Flat session as focus turns to UK budget and US Nonfarm Payrolls next week

Notes/observations

- Subdued session overall but looking forward to an action-pack week ahead. Session saw cautious tone as market's focus on the health of the corporate sector. Geopolitical tensions in the Middle East as well as election uncertainty.

- UK Autumn Budget Statement looms on Wed Oct 30th: Widely telegraphed to increase taxes for business and high earners, including changes to how govt debt is calculated to leverage out more public spending; PM Starmer in UK press this morning called people with assets ‘non-workers’, suggesting they will be targets for next week under capital gains revisions.

- China NPC Standing Committee's meeting scheduled between Nov 4-8th; Earlier, UBS analysts noted that specific numbers of China stimulus were likely to be unveiled after the NPC Standing Committee's approval.

- Notable EU earnings from Sanofi, Natwest, Electrolux, Remy Cointreau and Mercedes; Weakness in European defense sector being attributed to Russia Pres Putin comment that Russia is ready for "sensible compromise" with Ukraine.

- Key US earnings in upcoming premarket: AON, APO, BAH, CL, AN, KOF, NWL, PIPR.

- Asia closed mixed with Nifty50 underperforming -1.3%. EU indices are mixed. US futures are +0.1% to +0.2%. Gold -0.6%, DXY 0.0%; Commodity: Brent +0.3%, WTI +0.3%; Crypto: BTC +1.3%, ETH +0.4%.

Asia

- China PBOC set the 1-year Medium Term Lending Facility (MLF) rate unchanged at 2.00% (as expected). Volume (CNY): 700B v 600Be compared to 789B maturing (net drain CNY89B).

- Japan Oct Tokyo CPI Y/Y: 1.8% v 1.8%e; CPI (ex-fresh food) Y/Y:1.8% v 1.7%e.

- Japan Sept PPI Services Y/Y:2.6% v 2.7%e.

- Japan Econ Min Akazawa reiterated govt stance that was closely watching FX moves noting that weak Yen had various impacts on the economy. (**Note: Fin Min Kato met US Treasury Sec Yellen on Oct 24th (in Washington) and discussed recent FX moves).

- Japan MOF Top FX diplomat Mimura reiterated stance that had recently seen one-sided, "sharp" FX moves.

- South Korea Fin Min Choi: Alert to FX volatility and of FX market concerns on KRW currency (Won).

- RBA Annual Report had Gov Bullock reiterated view that would take "another year or two" before inflation back to 2.0% to 3.0% target range.

- New Zealand Oct ANZ Consumer Confidence: 91.2 v 95.1 prior.

- Australia Treasurer Chalmers: Domestic economy is on track for a soft landing.

- Japanese media polling indicated was 'unclear' if ruling coalition LDP party could retain majority on Oct 27th General Election. Japan election poll showed the race was tightening in the final stretch.

Europe

- UK Oct GfK Consumer Confidence: -21% v -20%e (Insight: anticipation of increase in tax in the upcoming UK budget at the end of the month).

- ECB’s Lane (Ireland, chief economist) noted that disinflation process was well on track; Inflation set to hit 2% over course of 2025.

- ECB's Muller (Estonia) noted that the best policy choice was measure rate cuts; Not worried about falling behind the curve.

- ECB’s Wunsch (Belgium) pushed back against 50bps cut and did not see why the cut was being discussed. Domestic inflation in Europe was still very high and would not overdramatize inflation falling to 1.7%. Conceded that Europe was weaker than thought.

- ECB's Kazaks (Latvia, voter, hawk) noted that domestic price pressures were somewhat sticky; Economy was the single biggest concerns and must avoid undue damage. Sensible to proceed step by step on ECB rates; Should not hold rates at higher levels for too long.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.02% at 519.08, FTSE -0.05% at 8,265.64, DAX +0.06% at 19,464.55, CAC-40 -0.02% at 7,501.75, IBEX-35 +0.17% at 11,859.71, FTSE MIB +0.42% at 34,843.00, SMI +0.07% at 12,185.40, S&P 500 Futures +0.20%].

Market focal points/key themes: European indices open generally lower and trended in the red for the early part of the session; lack of risk appetite attributed to a focus on earnings; among sectors managing to hold on to gains are materials and health care; sectors trending lower include utilities and industrials; focus on US durable goods orders later in the day; earnings expected in the upcoming US session include Colgate-Palmolive, HCA Healthcare and Aon.

Equities

- Consumer discretionary: Electrolux [ELUX.SE] -15.0% (Q3 results, misses estimates, trims capex guidance), Norwegian Air Shuttle [NAS.NO] -12.5% (earnings; comments on Boeing delays), Remy Cointreau [RCO.FR] -1.5% (Q2 sales, cuts FY rev), Ryanair [RYA.IE] +0.5% (Barclays raised to overweight).

- Energy: Eni [ENI.IT] +1.0% (earnings) - Financials: Natwest [NWG.UK] +4.5% (Q3 results, beats estimates, raises guidance).

- Healthcare: Sanofi [SAN.FR] +1.5% (Q3 results, beats estimates).

- Industrials: Signify [LIGHT.NL] +8.5% (Q3 results, appoints new CFO), Vinci [DG.FR] -3.0% (sales).

- Materials: Holcim [HOLN.CH] +1.5% (earnings).

