USD finds some footing, China continues to add Gold to its reserves

Notes/Observations

- Rising US dollar bears down on equities throughout Asia and EU sessions while pressure on bond yields continued to ease.

- China gold holdings rose for the 12 straight month.

- Germany Oct Construction PMI registered its lowest reading since Apr 2020 (38.3 v 39.3 prior).

- UK Oct Halifax House Price Index registered its 1st M/M rise in 7 months.

- EU Earnings Recap: UBS (bank) higher after Q3 results, with focus on underlying figures and accelerated planned expense reductions; ABF (packaged foods) buyback and special div highlights strong FY results; Persimmon (homebuilder) adjusts FY completions upwards as ASP falls slightly and use of incentives increase.

- Asia closed lower with KOSPI under-performing at -2.3%. EU indices are -0.1% to -0.4%. US futures are -0.3%. Gold -0.5%, DXY +0.4%; Commodity: Brent -2.0%, WTI -2.0%, TTF +4.4%; Crypto: BTC -1.3%, ETH -1.3%.

Asia

- RBA raised the Cash Rate Target by 25bps to 4.35% (as expected) to resume its tightening after 3 pauses. Future decisions to be data dependent.

- China Oct Trade Balance: $56.5B v $82.0Be; Exports Y/Y: -6.4% v -3.5%e; Imports Y/Y: +3.0% v -5.0%e.

- Japan Sept Labor Cash Earnings Y/Y:1.2% v 1.0%e; Real Cash Earnings Y/Y: —2.4% v 2.4%e.

- Japan Sept Household Spending Y/Y: -2.8% v -2.7%e.

Europe

- UK Oct BRC LFL Sales Y/Y: 2.6% v 2.8% prior.

Americas

-Fed's Kashkari (voter) stated that was not convinced that rate tightening was over; Would err on the side of doing more rather than failing to do enough.

- Fed's Cook (voter) stated that remained determined to reached the 2% inflation target; Fed trying to balance two sided risks in hope of soft landing.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.18% at 442.70, FTSE -0.06% at 7,413.61, DAX -0.14% at 15,114.76, CAC-40 -0.28% at 6,993.94, IBEX-35 +0.17% at 9,257.25, FTSE MIB +0.12% at 28,625.00, SMI +0.15% at 10,592.80, S&P 500 Futures -0.19%].

Market Focal Points/Key Themes: European indices opened mixed with a bias to the downside and remained inclined lower through the early part of the session; better performing sectors include technology and consumer discretionary; sectors dragging to the downside include energy and telecom; oil & gas subsector under pressure after Brent fell below $85/bbl; Wheel Topco confirms won’t make an offer for Restaurant Group; Vistry signs partnership with Leaf Living and Sage Homes for home deliveries; focus on release of US trade balance later in the day; earnings expected in the upcoming Americas session include Air Products, DR Horton, Gilead and Uber.

Equities

- Consumer discretionary: Ryanair [RYA.IE] +2.0% (analyst action), 4Imprint [FOUR.UK] -4.0% (notes in recent weeks saw some evidence of softening demand patterns), Persimmon [PSN.UK] +1.5% (earnings; Halifax data).

- Consumer staples: Associated British Foods [ABF.UK] +6.5% (earnings; executives comments), Asos [ASC.UK] +4.5% (AB Foods results and outlook; analyst action).

- Energy: Engie [ENGI.FR] +1.5% (earnings).

- Financials: UBS [UBSG.CH] +4.5% (earnings; executives comments).

- Industrials: Daimler Truck [DTG.DE] -3.5% (earnings).

- Technology: Capgemini [CAP.FR] -0.5% (earnings).

- Telecom: Telefonica Deutschland [O2D.DE] +40.5% (earnings; offer for stake).

Speakers

- ECB's De Guindos (Spain): Low growth or even an economic standstill expected to continue in Q4 for the region.

- France Fin Min Le Maire stated that the inflationary crisis was behind us.

