Putin apparently intends to extend olive branch to Trump over Ukraine

EU mid-market update: Putin apparently intends to extend olive branch to Trump over Ukraine; Market not confident due to historically deceiving rhetoric; Nvidia to report after close.

Notes/observations

- UK Oct CPI hotter than expected, specifically in services, which echoes Bank of England MPC concerns from Parliamentary Testimony yesterday and foreshadows a more hawkish tilt ahead of govt budget impacts and potential US tariff inflationary pressures. Sterling initially spiked higher >1.27 before fading back, but BOE futures still see any Dec rate cut as very unlikely.

- Press reports gaining traction that Russia Pres Putin is open is discussing a Ukraine ceasefire deal with US Pres Elect Trump, including security guarantees for Ukraine and withdrawal from small patches of territory, but with proviso that majority of conflict lines are frozen and Ukraine abandons desire to join NATO; Worth noting Putin has in the past shown more favorability towards Trump compared to Democrat leaders and yesterday Putin signed into law the amended Nuclear Doctrine, as Ukraine fired first West approved US long range missile into Russia.

- Market continues to monitor Trump’s decision for Treasury Sec; Marc Rowan, a private equity billionaire said to be leading contest.

- Asia closed mixed with Shanghai composite outperforming +0.7%. EU indices are +0.2-0.8%. US futures are +0.2-0.3%. Gold -0.4%, DXY +0.4%; Commodity: Brent +0.3%, WTI +0.3%; Crypto: BTC +1.7%, ETH +0.2%.

Asia

- Australia Oct Westpac Leading Index M/M: 0.18 v 0.01 prior.

- Japan Oct Trade Balance: -¥461.2B v -¥391.9Ber; Exports Y/Y: 3.1% v +1.0%e; Imports Y/Y: +0.4% v -1.9%e.

- China PBOC Monthly Loan Prime Rate Setting left rates unchanged at 3.10% and 3.60% respectively.

Europe

- UK official stats agency said to undercount jobs by 1M; cites report from Resolution Foundation [think tank].

- Whitehall impact assessment said to show that govt decision to cut winter fuel payments will push up to 100K additional pensioners into poverty a year.

Americas

- Fed's Schmid noted that remained to be seen how far interest rates could come down.

Energy

- Weekly API Crude Oil Inventories: +4.8M v -0.8M prior.

- IAEA: Iran has agreed to stop producing near-bomb grade uranium, and to allow experienced inspectors to conduct verifications.

- Iran said to sharply expands stockpile of nuclear fuel ahead of Trump’s return.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.48% at 503.02, FTSE +0.19% at 8,114.12, DAX +0.54% at 19,164.05, CAC-40 +0.34% at 7,254.00, IBEX-35 +0.84% at 11,685.74, FTSE MIB +0.25% at 33,407.00, SMI +0.73% at 11,613.50, S&P 500 Futures +0.16%].

Market focal points/key themes: European indices open generally higher and remained upbeat through the early part of the session; easing geopolitical tensions seen supporting risk appetite; among sectors leading the way higher are industrials and health care; lagging include communication services and real estate; Symrise to acquire Probi; reportedly Rubis looking at potential sale; Grifols Board recommends voting against Brookfield takeover; earnings expected in the upcoming US session include Nvidia, TJX, Target and Palo Alto Networks.

Equities

- Consumer discretionary: Elior [ELIOR.FR] -17.5% (FY results, initial FY25 guidance).

- Financials: Crest Nicholson [CRST.UK] -2.0% (trading update), Barclays [BARC.UK] +1.0% (conference comments).

- Healthcare: CVS Group [CVSG.UK] +3.0% (trading update).

