US CPI will be relevant but forward looking inflation forecasting more important given Trump win

Notes/observations

- US Oct CPI later is expected to tick up from 2.4% to 2.6% on YoY basis but economists are more interested in longer term inflation projections from any incoming Trump tariffs. Administration is being filled out, with Musk and Ramaswamy confirmed to lead Dept of Govt Efficiency (DOGE); Other notable nominations include Pete Hegseth as Sec of Defense and John Ratcliff as CIA Director.

- European narrative is unchanged; Sentiment for French assets is unfazed after French lawmakers rejected budget bill yesterday and unemployment matched estimates at 7.4% for Q3; ECB’s Villeroy predicts French unemployment will rise to 8% before dropping to 7%.

- Asia closed mixed with -2.6% to +0.5%. EU indices are +0.2-0.4%. US futures are -0.2%. Gold +0.4%, DXY -0.1%; Commodity: Brent +0.9%, WTI +1.0%; Crypto: BTC +0.4%, ETH -6.2%.

Asia

- South Korea Oct Unemployment Rate: 2.7% v 2.6%e.

- Japan Oct PPI (domestic CGPI) M/M: 0.2% v 0.0%e; Y/Y: 3.4% v 2.9%e.

- Australia Q3 Wage Price Index Q/Q: 0.8% v 0.9%e; Y/Y: 3.5% v 3.6%e.

Europe

- French lawmakers rejected amended PM Barnier's budget bill (vote was 362-192) against the text; Will be given next to the Senate for review (**Insight: Over the weeks of debate, lawmakers transformed Barnier's original €60B plan to right the public finances(comprised of €40B in spending cuts and €20B in new tax receipts.

- Chancellor Reeves said to call for overhaul of system for consumer redress in finanical services sector - ahead of Mansion House speech on Thurs Oct 14th.

Americas

- Pres-elect Trump’s new Admin picks continue with both new and familiar faces. Reportedly wants his ex-Trade Rep Robert Lighthizer to be Trade Czar and confirms Elon Musk with Vivek Ramaswamy to lead Dept of Government Efficiency (DOGE). Nominates Pete Hegseth (another China hawk) as Secretary of Defense. Former WH Cabinet Sec Bill McGinley to return as White House Counsel. Names Kristi Noem [Gov of South Dakota] as pick for Secretary of Homeland Security. Names John Ratcliffe as CIA director (former Dir of National Intelligence in 1st Trump Admin).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.35% at 502.40, FTSE +0.24% at 8,045.30, DAX +0.38% at 19,120.75, CAC-40 +0.33% at 7,250.90, IBEX-35 +0.49% at 11,438.35, FTSE MIB +0.50% at 33,774.00, SMI -0.06% at 11,698.17, S&P 500 Futures -0.08%].

Market Focal Points/Key Themes: European indices open generally higher and most of them remained in the positive territory through the early part of the session; markets seen in holding pattern ahead of risk events later in the day, among sectors leading to the upside are financials (amid positive Deutsche Bank comments from UBS conference) and energy; on corporate front, Allianz, Siemens Energy and Flutter Entertainment all trading higher following results; some French stocks, including LVMH, rose slightly after French lawmakers rejected amended PM Barnier's budget bill, which included tax hikes; on M&A front, Just Eat Takeaway finally agreed to sell Grubhub for $650M; earnings expected in the upcoming US session include Dole, Loblaw and Cisco.

Equities

- Consumer discretionary: Just Eat Takeaway [JET.UK] +22.0% (sells Grubhub), LVMH [MC.FR] +0.5% (French lawmakers reject amended PM Barnier's budget bill; Will be given next to the Senate for review), Pierer Mobility [PMAG.AT] -31.0% (restructuring update), Flutter Entertainment [FLTR.UK] +4.5% (earnings).

- Energy: Siemens Energy [ENR.DE] +16.0% (Q4 results, post close; raises mid-term targets) - Financials: Allianz [ALV.DE] +2.0% (earnings), Deutsche Bank [DBK.DE] -0.5% (UBS conf comments).

