UK Oct retail sales beat expectations; Brexit talks continue with same hurdles remaining

Notes/Observations

- UK Oct Retail Sales best expectations and suggested the economy was in better-shape when the Covid-19 tiered restrictions were being implemented

- Brexit talks continue with 3 main hurdles remaining but negotiators said to be making progress

Asia

- Japan Oct National CPI data in-line (YoY: -0.4% v -0.4%e; CPI Ex-fresh food (core) Y/Y: -0.7% v -0.7%e)

- Japan Nov Preliminary PMI Manufacturing registered its 19th month of contraction) (48.3 v 48.7 prior)

- Australia Preliminary Oct Retail Sales M/M: +1.6% v -1.1% prior

- China Monthly LPR Rate Setting leaves LPR unchanged (1-Year Loan Prime Rate unchanged at 3.85% and 5-Year Loan Prime Rate unchanged at 4.65%)

Europe

- UK-EU trade deal reportedly could be announced next Monday, Nov 23rd. EU diplomatic source said to note that trade deal was 90% done. Warned a crucial breakthroughs on fishing, level-playing-field (LPF) guarantees, and protocols around the deal's enforcement remained elusive

- Chancellor of the Exchequer Sunak (Fin Min) set to announce a public sector 'pay restraint' at the upcoming spending review next week

- EU Leaders met for summit on Thursday. EU Council President Michel stated that a vast majority of EU countries agreed with compromise on rule of law and would continue to try to find a solution acceptable to all

Americas

- Treasury Sec Mnuchin sent letter to Fed's Powell requesting 90 day extension of Fed's Commercial Paper Funding Facility, Primary Dealer Credit Facility, Money Market Liquidity Facility, and Paycheck Protection

Program Liquidity Facility. Called on Fed to return unused stimulus funds to the Treasury

- Treasury Sec Mnuchin; Financial conditions are quite strong; hopes $580B in leftover funds [from Fed] are used to help the economy (returned to treasury). Companies that are hurting from COVID need grants not debt

- Fed Bostic (dove, non-voter): Given where economy was he saw it as being prudent to keep emergency facilities open; Was a bit surprised by US Treasury decision [related to unused Fed stimulus funds]. As federal relief expired, it would leave people at risk

- Moody's affirmed Canada AAA sovereign rating; outlook Stable

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.49% at 389.48, FTSE +0.50% at 6,366.05, DAX +0.35% at 13,132.40, CAC-40 +0.45% at 5,499.20, IBEX-35 +0.39% at 7,961.00, FTSE MIB +0.70% at 21,687.50, SMI +0.17% at 10,509.00, S&P 500 Futures -0.15%]

Market Focal Points/Key Themes: European indices open modestly lower but quickly turned around to trade higher across the board; better performing sectors include energy and consumer discretionary; telecom and financials sectors among underperformers; Telit confirms receipt of non-binding offer from u-blox; reportedly Liberbank and Unicaja reach agreement on merger; BBVA and Sabadell will hold board meetings on their merger in early Decmber; Amazon France agrees to delay Black Friday; Bootz beings trading in Denmark; earnings expected in the upcoming US session include Foot Locker and Buckle

Equities

- Consumer discretionary: Europcar [EUCAR.FR] +14% (creditors talks)

- Industrials: Costain [COST.UK] +7% (new CFO), Sage Group [SGE.UK] -9% (earnings)

- Materials: Bekaert [BEKB.BE] +11% (sales)

- Telecom: Telit Communications [TCM.UK] +17% (new takeover offer), Helios Towers [HTWS.UK] -11% (placement)

Speakers

- ECB chief Lagarde reiterated stance that decisive policy actions were needed to sustain growth

- Italy Econ Min Gualtieri stated that he hoped that Hungary/Poland vetoes on Recovery Fund would be resolved at the Dec Leader Summit

- EU envoys were told that all three main Brexit hurdles remained unresolved; negotiations to continue and saw signs of progress emerging. UK had yet to move sufficiently to overcome the three main obstacles to a post-Brexit trade deal an that time was running out and talks may go into December

- Hungary PM Orban stated that EU must continue to negotiate on its 7-year budget plan; deal was a matter of political will. Could be several options to unlock the deadlock on budget

- Turkey President Erdogan stated that the CBRT interest rate hike was part of bitter pill policy; rates would fall as inflation slowed. Reiterated stance that high interest rates were the cause of high inflation

Currencies/ Fixed Income

- USD was mixed in the session. The greenback did exhibit some initial weakness during Asia after reports circulated that the US Treasury sent the Fed a letter requesting the return of unused stimulus aid.

