Fed decision on the back-burner as 'too close to call' US election takes center stage

EU mid-market update: Fed decision on the back-burner as 'too close to call' US election takes center stage; Vote officially opens tomorrow.

Notes/observations

- Dollar is lower, equities are marginally higher as traders wait for US election. Early voting has begun, with official nationwide voting open tomorrow. Results typically trickle out over several days, but all focus is on the seven swing states of Pennsylvania, Georgia, North Carolina, Michigan, Arizona, Wisconsin and Nevada. Polls indicate the race is too close to call; Analysts note volatility likely to mostly fall on a Trump victory (Trump trade), particularly for US dollar, given Harris already in power as VP; Accurate projections for final results could be seen as early as Wednesday’s Asian session.

- European Manufacturing PMIs saw a beat from Spain (2.5 year high), miss from Italy (6 month low), marginal upwards revisions for Germany and Eurozone and France unrevised.

- FOMC and Bank of England (BoE) both expected to cut by rates by 25bps on Thurs, Nov 7th; CME futures see 99.8% chance of 25bps cut by Fed.

- Travel and Leisure sector underperforms in Europe, highlighted by Ryanair Q2, which trades lower as FY25 profit guidance still omitted, and cuts passenger guidance for FY26, noting delays in Boeing deliveries. Commentary on demand outlook remained strong, with decline in pricing seen to be moderating.

- Asia closed higher with KOSPI outperforming at +1.8%. EU indices are -0.2% to +0.6%. US futures are +0.1%. Gold +0.3%, DXY -0.5%; Commodity: Brent +2.6%, WTI +2.9%; Crypto: BTC +0.9%, ETH +0.4%.

Asia

- China’s Standing Committee of NPC meets between 4-8 Nov and are expected to approve more stimulus measures once it ends.

Global conflict/tensions

Iran Supreme Leader Advisor Kharrazi: Iran will certainly respond to the Israeli aggression at the appropriate time; Changing its nuclear doctrine is still on table if Iran faces an existential threa.

Europe

- S&P raises Turkey sovereign rating by 1 notch to BB-; notes 'tight' monetary policy stance.

- German Chancellor Scholz said to hold meetings with Fin Min Lindner and Econ Min Habeck to to seek common ground on economy.

Americas

- Harris and Trump poised for a photo finish in the US election; voters are narrowly split both nationally and across pivotal swing state.

Energy

- OPEC+ said to have confirmed to agree to delay planned Dec 2024 oil output increase by one month.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.26% at 512.24, FTSE +0.58% at 8,224.77, DAX +0.14% at 19,279.15, CAC-40 +0.45% at 7,442.81, IBEX-35 +0.12% at 11,856.64, FTSE MIB +0.32% at 34,786.00, SMI -0.23% at 11,958.80, S&P 500 Futures +0.19%].

Market Focal Points/Key Themes: European indices open mixed and failed to gain traction in the early part of the session; focus on risk events later in the week including tomorrow’s US election; among sectors trending higher are energy and financials; sectors inclined to the downside include technology and industrials; Anglo American divests its minority interest in Jellinbah to Zashvin; reportedly Meta planning to make multi-billion investment in EsselorLuxottica; reportedly BT looking to divest its Global unit; earnings expected in the upcoming US session include Lowes, Brookfield Asset Management, Palantir and Marriott.

Equities

- Consumer discretionary: Burberry [BRBY.UK] +5.0% (Moncler declines to comment on 'unsubstantiated' speculation related to bid for Burberry), Ryanair [RYA.IE] -2.0% (H1 results; Affirms FY24 passenger guidance but cuts FY26 target; Sees aircrafft delivery headwinds; Notes too early for FY25 profit guidance), EssilorLuxottica [EL.FR] +4.5% (reportedly Meta plans to invest about €5.0B to become 4-5% stake holder in EssilorLuxottica).

- Technology: SUSS MicroTec [SMHN.DE] +3.0% (doubles production capacity with new site in Taiwan), STMicroelectronics [STM.FR] -1.5% (Oddo and Morgan Stanley downgrade) - Industrials: PostNL [PNL.IE] -1.5% (Q3 results, cuts guidance; New CEO) - Real Estate: SBB [SBB.SE] -23.5% (hearing analyst recommends to sell) - Materials: Anglo American [AAL.UK] +0.5% (Divests minority interest in Jellinbah to Zashvin Pty Limited for A$1.6B), Zotefoams [ZTF.UK] +4.0% (trading update).

Speakers

- China National People's Congress said to be reviewing local govt debt.

Currencies/fixed income

- USD was on soft footing in the aftermath of Friday’s disappoint Non-farm Payroll Report. Focus turns to the Tuesday US Presidential and Congressional races. Harris and Trump poised for a photo finish in the as voters appeared to be narrowly split both nationally and across pivotal swing state.
The week will also see several key rate decisions with both the Fed and BOE expected to cut key rates by 25bps.

- Nonetheless market volatility likely to be the clear winner as markets appeared to be poised set to remain jittery while yearning for the US election results.

- EUR/USD hovering just under the 1.09 level in quiet trade.

- GBP/USD at 1.2970 with focus on Thursday’s BOE rate decision. BOE expected to deliver a 25bps rate cut as recent soft inflation and weaker wage readings support such a move. Markets to look for clarification of any additional rate cut further out and suggest a meeting-by-meeting approach.

- USD/JPY at 152.00 area as markets continue to digest recent BOJ Gov Ueda comments which were interpreted as slightly hawkish and suggest a potential rate hike at the Dec meeting. 

Economic data

- (TR) Turkey Oct CPI M/M: 2.9% v 2.7%e; Y/Y: 48.6% v 48.3%e; CPI Core Index Y/Y: 47.8% v 47.8%e.

