G20 gathers in Brazil as US allows Ukraine to use long-range missiles inside Russia
|Notes/observations
- Quiet session to begin the week; BOJ Gov Ueda speech earlier today left pricing for potential December hike essentially unchanged.
-Russia steps up rhetoric after Pres Biden authorized Ukraine to use long-range missiles ATACMS to hit targets inside Russia; Some press outlets highlight that the idea behind this shift is to strengthen Ukraine's position ahead of eventual peace talks.
- Tesla shares rise premarket after reports that Trump team said to want easing rules on self-driving cars; Elsewhere, Nvidia shares extend losses premarket after reports that its customers said to have concerns about overheating servers associated with new Blackwell AI chip servers; Company might have an opportunity to comment on the issue later today as NVIDIA CEO Huang to hold SC24 Virtual Special Address around 13:30ET on Monday.
Asia
- BOJ Gov Ueda stated that to assess risks, data and decide on policy at every meeting and make appropriate decision in Dec based on data. Reiterated stance to continue to raise policy rate and adjust degree of monetary support if the economy and prices move in line with forecasts.
- Japan Sept Core Machine Orders M/M: -0.7% v +1.5%e; Y/Y: -4.8% v +1.8%e.
- New Zealand Q3 PPI Input Q/Q: 1.9% v 1.4% prior; Output Q/Q: 1.5% v 1.1% prior.
Global conflict/tensions
- Pres Biden reportedly for the first time authorized Ukraine to use long-range missiles ATACMS to hit targets inside Russia (for now only in Kursk region) is a significant reversal in US policy.
- Senior Russian Senator noted that US decision to allow Ukraine to strike Russia with US long range missiles represents escalation; could result in Ukrainian statehood in complete ruins by morning.
Europe
- ECB’s De Guindos (Spain) reiterated confidence that inflation would return to 2% in 2025 but still some questions about services inflation.
- German SPD member Weingarten said to be calling for Pistorius to replace Scholz as election candidate.
- UK Nov Rightmove House Prices M/M: -1.4% v +0.3% prior; Y/Y: 1.2% v 1.0% prior.
- S&P affirmed Ireland sovereign rating at AA; Outlook Positive.
- Fitch affirmed Ireland sovereign rating at AA; Outlook Stable.
Americas
- Fed’s Barkin (non-voter for 2025) stated that had always expected that core PCE would stay in high 2%s in H2 2024; Hoped that in Q1 2025 inflation will come down.
- Fed's Goolsbee (voter for 2025) noted that did not like tying our hands on Dec rate cut, still more data to come; Saw rate coming down along lines of dot plot.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.22% at 502.02, FTSE +0.24% at 8,083.16, DAX -0.15% at 19,191.55, CAC-40 -0.06% at 7,265.12, IBEX-35 % at #, FTSE MIB -1.25% at 33,765.00, SMI -0.10% at 11,606.80, S&P 500 Futures +0.03%].
Market Focal Points/Key Themes: European indices open mixed with a upward bias, but failed to gain momentum in early trading; markets seen in holding pattern ahead of risk events later in the day and week; better performing sectors include materials and industrials; among sectors inclined to the downside are real estate and financials; reportedly Brookfield looking to take over Grifols; Segro’s offer to takeover Tritax EuroBox lapsed; focus on speech by Lagarde later in the day; earnings expected in the upcoming US session include AECOM.
Equities
- Energy: OMV [OMV.AT] -0.5% (confirmed Gazprom cut gas supplies to Baumgarten hub), Equinor [EQNR.NO] -3.5% (DNB cuts to Sell).
- Healthcare: Grifols [GRF.ES] -2.5% (Brookfield considers an offer of €10.5/shr to take Grifols private).
- Industrials: Melrose [MRO.UK] +8.5% (trading update) - Technology: Prosus [PRX.NL] +1.5% (trading update), ASML [ASML.NL] -1.5% (Nvidia customers said to have concerns about overheating servers associated with Co's new Blackwell AI chip servers), Iqe PLC [IQE.UK] -7.5% (trading update), Datagroup [D6H.DE] +14.5% (spin-off announcement), DKSH Holdigns [DKSH.CH] +1.5% (CMD) - Telecom: Vivendi [VIV.FR] -1.0% (updates on spin-offs).
Speakers
- ECB's Nagel (Germany): Trade tensions could keep interest rates higher.
- ECB's De Guindos (Spain) noted that the balance of risks had shifted from inflation to growth. Trade outlook clouded by uncertainty and tensions could rise further.
- Poland Central Bank (NBP) Maslowska saw Polish rate cuts more likely in H2 of 2025.
- RBA Asst Gov Kent (Financial Markets) noted that forward guidance in Australia might be less useful than in the US.
