrong World Industries, Centene, Dana, Ecolab, GE, Corning, Hasbro, JetBlue, Eli Lilly, Lockheed Martin, 3M, Paccar, PulteGroup, Polaris, Pentair, Raytheon, Sherwin-Williams, S&P Global, UPS, Waste Management, Xerox.
Asia
- South Korea Q3 Preliminary GDP Q/Q: 0.3% v 0.6%e; Y/Y: 4.0% v 4.3%e.
- Chinese Developer Modern Land [11107.HK] missed payment on USD-denominated bond.
- China PBOC Open Market Operation (OMO) injected CNY200B in 7-day reverse repos v CNY200B prior; Net injection remained at CNY190B.
- China Securities Journal (CSJ): PBOC liquidity injections showed less prospects for RRR cut [in line].
- China State Planner (NDRC) was said to be considering floating coal prices based off of benchmark pricing; Studying mechanism to stabilize coal prices over long term.
- China Vice Premier Liu He and US Treasury Sec Yellen spoke on Tuesday (Oct 26th) on economy, and bilateral and global cooperation.
- Recent poll PM Kishida’s ruling Liberal Democratic Party said to likely to keep substantially more than half the seats in parliament in this weekend’s general election.
Coronavirus
- Biden administration to allow international travelers to enter the US as long as they had received any vaccine authorized by the WHO from November 8th.
- New Zealand PM Ardern reiterated stance that country to continue to lockdowns until vaccination targets (90% of population) was met.
Europe
- France to use "go slow" strategy for customs checks for UK lorries heading into Christmas season in retaliation over fishing dispute.
- UK Chancellor of the Exchequer Sunak (Fin Min) expected to announce a salary rise next year for public sector workers, will also raise National Living Wage from £8.91 to £9.50/hr.
Americas
- Sen Manchin (D-WV) saw reaching a 'framework deal' for the economic agenda this week; Still working on topline figure for spending with his topline remaining at $1.5T.
- SEC said to have convinced other regulators and would get the go ahead to make moves to crack down on stablecoin market.
Energy
- Russia Energy Min Novak stated that he expected OPEC+ to increase oil output by 400K bpd in November (as previously agreed.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
Indices [Stoxx600 +0.64% at 475.24, FTSE +0.79% at 7,279.91, DAX +1.10% at 15,770.40, CAC-40 +0.83% at 6,768.27, IBEX-35 +0.91% at 9,002.50, FTSE MIB +0.77% at 27,021.00, SMI +0.54% at 12,128.22, S&P 500 Futures +0.42%].
Market Focal Points/Key Themes: European indices open marginally higher across the board and advanced in the green as the session progressed; sectors leading to the upside include consumer discretionary and industrials; sectors dragging their feet include financials and telecom; DAX index supported by outperformance in the automotive subsector; oil and gas subsector under pressure following lower crude price and Novak stating OPEC+ likely to maintain production increase at next meeting; Austria closed for holiday; River & Mercantile to divest its Solutions buisness; earnings expected during upcoming US session include Alphabet, Twitter, ASM International and SEB.
Equities
- Consumer discretionary: Michelin [ML.FR] -1% (earnings).
- Energy: Norsk Hydro [NHY.NO] -1.5% (earnings).
- Financials: UBS [UBSG.CH] +1.5% (earnings).
- Healthcare: Novartis [NOVN.CH] +1% (earnings), Reckitt [RKT.UK] +5.5% (earnings).
- Industrials: Thales [HO.FR] +1% (earnings), Faurecia [EO.FR] -2.5% (earnings).
- Telecom: Orange [ORA.FR] -3% (earnings).
Speakers
- ECB's de Cos (Spain) noted that policies aimed at promoting transition to a carbon-neutral economy likely to affect the volatility of headline inflation.
- ECB Q3 Lending Survey noted that credit standards remained broadly unchanged for firms and tightened for housing loans. Loan demand by firms and households continued to increase.
- German Econ Ministry said to cut 2021 GDP forecast while raising the 2022 outlook. To cut 2021 GDP growth forecasts from 3.5% to 2.6%. To raise 2022 GDP growth forecast from 3.6% to 4.1%.
- EU Commissioner Breton stated that he was in favor of Nord Stream 2 pipeline. Believed Poland would never leave the EU.
- France Fin Min Le Maire noted that nuclear energy would be seen as green in EU taxonomy.
- Turkey President Erdogan said to have made a U-turn on his threat to expel Western ambassadors.
Currencies/Fixed Income
- Quiet trading as markets await various central bank decisions this week (Canada, BOJ and ECB are the main ones). Dealers noted that the greenback could resume its recent rally into next week, as the FOMC meeting approached and the reality of the beginning of Fed tapering.
- Dealers note that ECB likely to keep a close eye on the current high rates of inflation. Lagarde would likely deflect questions on asset purchases in the face of higher yields until the December meeting. EUR/USD hovering around the 1.16 level in the session.
- TRY currency (Lira) rebounded from record lows after President Erdogan dropped his demand for 10 Western ambassadors to be expelled from the country.