- Industrials: ThyssenKrupp [TKA.DE] +2.5% (CDP may back Fincantieri in bid for Thyssenkrupp's Marine unit - press), Rheinmetall [RHM.DE] -1.0% (speculation Russia Pres Putin open for small withdrawals from Ukraine in any peace talks with US Pres-elect Trump) - Technology: Sage Group [SGE.UK] +18.0% (Q4 results, initial FY25 guidance), STMicroelectronics [STM.FR] -1.0% (provides new mid-long term targets; gross margin target delayed) - Real Estate: British Land [BLND.UK] -2.0% (H1 results).

Speakers

- ECB Bi-Annual Financial Stability Review noted that rising global trade tensions threatened financial stability; Vulnerabilities remained elevated. Economic growth was still fragile and trade added to uncertainty.

- ECB's De Guindos (Spain) noted that the current low growth scenario had more to do with structural policy and not monetary policy.

- Iceland Central Bank Policy Statement noted that headline and underlying inflation had fallen recently and was broad-based, Added that persistent inflation and above-target inflation expectations called for caution.

- Turkey President Erdogan stated that he opposed US decision to allow Ukraine to use long-range missiles.

- Indonesia Central Bank Policy Statement noted that the decision to keep rates steady was consistent with stance to keep inflation within target for both 2024 and 2025 period. Policy focus was on IDR currency (Rupiah) amid rising geopolitical uncertainty. To monitor FX and inflation to assess room for further easing.

Currencies/fixed income

- USD was steady against the major pairs in quiet trading as it tried to climbed from a one-week lows.

- GBP/USD moved initially above the 1.27 level after Oct CPI reading came in higher-than-expected and back above BOE target. Dealers scaled back any hope of a Dec BOE rate cut to under 5% probability at this time. UK inflation data coupled with global inflationary pressures from President-elect Trump's trade tariffs and tax policies could likely to result in higher interest rates for longer. Dealers also noted that price pressures could be compounded by the UK Fin Min Reeves's fiscal measures in her budget. Pair retraced back to 1.2670 by mid-session.

- USD/JPY moved higher to test above 155.60 as safe haven demand faded as Russia Foreign Min Lavrov noted that Russia's position was that a nuclear war would not happen; Nuclear weapons were a deterrent.

Economic data

- (UK) Oct CPI M/M: 0.6% v 0.5%e; Y/Y: 2.3% v 2.2%e; CPI Core Y/Y: 3.3% v 3.1%e; CPI Services Y/Y: 5.0% v 4.9%e; CPIH Y/Y: 3.2% v 3.0%e.

- (UK) Oct RPI M/M: 0.5% v 0.5%e; Y/Y: 3.4% v 3.4%e; RPI (ex-mortgage payments) Y/Y: 2.8% v 2.0% prior; Retail Price Index: 390.7 v 390.8e.

- (UK) Oct PPI Input M/M: 0.1% v 0.5%e; Y/Y: -2.3% v -2.9%e.

- (UK) Oct PPI Output M/M: 0.0% v -0.1%e; Y/Y: -0.8% v -1.1%e.

- (DE) Germany Oct PPI M/M: 0.2% v 0.2%e; Y/Y: -1.1% v -1.0%e.

- (DK) Denmark Q3 Preliminary GDP Q/Q: 1.2% v 1.3% prior; Y/Y: 3.9% v 3.5% prior.

- (ID) Indonesia Central Bank (BI) left Bi-Rate unchanged at 6.00% (as expected) for its 2nd straight pause under the current easing cycle.

- (ZA) South Africa Oct CPI M/M: -0.1% v +0.1%e; Y/Y: 2.8% v 3.0%e.

- (ZA) South Africa Oct CPI Core M/M: 0.2% v 0.2%e; Y/Y: 3.9% v 3.9%e.

- (TW) Taiwan Oct Export Orders Y/Y: 4.9% v 3.8%e.

- (TW) Taiwan Q3 Current Account Balance: $27.5B v $22.7B prior.

- (IS) Iceland Central Bank (Sedibanki) cuts 7=Day Term Deposit Rate by 50bps to 8.50%.