Speakers

- ECB's Kazaks (Latvia, voter, hawk) stated that did not see the case for rates to fall below neutral level. Move below neutral would require a weaker baseline scenario and substantial undershooting of inflation target.

- ECB's Simkus (Lithuania) reiterated that he did not see case for 50bps rate cut in Dec.

- German Economists noted that orders were not improving and unclear if recent survey indicated a turnaround. Remained a challenging environment for manufacturing companies. More rate cuts from ECB are appropriate for Germany.

- China NPC Standing Committee's meeting scheduled on Nov 4-8th.

Currencies/Fixed income

- FX market remain subdued but looking forward to an action-pack week ahead. Session saw cautious tone as market's focus on the health of the corporate sector. Geopolitical tensions in the Middle East as well as election uncertainty.

- EUR/USD at 1.0835 as an improvement in German IFO survey prompted some short-covering in the pair. Dealers noted that growth divergence between EU and US remained a key underlying dollar-positive them.

- GBP/USD at 1.2970 area with focus on upcoming UK budget on October 30th for insights on the govt plans for government borrowing.

- USD/JPY hovering around 152. Asia session saw another round of verbal intervention at address the weak yen currency. Further Japanese media polling indicated 'unclear' if ruling coalition LDP party could retain majority on Oct 27th General Election but poll showed the race as tightening in the final stretch.

Economic data

- (SE) Sweden Sept Household Lending Y/Y: 1.0% v 0.9% prior.

- (SE) Sweden Sept PPI M/M: -1.8% v +0.6% prior; Y/Y: -2.3% v +1.2% prior.

- (DK) Denmark Sept Retail Sales M/M: 0.1% v 0.3% prior; Y/Y: 0.5% v 2.9% prior.

- (HU) Hungary Sept Unemployment Rate: 4.5% v 4.2%e.

- (FR) France Oct Consumer Confidence: 94 v 95e.

- (ES) Spain Q3 Unemployment Rate: 11.2% v 11.4%e.

- (ES) Spain Sept PPI M/M: -2.3% v +1.4% prior; Y/Y: -5.2% v -1.4% prior.

- (TR) Turkey Oct Real Sector (Manufacturing) Confidence: 102.2 v 99.2 prior; Real Sector Confidence (unadj): 100.9 v 98.8 prior

- (TR) Turkey Oct Capacity Utilization: 74.9# v 74.9% prior

- (CN) Weekly Shanghai Copper Inventories (SHFE): 163.1K v 168.4K tons prior

- (TH) Thailand May Foreign Reserves w/e Oct 18th: $240.5B v $240.0B prior

- (DE) Germany Oct IFO Business Climate: 86.5 v 85.6e; Current Assessment Survey: 85.7 v 84.4e; Expectations Survey: 87.3 v 86.9e.

- (EU) Euro Zone Sept M3 Money Supply Y/Y: 3.2% v 2.9%e.

- (EU) ECB Sept Consumer Expectation Survey: 1 Year CPI Expectations: 2.4% v 2.6%e; 3-year CPI Expectations: 2.1% v 2.2%e.

- (IT) Italy Oct Consumer Confidence: 97.4 v 98.5e; Manufacturing Confidence: 85.8 v 87.0e; Economic Sentiment: 93.4 v 95.6 prior.

- (RU) Russia Narrow Money Supply w/e Oct 18th (RUB): 18.47T v 18.43T prior.

Fixed income issuance

- (IN) India sold total INR320B vs. INR320B indicated in 2034 and 2073 bonds.

- (IT) Italy Debt Agency (Tesoro) sold €2.5B vs. €2.0-2.5B indicated range in 3.10% Aug 2026 BTP bonds; Avg Yield: 2.56% v 2.51% prior; bid to cover: 1.70x v 1.62x prior.

- (IT) Italy Debt Agency (Tesoro) sold total €2.5B vs. €2.0-2.5B indicated range in inflation–linked 2030 and 2036 bonds (BTPei).

Looking ahead

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

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2038 and 2050 Bonds.

- 06:00 (FR) France Q3 Total Jobseekers: No est v 2.809M prior.

- 06:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £2.5B respectively).

- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to raise One-Week Auction Rate by 100bps to 20.00%.

- 07:00 (BR) Brazil Oct FGV Consumer Confidence: No est v 93.7 prior.

- 07:30 (IN) India Forex Reserve w/e Oct 18th: No est v $690.4B prior.

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

- 08:30 (US) Sept Preliminary Durable Goods Orders: -1.0%e v 0.0% prior; Durables (ex-transportation): -0.1%e v +0.5% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.1%e v 0.3% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.0%e v -0.1% prior.

- 08:30 (CA) Canada Aug Retail Sales M/M: 0.5%e v 0.9% prior; Retail Sales (ex-auto) M/M: 0.4%e v 0.4% prior.

- 09:00 (BE) Belgium Oct Business Confidence: -12.8e v -13.3 prior.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 10:00 (US) Oct Final University of Michigan Confidence: 69.1e v 68.9 prelim.

- 11:00 (US) Oct Kansas City Fed Services Activity: No est v -2 prior.

- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on France; S&P on Belgium, Finland, Hungary ratings).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 15:00 (AR) Argentina Aug Wages M/M: No est v 7.5% prior.

- 15:00 (IN) India Central bank (RBI) Gov Das.

Weekend

(CN) China Sept Industrial Profits Y/Y: No est v -17.8% prior.