IMF economic outlook shows global economy limping along

EU mid-market update: IMF economic outlook shows global economy limping along; China said to consider new stimulus to meet growth target.

Notes/observations

- Some calm returns as Mid-East tension yet to escalate.

- Fed speak aids sentiment following slightly dovish shift in rhetoric.

- Various Nordic and emerging Europe CPI data continued to ease.

- IMF maintains its 2023 global growth forecast at 3.0%; trims 2024 outlook to 2.9%.

- China said to be considering new stimulus and higher budget deficit to GDP ratio to help meet the 2023 GDP growth target; European luxury retail names trade higher on this ahead of LVMH results today.

- European home appliances and semiconductor stocks opened higher following LG Electronics’ preliminary results.

Asia

- Japan Aug Current Account: ¥2.28T v ¥2.97e; Trade Balance (BoP basis): -¥749.5B v -¥708.4Be.

- Japan Sept Eco Watchers Current Survey: 49.9 v 53.2e; Outlook Survey: 49.5 v 51.3e.

- Australia Sept NAB Business Confidence: 1 v 2 prior; Business Conditions: 11 v 14 prior.

- Australia Oct Westpac Consumer Confidence: 82.0 v 79.7 prior.

Mid-East

- Israeli military official: Reestablished control over Gaza border; No infiltrations in last 24 hours.

- Hamas official says open to discussions of a truce with Israel noting that it had having "achieved its targets.".

- White House's Kirby stated that it did not have intelligence pointing at direct participation of Iran in attacks against Israel. Iran was complicit but there was no direct evidence tying it to the attacks.

Europe

- UK Sept BRC LFL Sales Y/Y: 2.8% v 4.3% prior (**Note: high cost of living continues to bear down on households).

- BOE's Mann (hawk) noted that policy had to be aggressive to address drift in expectations as well as the actual inflation. Going forward the length of time inflation remains above targets will be important given that inflation expectations tend to drift.

Americas

- Fed's Jefferson (voter) noted that might be too soon to confidently say we had tightened enough. Would keep higher bond yields in mind in assessing future rate path. Have to balance the risk of not having tightened enough, against the risk of policy being too restrictive.

Energy

- US and Venezuela said to be in talks for fresh oil sanction exemptions.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +1.32% at 449.64, FTSE +1.46% at 7,601.77, DAX +1.51% at 15,356.45, CAC-40 +1.34% at 7,115.75, IBEX-35 +1.53% at 9,291.62, FTSE MIB +1.65% at 28,140.00, SMI +1.13% at 10,944.00, S&P 500 Futures +0.23%].

Market focal points/Key themes: European indices open higher across the board and advanced through the early part of the session; all sectors start the day in the green; sectors leading the way higher include materials and consumer discretionary; among lagging sectors are energy and health care; Nordic Weatherproofing to be acquired by Kingspan; Currys says received multiple interest in its Kotsovolos unit; earnings expected in the upcoming US session include Pepsico and LVMH.

Equities

- Consumer discretionary: AB Electrolux [ELUXB.SE] +1.5% (LG Electronics prelim results), LVMH Moët Hennessy - Louis Vuitton Société Européenne [MC.FR] +1.5% (new China stimulus chatter; earnings later today), Greencore Group [GNC.UK] +15.5% (Q4 trading update, share buyback), About You [YOU.DE] +6.0% (Q2 results, cuts FY guidance), Currys [CURY.UK] +3.5% (strategic review of the unit), Hennes & Mauritz [HMB.SE] +2.0% (analyst action).

- Energy: PGS [PGS.NO] -3.5% (prelim results).

- Financials: Swedbank [SWEDA.SE] +3.5% (analyst action).

- Industrials: Outokumpu [OUT1V.FI] +3.0% (analyst action).

- Technology: Nordic Waterproofing [NWG.SE] -0.5% (offered to be fully acquired by Kingspan).

- Materials: Kingspan [KGP.UK] +0.5% (offer to acquire Nordic Waterproofing Holding).

Speakers

- ECB's Villeroy (France, dove): Vigilant on oil due to Israel-Hamas conflict. Still saw clear downward trend on inflation and added saw no reason to change current view on CPI returning to 2% target in 2025.

