Key week for Brexit talks

Notes/Observations

- Pivotal week in Brexit negotiations with key issues remaining difficult to close

- Far East equity markets end higher aided by signing of Asia-Pacific trade agreement

Asia

- Japan Q3 Preliminary GDP registered its 1st increase in 4 quarters and largest expansion in 52 years. (Q/Q: 5.0% 4.4%e; GDP Annualized Q/Q: 21.4% v +18.9%e)

- China Oct Industrial Production Y/Y: 6.9% v 6.7%e

- China Oct Retail Sales YoY: 4.3% v 5.0%e

- China National Bureau of Stats (NBS): National Economy maintained steady recovery in Oct; Multiple challenges need to be conquered to achieve full economic recovery; Q4 growth to accelerate q/q

- Japan Econ Min Nishimura reiterated stance to compile comprehensive stimulus package, high level of attention needed for downside risks; Boost to economy from past government stimulus to narrow in FY2021 and needed to be taken into account in compiling new stimulus package

- BOJ Masai stated that domestic price momentum had been lost; Japan might take longer than forecasted to hit 2% inflation target

- Regional Comprehensive Economic Partnership (RCEP) signed between 15 countries, including 10 members of the Association of Southeast Asian Nations (ASEAN) as well as South Korea, China, Japan, Australia and New Zealand was signed over the weekend

Coronaviurs

- Total Global Cases 54.$M; total deaths: l 1.32M

- PM Johnson self-isolating after meeting with an MP last week who has since tested positive for COVID

- Germany govt said to be considering increased measures to deal with spread of COVID

Europe

- European Parliament President Sassoli: Joint borrowing by EU member states to overcome the economic shock caused by the COVID-19 pandemic should become permanent

- German Eco Min Altmaier stated that the German people should get ready for 4-5 months of severe virus measures to stop the increase in new cases and not expect current rules to be relaxed quickly

- Canadian ratings agency DBRS cut United Kingdom sovereign rating to AA (high); outlook to Stable

- Fitch affirmed France AA sovereign rating; outlook Negative

Americas

- President Trump said to be looking at implementing additional measures against China during his final weeks in office. Potential measures include sanctions or trade restrictions against more Chinese companies, government entities and officials for alleged involvement in human rights abuses in Xinjiang and Hong Kong, and for threatening US national security.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.72% at 387.92, FTSE +0.71% at 6,361.41, DAX +0.67% at 13,164.10, CAC-40 +1.30% at 5,449.90, IBEX-35 +2.06% at 7,944.00, FTSE MIB +1.21% at 21,156.50, SMI -0.01% at 10,491.50, S&P 500 Futures +0.81%]

Market Focal Points/Key Themes: European indices open higher (SMI being notable exception) and advanced further into the green as the session progressed; financials and materials sectors lead to the upside; sectors underperforming include health care and utilities; BBVA sells US unit; Baverian state premier says sees first signs of success from virus restrictions, Hamburg state remains opposed to easing; earnings expected in the upcoming US session include Tyson Foods, Aecom Technology and Palo Alto Networks

Equities

- Utilities: Encavis [CAP.DE] -4% (earnings)

- Financials: BBVA [BBVA.ES] +14% (divestment)

- Materials: Unibail-Rodamco-Westfield [URW.NL] +8% (potential CEO & CFO resignations)

- Industrials: Softcat [SCT.UK] +6% (trading update), Alstom [ALO.FR] -1% (capital raise)

- Technology: Smiths [SMIN.UK] +3% (trading update)

- Telecom: Vodafone [VOD.UK] +3.5% (earnings)

Speakers

- ECB’s De Guindos (Spain) reiterated Council stance that risks were clearly to the downside. Pandemic putting great pressure on economy. News about a potential vaccine fostered hope of a faster return to pre-pandemic growth levels

- UK PM Johnson: Confident that UK could prosper without an EU trade agreement. Would not accept any proposal that undermines UK status as a sovereign, independent country

- EU diplomats said to see progress made in drafting legal text of new trade agreement, but no mutually acceptable solutions on key issues of fisheries, governance or level-playing-field yet

- Germany govt said to be planning further limits on public gathering and look to decide on Dec restrictions during week of Nov 23rd (next week)

- German Econ Min Altmaier stated that EU supply chains were intact and would remain so

- Ireland Foreign Min Coveney reiterated stance that a Brexit deal was doable but difficult. Not in a good place regarding issue of fisheries. Negotiations need to move forward this week

- Israel Central Bank (BOI) semi-annual report on banking system noted that the banking sector was stable but profitability was being affected

- BOJ Board Member Masai stated that needed to deepen debate on how to make policy more flexible. ETF purchases were part of the stimulus as it remained one of the best tools in the toolbox. Impact from conventional policy tools were weakening. Reiterated that inflation and inflationary expectations were lowering

