UK Q3 GDP in-line and fights off the ‘weaker momentum’ that afflicted the euro area


- Northern Ireland DUP party sees alarms bells over PM May over backstop betrayal (May warned DUP of customs border in Irish sea in case of no deal)

- France Sept production data continues the trend of a soft spot in EU economic releases

- UK economy avoided the ‘weaker momentum' that afflicted the euro area in Q3

- Fed was poised to hike rates in Dec and on course for up to another four hikes in 2019


- China Oct CPI Y/Y: 2.5% v 2.5%e

- RBA Quarterly Monetary Policy Statement (SOMP) ruled out near-term rate hike. Outlook for inflation and unemployment mean higher interest rates likely at some point

- South Korea President Moon named Government Coordination Office Chief Hong Nam-Ki as the new Finance Min (replaces Kim)


- Leaked PM May letter: EU plan to put a customs border in the Irish sea if there was no Brexit agreement (backstop to the backstop that would leave Northern Ireland tied to the single market and customs union if no agreement

- PM May spokesperson: govt won't agree to anything that cause's hard border on Ireland; would not accept UK division into two customs territories

- PM May said to hold conference calls with ministers on Sunday, Nov 11th to secure agreement on Irish border issue. If she wins approval she'll call a formal cabinet meeting next Monday or Tuesday to approve the Brexit deal

- SNB's Maechler reiterated that was too early to contemplate tighter policy and reiterated stance that CHF currency (Franc) was highly valued and that the FX situation remained fragile


- FOMC left its target range unchanged between 2.00-2.25% (as expected) in an unanimous vote. Reiterates expected further gradual increases in rate would be consistent with sustained economic expansion, strong jobs market, and inflation objective. Economic activity had been rising at a strong rate

- Canada govt reportedly disagreed with some US changes to USMCA trade deal text. Govt said to believe some text the US was putting forward was not what Canada agreed to


- Think-tank with ties to Saudi govt started study on effects that an OPEC breakup would have on oil prices




Indices [Stoxx600 -0.5% at 365.2, FTSE -0.6% at 7100, DAX -0.5% at 11475, CAC-40 -0.7% at 5094, IBEX-35 -0.9% at 9094, FTSE MIB -1.1% at 19222, SMI -0.4% at 9059, S&P 500 Futures -0.4%]

Market Focal Points/Key Themes: European Indices trade lower across the board with Basic resources and Banks underperrming. Asian Indices traded mostly lower tracking mixed US Indices overnight and weaker futures this morning. Overnight the FED kept rates on hold as expected but the hawkish tone remains. On the earnings front Allianz trades higher after beating on the top and bottom line, while Richemont weighs on the luxury sector after reporting a profit miss. Thyssenkrup has its worst day in two years after cutting its outlook on cartel provisions, while Leonardo, Fincantieri and Telecom Italia among other notable decliners after earnings. Elsewhere Kloeckner falls sharply after a downgrade by Goldman Sachs, SSE trades lower after warning on possible delays in transaction with Innogy; BBVA trades over 6% lower after Mexico President elect proposed slashing bank fees. Overnight shares of Disney gained on a strong top and bottom line beat. Looking ahead notable earners include Adient, Revlon and Tribune Media.



- Consumer discretionary: Edenred [EDEN.FR] +3.5% (acquisition), Richemont [CFR.CH] -6.5%, Swatch Group [UHR.CH] -5% (Richemont earnings), Informa PLC [INF.UK] +3% (earnings), Air France-KLM [AF.FR] -0.5% (load factor), Salvatore Ferragamo [SFER.IT] +1.5% (earnings)

- Materials: Haydale Graphene [HAYD.UK] -21.5% (update on financing position)

- Telecom: Telecom Italia [TIT.IT] -4% (earnings; withdraws FY18-20 guidance), Telefonica [TEF.ES] -0.5% (divestiture)

- Financials: Allianz [ALV.DE] +1% (earnings; affirms outlook), Natixis [KN.FR] +0.5% (earnings)

- Healthcare: Attendo [7AT.DE] +1% (earnings)

- Industrials: Leonardo-Finmeccanica Spa [LDO.IT] -5% (earnings; affirms outlook), ThyssenKrupp [TKA.DE] -8.5% (outlook cut)

- Technology: Nexans [NEX.FR] -17% (earnings; transformation program)

- Utilities: SSE [SSE.UK] -3% (comments on merger with Innogy),EDP [EDP.PT] -2% (unit sale)



