EU Draft document on future relationship gives GBP currency a boost

Asia:

- Japan Oct National CPI Y/Y: 1.4% v 1.4%e; CPI Ex-Fresh Food (core) Y/Y: 1.0% v 1.0%e; CPI Ex-Fresh Food/Energy (core-core) Y/Y: 0.4% v 0.4%e

- Singapore Q3 Final GDP Q/Q: 3.0% v 4.0%e; Y/Y: 2.2% v 2.4%e

Europe:

- PM May stated that she made progress in talks with EU's Juncker and given direction to Brexit negotiators who could now resolve the remaining Brexit issues; To return to Brussels on Saturday, Nov 24th ahead of the EU Leader Summit

-Northern Ireland's DUP Leader Foster: confidence and supply agreement with Tories is still very much in existence

- Ireland PM Varadkar proposes motion asking his parliament to support draft Brexit withdrawal agreement (ahead of Sunday summit)

- Spain PM Sanchez reiterated view that if no solution reached on Gibraltar, would say no to Brexit deal on Sunday. Spain's Gibraltar demands are not reflected in the current wording of the Brexit agreement. There's been a positive, constructive tone on Gibraltar

- Approx 84 Tory MPs said to have publicly indicated that they would not vote for PM May's Brexit deal

- German Finance Ministry Monthly Report saws domestic economy continuing to grow but at a slower pace

Americas:

- USTR report on China IP and tech transfers stated that China had not modified its unfair practices

 

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.70% at 352.76, FTSE -1.04% at 6,976.85, DAX -0.64% at 11,172.71, CAC-40 -0.60% at 4,945.84, IBEX-35 -0.55% at 8,910.95, FTSE MIB -0.51% at 18,636.50, SMI -0.69% at 8,781.20, S&P 500 Futures -0.23%]

Market Focal Points/Key Themes:

Equities

European Indices trade lower across the board following a mixed Asian session and negative US futures. New York Stock exchange is closed because of nationwide Thanksgiving Day. Focus is on Italy and U.K. with the FTSE MIB and FTSE 100 underperforming due to continued negotiations of country leaders on Italian budget plan and PM May Brexit deal proposition, respectively. On the corporate front Imperial Brands and British American Tobacco trades lower following press speculation that UK Top court said to rule that ban on oral tobacco is legal and in-line with EU rules; Standard Chartered trade slightly higher on FT report that bank plans buyback program. Telecom Italia trades slightly lower after news that Italy govt reportedly mulls transferring state assets to new fixed-line network company and transferring to new entity 30,000 company's stuff. On the earnings front, Remy Cointreau trades higher after earnings, while Centrica trades notably lower in the U.K. after providing trading update; Rotork and Altice also falls after their earnings and followed comments of executives. Delivery Hero in Germany trades higher after analyst upgrade. On M&A front, Kotipizza Group trades 39% higher in Finland after takeover proposition made by Orkla. Looking ahead notable earners include Lundbergforetagen B and Eurobank Ergasias SA after European markets close.

- Consumer discretionary: Remy Cointreau [RCO.FR] +1.5% (earnings; affirms outlook), Equiniti [EQN.UK] +3.5% (trading update), Kotipizza Group [PIZZA.FI] +39%, Orkla ASA [ORK.NO] n/c (Orkla ASA proposed to acquire Kotipizza), Delivery Hero AG [DHER.DE] +3% (analyst action), Majestic Wine [WINE.UK] -13% (earnings; following analyst action), Mothercare [MTC.UK] -5% (earnings)

- Consumer staples: Imperial Brands [IMB.UK] -4%, British American Tobacco [BATS.UK] -2% (UK Top court said to rule that ban on oral tobacco is legal and in-line with EU rules)

- Energy: Centrica PLC [CNA.UK] -9% (trading update)

- Financials: Standard Chartered [STAN.UK] +0.5% (share buyback program speculation), Intu Properties [INTU.UK] -0.5% (Granted extension till Nov 30 for consortium to either announce a firm intention to make offer for intu or announce that it does not intend to make an offer)