Economic data
- (FI) Finland Sept Unemployment Rate: 7.0% v 6.5% prior.
- (FI) Finland Sept Preliminary Retail Sales Volume Y/Y: 0.6% v 3.4% prior.
- (ES) Spain Sept PPI M/M: 5.2% v 1.8% prior; Y/Y: 23.6% v 17.9% prior (largest annual rise since Dec 1977).
- (ZA) South Africa Aug Leading Indicator: 127.9 v 127.0 prior.
- (SE) Sweden Sept PPI M/M: 1.5% v 2.0% prior; Y/Y: 17.2% v 15.8% prior.
- (HK) Hong Kong Sept Trade Balance (HKD): -42.4B v -27.0Be; Exports Y/Y: 16.5% v 20.6%e; Imports Y/Y: 23.5% v 21.9%e.
Fixed income Issuance
- (ID) Indonesia sold total IDR8.0T vs. IDR8.0T target in bills and bonds.
- (NL) Netherlands Debt Agency (DSTA) sold €2.49B vs. €1.5-2.5B indicated range in 0% July 2031 Bonds; Avg Yield: +0.14% v -0.53% prior.
- (UK) DMO sold £2.75B in 0.375% Oct 2026 Gilts; Avg Yield: 0.789% v 0.429% prior; bid-to-cover: 2.16x v 2.67x prior; Tail: 1.0bps v 0.2bps prior.
- (IT) Italy Debt Agency (Tesoro) sold €2.25B vs. €1.75-2.25B indicated range in 0.00% Jan 2024 BTP Bonds; Avg Yield: -0.23% v -0.19% prior; bid-to-cover: 1.65x v 1.45x prior.
- (IT) Italy Debt Agency (Tesoro) sold €750M vs. €500-750M indicated range in 0.15% May 2051 Inflation-linked Bonds (BTPei); Real Yield: -0.16% v +0.47% prior; bid-to-cover: 1.34x v 1.30x prior.
Looking Ahead
- 05:15 (CH) Switzerland to sell 3-month Bills.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (DE) Germany to sell €3.0B in 0.25% Nov 2028 Bunds.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2032, 2044 and 2048 bonds.
- 06:00 (UK) Oct CBI Retailing Reported Sales: 13e v 11 prior; Total Distribution Reported Sales: 20e v 21 prior.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (BR) Brazil Oct FGV Construction Costs M/M: 0.4%e v 0.6% prior.
- 08:00 (BR) Brazil mid-Oct IBGE Inflation IPCA-15 M/M: 1.0%e v 1.1% prior; Y/Y: 10.1%e v 10.1% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 08:55 (US) Weekly Redbook LFL Sales data.
- 09:00 (US) Aug FHFA House Price Index M/M: 1.5%e v 1.4% prior.
- 09:00 (US) Aug S&P Case-shiller House Price Index (20-City) M/M: 1.50%e v 1.55% prior; Y/Y: 20.00%e v 19.95% prior.
- 09:00 (US) Aug S&P Case-shiller House Price Index (overall) Y/Y: No est v 19.70% prior.
- 09:00 (BR) Brazil Sept Total Formal Job Creation: +355.0Ke v 372.3K prior.
- 09:00 (EU) Weekly ECB Forex Reserves.
- 09:00 (EU) ECB weekly QE bond buying update.
- 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (20+ years).
- 10:00 (US) Sept New Home Sales: 759Ke v 740K prior.
- 10:00 (US) Oct Consumer Confidence: 108.3e v 109.3 prior.
- 10:00 (US) Oct Richmond Fed Manufacturing Index: +5e v -3 prior.
- 10:00 (MX) Mexico Weekly International Reserve data.
- 11:45 (FR) ECB’s Villeroy (France).
- 13:00 (US) Treasury to sell 2-Year Notes.
- 14:30 (BR) Brazil Sept Tax Collections (BRL): 147.6Be v 146.5B prior.
- 15:00 (AR) Argentina Aug Supermarket Sales Y/Y: No est v 4.2% prior; Shop Center Sales Y/Y: No est v 285.7% prior.
- 16:30 (US) Weekly API Oil Inventories.
- 17:00 (KR) South Korea Oct Consumer Confidence: No est v 103.8 prior.
- 17:45 (NZ) New Zealand Sept Trade Balance (NZD): No est v -2.1B prior.
- 19:01 (UK) Oct BRC Shop Price Index Y/Y: No est v -0.5% prior.
- 20:00 (NZ) New Zealand Oct Final Business Confidence: No est v -8.6 prelim; Activity Outlook: No est v 26.2 prelim.
- 20:30 (AU) Australia Q3 CPI Q/Q: 0.8%e v 0.8% prior; Y/Y: 3.1%e v 3.8% prior.
- 21:30 (CN) China Sept Industrial Profits Y/Y: No est v 10.1% prior.
- 23:00 (CN) China to sell 1-year and 10-year upsized bonds.
- 23:35 (JP) Japan to sell 2-Year JGB Bonds.
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