ECB comments and economic data suggest cautious Dec decision

EU mid-market update: ECB comments and economic data suggest cautious Dec decision; Slightly hawkish tones from BoJ Ueda; Earnings remain in focus ahead of Payrolls on Fri and Election next week.

Notes/observations

- Europe is down as repricing for the ECB decision in Dec sways further towards smaller cuts, amid economic data that does not support aggressive easing. Inflation stabilized out of France, Netherlands, Austria and Poland, with a beat in German Retail Sales on MoM basis.

- UK 10-year gilt yield at one-year highs following tax heavy UK budget statement yesterday. Sterling remains just below 1.30.

- Japanese Yen traded sideways after BOJ decision came in line with expectations but strengthened substantially after BOJ Gov Ueda noted removal of ‘time to spare’ phrase in regard to policy decisions. USDJPY last seen at 152.5.

- Notable EU earnings from: SocGen, BBVA, BNP Paribas, Caixabank, ING, Geberit, Repsol, Sabadell, Danske, Erste, Maersk, Carlsberg, , Shell, Stellantis and TotalEnergies.

- Upcoming US premarket earnings: ARW, BALL, BMY, BTU, BWA, CCO, CI, CMCSA, CMS, CNQ, CNP, CVE, CWT, DINO, EL, EME, ETN, ETR, GCI, GWW, H, HII, ICE, ING, IP, K, LIN, LNC, MA, MO, MRK, PH, SO, WEC, WEN, XEL.

- Asia closed lower with KOSPI underperforming -1.3%. EU indices are -0.4% to -0.8%. US futures are -0.6% to -1.1%. Gold -0.3%, DXY 0.0%; Commodity: Brent +0.5%, WTI +0.5%; Crypto: BTC +0.2%, ETH -0.8%.

Asia

- Bank of Japan (BOJ) left Target Rate unchanged at 0.25% (as expected) for its 2nd straight pause in the current phase of its tightening cycle. Vote was unanimous (9-0) to keep policy steady.

- BOJ Quarterly Outlook for Economic Activity and Prices (aka Staff Projections) maintained Maintains FY24/25 GDP growth forecast at 0.6% while raising FY25/26 GDP from 1.0% to 1.1%. Projections maintained Core-core CPI for both FY25 and FY26 at 1.9%.

- China Oct Manufacturing PMI (Govt Official) registered its 1st expansion in 6 months (50.1 v 49.9e).

- Japan Sept Preliminary Industrial Production M/M: 1.4% v 0.8%e; Y/Y:-2.8% v -3.2%e.

- Japan Sept Retail Sales M/M: -2.3% v -0.3%e; Y/Y: 0.5% v 2.1%e.

- South Korea Sept Industrial Production M/M: -0.2% v +1.2%e; Y/Y: -1.3% v +0.5%e.

- Australia Sept Retail Sales M/M: 0.1% v 0.3%e; Q/Q: 0.5% v 0.5%e.

- Australia Q3 Import Price Index Q/Q: -1.4% v -0.3%e; Export Price Index Q/Q: -4.3% v -4.0%e.

- Australia Sept Building Approvals M/M: 4.4% v 2.1%e.

- Australia Sept Private Sector Credit M/M: 0.5% v 0.5%e; Y/Y: 5.8% v 5.7% prior.

- New Zealand Oct ANZ Business Confidence: 65.7 v 60.9 prior.

Global conflict/tensions

- North Korea suspected of firing ballistic missile. Japan Def Min Nakatani stated that strongly condemned North Korea’s missile launch.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.68% at 508.06, FTSE -0.65% at 8,106.45, DAX -0.59% at 19,152.75, CAC-40 -0.73% at 7,374.09, IBEX-35 -0.33% at 11,676.11, FTSE MIB -0.32% at 34,392.00, SMI -0.78% at 11,872.90, S&P 500 Futures -0.84%].

Market focal points/key themes: European indices open lower across the board, but moderated some of the losses in the early part of the session; all sectors start the day in the red; more cautious commentary on rate cuts by leading ECB officials seen as theme; among sectors with the least losses are financials and material; sectors leading to the downside include consumer discretionary and real estate; Siemens confirms acquisition of Altair Engineering and divests its airport logistics unit;focus on Eurozone flash CPI and US PCE Price index later in the day; earnings expected in the upcoming Americas session include Uber, Amazon, Intel, Apple and Casino Guichard Perrachon.

Equities

- Consumer discretionary: Ubisoft [UBI.FR] +3.0% (earnings), Carlsberg [CARLB.DK] +0.5% (Q3 results, affirms guidance) - Consumer staples: AB Inbev [ABI.BE] -3.5% (Q3 results).