- (TR) Turkey Oct PPI M/M: 1.3% v 1.4% prior; Y/Y: 32.2% v 33.1% prior.

- (HU) Hungary Oct Manufacturing PMI: 47.6 v 49.1e (5th month of contraction).

- (PL) Poland Oct Manufacturing PMI: 49.2 v 48.6e (30th month of contraction).

- (BR) Brazil Oct FIPE CPI (Sao Paulo): 0.8% v 0.7%e.

- (ES) Spain Oct Manufacturing PMI: 54.5 v 53.2e (9th month of expansion and highest since Feb 2022).

- (IT) Italy Oct Manufacturing PMI: 46.9 v 48.5e (7th month of contraction).

- (FR) France Oct Final Manufacturing PMI: 44.5 v 44.5 prelim (confirmed 21st month of contraction).

- (DE) Germany Oct Final Manufacturing PMI: 43.0v 42.6 prelim (confirmed 28th month of contraction).

- (EU) Euro Zone Oct Final Manufacturing PMI: 46.0 v 45.9 prelim (confirmed 28th month of contraction).

- (CH) Swiss weekly Total Sight Deposits (CHF): 456.6B v 457.4B prior; Domestic Deposits:: 447.8B v 449.4B prior.

- (EU) Euro Zone Nov Sentix Investor Confidence: -12.8 v -12.6e.

Fixed income issuance

NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.43% v 4.46% prior; bid-to-cover: 2.53x v 2.47x prior.

Looking ahead

- (IT) Italy Oct Budget Balance: No est v -€24.0B prior.

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

- 05:30 (DE) Germany to sell combined €5.0B in 3-month and 9-month BuBills.

- 05:30 (EU) European Union to sell combined €5.0B in 2029 and 2034 NGEU bonds.

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

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

- 06:00 (TR) Turkey to sell TLREF Indexed Bonds.

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

- 06:30 (CL) Chile Sept Economic Activity Index (Monthly GDP) M/M: 0.0%e v -0.2% prior; Y/Y: 1.2%e v 2.3% prior.

- 07:00 (MX) Mexico Aug Gross Fixed Investment M/M: -0.5%e v +1.8% prior; Y/Y: -2.0%e v +6.4% prior; Private Consumption Y/Y: 1.9%e v 5.2% prior.

- 07:00 (MX) Mexico Oct Vehicle Domestic Sales: No est v 116.5K prior.

- 07:00 (MX) Mexico Sept Leading Indicators M/M: No est v -0.14 prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuanc; to sell €B in 2030, 2033 and 2054 SPGB bonds on Nov 7th.

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

- 08:00 (AT) ECB’s Holzmann (Austria).

- 08:30 (NL) ECB’s Elderman (Netherlands).

- 09:00 (FR) France Debt Agency (AFT) to sell €6.3-7.9B in 3-month, 6-month and 12-month bills.

- 10:00 (US) Sept Factory Orders: -0.5%e v -0.2% prior; Factory Orders (ex-transportation): No est v -0.1% prior.

- 10:00 (US) Sept Final Durable Goods Orders: -0.8%e v -0.8% prelim; Durables (ex-transportation): 0.4%e v 0.4% prelim; Capital Goods Order (non-defense/ex-aircraft): No est v 0.5% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v -0.3% prelim.

- 11:00 (DK) Denmark Oct Foreign Reserves (DKK): No est v 641.6B prior.

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

- 12:00 (IT) Italy Oct New Car Registrations Y/Y: No est v -10.8% prior.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 15:00 (NZ) New Zealand RBNZ Publishes Bi-Annual Financial Stability Report.

- 16:00 (KR) South Korea Oct Foreign Reserves: No est v $420.0B prior.

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

- 17:00 (AU) Australia Oct Final PMI Services: No est v 50.6 prelim; PMI Composite: No est v 49.8 prelim.

- 18:00 (KR) South Korea Oct CPI M/M: 0.2%e v 0.1% prior; Y/Y: 1.4%e v 1.6% prior; CPI Core Y/Y: 1.9%e v 2.0% prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.4 prior.

- 18:50 (JP) Japan Oct Monetary Base Y/Y: No est v -0.1% prior.

- 19:00 (NZ) New Zealand Oct ANZ Commodity Price M/M: No est v 1.8% prior.

- 19:01 (UK) Oct BRC LFL Sales Y/Y: No est v 1.7% prior.

- 19:30 (HK) Hong Kong Oct PMI (whole economy): No est v 50.0 prior.

- 19:30 (SG) Singapore Oct PMI (whole economy): No est v 56.6 prior.

- 20:00 (PH) Philippines Oct CPI M/M: 0.3%e v -0.2% prior; Y/Y: 2.4%e v 1.9% prior.

- 20:01 (IE) Ireland Oct PMI Services: No est v 55.7 prior; PMI Composite: No est v 52.1 prior.

- 20:45 (CN) China Oct Caixin PMI Services: 50.5e v 50.3 prior; PMI Composite: No est v 50.3 prior.

- 22:00 (TH) Thailand Central Bank to sell combined THB95B in 3-month and 12-month bills.

- 22:30 (HK) Hong Kong to sell 3-month and 6-month bills.

- 22:30 (AU) Reserve Bank of Australia (RBA) Interest Rate Decision: Expected to leave Cash Rate Target unchanged at 4.35%.

- 22:30 (AU) RBA-Statement on Monetary Policy (SOMP).

- 23:00 (ID) Indonesia Q3 GDP Q/Q: 1.6%e v 3.8% prior; Y/Y: 5.0%e v 5.1% prior.