- Industrials: Rotork [ROR.UK] -7.5% (trading update)

- Technology: Keller Group [KLR.UK] -2% (trading update)

- Telecom: Altice [ATC.NL] -14% (earnings), Telecom Italia [TIT.IT] -1% (Italy govt reportedly mulls transferring state assets to new fixed-line network company valued at €15B)

 

Speakers

- EU-UK declaration on future relationship draft said to foresee equivalence for UK banks and commit to deep customs cooperation and build on single customs territory. It also stated a determination to replace backstop in the future. EU to recognize UK independent trade policy

- Italy President Mattarella said to want PM Conte to reach deal with EU's Juncker over budget

- Italy PM Conte to address Parliament on budget and said to present an urgent report on dispute with EU

- Italy PM Conte: Govt acting responsibly on budget; confident that bond spread will narrow

- Italy Dep PM Di Maio said to see possible budget modifications during the Parliament process but opposed cuts in resources for reforms

- Italy Dep PM Di Maio and Italy Dep PM Salvini reportedly did not want to negotiate with EU over next year budget

- Italy Dep PM Salvini: Concerned about bond spreads but they couldnot be controlled by government

- EU's Moscovici: Commission was prudent on Italy, need mutual respect in talks on budget. Further steps on Excessive Deficit Procedure were not yet set (included the pace and trajectory of debt and deficit reduction)

- Austria Fin Min Loeger: Italy could pose stability risks for all

- Swiss govt said to plan to restrict the use of bearer shares

- Sweden Central Bank (Riksbank) Dep Gov Skingsley: To weight incoming data ahead of the Dec policy meeting in regards to 1st potential rate hike. Had not seen anything worrying in regards to inflation and would need to see if there was value in waiting in December

- Norway Central Bank (Norges) Q4 Expectation Survey saw Households cut 12-month inflation from 2.4% to 1.9%

- Sweden Center party leader Loof stated that the will to compromise was not strong enough; gridlock remains

- Turkey Fin Min Albayrak: Lead indicators point toward a slowdown and balancing economy in H2 2018. Tight fiscal policy to provide key support for fight against inflation

- South Africa President Ramaphosa said to announce changes to Cabinet

- BOJ Gov Kuroda testified in parliament that needed to persistently continue with current policy and would need to reduce balance sheet once prices rose. Should not take additional easing measures as economy and prices are improving

- Japan Cabinet Office Nov Monthly Economic Report: Maintained its overall economic assessment, economy was recovering at moderate pace

- China PBoC stated that ot would support funding to private companies via bill financing. To support debt issuance by private companies using credit risk mitigation tools

 

Currencies/Fixed Income

- FX markets were subdued with no major expected data released and US markets closed for its Thanksgiving holiday.

- The USD still exhibiting a soft tone as a string of recent soft US data has raised speculation the Fed might take a pause in hiking rates as early as next spring

- EUR/USD hovering around the 1.14 level as the struggle between Italy and the European Union rumbled on after the EU Commission released its final opinion of the 2019 fiscal budgets.

- GBP/USD was initially steady as PM May planned last minute Brexit talks ahead of Sunday's EU Leader Summit. Pair at 1.2790 but then popped 100 pips higher on reports of a EU-UK Draft document on future relationship foreseeing equivalence for UK banks and EU to recognize UK independent trade policy

 

Economic Data

- (DK) Denmark Nov Consumer Confidence Indicator: 4.3 v 5.1 prior

- (TR) Turkey Nov Consumer Confidence Index: 59.6 v 57.3 prior

- (MY) Malaysia mid-Nov Foreign Reserves: $102.1B v $101.7B prior

- (FR) France Nov Business Confidence: 104 v 104e; Manufacturing Confidence: 105 v 103e; Production Outlook Indicator: 4 v 7 prior; Own-Company Production Outlook: 14 v 10 prior

