Flat start to Monday after global equities posted best week in a year

Notes/observations

- Markets take a pause after rallying towards the end of last week on back of falling bond yields and Fed commentary after FOMC decision.

- Little change to macro picture as European Service PMIs came in mixed and US Sec of State Blinken continues visit in Middle East region.

- European airlines and travel sector strengthens after Ryanair announces €400M maiden dividend and a bright industry outlook despite capacity constraints.

- Asia closed higher with KOSPI outperforming at +5.6%. EU indices are mixed -0.3% to +0.2%. US futures are +0.1% to +0.2%. Gold -0.3%, DXY -0.1%; Commodity: Brent +1.5%, WTI +1.7%, TTF -3.5%; Crypto: BTC +0.1%, ETH 0.0%.

Asia

- Japan Oct Final PMI Services: 51.6 v 51.1 prelim (confirmed 13th month of expansion).

- BOJ Gov Ueda reiterated that would continue monetary easing under YCC policy. Reiterated overall assessment that domestic economy likely to continue recovering, economy is recovering moderately.

- BOJ Sept Monetary Policy Meeting Minutes [2 meetings ago] agreed that sustainable and stable achievement of the price stability target, accompanied by wage increases, had not yet come in sight.

- South Korea govt said to consider new temporary ban on stock short selling until system improvement was completed.

-China PBoC reportedly to make mortgage rates more market-based.

Global conflict/tensions

- Israeli PM Netanyahu ruled out any ceasefire until unless hostages held by Hamas were released.

- US Sec of State Blinken met with president of the Palestinian Authority during a region-wide tour; Arrived to Turkey after visiting West Bank and meeting Palestinian Authority Pres Mahmoud Abbas.

-Iran Foreign Ministry spokesperson reiterated war very likely to spread if Israel crimes persist.

Europe

- ECB Chief Lagarde reiterated stance that was determined to bring inflation down to 2% target and looking to achieve in 2025.

-UK Bank of England (BoE) and FCA proposes regulatory regime for systemic payment systems using stablecoins and related service providers.

-Russia Pres Putin reportedly formally decided to run for new 6-year presidential term in Mar 2024 - press citing Kremlin sources.

Americas

- House Speaker Johnson stated that worked over the weekend and will push ahead with a stopgap funding plan.

- NY Times Poll: Trump leading Biden by anywhere from three to 10 percentage points in five of six battleground states surveyed.

Energy

- Saudi Energy Ministry reiterated that it would continue its voluntary cut of 1Mbpd until end-2023.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.04% at 444.06, FTSE -0.04% at 7,414.71, DAX -0.16% at 15,165.05, CAC-40 -0.21% at 7,032.43, IBEX-35 -0.25% at 9,270.72, FTSE MIB +0.26% at 28,748.00, SMI -0.17% at 10,561.40, S&P 500 Futures +0.17%].

Market Focal Points/Key Themes: European indices open higher across the board but later turned around to trade with a downward bias; better performing sectors include financials and industrials; while materials and consumer discretionary sectors were among those trending lower; airline stocks up in sympathy with Ryanair; Telecom Italia approves sale of network grid to KKR; earnings expected in the upcoming US session include Brookfield Asset Management, Dish Networks and EchoStar.

Equities

- Consumer discretionary: Ryanair [RYA.IE] +5.5% (H1 results, positive early 2024 outlook; plans to initiate div for first time).

- Materials: Kingspan [KGP.UK] -3.5% (trading update - affirms FY23 guidance).

- Healthcare: Evotec [EVT.DE] -7.0% (analyst action).

- Financials: Prudential plc [PRU.UK] -1.0% (trading update), Dino Polska [DNP.PL] +4.5% (analyst action).

- Industrials: Tesla [TL0.DE] +1.5% (plans to build a €25,000 EV at its factory near Berlin), BMW [BMW.DE] +1.5% (analyst action), PostNL [PNL.NL] -9.5% (Q3 results, adjusts guidance to lower end of range).

- Technology: Infineon [IFX.DE] +1.0% (Foxconn monthly sales).

- Telecom: Telecom Italia [TIT.IT] -3.5% (Board approves KKR's €18.8B offer to acquire its network grid; Vivendi to oppose it).

Speakers

- Bank of England (BoE) and FCA proposed regulatory regime for systemic payment systems using stablecoins and related service providers.

- Russia Pres Putin said to have formally decided to run for a new 6-year term in Mar 2024.

- Ukraine Central Bank (NBU) Oct Minutes noted that it saw further decline in inflation in October.

- Iran Foreign Ministry spokesperson reiterated stance that war would be very likely to spread if Israel crimes persisted.

-Philippines Fin Min Diokno said will vote to hold policy rate at Nov 16th policy meeting; no justification for higher interest rates.

- China PBoC pledged that it would make mortgage rates more market-based.

- China Commerce Ministry (MOFCOM) reiterated China firmly rejects US to include Chinese firms on SDN (sanction) list.

- Treasury Sec Yellen said to meet China Vice Premier in San Franciso on Nov 9-10th. Meetings will also convene the new economic and financial forums launched in October by the Treasury and China's finance ministry and central bank (Note: Biden administration to hosts ministers and leaders of Asia Pacific Economic Cooperation countries from Nov. 11-17th.).

Currencies/fixed income

- USD consolidated its recent losses following softer payroll data and a dialing down the Fed’s hawkish rhetoric. Greenback near 6-week lows against several major pairs. Market overwhelmingly believe the Fed is done with its tightening.

