Payrolls, US election and Fed rate decision in spotlight

Notes/observations

- US Nonfarm Payrolls in focus, analyst ranges from +70K to +157K, last major indicator of US economy before US election next week; Axios is circulating new internal Trump’s campaign memo, which tells the former president he's in a radically better position now than he was right before the 2020 election.

- UK Gilt yields rise again, albeit slightly, but with the backdrop of yesterday’s big climb, the lack of reprieve is revealing about what the bond market thinks about budget from Wed. Gilt market to navigate payrolls and US election.

- All Saints Holiday across Europe keeping corporate news flow lighter than expected for middle of earnings season.

- Apple shares trades lower following conservative guidance for its next quarter’s revenue, while Amazon stock holding gains following earnings call where it highlighted that its AI business is a multibillion-dollar run-rate, growing triple-digit y/y, three times faster than AWS did at same stage.

- Boeing’s union endorsed newly improved offer and to vote on the new proposal on Monday.

-Asia closed lower with Nikkei225 underperforming -2.8%. EU indices are +0.5-0.9%. US futures are +0.2-0.4%. Gold +0.2%, DXY +0.1%; Commodity: Brent +2.6%, WTI +2.8%; Crypto: BTC -3.9%, ETH -5.0%.

Asia

- China Oct Caixin PMI Manufacturing moved back into expansion (50.3 v 49.7e).

- Japan Oct Final Manufacturing PMI confirmed its 4th straight contraction (49.2 v 49.0 prelim.

- Australia Oct Final Manufacturing PMI confirms 9th month of contraction (47.3 v 46.6 prelim).

- Australia Q3 PPI Q/Q: 0.9% v 1.0% prior; Y/Y: 3.9% v 4.8% prior.

- Australia Sept Household Spending M/M: -0.1% v +0.2% prior; Y/Y: 1.3% v 2.7% prior.

- Australia Sept Home Loans Value M/M: -0.3% v +1.0%e.

- South Korea Oct Trade Balance: $3.2B v $4.1Be; Exports Y/Y: 4.6% v 7.0%e; Imports Y/Y: 1.7% v 2.2%e.

- (NZ) New Zealand Sept Building Permits M/M: +2.6% v -5.2% prior.

- IMF urged China to fix property woes, boost consumption. Concerns that deflationary pressure from China could provoke trade tensions.

Global conflict/tensions

- Iran said to be planning to conduct a "major" retaliatory strike against Israel from Iraqi territory.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.49% at 507.90, FTSE +0.52% at 8,152.21, DAX +0.38% at 19,130.45, CAC-40 +0.49% at 7,386.04, IBEX-35 +0.43% at 11,723.00, FTSE MIB +0.52% at 34,461.00, SMI +0.72% at 11,871.30, S&P 500 Futures +0.26%].

Market Focal Points/Key Themes: European indices open generally higher and advanced through the early part of the session; light trading with most of Europe having public holidays, although major bourses remained open; among sectors leading the way higher are energy and communication services; lagging sectors include real estate and technology; tech sector underperforming following major earnings releases yesterday; oil & gas subsector supported following rise in Middle East tensions pushing up crude prices; focus on US NFP released later in the day; earnings expected in the upcoming Americas session include Exxon Mobil, Chevron, Enbridge and Berkshire Hathaway.

Equities

- Consumer discretionary: Lufthansa [LHA.DE] -1.5% (HSBC cuts to hold), Tesco [TSCO.UK] +0.5% (completes sale of banking business, to return £700M to shareholders via buyback), HelloFresh [HFG.DE] +9.5% (JPMorgan raised to overweight), Fielmann [FIE.DE] -8.0% (earnings), Casino Guichard-Perrachon [CO.FR] -0.5% (Q3 results - post close).

- Energy: Shell [SHEL.UK] +2.0% (oil rallies after Iran reportedly mulls strike on Israel soon).

- Industrials: Aixtron [AIXA.DE] -5.0% (Jefferies cuts to hold).

- Technology: STMicroelectronics [STM.FR] -2.5% (Intel earnings), Fugro [FUR.NL] -5.0% (Q3 results).

Speakers

- UK Business Sec Reynolds commented that tax hikes announced in the govt budget this week might hinder companies’ ability to hire people and raise salaries.

- UK Treasury Min stated that scenario was very different from that of Truss 'Mini Budget' (**Note: Gilt yields had risen notably since the tax heavy budget revealed on Wed, Oct 30th from Labour Govt).

- Japan DPP Party (opposition) Chief Tamaki stated that BOJ should not raise interest rate for at least half a year; Monetary policy should not be used to manipulate currency rates.

- Malaysia Central Bank (BNM) stated that a positive economic outllok to support MYR currency (Ringgit). To remain vigilant on FX volatility.

Currencies/fixed income

- FX markets were relatively quiet in holiday-thin trading conditions. Focus was on the upcoming US jobs report and looming US Presidential and Congressional elections. Overall most opinion polls still show a very tight Presidential race and the result is too close to call.

- GBP/USD back above the 1.29 level as markets continued to analyze the recent UK budget. Dealers noted that the UK budget was still getting a lot of scrutiny. Gilts yields continued to rise with two- and 10-year yields both rising about three basis points, reinforcing the challenging outlook ahead.

- EUR/USD at 1.0860 as markets dialed back against ECB easing too quickly after a spat of higher inflation data and GDP reading over the past few session.

- USD/JPY hovered around the 152.60 area. Yen was weaker and retraced some of its strength from yesterday reaction to Ueda post rate decision press conference.

