German IFO survey gives hope, Riksbank hikes 75bps as expected, US Thanksgiving holiday

Notes/observations

- Sweden Central Bank (Riksbank) hiked by 75bps (as expected) and noted it was close to the end of tightening; Lifted rate path cap and cut GDP growth forecasts.

- German IFO Survey came in better than expected with Economist comments noting signal of hope for domestic economy.

-EU Commission Pres Von der Leyen said they are working full speed on 9th sanction package against Russia and she remains confident will very soon back and approve price cap on Russian oil.

-Russian and Ukrainian officials reportedly met in UAE on Nov 17th to discuss allowing Russia to resume ammonia exports via a Ukrainian pipeline in exchange for a large prisoner-of-war swap; Same time, Ukraine capital Kyiv said to be experiencing the biggest power outage since Feb 24th.

-UK’s Ofgem raised the energy price cap from £3,549 to £4,279, effective from Jan 1st for 3 months, in line with pre-announcement at UK’s Autumn budget statement.

- US markets will be closed on Thursday for Thanksgiving (thin liquidity conditions prevail).

-Asia closed mixed with Indias Nifty 50 +1.2%. EU indices are +0.2-0.8%. Gold +0.7%, DXY -0.2%; Commodity: Brent -0.4%, WTI -0.2%, UK Nat Gas -3.1%; Crypto: BTC +0.3%, ETH +3.1%.

Asia

- Bank of Korea (BOK) raised the 7-Day Repo Rate by 25bps to 3.25% (as expected).

- Japan Nov Preliminary PMI Manufacturing registered its 1st contraction in 22 months and lowest since Nov 2020 (49.4 v 50.7 prior).

-(JP) Japan Cabinet Office (Govt) Nov Economic Report: Maintained overall economic assessment; Saw domestic economy picking up moderately.

Europe

- ECB's Centeno (Portugal) believed the Council was getting close to neutral rate and expected the Dec meeting to work out what rate ceiling could be.

- BOE’s Pill (chief economist) noted that further rate action was likely to be required to ensure inflation would return sustainably to 2% target.

-BOE’s Ramsden said his bias is towards further tightening but does depend on economy.

-(DE) German Bundesbank financial stability report; Sees considerable threats to German financial system; Major downside risks remain, but notes a correction in the housing market is not imminent.

-(IE) ECB’s Makhlouf (Ireland): Undoubtedly risks of further asset price falls and potential episodes of market disruption as inflation is tackled.

-(SE) Sweden Central Bank (Riksbank) Gov Ingves: Underlying inflation shows way too high price pressures - post rate decision press conference.

Americas

- FOMC Oct Meeting Minutes noted that participants concurred there were few signs of inflation pressure abating; a substantial majority judged that a slowing of the pace of hikes would likely be appropriate.

- Bank of Canada (BOC) Gov Macklem reiterated stance that expected policy rate would need to rise further; Had yet to see a generalized decline in price pressures, though higher rates were starting to weigh on growth.

Energy

- EU talks on Russia oil price cap said to have stalled over price level but negotiations do continue.

- EU Energy Ministers said to likely to disagree on how to curb gas prices when they meet on Thursday (Nov 24th); Spain and Poland have been critical over an emergency gas price brake proposal.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.33% at 440.26, FTSE +0.22% at 7,481.28, DAX +0.74% at 14,534.09, CAC-40 +0.61% at 6,719.52, IBEX-35 +0.37% at 8,361.67, FTSE MIB +0.23% at 24,638.00, SMI +0.41% at 11,140.50, S&P 500 Futures +0.34%].

Market Focal Points/Key Themes: European indices open modestly higher and drifted higher though the early part of the session; better performing sectors include energy and industrials; underperforming sectors include consumer discretionary and technology; oil & gas subsector supported on reports of potential higher price cap for Russian oil being discussed in EU; utilities sector dragged by Uniper on reports Germany considering windfall energy tax; reportedly Goldman Sachs looking to sell its Italian leasing portfolio; Elior and Derichebourg discussing possible investment in multiservices division; North Holdings starts takeover of Caverion; US markets closed for holiday.

Equities

- Consumer discretionary: Remy Cointreau [RCO.FR] -3.5% (earnings), Jet2 [JET2.UK] +3.5% (earnings), Kingfisher [KGF.UK] -1.5% (trading update).

- Financials: MichelMersh Brick Holdings [MBH.UK] +12% (trading update; acquisition; buyback).

- Technology: Fingerprint Cards [FINGB.SE] -1.5% (partnership).

Speakers

- Sweden Central Bank Policy Statement reiterated view that inflation was still far too high. It noted that the risk of high inflation for a long time was reduced, as was the risk of even greater monetary tightening further ahead. Risk of current high inflation becoming entrenched was still substantial. Forward guidance noted that policy rate was expected to be raised further at the beginning of next year to then be just under 3.00%.

- ECB’s Kazimir (Slovakia) said to be again facing bribery allegations.

- German IFO Economists noted that the domestic economy was sending signals of hope.

- India Chief Economic Advisor Nageswaren stated that needed to be cautious on the country's export outlook.

- Greece Energy Min Skrekas stated that needed a gas price ceiling between €150-200.

- China Defense Ministry spokesperson Wu Qian stated that Taiwan's 24-nautical mile line did not exist and viewed it as unlawful and invalid.

-BOE’s Ramsden said his bias is towards further tightening but does depend on economy.

-ECB’s Makhlouf noted undoubtedly risks of further asset price falls and potential episodes of market disruption as inflation is tackled.