- Industrials: Experian [EXPN.UK] -1.5% (H1 results, raises margin guidance), Smiths Group [SMIN.UK] +14.0% (Q1 trading update, raises guidance), Renk [R3NK.DE] -2.5% (Q3 results, beats estimates) - Technology: SoftwareONE [SWON.CH] +13.0% (Q3 results, affirms guidance; continue talks to be acquired) - Utilities: RWE [RWE.DE] +8.0% (9M results, beats estimates, adjusts guidance).

Speakers

- ECB's Villeroy (France) commented that French inflation to remain moderate; Expected domestic unemployment rate to go up to around 8% before going back down to 7%. Domestic economy is showing underlying resilience.

- ECB’s Nagel (Germany) stressed that Trump tariff plan could cost Germany 1% in GDP. Core inflation was quite high and still noticeable price pressure, especially in services.

- ECB's Kazaks (Latvia, voter, hawk) stated that should avoid sharp moves in rates and stick to measured pace. Should not intentionally undershoot or overshoot the inflation target to maintain credibility.

- BOE’s Mann (dissenter) stated that inflation had definitely not been beaten. Services inflation was 'pretty sticky' and saw upside risks to energy prices.

- Sweden Central Bank (Riksbank) Nov Minutes noted that it was wise to continue to reduce the tightening effect of monetary policy. Consumer prices were continuing to develop in line with forecasts and saw few concrete signs of new inflationary impulses. Outlook for international industrial activity continued to weaken; Growth was not as strong as had expected.

- Poland Central Bank (NBP) Member Kochalski reiterated stance that ready to consider rate cut in Mar 2025.

- Hungary Central Bank (MNB) likely to continue its pause under the current easing cycle until Feb.

- Iran Oil Min Paknejad stated that it had made plans to keep oil exports stable under Trump.

Currencies/fixed income

- USD continued its firm tone under the post-election trend. With focus on US Oct CPI data later in the session. Dealers noted that Trump's victory created asymmetric hawkish risk around inflation data. Trump's policies were widely expected to be inflationary, likely keeping US Treasury yields elevated and slowing the pace of interest-rate cuts by the Federal Reserve.

- EUR/USD continued to register fresh 1-year lows as the pair dipped below the 1.06 level. Dealers noted that any upside surprise in US CPI data could add further impetus to a widening of the U.S. Treasury-German Bund yield spread.

- USD/JPY above the 155 level for reasons noted above. The 160 level remains pivotal resistance and the former area where Japan MOF instructed FX intervention.

Economic data

- (FR) France Q3 ILO Unemployment Rate: 7.4% v 7.4%e; Mainland Unemployment Rate: 7.2% v 7.2%e.

- (CZ) Czech Sept Current Account Balance (CZK): -8.7B v +10.9Be.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK200M in 3-month bills; Avg Yield: 2.51% v 2.80% prior; Bid-to-cover: 1.29x v 1.50x prior.

- (UK) DMO sold £4.0B in new 4.375% Mar 2028 Gilts; Avg Yield: 4.499% v 4.082% prior; bid-to-cover: 3.12x v 3.29x prior; Tail: 1.0bps v 0.6 bps prior.

- (SE) Sweden sold SEK12.0B vs. SEK12.0B indicated in 3-month bills; Avg Yield: 2.5900% v 2.663% prior; Bid-to-cover: 1.64x v 2.51x prior.

- (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2029 and 2034 Bonds.

- (IT) Italy Debt Agency (Tesoro) sold total €8.25B vs. €7.0-8.25B indicated range in 3-year, 7-year and 15-year BTP Bonds (4 tranches).

- Sold €4.0B vs. €3.5-4.0B indicated range in new 2.70% Oct 2027 BTP bonds; Avg Yield: 2.73%; bid-to-cover: 1.49x.

- Sold €1.5B vs. €1.25-1.5B indicated range in 3.50% Feb 2031 BTP bonds; Avg Yield: 3.23% v 3.53% prior; bid-to-cover: 1.88x v 1.35x prior.

- Sold €1.5B vs. €1.25-1.5B indicated range in 2.50% Dec 2032 BTP; Avg Yield: 3.37% v 3.98% prior; bid-to-cover: 1.92x v 1.83x prior.