Economic data

- (NL) Netherlands Sept Retail Sales Y/Y: 2.6% v 2.2% prior.

- (RU) Russia Oct Manufacturing PMI: 50.6 v 49.7e (moves back into expansion).

- (NL) Netherlands Oct Manufacturing PMI: 47.0 v 48.2 prior (4th month of contraction).

- (UK) Oct Nationwide House Price Index M/M: 0.1% v 0.3%e; Y/Y: 2.4% v 2.8%e.

- (TR) Turkey Oct Manufacturing PMI: 45.8 v 44.3 prior(7th month of contraction).

- (CH) Swiss Oct CPI M/M: -0.1% v 0.0%e; Y/Y: 0.6% v 0.8%e; CPI Core Y/Y: 0.8% v 1.0%e.

- (CH) Swiss Oct CPI EU Harmonized M/M: 0.0% v 0.1%e; Y/Y:0.7 % v 0.9%e.

- (CH) Swiss Sept Real Retail Sales Y/Y: 2.2% v 2.7% prior.

- (SE) Sweden Oct PMI Manufacturing: 53.1 v 51.6e.

- (TH) Thailand Oct Business Sentiment Index: 47.0 v 45.7 prior.

- (TH) Thailand May Foreign Reserves w/e Oct 25th: $238.5B v $240.5B prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 153.2K v 163.1K tons prior.

- (NO) Norway Oct Unemployment Rate: 1.9% v 2.0% prior; Unemployment Rate (seasonally adj): 2.1% v 2.1%e.

- (RU) Russia Narrow Money Supply w/e Oct 25th (RUB): 18.36T v 18.47T prior.

- (CH) Swiss Oct PMI Manufacturing: 49.9 v 49.5e (22nd month of contraction); Services PMI: 51.8 v 49.8 prior.

- (CZ) Czech Oct Manufacturing PMI: 47.2 v 46.6e (29th month of contraction).

- (HK) Hong Kong Sept Retail Sales Volume Y/Y: -8.7% v -10.7%e; Retail Sales Value Y/Y: -6.9% v -9.0%.

- (NG) Nigeria Oct Manufacturing PMI: 46.9 v 49.8 prior.

- (GR) Greece Oct Manufacturing PMI: 51.2 v 50.3 prior (20th month of expansion).

- (ZA) South Africa Oct Manufacturing PMI: 52.6 v 50.8e (2nd month of expansion).

- (NO) Norway Oct PMI Manufacturing: 52.4 v 51.7 prior (4th month of expansion).

- (DE) Germany Oct CPI Brandenburg M/M: 0.3% v 0.0% prior; Y/Y: 1.8% v 1.4% prior.

- (UK) Oct Final Manufacturing PMI: 49.9 v 50.3e (confirmed 1st contraction in 6 months).

Fixed income issuance

- None seen.

Looking ahead

- (ZA) South Africa Oct Naamsa Vehicle Sales Y/Y: No est v -4.1% prior.

- (US) Oct Total Vehicle Sales: No est v 15.7M prior.

- (RO) Romania Oct International Reserves: No est v $73.5B prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance ((bills, Oats).

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (ZA) South Africa to sell combined ZAR1.0B in I/L2031, 2043 AND 2058 Bonds.

- 07:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £2.5B respectively).

- 07:30 (IN) India Forex Reserve w/e Oct 25th: No est v $688.3B prior.

- 08:00 (MX) Mexico Sept Unemployment Rate: 3.0%e v 3.0% prior; Unemployment Rate (seasonally adj): No est v 2.8% prior.

- 08:00 (BR) Brazil Sept Industrial Production M/M: 1.0%e v 0.1% prior; Y/Y: 3.4%e v 2.2% prior.

- 08:30 (US) Oct Change in Nonfarm Payrolls: +100Ke v +254K prior; Private Payrolls: +70Ke v +223K prior; Manufacturing Payrolls: -30Ke v -7K prior.

- 08:30 (US) Oct Unemployment Rate: 4.1%e v 4.1% prior; Underemployment Rate: No est v 7.7% prior; Labor Force Participation Rate: 62.7%e v 62.7% prior.

- 08:30 (US) Oct Average Hourly Earnings M/M: 0.3%e v 0.4% prior; Y/Y: 4.0%e v 4.0% prior; Average Weekly Hours All Employees: 34.2e v 34.2 prior.

- 09:00 (BR) Brazil Oct Manufacturing PMI: No est v 53.2 prior.

- 09:00 (CZ) Czech Oct Budget Balance (CZK): No est v -181.8B prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming bond issuance.

- 09:30 (CA) Canada Oct Manufacturing PMI: No est v 50.4 prior.

- 09:45 (US) Oct Final S&P Manufacturing PMI: 47.8e v 47.8 prelim.

- 10:00 (US) Oct ISM Manufacturing: 47.6e v 47.2 prior.

- 10:00 (US) Sept Construction Spending M/M: 0.0%e v -0.1% prior.

- 11:00 (CO) Colombia Oct PMI Manufacturing No est v 48.1 prior.

- 11:00 (MX) Mexico Oct Manufacturing PMI: No est v 47.3 prior.

- 11:00 (MX) Mexico Sept Total Remittances: $6.0Be v $6.1B prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 11:00 (PE) Peru Oct CPI M/M: 0.0%e v -0.2% prior; Y/Y: 2.1%e v 1.8% prior.

- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on ESM and EFSF; S&P on Turkey).

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

- 14:00 (MX) Mexico Oct IMEF Manufacturing Index: No est v 49.5 prior; Non-Manufacturing Index: No est v 49.4 prior.