- (HU) Hungary Sept Average Gross Wages Y/Y: 10.4% v 10.0%e

- (TW) Taiwan Oct Unemployment Rate: 3.7% v 3.7%e

- (CH) Swiss Q3 Industrial Output Y/Y: 1.4% v 6.2%e; Industry & Construction Output Y/Y: 1.1% v 7.9% prior;

- (SE) Sweden Q3 Total Number of Employees Y/Y: 2.8% v 2.6% prior

- (PL) Poland Oct Retail Sales M/M: 7.4% v 5.2%e; Y/Y: 9.7% v 7.6%e; Real Retail Sales Y/Y: 7.8% v 5.8%e

- (IS) Iceland Oct Wage Index M/M: 0.4% v 0.6% prior; Y/Y: 6.2% v 5.9% prior

 

Fixed Income Issuance

- (ES) Spain Debt Agency (Tesoro) sold total €3.146B vs. €2.5-3.5B indicated range in 2022, 2028 and 2033 Bonds

- Sold €831M in 0.45% Oct 2022 SPGB; Avg yield: 0.310% v 0.270% prior, Bid-to-cover: 4.63x v 2.60x prior

- Sold €1.305B in 1.40% July 2028 SPGB; Avg yield: 1.607% v 1.644% prior, Bid-to-cover: 1.57x v 2.08x prior

- Sold €1.01B in 2.35% July 2033 SPGB; Avg Yield: 2.116% v 1.798% prior; Bid-to-cover: 1.45x v 1.37x prior

- (FR) France Debt Agency (AFT) sold total €7.317B vs. €6.5-7.5B indicated range in 2022, 2023 and 2024 Bonds

- Sold €2.352B in 0.00% May 2022 Oat; Avg yield: -0.29% v -0.04% prior; Bid-to-cover: 2.08x v 1.91x prior

- Sold €2.555B in 0.0% Mar 2023 Oat; Avg Yield: -0.13% v +0.10% prior; bid-to-cover: 2.06x v 2.42x prior

- Sold €2.41B in 0.00% Mar 2024 Oat; Avg Yield: 0.06% v 0.16% prior; Bid-to-cover: 2.37x v 1.81x prior

- (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% Jun 2032 I/L bond; Avg Yield: -0.9946% v -0.8752% prior; Bid-to-cover: 3.77x v 2.69x prior

- (IT) BTP Italia (retail bond) institutional order book said to be over €1.0B

 

Looking Ahead

- (NG) Nigeria Central Bank Interest Rate Decision; Expected to leave Interest Rates unchanged at 14.00%

- (BR) Brazil Nov CNI Industrial Confidence: No est v 53.7 prior

- (PT) Portugal Sept Current Account Balance: No est v €0.5B prior

- (AR) Argentina Nov Consumer Confidence Index: No est v 32.6 prior

- (GR) Bank of Greece expected to announce bad loan plan

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 2021, 2024 and 2038 bonds

- 05:50 (FR) France Debt Agency (AFT) to sell €0.75-1.0B in 2024, 2028 and 2030 Inflation-linked bonds (Oatei)

- 06:00 (IE) Ireland Oct PPI M/M: No est v -2.3% prior; Y/Y: No est v -2.6% prior

- 06:00 (RO) Romania to sell Bonds

- 07:30 (EU) ECB Account of Policy Meeting

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 16th: No est v $461.5B prior

- 08:00 (PL) Poland Central Bank Nov Minutes

- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: expected to raise Interest Rate by 25bps to 6.75%

- 08:10 (UK) Baltic Dry Bulk Index

- 09:00 (IT) Italy Fin Min Tria in Parliament (Upper House)

- 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -3.0e v -2.7 prior

- 11:30 (DE) ECB's Weidmann (Germany) with members Knot (Netherlands) and Visco (Italy) in Florence

- 15:55 (UK) BOE's Saunders at CBI dinner

- (IT) Italy Debt Agency (Tesoro) details CTZ/BTPei auctions for Nov 27th