Notes/Observations

- Russia/Ukraine conflict dwarfs corporate and economic news this morning, following a large explosion on critical Russian military supply vein across Crimea-Russia bridge on the weekend. Russia has began its response with over 75 missiles launched into the heart of major Ukrainian cities Kyiv and Lviv. Putin to convene a weekly meeting with security council members later today. Widespread global concern lingers over potential Russia escalation into more advanced weaponry.

- UK BoE announced additional measures to restore market functioning in long-dated Govt bonds. Increased maximum size of temporary Gilt purchase amounts from £5B to £10B until Oct 14th and launched a Temporary Expanded Collateral Repo Facility (TECRF).

- UK Govt to reveal medium term fiscal plan OBR forecast on Oct 31st, brought forward from Nov 23rd amid backlash following the ‘mini fiscal event’ on Sept 23rd which omitted the OBR forecast.

- Risk sentiment in general remains dour amid geopolitical concerns and ahead of US CPI on Thurs with earnings season just around the corner.

- Asia closed lower with Hang Seng underperforming at -3.0%. EU indices are 0% to -0.8% lower, with bond yields mostly lower except for UK10Y which climbs 10bps to 4.33%. US futures are -0.6%. Gold -1.1%, DXY +0.4%; Commodity: Brent -0.7%, WTI -0.7%, UK Nat Gas -5.3%; Crypto: BTC -0.7%, ETH -0.8%.

Asia

- China Shanghai back open following the 1 week Golden holiday period.

- China Sept Caixin PMI Services registered its 1st contraction in 4 months (49.3 v 54.4e).

- North Korea Leader Kim Jong Un oversaw tactical nuclear military training (*8Note: Latest sign regime might be preparing for atomic bomb test.

- North Korea fired a unspecified ballistic missile towards the East Sea, landed outside Japan’s EEZ.

- Holidays in South Korea, Taiwan.

Ukraine conflict

- Explosion hit the railway section of Kerch bridge connecting mainland Russia with Crimea peninsula (*8Note: Kerch bridge is important for Russian military logistics as Russian forces still use it for supplies for occupied territories in the South Ukraine).

Europe

- Germany Gas Commission proposes two-step gas price cap plan; Proposes a one time payment equal to one month of gas bills to German consumers, with instituting a price break in 2023 in early spring.

- German Social Democrats (SPD) won 32.5% in the lower Saxony state election.

- Scotland First Min Sturgeon expressed confidence that Scottish independence referendum could happen in Oct next year if Supreme Court approved bid.

- Fitch affirmed Greece sovereign rating at 'BB' rating; Outlook Positive.

Americas

- US bond market closed for Columbus Day holiday; NYSE open.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.44% at 389.96, FTSE -0.58% at 6,950.40, DAX -0.15% at 12,254.62, CAC-40 -0.88% at 5,815.10, IBEX-35 -0.62% at 7,390.66, FTSE MIB -0.43% at 20,811.00, SMI -0.73% at 10,233.42, S&P 500 Futures -0.36%].

Market Focal Points/Key Themes: European indices open down across the board and fell further as the session wore on; lack of risk appetite being attributed to geopolitical concerns; all sectors start the day in the red; less negative sectors include industrials and telecom; sectors leading to the downside include consumer discretionary and utilities; Bonava divests its Russian assets; Renault and Nissan confirm talks on further investments in alliance; reportedly Sligro looking at combination with Metro; US closed for holiday.

Equities

- Materials: BE Group [BEGR.SE] -16% (trading update).

- Industrials: Renault [RNO.FR] +3.5% (talks with Nissan), DS Smith [SMDS.UK] +10% (trading update), BMW [BMW.DE] +1% (vehicle sales).

- Technology: AMS Osram [AMS.CH] -7% (CFO to leave).

- Utilities: National Grid [NG.UK] -1.5% (trading update).

Speakers

- ECB's Villeroy (France) stated that ECB engaged in bringing down inflation to 2% target within 2-3 years from now.

- ECB’s Knot (Netherlands, hawk) stated that ECB would take significant interest step again in Oct but at least two meetings before quantitative tightenin. Markets seem to underestimate the upward risks in inflation outlook. Expected inflation to go down in 2023 but question was how quickly. Reiterates that to continue with rate hikes until 2% target was a realistic.

- ECB’s Centeno (Portugal) reiterated that policy normalization was absolutely necessary and must be gradual.

- Bank of England (BOE) launches temporary expanded collateral Repo facility. Would stand ready to increase the size of its daily auctions to ensure there is sufficient capacity for gilt purchases ahead of Friday Oct 14th.

- UK govt to bring forward its fiscal plan to end of Oct.

- Czech Republic (current president Council of the European Union) said to be planning to Nov energy council.

- Belarus President Lukashenko: Belarus and Russia to form a joint regional grouping of troops.

- Thailand Fin Min Arkhom stated that the central bank rate hikes to depend on many factors. Believed the global slowdown would not impact domestic economy.

- China Foreign Ministry spokesperson Mao: China will make room for peaceful unification with Taiwan.

- China Commerce Ministry (MOFCOM) reiterates stance that govt is firmly opposed to US chip export controls.

Currencies/fixed income

- USD maintained firm footing as it continued to be supported by expectations for further substantial interest rate rises by the Fed.