- ECB's Lane (Ireland) stated that could not rule out disorderly Brexit and the GBP currency (Pound Sterling) could weaken as a result. Cheaper sterling after Brexit could hurt Irish business

- Northern Ireland DUP Leader Foster: PM May Brexit letter raises alarm bells; seem PM is wedded to regulatory border

- Northern Ireland DUP Brexit Spokesman Wilson stated that party would not support current Brexit proposals; PM May was breaching her promises

- Junior UK Brexit Ministor Walker: One of the scenarios being discussed is Britain remaining in a customs agreement with EU after end of transition period on Dec 31st 2020 which would avoid new border controls between Ireland and Northern Ireland. Reiterated govt view that 95% of the Brexit agreement was in place

- France Fin Min Le Maire: Time for German govt to respond to PM Macron's proposal for the future of Europe. Euro Zone was not prepared for a financial or economic crisis

- Italy Fin Min Tria: budget to increase 2019 GDP by 0.6%; reiterated that budget deficit to GDP will be 2.4%. Economic slowdown made the expansionary budget even more necessary

- Italy Dep PM Di Maio reiterated confidence that of the 2019 budget deficit of 2.4% based upon growth and spending cuts. Did not believe the EU would levy fines on Italy. Reiterated that BTP/BUND spread to narrow as Italy explained the details of its budget. Reiterates that govt believed that Italy must not leave the Euro; dropped calls to leave because of perceived changing equilibrium in Europe means that Italy has a voice

- EU's Dombrovskis reiterated that Italy govt was basing its 2019 budget on overly optimistic assumptions. Many spending cuts could be made to ensure 2.4% deficit target met

- Italy banks and FITD (interbank deposit protection fund) said to consider a credit line worth €2.7B to strengthen support for weaker lenders in case of market turmoil; would only be used as a guarantee for bank deposits under €100K

- Czech Central Bank (CNB) Nov Minutes noted that it preferred to hike in smaller steps as several members considered a 50bps hike. Policy makers agreed that real rates should not be negative now

- Japan govt said to consider ¥10T stimulus to offset 2nd phase of the planned sales tax hike (**Reminder: The sales tax is expected to rise to 10% in Oct of 2019 v 8% currently. Japan's govt had twice delayed a plan to raise the sales tax to 10% from 8%)


Currencies/Fixed Income

- USD extended its post FOMC gains as participants continued to believe FOMC statement did little to change the view the Fed was poised to hike rates in Dec and on course for up to another four hikes in 2019. Dealers noted that the Fed would only consider a pause in rate hikes if the economy slowed down

- UK economy avoided the ‘weaker momentum' that afflicted the euro area in Q3 with the data coming in-line with expectations. The annual pace of GDP moved off 5-year lows. However, continued Brexit concerns remained the rationale behind price action. A leaked PM May letter noted that the EU plan to put a customs border in the Irish sea if there was no Brexit agreement (backstop to the backstop) that would leave Northern Ireland tied to the single market and customs union if no agreement. GBP/USD lower by almost 0.5% mid-European session to just under the 1.31 level.

- EUR/USD lower by 0.2% at 1.1343 and looked poised to continue with weak technical closings

- USD/JPY holding below the 114 level


Economic data

- (NL) Netherlands Sept Manufacturing Production M/M: 0.7% v 1.2% prior; Y/Y: 2.9% v 3.3% prior; Industrial Sales Y/Y: 12.8% v 13.5% prior

- (DK) Denmark Sept Current Account Balance (DKK): 12.3B v 8.7B prior; Trade Balance: 5.3B v 4.8B prior

- (NO) Norway Oct CPI M/M: -0.2% v 0.0%e; Y/Y: 3.1% v 3.4%e

- (NO) Norway Oct CPI Underlying M/M: 0.0% v 0.2%e; Y/Y: 1.6% v 1.8%e

- (NO) Norway Oct PPI M/M: 3.6% v 1.5% prior; Y/Y: 22.5% v 21.1% prior

- (FI) Finland Sept Industrial Production M/M: 0.5% v 0.5% prior; Y/Y: 2.5% v 2.2% prior

- (CN) Weekly Shanghai copper inventories (SHFE): 142.2K v 147.5K prior

- (FR) France Sept Industrial Production M/M: -1.8% v -0.3%e; Y/Y: -1.1% v 1.1%e

- (FR) France Sept Manufacturing Production M/M: -2.1% v -0.2%e; Y/Y: -1.0% v +1.8%e