- RBA Gov Lowe stated that job creation was a greater challenge than CPI pressures; now was not the time for higher interest rates. Recent data had been better than expected and success in controlling the coronavirus had put the economy on a "road to recovery". Unlikely that inflation would be a problem and reiterated stance that negative rates were extraordinarily unlikely

Currencies/ Fixed Income

- Quiet trade in Europe this session with little in terms of key economic releases. USD sighly lower but contained with key parameters against the major pairs

- Focus remains on Brexit as talks become more critical as the end-Dec transition period looms. GBP/USD slightly firmer but back below the 1.32 level.
USD/JPY was lower by 0.1% to trade at 104.50. Yen aided by by signing of Asia-Pacific trade agreement

Economic Data

- (IN) India Oct Wholesale Prices (WPI) Y/Y: 1.5% v 1.5%e

- (DK) Denmark Oct PPI M/M: -1.2% v -0.4% prior; Y/Y: -2.9% v -1.3% prior

- (NO) Norway Oct Trade Balance (NOK): +2.7B v -8.6B prior

- (CZ) Czech Oct PPI Industrial M/M: 0.4% v 0.2%e; Y/Y: 0.3% v 0.1%e

- (CH) Swiss weekly Total Sight Deposits (CHF): 707.9B v 707.6B prior; Domestic Sight Deposits: 644.5B v 638.7B prior

- (IT) Italy Oct Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: -0.3% v -0.3% prelim; CPI Index (ex-tobacco): 102.0 v 101.9 prior

- (IT) Italy Oct Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: -0.6% v -0.6% prelim

- (IT) Italy Sept General Government Debt: €2.583T v €2.579T prior (record high)

Fixed income Issuance

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 0.04% v 0.04% prior; bid-to-cover: 2.28x v 3.76x prior

Looking Ahead

- 05:30 (DE) Germany to sell combined €4.5B in 3-month, 9-month and 12-month BuBills

- 06:00 (IE) Ireland Sept Trade Balance: No est v €6.8B prior

- 06:00 (IL) Israel Q3 Advance GDP Annualized: +24.0%e v -28.8% prior

- 06:00 (BR) Brazil Nov FGV Inflation IGP-10 M/M: 3.4%e v 3.2% prior

- 06:00 (RO) Romania to sell RON400M in 4.75% 2034 Bonds

- 06:00 (IL) Israel to sell bonds

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

- 06:45 (US) Daily Libor Fixing

- 07:25 (SE) Sweden Central Bank (Riksbank) Dep Gov Skingsley

- 08:00 (PL) Poland Oct CPI Core M/M: 0.3%e v 0.4% prior; Y/Y: 4.2%e v 4.3% prior

- 08:00 (PE) Peru Oct Unemployment Rate: 15.4%e v 16.5% prior

- 08:00 (PE) Peru Sept Economic Activity Index (Monthly GDP) Y/Y: -8.0%e v -9.8% prior

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

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance

- 08:30 (US) Nov Empire Manufacturing: 13.8e v 10.5 prior

- 08:30 (CA) Canada Sept Manufacturing Sales M/M: +1.5%e v -2.0% prior

- 08:30 (LX) ECB’s Mersch (Luxembourg)

- 09:00 (CA) Canada Oct Existing Home Sales M/M: No est v 0.9% prior

- 09:00 (FR) France Debt Agency (AFT) to sell €5.6-7.3B in 3-month, 6-month and 12-month bills (4-tranches)

- 09:30 (UR) Ukraine Q3 Preliminary GDP Q/Q: +7.7%e v -9.9% prior; Y/Y: -4.5%e v -11.4% prior

- 09:45 (EU) ECB weekly QE bond buying update

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

- 12:30 (UK) BOE’s Haskel

- 14:00 (US) Fed’s Clarida

- 14:00 (AR) Argentina Sept Capacity Utilization: No est v 58.4% prior

- 16:00 (US) Weekly Crop Progress Report

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 103.1 prior

- 18:50 (JP) Japan Q3 Housing Loans Y/Y: No est v 2.5% prior

- 19:30 (AU) RBA Nov Minutes

- 19:30 (SG) Singapore Oct Non-oil Domestic Exports M/M: +3.2%e v -11.3% prior; Y/Y: 5.1%e v 5.9% prior; Electronic Exports Y/Y: No est v 21.4% prior

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years; 5~10 Years

- 21:00 (NZ) New Zealand Oct Non Resident Bond Holdings: No est v 49.4% prior

- 22:00 (TH) Thailand Central Bank to sell combined THB60B in 3-month and 6-month bills

- 23:30 (HK) Hong Kong to sell 3-month and 6-month bills