- IMF raised China 2023 and 2024 GDP growth forecast. It raised the 2023 GDP growth forecast from 5.0% to 5.4% and 2024 GDP growth forecast from 4.2% to 4.6%.

- Bank of Korea (BOK) Oct Minutes had some members’ note it needed to watch Mid-East war, oil prices and FX. Saw upside risk in CPI due to uncertainties.

Currencies/fixed income

- USD recovered from its multi-day sell-off as several Fed speakers hinted that it likely had more work ahead of it to control inflation.

- USD/JPY back above the 150 level as market participants remain on the lookout for signs of Japanese FX intervention.

- AUD/USD was softer after the RBA rate decision. Market took the statement as a ‘dovish hike’ as the language turned to more data-dependent on future decisions. Expectations percolating that RBA rate hikes were nearing an end.

Economic data

- (NL) Netherlands Oct CPI M/M: +0.4 % v -0.4% prior; Y/Y (final): -0.4% v -0.4% prelim.

- (NL) Netherlands Oct Final CPI EU Harmonized (final) M/M: 0.6% v 0.6% prelim; Y/Y: -1.0% v -1.0% prelim.

- (ZA) South Africa Oct Gross Reserves: $61.0B v $61.7Be; Net Reserves: $55.5B v $55.6Be.

- (CH) Swiss Oct Unemployment Rate: 2.0% v 2.1%e; Unemployment Rate (seasonally adj): 2.1% v 2.1%e.

- (DE) Germany Sept Industrial Production M/M: -1.4% v -0.1%e; Y/Y: -3.7% v -2.7%e.

- (UK) Oct Halifax House Price Index M/M: 1.1% v 0.4% prior (biggest M/M rise in 7 months); Y/Y: -3.2% v -4.7% prior.

- (SE) Sweden Oct Budget Balance (SEK): -0.7B v -6.3B prior.

- (NO) Norway Sept Industrial Production M/M: -8.6% v -1.0% prior; Y/Y: -20.1% v -8.7% prior.

- (NO) Norway Sept Manufacturing Production M/M: -1.3% v +1.4% prior; Y/Y: -1.5% v +1.4% prior.

- (DK) Denmark Sept Industrial Production M/M: 0.3% v 0.3% prior.

- (FI) Finland Sept Preliminary Trade Balance: €0.4B v €0.0B prior.

- (MY) Malaysia end-Oct Foreign Reserves: $108.5B v $108.9B prior.

- (HU) Hungary Sept Industrial Production M/M: +1.2% v -2.4% prior; Y/Y: -5.8% v -6.4%e.

- (ES) Spain Sept Industrial Production M/M: 1.1% v 0.4%e; Y/Y: -1.4% v -2.4%e; Industrial Output NSA (unadj) Y/Y: -4.1% v -3.7% prior.

- (CH) Swiss Oct Foreign Currency Reserves (CHF): 657.8B v 678.3B prior.

- (AT) Austria Oct Wholesale Price Index M/M: -1.1% v 1.2% prior; Y/Y: -6.5% v -2.5% prior.

- (CZ) Czech Sept Retail Sales (ex-auto) Y/Y: -4.0% v -3.7%e.

- (TW) Taiwan Oct CPI Y/Y: 3.1% v 2.8%e; CPI Core Y/Y: 2.5% v 2.5% prior; PPI Y/Y: -0.3% v +0.2% prior.

- (TW) Taiwan Oct Trade Balance: $5.8B v $8.9Be; Exports Y/Y: -4.5% v 0.0%e; Imports Y/Y: -12.3% v -15.2%e.

- (CN) China Oct Foreign Reserves: $3.101T v $3.102Te; Gold reserves: 71.2M v 70.46M troy oz prior (12th straight rise).

- (DE) Germany Oct Construction PMI: 38.3 v 39.3 prior.

- (IS) Iceland Oct Preliminary Trade Balance (ISK): B v -19.8B prior.

- (CZ) Czech Oct International Reserves: $136.9B v $138.4B prior.