- Sweden Central Bank (Riksbank) Gov Ingves said underlying inflation shows way too high price pressures - post rate decision press conference.

Currencies/fixed Income

- USD maintained a soft tone in the aftermath of the Oct FOMC Minutes that were released on Wed. Dealers growing confident that FOMC would slow its pace of tightening from December. The Fed had previously hike by 75bps at its last four decisions. Dealers noted that substantial uncertainty remained on how high rates might climb (terminal rate) despite the consensus that rates would rise more slowly.

- EUR/USD holding above 1.04 level with the 1.05 area viewed as key medium-term resistance.

- USD/JPY staying below the 139 area.

Economic data

- (FI) Finland Oct PPI M/M: +0.1% v -0.3 % prior; Y/Y: 22.3% v 23.7% prior.

- (NO) Norway Sept AKU Unemployment Rate: 3.4% v 3.2% prior.

- (TR) Turkey Nov Real Sector (Manufacturing) Confidence (seasonally adj): 101.3 v 102.0 prior; Real Sector Confidence NSA (unadj): 97.9 v 100.3 prior.

- (TR) Turkey Nov Capacity Utilization: 75.9 v 76.9% prior.

- (FR) France Nov Business Confidence: 102 v 101e; Manufacturing Confidence: 101 v 102e; Production Outlook Indicator: -10 v -8 prior; Own-Company Production Outlook: 17 v 12 prior.

- (CZ) Czech Nov Business Confidence: 4.5 v 5.0 prior; Consumer Confidence: -30.8 v 34.5 prior; Composite Index (Consumer & Business Confidence): -2.6 v -2.9 prior.

- (HU) Hungary Sept Average Gross Wages Y/Y: 17.8% v 16.3%e.

- (TW) Taiwan Oct M1 Money Supply Y/Y: 5.2% v 6.6% prior; M2 Money Supply Y/Y: 7.3% v 6.8% prior.

- (SE) Sweden Central Bank (Riksbank) raised Repo Rate by 75bps to 2.50% (as expected).

- (DE) Germany Nov IFO Business Climate Survey: 86.3 v 85.0e; Current Assessment Survey: 93.1 v 93.9e; Expectations Survey: 80.0 v 77.0e.

- (PL) Poland Nov Consumer Confidence: -44.0 v -45.5e.

-(ZA) South Africa Oct PPI M/M: 0.4% v 0.7% prior; Y/Y: 16.0% v 16.3% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €2.75B vs. €2.25-2.75B indicated range in 2-year BTP bonds.

- (SE) Sweden sold total SEK435M vs. SEK500M indicated in 2030 and 2032 I/L Bonds.

Looking ahead

- (RO) Romania Oct M3 Money Supply Y/Y: No est v 8.6% prior.

- (NG) Nigeria Q3 GDP Y/Y: 2.9%e v 3.5% prior.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to cut One-Week Repo Rate by 150bps to 9.00%.

- 06:00 (UK) Nov CBI Industrial Trends Total Orders: -9e v -4 prior; Selling Prices: No est v 46 prior.

- 06:00 (BR) Brazil Nov FGV Consumer Confidence: No est v 88.6 prior.

- 06:00 (RO) Romania to sell RON400M in 8.25% 2032 Bonds.

- 06:15 (ES) ECB’s De Guindos (Spain).

- 06:45 (US) Daily Libor Fixing.

- 07:00 (CA) Canada Nov CFIB Business Barometer: No est v 51.4 prior.

- 07:00 (CL) Chile Oct PPI M/M: No est v -0.1% prior.

- 07:00 (BR) Brazil mid-Nov IBGE Inflation IPCA-15 M/M: 0.6%e v 0.2% prior; Y/Y: 6.2%e v 6.9% prior.

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

- 08:00 (PL) Poland Oct M3 Money Supply M/M: 0.8%e v 0.9% prior; Y/Y: 7.5%e v 7.7% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 18th: No est v $552.1B prior.

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

- 08:00 (DE) ECB’s Schnabel (Germany).

- 08:00 - (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to raise Interest Rates by 75bps to 7.00.

- 09:00 (BE) Belgium Nov Business Confidence: -14.3e v -15.5 prior.

- 10:00 (MX) Mexico Central Bank (Banxico) Nov Minutes.

- 11:00 (DE) ECB’s Nagel (Germany).

- 14:00 (AR) Argentina Sept Shop Center Sales Y/Y: No est v 15.9% prior; Supermarket Sales Y/Y: No est v -0.2% prior.

- (AR) Argentina Nov Consumer Confidence: No est v 35.7 prior.

- 16:00 (NZ) New Zealand Nov Consumer Confidence Index: No est v 85.4 prior; M/M: No est v 0.0% prior.

- 16:45 (NZ) New Zealand Q3 Retail Sales (ex-inflation) Q/Q: +0.5%e v -2.3% prior.

- 18:30 (JP) Japan Nov Tokyo CPI Y/Y: 3.6%e v 3.5% prior; CPI (Ex-Fresh Food) Y/Y: 3.5%e v 3.4% prior; CPI (ex-fresh food/energy) Y/Y: 2.3%e v 2.2% prior.

- 18:50 (JP) Japan Oct PPI Services Y/Y: 2.1%e v 2.1% prior.

- 21:35 (CN) China to sell 3-month and 6-month Bills.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:35 (JP) Japan to sell 40-Year JGB Bonds.

- 23:00 (MY) Malaysia Oct CPI Y/Y: 3.9%e v 4.5% prior.