- Inflation to likely keep the pressure on global central banks.
- Session saw improved risk sentiment on hopes China's property market woes would be contained as after some of its peers made bond coupon payments this week.
- Plethora of central bank speak in later part of EU session.
- Corp earning season picking up; Companies due to report during the NY morning include Bank of NY, Fifth Third, Halliburton, J&J, Manpower, Procter & Gamble, Philip Morris, Travelers.
- RBA Oct Minutes Delta variant had interrupted recovery, in central scenario the economy would return to growth in Dec quarter and pre-Delta path in H2 2022.
- North Korea fired a ballistic missile toward the East Sea Tuesday.
- France said to set a two-week deadline for Britain and Jersey to give French fisherman more licenses or risk retaliatory measures.
- EU Competition Commissioner Vestager stated that sought to extend relaxation of state aid rules for six months to June 2022. Move seen to to slowly wean corporations off the billions of euros provided by governments across the European Union.
- Treasury Sec Yellen sent letter to Congressional leaders informing them she would extend extraordinary cash measures to stay under the Federal debt limit until Dec 3rd. Reiterated that was imperative that Congress act to increase or suspend the debt limit in a way that provide longer-term certainty that the government would satisfy all of its obligations.
- Sen Manchin (D-WV) noted that he could not see how deal on Biden's terms could happen by Oct 31st (Reminder: White House spokesperson noted that Biden had been in touch with both Manchin and Sanders on their priorities in the reconciliation bill).
Indices [Stoxx600 +0.08% at 467.42, FTSE +0.05% at 7,207.50, DAX -0.03% at 15,469.55, CAC-40 0.00% at 6,673.33, IBEX-35 +0.76% at 9,006.50, FTSE MIB +0.17% at 26,313.00, SMI -0.38% at 11,922.20, S&P 500 Futures +0.31%].
Market Focal Points/Key Themes: European indices open modestly higher across the board and remained generally positive through the session so far; materials and utilities sectors among those leading higher; while laggards include financials and energy; oil and gas subsector under pressure following concerns over China demand; moneysupermarket buys Quidco; UK CMA to review Meggitt takeover by Parker-Hannifin; earnings expected during the upcoming US session include Bank of New York Mellon, Johnson & Johnson, Philip Morris and Procter & Gamble.
- Consumer staples: Danone [BN.FR] -1.5% (earnings).
- Industrials: RHI Magnesita [RHIM.UK] +5% (trading update; acquisition).
- Technology: Moneysupermarket.com [MONY.UK] +6% (sales; acquisition), Software AG [SOW.DE] -12% (raises outlook).
- Telecom: Ericsson [ERICB.SE] -3% (earnings), Tele2 [TEL2B.SE] -3% (earnings).
- ECB's Villeroy (France) stated that saw no reason to raise rates in 2022; convinced that inflation to be back below 2.0% by end-2022. Big difference in terms of rising energy prices and overall total inflation (**Reminder: On Oct 18th money markets were pricing in 10bps ECB hike in Sept 2022).
- EU Commission chief Von der leyen stated that the situation had worsened after recent Polish court ruling; EU commission would act with infringements being the first option and financial tools were second option.
- Poland PM Morawiecki stated in EU Parliamant that Poland's place was within the EU but rejected financial blackmail by EU over courts.
- Sweden Central Bank (Riksbank) Gov Ingves stated in parliament that country was now moving from a very rapid recovery to more normal growth rates. Expected inflation to fall back at some point in 2022. Underlying inflation signaled no obvious long-term upturn.
- Sweden Central Bank (Riksbank) Dep Gov Floden believed that inflationary pressures were not that strong but added the risks of inflation being higher than in our forecast had increased.
- Norway Central Bank (Norges) Dep Gov Bache stated that the surge in power prices was seen as transitory.
- Hungary Fin Min Varga stated that monetary policy shift that has begun was justified; had a good chance to have CPI back at 3% target by end 2022. The question was whether inflation was transitory or lasting. Did expect inflation to decline from early 2022.
- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference noted that the domestic economy continued its improvement as pandemic restrictions were eased. Domestic recovery was supported by high exports and improving consumption. Reiterated to stabilize IDR currency (Rupiah) to be inline with fundamentals. Q3 current account balance seen as surplus and saw 2022 current account deficit remaining small.
- China's govt advisor Yao Jingyuan: PBoC should cut RRR in order to boost liquidity and support economic growth.
- China Industry Ministry (MIIT) said to warn of downward pressure in the Industrial sector.
- USD was softer as some unwinding of sale-haven flows occurred. There was hope China's property market woes would be contained as after some of its peers made bond coupon payments this week.
- EUR/USD tested 3-week highs of 1.1658 in the session amid improved risk sentiment. Pair moved off its best level after ECB member played down market expectations versus the ECB forward guidance stressing that they were not consistent with ECB guidance.