- (SG) Singapore Oct Foreign Reserves: $338.2B v $337.4B prior.

- (EU) Euro Zone Sept PPI M/M: 0.5% v 0.5%e; Y/Y: -12.5% v -12.5%e.

Fixed income issuance

- (ID) Indonesia sold total IDR2.24T vs. IDR9.0T target in Islamic bills and bonds (sukuk).

- (DK) Denmark opened its book to sell USD-denominated 2-year notes; guidance seen +11bps to Treasuries.

- (ES) Spain Debt Agency (Tesoro) sold total €4.27B vs. €4.0-5.0B indicated range in 6-month and 12-month bills.

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2035, 2040 and 2048 bonds.

- (UK) DMO sold £3.75B in 4.625% Jan 2034 Gilts; Avg Yield: 4.405% v 4.444% prior; bid-to-cover: 2.90x v 3.12x prior; Tail: 0.4bps v 0.5bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €1.27B vs. €1.27B indicated in 2028 and 2033 bonds.

Looking ahead

- (RU) Russia Oct Vehicle Sales Y/Y: No est v 120.5% prior.

- (UR) Ukraine Oct Official Reserve Assets: No est v $39.7B prior.

- (IL) Israel Oct Foreign Currency Balance: No est v $198.6B prior.

- (MX) Mexico CitiBanamex Survey of Economists.

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

- 05:30 (CH) Switzerland to sell 6-month Bills.

- 05:30 (DE) Germany cancelled planned auction of I/L bonds (Bundei).

- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.0B in 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).

- 06:00 (BR) Brazil Central Bank (BCB) Nov Minutes.

- 06:30 (CL) Chile Oct Trade Balance: $1.0Be v $1.0B prior; Exports: No est v $7.3B prior; Imports: No est v $6.4B prior; Copper Exports: No est v $3.9B prior.

- 06:30 (CL) Chile Oct International Reserves: No est v $41.4B prior.

- 06:30 (BR) Brazil Sept Total Outstanding Loans (BRL): No est v 5.524T prior; M/M: No est v +1.1% prior; Personal Loan Default Rate: No est v 6.1% prior.

- 06:30 (UK) King’s Speech in Parliament.

- 06:30 (EU) ESM to sell €1.1B in 3-month Bills.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (MX) Mexico Oct Vehicle Production: No est v 338.9K prior; Vehicle Exports: No est v 301.3K prior.

- 07:00 (CL) Chile Sept Nominal Wage Y/Y: No est v 8.0% prior.

- 08:00 (PL) Poland Oct Official Reserves: No est v $180.1B prior.

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

- 08:30 (US) Sept Trade Balance: -$60.0Be v -$58.3B prior.

- 08:30 (CA) Canada Sept Int'l Merchandise Trade (CAD): 1.0Be v 0.7B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:15 (US) Fed’s Barr.

- 09:30 (TR) Turkey Oct Cash Budget Balance (TRY): No est v -69.1B prior.

- 09:50 (US) Fed’s Schmid.

- 10:00 (US) Fed’s Waller.

- 12:00 (US) Fed’s Barr.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 13:30 (US) Fed's Logan.

- 14:00 (AR) Argentina Sept Industrial Production Y/Y: No est v -3.1% prior; Construction Activity Y/Y: No est v -3.0% prior.

- 14:30 (DE) ECB’s Nagel (Germany).

- 15:00 (US) Sept Consumer Credit: +$9.0Be v -$15.6B prior.

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

- 18:00 (KR) South Korea Sept Current Account Balance: No est v $4.8B prior; Balance of Goods (BoP): No est v $5.1B prior.

- 20:00 (PH) Philippines Sept Unemployment Rate: No est v 4.4% prior.

- 21:00 (NZ) New Zealand Q4 Inflation Expectation Survey: No est v 2.8% prior.

- 21:35 (CN) China to sell 1-month, 2-month and 3-month bills.

- 21:35 (CN) China to sell 2Y Upsized Bond.