- GBP could not sustain any upside momentum even after BOE noted it would implement further measures to support an orderly end to its emergency bond-buying program. Overall concerns remain about what will happen when the support package ends on October 14th.

- USD/JPY edging back to the Sept intervention area with the pair trading above 145.50.

Economic data

- (NL) Netherlands Aug Manufacturing Production M/M: -1.2% v +0.7% prior; Y/Y: 5.9% v 5.2% prior; Industrial Sales Y/Y: 28.3% v 20.9% prior.

- (SE) Sweden Sept SEB Housing-Price Indicator: -35 v -40 prior.

- (FI) Finland Aug Industrial Production M/M: +0.5% v -2.6% prior; Y/Y: 2.3% v 2.7% prior.

- (NO) Norway Sept CPI M/M: 1.4% V 0.7%e; Y/Y: 6.9% V 6.2%e (highest annual pace since July 1988).

- (NO) Norway Sept CPI Underlying M/M: 1.0% V 0.7%e; Y/Y: 5.3% v 5.0%e.

- (NO) Norway Sept PPI (including oil) M/M: % v 8.2% prior; Y/Y: % v 77.3% prior.

- (DK) Denmark Sept CPI M/M: 1.3% V 1.0%e; Y/Y: 10.0% V 9.6%e (highest annual pace since 1983).

- (DK) Denmark Sept CPI EU Harmonized MoM: 1.5% v 0.0% prior; YoY: 11.1% v 9.9% prior.

- (DK) Denmark Aug Current Account Balance (DKK): 41.7B v 34.8B prior; Trade Balance: 4.1B v 1.3B prior.

- (AT) Austria Aug Industrial Production M/M: +2.3% v -3.9% prior; Y/Y: 7.6% v 5.0% prior.

- (CZ) Czech Sept Unemployment Rate: 3.5% v 3.5%e.

- (HU) Hungary Aug Preliminary Trade Balance: -€1.3B v -€1.3B prior.

- (TR) Turkey Aug Unemployment Rate: 9.6% v 10.0% prior.

- (CH) Swiss weekly Total Sight Deposits (CHF): 639.3B v 669.6B prior; Domestic Sight Deposits: 552.5B v 563.7B prior.

- (EU) Eurozone Oct Sentix Investor Confidence: -38.3 v -34.7e.

- (IS) Iceland Sept Preliminary Trade Balance (ISK): -43.5B v -16.9B prior.

- (GR) Greece Sept CPI Y/Y: 12.0% v 11.4% prior; CPI EU Harmonized Y/Y: 12.1% v 11.2% prior.

- (GR) Greece Aug Industrial Production Y/Y: 3.9% v 6.5% prior.

- (HU) Hungary Sept YTD Budget Balance (HUF): -2.692T v -2.873T prior.

Fixed income issuance

- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 2.53% v 1.45% prior; bid-to-cover: 2.07x v 2.88x prior.

Looking ahead

- (MX) Mexico Sept Nominal Wages: No est v 5.0% prior.

- (CO) Colombia Sept Consumer Confidence: -3.2e v -2.4 prior.

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

- 05:30 (DE) Germany to sell combined €8.0B in 3-month and 9-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (PT) Portugal Aug Trade Balance: No est v -€2.1B prior.

- 06:00 (IL) Israel to sell bonds.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 (EU) ECB chief Lagarde.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (IS) Iceland Sept Unemployment Rate: No est v 3.1% prior.

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

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

- 08:30 (UR) Ukraine Sept CPI M/M: No est v 1.1% prior; Y/Y: No est v 23.8% prior.

- 08:30 (SE) Sweden Central Bank (Riksbank) Gov Ingves.

- 09:00 (US) Fed’s Evans at NABE Conference in Chicago.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.0-6.2B in 3-month, 6-month and 12-month bills.

- 09:45 (UK) BOE APF Gilt purchase operation.

- 11:30 (SE) Sweden Central Bank (Riksbank) Dep Gov Ohlsson on panel.

- 13:00 (US) Fed’s Brainard at NABE Conference in Chicago.

- 17:00 (NZ) New Zealand Sept Truckometer Heavy M/M: No est v 7.0% prior.

- 17:45 (NZ) New Zealand Sept Total Card Spending M/M: No est v 0.7% prior; Retail Card Spending M/M: No est v 0.9% prior.

- 18:00 (AU) Australia Sept CBA Household Spending M/M: No est v 0.8% prior; Y/Y: No est v 15.1% prior.

- 19:01 (UK) Sept BRC Sales LFL Y/Y: No est v 0.5% prior.

- 19:30 (AU) Australia Oct Westpac Consumer Confidence: No est v 84.4 prior; M/M: No est v +3.9% prior.

- 19:50 (JP) Japan Aug BoP Current Account Balance: ¥75.8Be v ¥229.0B prior; Adj Current Account: ¥472.1Be v -¥629.0B prior; Trade Balance (BOP): -¥2.410Te v -¥1.21T prior.

- 20:30 (AU) Australia Sept NAB Business Confidence: No est v 10 prior; Business Conditions: No est v 20 prior.

- 21:00 (PH) Philippines Aug Trade Balance: -$5.8Be v -$5.9B prior; Exports Y/Y: -4.6%e v -4.2% prior; Imports Y/Y: 20.8%e v 21.5% prior.

- 22:30 (KR) South Korea to sell KRWB in 3-year Bonds.

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