- EUR/USD at 1.1855 area by mid-session and off the Asian high of 1.1890

- GBP/USD was near its best levels with some choppiness exhibited over Brexit talks. Cabled aided by UK Oct Retail Sales that beat expectations and suggested the economy was in better-shape when the Covid-19 tiered restrictions were being implemented. Some weakness in price action emerged after reports circulated that Brexit talks continue with 3 main hurdles remaining. However, the Pound curreny found some momentum as negotiators were said to be making progress. GBP/USD trying to test above the 1.33 level.

Economic Data

- (NE) Netherlands Nov Consumer Confidence Index: -26 v -30 prior

- (UK) Oct Retail Sales (ex-auto/fuel) M/M: 1.3% v 0.0%e; Y/Y: 7.8% v 5.9%e

- (UK) Oct Retail Sales (including auto/fuel) M/M: +1.2% v -0.3%e; Y/Y: 5.8% v 4.1%e

- (UK) Oct Public Finances (PSNCR): £19.8B v £33.4B prior; PSNB (ex-banking groups): £22.3B v £30.0Be; Public Sector Net Borrowing: £21.6B v £31.5Be; Central Government NCR: £14.4B v £25.2B prior

- (DE) Germany Oct PPI M/M: 0.1% v 0.1%e ; Y/Y: -0.7% v -0.8%e

- (NE) Netherlands Oct House Price Index M/M: 1.1% v 1.0% prior; Y/Y: 9.1% v 8.6% prior

- (DK) Denmark Nov Consumer Confidence Indicator: -7.6 v -6.2 prior

- (MY) Malaysia Mid-Nov Foreign Reserves: $B104.9 v $104.6B prior

- (CN) Weekly Shanghai copper inventories (SHFE): 96.8K v 118.0K tons prior

- (RU) Russia Narrow Money Supply w/e Nov 13th (RUB): T v 13.41T prior

- (TW) Taiwan Oct Export Orders Y/Y: 9.1% v 9.0%e

- (TW) Taiwan Q3 Current Account Balance: $28.7B v $20.5B prior

- (SE) Sweden Q3 Industry Capacity: 86.8% v 82.8% prior

- (HK) Hong Kong Oct CPI Composite Y/Y: -0.2% v -1.6%e

- (PL) Poland Oct Sold Industrial Output M/M: 3.2% v 2.5%e; Y/Y: 1.0% v 0.6%e

- (PL) Poland Oct PPI M/M: 0.4% v 0.2%e; Y/Y: -0.4% v -0.9%e

- (IT) Italy Sept Industrial Sales M/M: -3.2% v +5.6% prior; Y/Y: -4.6% v -3.6% prior

- (IT) Italy Sept Industrial Orders M/M: -6.4% v +13.5% prior; Y/Y: 3.2% v 5.8% prior

- (BE) Belgium Nov Consumer Confidence Index: -15 v -17 prior

Fixed income Issuance

- (IN) India sold total INR220B vs. INR220B indicated in 2023, 2033, 2035 and 2050 bonds

- (ZA) South Africa sold total ZAR2.0B vs. ZAR2.0B indicated in I/L 2029, 2033 and 2046 Bonds

Looking Ahead

- 06:00 (IE) Ireland Oct PPI M/M: No est v 0.5% prior; Y/Y: No est v -12.4% prior

- 06:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)

- 06:30 (IS) Iceland to sell 2023, 2031 and 2033 RIKB Bonds

- 06:45 (US) Daily Libor Fixing

- 07:00 (IN) India announces upcoming bill issuance (held on Wed)

- 06:30 (IN) India Weekly Forex Reserve w/e Nov 13th: No est v $568.5B prior

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

- 08:00 (DE) ECB's Weidmann (Germany) at European Banking Congress

- 08:30 (CA) Canada Sept Retail Sales M/M: 0.2%e v 0.4% prior; Retail Sales (ex-auto) M/M: 0.0%e v 0.5% prior

- 08:30 (US) Fed’s Kaplan

- 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -18.0e v -15.5 prior

- 11:00 (RU) Russia Oct Unemployment Rate: 6.4%e v 6.3% prior

- 11:00 (RU) Russia Sept Real Wages Y/Y: 0.1%e v 0.1% prior

- 11:00 (RU) Russia Oct Real Retail Sales Y/Y: -3.6%e v -3.0% prior

- 11:00 (EU) Potential sovereign ratings after European close (Fitch on Portugal sovereign rating; Moody's on Ukraine sovereign rateing; S&P on South Africa sovereign rating)

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

- (MX) Citibanamex Survey of Economists