- IMF Updated its World Economic Outlook which maintained 2023 Global GDP growth forecast at 3.0% while trimming the 2024 GDP from 3.0% to 2.9%. On the inflation front IMF cut the 2023 Global inflation from 6.8% to 6.3%while raising the 2024 Global inflation seen from 5.2% to 5.3%.

- BOJ said to consider raising its FY23 (current year) Core CPI forecast from 2.5% to 3.0%.

- China said to be considering new stimulus and higher budget deficit to GDP ratio to help meet the 2023 GDP growth target.

- Iran Supreme Leader Khamenei commented that Israel had suffered irreparable military loss. Denied claims Iran was behind the Hamas attacks on Israel.

Currencies/fixed income

- USD consolidated some of its recent gains following some Fed speak on Monday. Officials Jefferson and Logan both noted it would need to proceed carefully given the recent rise in yields. Markets will have over a dozen Fed speakers this week to analyze the current theme. US 10-year yield was lower around 15 bps by mid-session. Sentiment also boosted as some calm returned to global markets as Mid-East tension had yet to escalate.
Unwinding of safe-haven flows aided the EUR/USD as the pair tried to regain the 1.06 level.

- USD/JPY tested below 148.50 in the session after reports circulated BOJ would consider raising its FY23 (current year) Core CPI forecast from 2.5% to 3.0%. Yen moved off its best level as market re-evaluated that BOJ was not in a situation where it could see the 2% inflation target being met beyond the current year.

Economic data

- (NL) Netherlands Sept CPI M/M: -0.4% v +0.4% prior; Y/Y (final): 0.2% v 0.2% prelim.

- (NL) Netherlands Sept CPI EU Harmonized M/M: -0.8% v -0.8% prelim; Y/Y: -0.3% v -0.3% prelim.

- (NL) Netherlands Aug Consumer Spending Y/Y: 0.5% v 0.1% prior.

- (NL) Netherlands Aug Manufacturing Production M/M: -0.7% v -0.7% prior; Y/Y: -8.0% v -8.5% prior; Industrial Sales Y/Y: -8.0% v -13.9% prior.

- (FI) Finland Aug Industrial Production M/M: 2.1% v 0.4% prior; Y/Y: +1.0% v -2.6% prior.

- (SE) Sweden Aug GDP Indicator M/M: -0.2% v -0.1%e; Y/Y: +0.3% v -0.3% prior.

- (SE) Sweden Aug Household Consumption M/M: % v 0.6% prior; Y/Y: % v 0.8% prior.

- (SE) Sweden Aug Private Sector Production M/M: 0.5% v 0.4% prior; Y/Y: +0.7% v -2.2% prior.

- (SE) Sweden Aug Industrial Orders M/M: +5.0% v -6.3% prior; Y/Y: -0.4% v -9.4% prior.

- (SE) Sweden Aug Industry Production Value Y/Y: +4.7% v -5.1% prior; Service Production Value Y/Y: 0.6% v 0.6% prior.

- (NO) Norway Sept CPI M/M: -0.1% v +0.7%e; Y/Y: 3.3% v 4.0%e.

- (NO) Norway Sept CPI Underlying M/M: 0.4% v 0.7%e; Y/Y: 5.7% v 6.1%e.

- (NO) Norway Sept PPI (including oil) M/M: 4.8% v 4.8% prior; Y/Y: -29.3% v -37.4% prior.

- (DK) Denmark Sept CPI M/M: -0.3% v -0.7% prior; Y/Y: 0.9% v 2.4% prior.

- (DK) Denmark Sept CPI EU Harmonized M/M: -0.3% v -0.8% prior; Y/Y: 0.6%v 2.3% prior.

- (HU) Hungary Sept CPI M/M:0.4% v 0.5%e; Y/Y:12.2% v 12.4%e; Core CPI Y/Y: 13.1% v 15.2% prior.

- (AT) Austria Aug Industrial Production M/M: +0.1% v -1.2% prior; Y/Y: -2.5% v 0.5% prior.

- (CZ) Czech Sept CPI M/M: -0.7% v -0.2%e; Y/Y: 6.9% v 7.5%e.