- Both EUR/USD and GBP/USD pairs at 6-week highs at 1.0750 and 1.2410 respectively.

- USD/JPY holding below the 150 level as Treasury yields slumped last week after softness in US jobs data.

- Dealers noted that softer EU and US economic data recently and declining inflation were validating the rally on the rate front.

Economic data

- (DE) Germany Sept Factory Orders M/M: +0.2% v -1.5%e; Y/Y: -4.3% v -3.0%e.

- (CZ) Czech Sept Industrial Output Y/Y: -7.8% v -5.4%e; Construction Output Y/Y: +1.7% v -0.2% prior.

- (CZ) Czech Sept Trade Balance (CZK): 12.8B v 6.4Be.

- (ES) Spain Oct Services PMI: 51.1 v 49.3e (2nd month of expansion); Composite PMI: 50.0 v 48.7e.

- (IT) Italy Oct Services PMI: 47.7 v 48.5e (3rd month of contraction; Composite PMI: 47.0 v 47.7e.

- (FR) France Oct Final Services PMI: 45.2 v 46.1 prelim (confirmed the 5th straight contraction); Composite PMI: 44.6 v 45.3 prelim.

- (DE) Germany Oct Final Services PMI: 48.2 v 48.0 prelim (confirmed move back into contraction); Composite PMI: 45.9 v 45.8 prelim.

- (EU) Euro Zone Oct Final Services PMI: 47.8 v 47.8 prelim (confirmed 4th month of contraction); Composite PMI: 46.5 v 46.5 prelim.

- (CH) Swiss weekly Total Sight Deposits (CHF): 474.6B v 472.1B prior; Domestic Sight Deposits: 465.0B v 463.1B prior.

- (UK) Oct New Car Registrations Y/Y: 14.3% v 21.0% prior.

- (EU) Euro Zone Nov Sentix Investor Confidence: -18.6 v -22.4e.

- (UK) Oct Construction PMI: 45.6 v 46.0e (2nd straight contraction).

Fixed income issuance

- (TR) Turkey to sell USD-denominated 5-year Islamic bond (sukuk).

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bill; Avg Yield: 4.29% v 4.25% prior; bid-to-cover: 2.20x v 2.08x prior.

Looking ahead

- (UR) Ukraine Central Bank (NBU) Oct Minutes.

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

- 05:30 ((DE) Germany to sell €2.0B in 6-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell combined €3.5B in 3-month and 6-month Bills.

- 06:00 (IE) Ireland Oct Live Register Monthly Change: No est v +4.2K prior; Live Register Level: No est v 180.2K prior.

- 06:00 (RO) Romania to sell RON600M in 7.35% Apr 2031 Bonds.

- 06:00 (RO) Romania to sell RON500M in 6-month bills.

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

- 06:30 (TR) Turkey Oct Real Effective Exchange Rate (REER): No est v 55.52 prior.

- 06:30 (BR) Brazil Sept Current Account Balance: -$1.4Be v -$0.8B prior; Foreign Direct Investment (FDI): $4.7Be v $4.3B prior.

- 07:00 (MX) Mexico Oct Consumer Confidence: No est v 46.8 prior.

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

- 07:45 (AT) ECB's Holzmann (Austria) with PBOC's Pan, CBTR's Erkan, NBH's Matolcsy.

- 08:00 (BR) Brazil Oct Services PMI: No est v 48.7 prior; Composite PMI: No est v 49.0 prior.

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

- 09:00 (FR) France Debt Agency (AFT) to sell €5.0-6.6B in 3-month, 6-month and 12-month bills.

- 10:00 (CA) Canada Oct Ivey Purchasing Managers Index (seasonally adj): No est v 53.1 prior; PMI (unadj): No est v 54.2 prior.

- 11:00 (US) Fed's Cook.

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

- 12:00 (UK) BOE's Pill (chief economist).

- 13:00 (DE) ECB's Nagel (Germany).

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 75.0 prior.

- 18:30 (JP) Japan Sept Labor Cash Earnings Y/Y: 1.0%e v 0.8% prior (revised from 1.1%); Real Cash Earnings Y/Y: -2.4%e v -2.8% prior (revised from -2.5%).

- 18:30 (JP) Japan Sept Household Spending Y/Y: -2.7%e v -2.5% prior.

- 19:01 (UK) Oct BRC LFL Sales Y/Y: No est v 2.8% prior.

- 20:00 (PH) Philippines Oct CPI M/M: 0.5%e v 1.1% prior; Y/Y: 5.6%e v 6.1% prior; Core CPI Y/Y: No est v 5.9% prior.

- 20:00 (PH) Philippines Sept Trade Balance: -$4.0Be v -$4.1B prior; Exports Y/Y: -7.0%e v 4.2% prior; Imports Y/Y: -9.4%e v -13.1% prior.

- 22:00 (ID) Indonesia Oct Foreign Reserves: No est v $134.9B prior.

- 22:30 (AU) Reserve Bank of Australia (RBA) Interest Rate Decision: Expected to raise Cash Rate Target by 25bps to 4.35%

- 23:00 (MY) Malaysia Sept Industrial Production Y/Y: No est v -0.3% prior; Manufacturing Sales Value Y/Y: No est v -3.3% prior

- (KR) Bank of Korea (BOK) Oct Minutes