- (RU) Russia Narrow Money Supply w/e Nov 2nd: 10.27T v 10.30T prior

- (CZ) Czech Oct CPI M/M: 0.4% v 0.4%e; Y/Y: 2.2% v 2.3%e

- (HU) Hungary Sept Preliminary Trade Balance: €0.3B v €0.0B prior

- (SE) Sweden Sept Household Consumption M/M: 0.1% v 0.9% prior; Y/Y: 0.0% v -0.1% prior

- (UK) Q3 Preliminary GDP Q/Q: 0.6% v 0.6%e; Y/Y: 1.5% v 1.5%e

- (UK) Sept GDP M/M: 0.0% v 0.1%e

- (UK) Q3 Preliminary Private Consumption Q/Q: 0.5% v 0.5%e; Government Spending Q/Q: 0.6% v 0.4%e; Gross Fixed Capital Formation Q/Q: 0.8% v 0.3%e; Exports Q/Q: 2.7% v 3.0%e; Imports Q/Q: 0.0% v 0.8%e;

- (UK) Q3 Preliminary Total Business Investment Q/Q: -1.2% v +0.2%e; Y/Y: -1.9% v -0.1% prior

- (UK) Sept Visible Trade Balance: -£9.7B v -£11.4Be; Total Trade Balance: -£0.0B v £1.5Be; Trade Balance Non EU: -£2.3B v -£3.8Be

- (UK) Sept Industrial Production M/M: 0.0% v -0.1%e; Y/Y: 0.0% v 0.4%e

- (UK) Sept Manufacturing Production M/M: 0.2% v 0.1%e; Y/Y: 0.5% v 0.4%e

- (UK) Sept Construction Output M/M: 1.7% v 0.1%e; Y/Y: 3.0% v 1.3%e

- (UK) Sept Index of Services M/M: -0.1% v 0.1%e; Y/Y: 0.4% v 0.5%e

- (GR) Greece Sept Industrial Production Y/Y: 2.0% v 1.4% prior

- (GR) Greece Oct CPI Y/Y: 1.8% v 1.1% prior; CPI EU Harmonized Y/Y: 1.8% v 1.1% prior

- (BR) Brazil Nov IGP-M Inflation (1st preview): -0.1% v 0.0% prior

- (ID) Indonesia Q3 Current Account: -$8.8B v -$9.0Be

**Fixed Income Issuance**

- (ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in I/ L 2029, 2038 and 2050 bonds


Looking Ahead

- (UR) Ukraine Oct CPI M/M: No est v 1.9% prior; Y/Y: 9.1%e v 8.9% prior

- (MX) Mexico Oct Nominal Wages: No est v 5.8% prior

- 06:00 (PT) Portugal Oct Trade Balance: No est v -€1.7B prior

- 06:00 (UK) DMO to sell €3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)

- 06:30 (IN) India weekly FX Reserves:

- 06:45 (US) Daily Libor Fixing

- 07:00 (CZ) Czech Central Bank to comment on CPI data

- 08:00 (RU) Russia Sept Trade Balance: $17.8Be v $15.8B prior; Exports: $38.2Be v $37.4B prior; Imports: $20.9Be v $21.6B prior

- 08:00 (IN) India announces upcoming bill issuance (held on Wed)

- 08:10 (UK) Baltic Dry Bulk Index

- 08:30 (US) Oct PPI Final Demand M/M: 0.2%e v 0.2% prior; Y/Y: 2.5%e v 2.6% prior

- 08:30 (US) Oct PPI (Ex Food/Energy) M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.5% prior

- 08:30 (US) Oct PPI (Ex Food/Energy/Trade) M/M: 0.2%e v 0.4% prior; Y/Y: No est v 2.9% prior

- 09:00 (MX) Mexico Sept Industrial Production M/M: +0.6%e v -0.5% prior; Y/Y: 1.8%e v 0.2% prior; Manufacturing Production Y/Y: 2.0%e v 2.1% prior

- 09:00 (US) Fed's Quarles (hawk, FOMC voter) to speak on Stress testing

- 10:00 (US) Nov Preliminary University of Michigan Confidence: 98.0e v 98.6 prior

- 10:00 (US) Sept Final Wholesale Inventories M/M: 0.3%e v 0.3% prelim; Wholesale Trade Sales M/M: 0.4%e v 0.8% prior

- 11:00 (EU) Potential sovereign ratings after European close (Egypt Sovereign Debt to be rated by S&P; Denmark Sovereign Debt to Be Rated by Moody's )

- 11:00 (US) Treasury announcement for TIPS auction for Nov 15th

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

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