- GBP/USD was at a one-month high as the pair approached the 1.38 area. Markets continue to recalibrate potential BOE rate hike by emd of 2021. Key UK inflation data to be released on Wed (Oct 20th).
- (CH) Swiss Sept Trade Balance (CHF): 5.1 v 5.1B prior; Real Exports M/M: +0.4 v -0.4% prior; Real Imports M/M: -0.8% v +1.8% prior; Watch Exports Y/Y: 16.6 v 11.5% prior.
- (ID) Indonesia Central Bank (BI) left the the 7-Day Reverse Repo unchanged at 3.50% (as expected).
- (ES) Spain Aug Trade Balance: -€3.9B v -€1.6B prior.
- (PL) Poland Sept Employment M/M: -0.1% v 0.0%e; Y/Y: 0.6% v 0.7%e.
- (PL) Poland Sept Average Gross Wages M/M: 0.0% v 0.0%e; Y/Y: 8.7% v 9.0%e.
- (EU) Euro Zone Aug Construction Output M/M: -1.3% v +0.1% prior; Y/Y: -1.6% v +3.5% prior.
- (IL) Israel Oct 12-month CPI Forecast: 1.8% v 1.4% prior.
Fixed income Issuance
- (ID) Indonesia to sold total IDR5.0T vs. IDR5.0T target in Islamic bills and bonds (sukuk).
- (ES) Spain Debt Agency (Tesoro) sold total €1.926B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.
- (AT) Austria Debt Agency (AFFA) to sell €2.0B in 3-month and 6-month Bills.
- 05:15 (FI) ECB’s Rehn (Finland) participates in online conference.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:15 (CH) Switzerland to sell 3-month Bills.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.
- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).
- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2032, 2035 and 2048 bonds.
- 06:00 (PT) Portugal Sept PPI M/M: No est v 0.8% prior; Y/Y: No est v 11.0% prior.
- 06:00 (UK) BOE’s Mann participates on panel.
- 06:00 (FI) Finland to sell 0.125% Sept 2031 RFGB bonds.
- 06:30 (EU) ESM to sell €1.5B in 6-month Bills.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (TR) Turkey to sell 2027 and 2030.
- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to raise the Base Rate by 15bps to 1.80%.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision.
- 08:00 (IT) ECB’s Panetta (Italy) participates in online conference.
- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).
- 08:05 (UK) BOE Gov Bailey on climate change.
- 08:15 (SE) Sweden Central Bank (Riksbank) Dep Gov Breman.
- 08:30 (US) Sept Housing Starts: 1.613Me v 1.615M prior; Building Permits: 1.680Me v 1.721M prior (revised from 1.728M).
- 08:55 (US) Weekly Redbook LFL Sales data.
- 09:00 (EU) Weekly ECB Forex Reserves.
- 09:00 (UK) BOE Pill (chief economist).
- 09:00 (EU) ECB weekly QE bond buying update.
- 09:45 (UK) BOE to buy £1.47B in APF Gilt purchase operation (20+ years).
- 10:00 (MX) Mexico Weekly International Reserve data.
- 10:00 (IE) ECB’s Lane (Ireland, chief economist) participates in online conference.
- 11:00 (US) Fed’s Daly.
- 11:00 (CO) Colombia Aug Trade Balance: -$1.5Be v -$1.2B prior; Total Imports: $5.2Be v $4.8B prior.
- 12:00 (CO) Colombia Aug Economic Activity Index (Monthly GDP) Y/Y: 16.0%e v 14.3% prior.
- 14:50 (US) Fed’s Bostic.
- 15:00 (US) Fed’s Waller.
- 16:30 (US) Weekly API Oil Inventories.
- 19:30 (AU) Australia Sept Leading Index M/M: No est v -0.3% prior.
- 19:50 (JP) Japan Sept Trade Balance: -¥520.7Be v -¥637.2B prior (revised from -¥635.4B); Adjusted Trade Balance: -¥586.4Be v -¥271.8B prior; Exports Y/Y: 10.3%e v 26.2% prior; Imports Y/Y: 34.5%e v 44.7% prior.
- 21:10 (JP) BOJ Outright Bond Purchase Operation 1~3 Years; 3~5 Years; 5~10 Years and 25 Years~.
- 21:30 China PBoC Monthly Loan Prime Rate (LPR) Operation: Expected to leave 1-Year Loan Prime Rate unchanged at 3.85% and leave 5-Year Loan Prime Rate unchanged at 4.65%.
- 21:30 (CN) China Sept New Home Prices M/M: No est v 0.2% prior.
- 21:30 (KR) Bank of Korea (BOK) to sell KRW1.3T in 3-year Bonds.
- 23:00 (CN) China to sell 2-year and 5-year Upsize Bonds.
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