- (CZ) Czech Aug Export Price Index Y/Y: -5.2% v -4.5% prior; Import Price Index Y/Y: -12.8% v -11.6% prior.

- (TR) Turkey Aug Unemployment Rate: 9.2% v 9.4% prior.

- (TR) Turkey Aug Industrial Production M/M: -0.8% v +1.0%e; Y/Y: 3.1% v 5.0%e.

- (IT) Italy Aug Industrial Production M/M: -0.3%e; Y/Y: -4.2% v -5.0%e; Industrial Production NSA (unadj) Y/Y: -4.1 v -2.2% prior.

- (IT) Bank of Italy Releases Banks and Money Monthly Statistics: Aug Gross Non-performing Loans (NPLs): €32.8B v €31.2B prior.

- (GR) Greece Sept CPI Y/Y: % v 2.7% prior; CPI EU Harmonized Y/Y: % v 3.5% prior.

- (GR) Greece Aug Industrial Production Y/Y: -0.5% v -1.9% prior.

Fixed income issuance

- (EU) European Union opened its book to sell combined €6.0B in 3-year and 20-year bonds via syndicate.

- (ID) Indonesia sold total IDR5.0T vs. IDR9.0T target in Islamic bills and bonds (sukuk).

- (UK) DMO sold £900M in 0.125% Mar 2039 inflation-linked bonds (UKTi); Real Yield: 1.265% v 0.986% prior; bid-to-cover: 3.17x v 2.62x prior.

Looking ahead

- (PT) Portugal Debt Agency (IGCP) to hold bond swap auction.

- (MX) Mexico Sept ANTAD Same-Store Sales Y/Y: No est v 3.1% prior.

- (CO) Colombia Sept Consumer Confidence: No est v -18.8% prior.

- 05:15 (CH) Switzerland to sell 3-month bills.

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

- 05:30 (UK) BoE Financial Policy Committee (FPC) Minutes.

- 05:30 (DE) Germany to sell combined €600M in 2033 and 2046 I/L Bundei.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell HUF15.0B in 3-month bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2044, 2048 and 2053 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (US) Sept NFIB Small Business Optimism Index: 91.0e v 91.3 prior.

- 06:00 (PT) Portugal Aug Trade Balance: No est v -€2.2B prior.

- 06:00 (FI) Finland sells €2.0B in 6-month and 9-month bills.

- 06:55 (US) Daily Libor Fixing.

- 07:00 (CZ) Czech Central Bank (CNB) comments on CPI data.

- 07:30 (CL) Chile Sept Trade Balance: $1.0Be v $0.6B prior; Exports: No est v $7.9B prior; Imports: No est v $7.4B prior; Copper Exports: No est v $3.7B prior.

- 07:30 (CL) Chile Sept International Reserves: No est v $41.1Be.

- 08:00 (IS) Iceland Sept Unemployment Rate: No est v 2.9% prior.

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

- 08:00 (BR) Brazil CONAB Crop Report.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (RU) Russia Q3 Preliminary Current Account Balance: $8.6Be v $B prior.

- 09:00 (US) Fed’s Perli.

- 09:30 (US) Fed’s Bostic (non-voter, dove).

- 10:00 (US) Aug Final Wholesale Inventories M/M: -0.1%e v -0.1% prelim; Wholesale Trade Sales M/M: 0.5%e v 0.8% prior.

- 11:00 (US) NY Fed 1-year Inflation Expectations: No est v 1.6% prior.

- 11:15 (FR) ECB’s Villeroy (France, dove).

- 11:30 (US) Treasury to sell 13-week and 26-week bills.

- 11:30 (US) Treasury to sell 43-day bills.

- 13:00 (US) Fed’s Waller (hawk).

- 13:00 (US) Treasury to sell new 3-year bond.

- 15:00 (US) Fed’s Kashkari (hawk).

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

- 17:45 (NZ) New Zealand Aug Net Migration: No est v 5.7K prior.

- 18:00 (US) Fed’s Daly (non-voter).

- 19:00 (KR) South Korea Aug Current Account Balance: No est v $3.6B prior; Balance of Goods (BOP): No est v $4.3B prior.

- 21:00 (AU) RBA’s Kent.

- 23:30 (JP) Japan to sell ¥2.5T in 5-year JGB bonds.