Currencies/fixed income
- USD continued to consolidate its post Trump election gains during a quiet Monday session. Recent stronger US economic data and Fed speak have provided the greenback with support. Post-election sentiment saw a rising risk of President-elect Trump's policies stoking inflation.
- EUR/USD at 1.0550 area as ECB speak shifts from inflation to growth concerns.
- GBP/USD at 1.2620. Focus on UK inflation data set to be released on We.
- USD/JPY at 154.90 after BOJ Gov Ueda remarks on rate outlook viewed as ‘cautios’ for any potential Dec rate hike (**Note: market see 50% change of it happening at this time)
Economic data
- (NO) Norway Q4 Consumer Confidence: -14.4 v -15.2prior.
- (CH) Swiss Q3 Industrial Output Y/Y: 3.5% v 7.0% prior; Industry & Construction Output Y/Y: 3.3% v 6.0% prior.
- (ES) Spain Sept Home Sales Y/Y: 41.5% v 0.9% prior.
- (CZ) Czech Oct PPI Industrial M/M: 0.1% v 0.3%e; Y/Y: 0.8% v 1.0%e.
- (HK) Hong Kong Oct Unemployment Rate: 3.1% v 3.0%e.
- (ES) Spain Sept Trade Balance: -€3.3B v -€4.8B prior.
- (CH) Swiss Weekly Total Sight Deposits (CHF): 463.4B v 463.5B prior; Domestic Sight Deposits: 455.0B v 455.4B prior.
- (EU) Euro Zone Sept Trade Balance: €13.6 v €7.7Be; Trade Balance NSA (unadj): €B v €6.0Be.
Fixed income issuance
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 4.54% v 4.46% prior; Bid-to-cover: 2.14x v 2.95x prior.
- (SK) Slovakia Debt Agency (Ardal) sold total €M in 2028, 2033, 2034 and 2036 Bonds.
Looking ahead
- (CO) Colombia Central Bank Economists Survey.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell combined €5.0B in 6-month and 12-month BuBills.
- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.
- 06:00 (IL) Israel Oct Unemployment Rate: No est v 2.7% prior.
- 06:00 (BE) Belgium Debt Agency (BDA) to sell 2034 and 2043 OLO Bonds.
- 06:00 (IS) Iceland to sell 3-month and 6-month Bills.
- 06:00 (IL) Israel to sell combined ILS2.90B in 2027, 2028, 2029, 2033, 2035 and 2052 bonds.
- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.
- 06:30 (CL) Chile Q3 GDP Q/Q: +0.6%e v -0.6% prior; Y/Y: 2.2%e v 1.6% prior.
- 06:30 (CL) Chile Q3 Current Account Balance: -$2.6Be v -$1.8B prior.
- 08:00 (PL) Poland Oct CPI Core M/M: 0.5%e v 0.3% prior; Y/Y: 4.2%e v 4.3% prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (IE) ECB's Lane (Ireland, chief economist).
- 08:00 (GR) ECB's Stournaras (Greece).
- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on size issuance for upcoming bond auction.
- 08:15 (CA) Canada Oct Annualized Housing Starts: 240.0Ke v 223.8K prior.
- 08:30 (US) Nov New York Fed Services Business Activity: No est v -2.2 prior.
- 08:30 (CA) Canada Sept Int’l Securities Transactions: No est v 10.0B prior.
- 09:00 (FR) France Debt Agency (AFT) to sell €6.6-8.2B in 3-month, 6-month and 12-month bills (4 tranches).
- 10:00 (US) Nov NAHB Housing Market Index: 42e v 43 prior.
- 10:00 (US) Fed's Goolsbee.
- 11:00 (CO) Colombia Sept Economic Activity Index (Monthly GDP) Y/Y: 1.5%e v 2.0% prior.
- 11:00 (CO) Colombia Q3 GDP Q/Q: 0.4%e v 0.1% prior; Y/Y: 2.3%e v 2.1% prior.
- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.
- 13:30 (EU) ECB's Lagarde.
- 13:30 (EU) ECB's Vujcic.
- 13:30 (UK) BOE's Greene.
- 16:00 (US) Sept Total Net TIC Flows: No est v $79.2B prior; Net Long-term TIC Flows: No est v $111.4B prior.
- 16:00 (US) Weekly Crop Progress Report.
- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.7 prior.
- 19:30 (AU) Reserve Bank of Australia (RBA) Oct Minutes- 22:00 (KR) South Korea Q3 Household Credit (KRW): No est v 1,896T prior.
- 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month Bills.
- 22:30 (JP) Japan to sell 12-Month Bills.
- 23:00 (MY) Malaysia Oct Trade Balance (MYR): 10.0Be v 13.2B prior; Exports Y/Y: +2.5%e v -0.3% prior; Imports Y/Y: 4.0%e v 10.9% prior.
- 23:30 (TW) Taiwan to sell combined NT$60B in 5-year and 10-year bonds.
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