- Sold €1.25B vs. €1.0-1.25B indicated range in 4.15% Oct 2039 BTP bonds; Avg Yield: 3.93% v 3.88% prior; bid-to-cover: 2.15x v 1.87x prior.

Looking ahead

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

- 05:30 (CH) Switzerland to sell 2035, 2043 and 2055 Bonds.

- 05:30 (DE) Germany to sell €4.0B in 2.60% Aug 2034 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2034 and 2045 OT Bonds.

- 06:00 (IL) Israel Oct Trade Balance: No est v -$3.1B prior.

- 06:00 (PT) Portugal Oct Final CPI M/M: No est v 0.1% prelim; Y/Y: No est v 2.3% prelim.

- 06:00 (PT) Portugal Oct Final CPI EU Harmonized M/M: No est v -0.4% prelim; Y/Y: No est v 2.6% prelim.

- 06:00 (CZ) Czech Republic to sell 2031, 2035 and 2044 Bonds.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Nov 8th: No est v -10.8% prior.

- 07:00 (BR) Brazil Sept IBGE Services Volume M/M: +0.7%e v -0.4% prior; Y/Y: 3.5%e v 1.7% prior.

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

- 08:00 (PL) Poland Sept Current Account Balance: -€1.3Be v -€2.8B prior; Trade Balance: -€1.3Be v -€2.2B prior; Exports: €27.8Be v €25.0B prior; Imports: €28.9Be v €27.2B prior.

- 08:30 (US) Oct CPI M/M: 0.2%e v 0.2% prior; Y/Y: 2.6%e v 2.4% prior.

- 08:30 (US) Oct CPI (ex-food/energy) M/M: 0.3%e v 0.3% prior; Y/Y: 3.3%e v 3.3% prior.

- 08:30 (US) Oct CPI Index NSA: 315.590e v 315.301 prior; CPI Core Index: 321.628e v 320.767 prior.

- 08:30 (US) Oct Real Avg Hourly Earning Y/Y: No est v 1.4% prior (revised from 1.5%); Real Avg Weekly Earnings Y/Y: No est v 1.3% prior (revised from 0.9%).

- 09:45 (US) Fed's Logan at Energy Conference.

- 11:00 (RU) Russia Q3 Advance GDP (1st of 3 readings) Y/Y: 3.0%e v 4.1% prior.

- 11:00 (RU) Russia Oct CPI M/M: 0.8%e v 0.5% prior; Y/Y: 8.6%e v 8.6% prior.

- 11:00 (RU) Russia Oct CPI Core M/M: 0.8%e v 0.8% prior; Y/Y: 8.2%e v 8.3% prior.

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

- 13:00 (US) Fed’s Musalem.

- 13:30 (US Fed’s Schmid at Energy Conference.

- 14:00 (US) Oct Monthly Budget Statement: -$225.0Be v +$64.3B prior.

- 16:30 (US) Weekly API Oil Inventories.

- 16:45 (NZ) New Zealand Oct Food Prices M/M: No est v 0.5% prior.

- 18:00 (AU) RBA Gov Bullock participates on panel.

- 19:00 (AU) Australia Nov Consumer Inflation Expectation Survey: No est v 4.0% prior.

- 19:01 (UK) Oct RICS House Price Balance: 11%e v 11% prior.

- 19:30 (AU) Australia Oct Employment Change: +25.0Ke v +64.1K prior; Unemployment Rate: 4.1%e v 4.1% prior; Full Time Employment Change: No est v +51.6K prior; Part Time Employment Change: No est v +12.5K prior; Participation Rate: 67.3%e v 67.2% prior.

- 21:35 (CN) China to sell 3-year and 7-year Bonds.

- 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 0.2% prior; “L” Money Supply M/M: No est v 0.0% prior.

- 23:00 (TH) Thailand Oct Consumer Confidence: No est v 48.8 prior; Economic Confidence: No est v 55.3 prior.

- 23:00 (TH) Thailand Central Bank to sell THB35B in 12-month FRN.