- (UK) Sept ONS House Price Index Y/Y: 2.9% v 2.7% prior.

- (EU) Euro Zone Sept Construction Output M/M: -0.1% v 0.0% prior; Y/Y: 1.6% v -2.5% prior.

- (EU) ECB Q3 Euro-Area Negotiated Wage Index: 5.4% v 3.6% prior.

- South Africa Q4 BER Business Confidence: 45 v 38 prior.

Fixed income issuance

- (DK) Denmark sold total DKK3.09B in 2033 and 2034 DGB Bonds.

- (SE) Sweden sold total SEK2.0B vs. SEK2.0B indicated in 2028 and 2035 bonds.

- (GR) Greece Debt Agency (PDMA) sold €250M vs. €250M indicated in 3.375% Jun 2034 GBB Bonds; Avg Yield: % v 3.11% prior; bid-to-cover: x v 3.70x prior.

Looking ahead

- (IL) Israel Nov 12-month CPI Forecast: No est v 3.1% prior.

- (MX) Mexico Citi Survey of Economists.

- (AR) Argentina Oct UTDT Leading Indicator: No est v 0.6% prior.

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

- 05:30 (DE) Germany to sell combined €2.0B in 2052 and 2053 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €0.75-1.0B in 12-month Bills.

- 05:30 (RU) Russia to sell OFZ Bonds.

- 06:00 (IE) Ireland Sept Property Prices M/M: No est v 0.9% prior; Y/Y: No est v 10.1% prior.

- 06:00 (ZA) South Africa Sept Retail Sales M/M: No est v 0.5% prior; Y/Y: 2.7%e v 3.2% prior.

- 06:00 (EU) EU Commission to sell combined €3.5B in 3-month and 6-month Bills.

- Sells €B vs. €1.5B indicated in 3-month bills; Avg Yield: % v 2.997% prior; Bid-to-cover: x v 2.14x prior (Nov 6th 2024).

- Sells €B vs. €2.0B indicated in 6-month bills; Avg Yield: % v 2.811% prior; Bid-to-cover: x v 2.04x prior (Nov 6th 2024).

- 07:00 (US) MBA Mortgage Applications w/e Nov 15th: No est v 0.5% prior.

- 07:00 (UK) Weekly PM Question time in House.

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

- 08:00 (EU) ECB chief Lagarde.

- 10:00 (CO) Colombia Sept Trade Balance: -$0.8Be v -$1.3B prior; Total Imports: $5.3Be v $5.5B prior.

- 10:00 (US) Fed's Barr.

- 10:30 (US) Weekly DOE Oil Inventories.

- 10:30 (UK) BOE’s Breeden.

- 11:00 (RU) Russia Oct PPI M/M: No est v 0.5% prior; Y/Y: No est v 5.6% prior.

- 11:00 (UK) BOE’s Ramsden.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 10-year Bonds.

- 12:15 (US) Fed's Bowman.

- 13:00 (US) Treasury to sell 20-Year Bonds.

- 13:00 (ES) ECB’s De Guindos (Spain).

- 13:30 (GR) ECB’s Stournaras (Greece).

- 14:00 (AR) Argentina Oct Trade Balance: No est v $1.2B prior.

- 14:00 (IE) ECB’s Makhlouf (Ireland).

- 16:00 (US) Fed's Collins.

- 19:00 (KR) South Korea Nov 1-20 Exports Y/Y: No est v -2.9% prior; Imports Y/Y: No est v -10.1% prior.

- 20:00 (CN) China Oct Swift Global Payments (CNY): No est v 3.6% prior.

- 22:00 (ID) Indonesia Q3 Current Account Balance: -$2.6Be v -$3.0B prior.

- 22:00 (TH) Thailand Central Bank to sell THB20B in new 2026 Bonds.

- 22:35 (JP) Japan to sell 20-year JGB Bonds.