- Energy: TotalEnergies [TTE.FR] -2.5% (earnings), Shell [SHEL.UK] +1.0% (Q3 results, $3.5B share buyback).

- Financials: Societe Generale [GLE.FR] +8.0% (earnings), AXA [CS.FR] -1.5% (earnings), Banco Sabadell [SAB.ES] -1.5% (Q3 results, affirms guidance), Caixabank [CABK.ES] -1.0% (9M results, €500M share buyback), ING [INGA.NL] +1.0% (Q3 results, €2.0B buyback and €500M cash dividend).

- Industrials: Airbus [AIR.FR] +3.5% (earnings), Maersk [MAERSKB.DK] +1.0% (final Q3 results, beats estimates, affirms guidance).

- Technology: STMicroelectronics [STM.FR] -0.5% (earnings; trims outlook; Samsung results).

Speakers

- ECB Chief Lagarde commented that inflation target of 2% was in sight; Reiterated to continue with rate cuts with data to determine size and sequence of cuts.

- (EU) Euro Zone ECB Economic Bulletin noted it would continue a data-dependent approach without pre-committing to a specific rate path. Inflation was expected to rise in the coming months before declining to the 2% target next year.

- BOJ Gov Ueda post rate decision press conference noted it had no preconception on timing of next rate hike. Policy decisions to be data dependent. Had no comments on FX price move and wanted to judge impact of weak Yen currency and its background. Reiterated stance to raise interest rate if outlook was realized. Uncertainties remained but markets had slowly regained stability.

Currencies/fixed income

- USD consolidated against most major pairs as market participants remain cautious andn on the sidelines ahead of key US economic data due this week and next week's US presidential election.

- USD/JPY probed the lower end of the 152 level after BOJ Gov Ueda noted that uncertainties remained but markets had slowly regained stability. Yen aided by remarks that impact of FX rates on prices had become larger than in the part, adding that firms were now more eager to hike wages and prices. Pair at 152.40 by mid-session.

- GBP/USD steady around 1.30 as markets assessed the details of the Autumn Budget.

- EUR/USD drifting higher as recent EU inflation and growth data has scaled back expectations of a 50bps rate cut at the Dec meeting.

Economic data

- (NL) Netherlands Preliminary Oct CPI Y/Y: 3.6% v 3.4%e; CPI EU Harmonized M/M: 0.6% v 0.7%e; Y/Y: 3.3% v 3.3%e.

- (DE) Germany Sept Retail Sales M/M: +1.2% v -0.6%; Y/Y: 0.9% v 1.2%e.

- (DE) Germany Sept Import Price Index M/M: -0.4% v -0.4%e; Y/Y: -1.3% v -1.4%e.

- (NO) Norway Sept Credit Indicator Y/Y: 3.7% v 3.7% prior.

- (DK) Denmark Sept Unemployment Rate:2.6 % v 2.6% prior; Gross Unemployment Rate:2.9 % v 2.9% prior.

- (TR) Turkey Sept Trade Balance: -$5.1B v -$5.1Be.

- (TH) Thailand Sept Current Account Balance: $0.6B v $1.6Be; Overall Balance of Payments (BoP): $2.4B v $2.5B prior; Trade Account Balance: $2.5B v $2.4B prior; Exports Y/Y: +1.1% v +11.4% prior; Imports Y/Y: +9.5% v +8.5% prior.

- (HU) Hungary Sept PPI M/M: -0.4% v +1.3% prior; Y/Y: 1.9% v 3.0% prior

- (HU) Hungary Aug Final Trade Balance: €0.4B v €0.7B prelim.

- (FR) France Oct Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 1.2% v 1.1%e.

- (FR) France Oct Preliminary CPI EU Harmonized M/M: 0.3% v 0.2%e; Y/Y: 1.5% v 1.5%e.

- (FR) France Sept PPI M/M: -0.1% v +0.3% prior; Y/Y: -7.0% v -6.3% prior.

- (AT) Austria Oct CPI M/M: +0.3% v -0.1% prior; Y/Y: 1.8% v 1.8% prior.

- (TR) Turkey Sept Foreign Tourist Arrivals Y/Y : 4.6% v 2.5% prior.

- (TW) Taiwan Q3 Advance GDP (1st of 3 readings) Y/Y: 4.0% v 3.5%e.

- (HK) Hong Kong Q3 Advance GDP Q/Q: -1.1% v +0.2%e; Y/Y: 1.8% v 3.1%e.

- (HK) Hong Kong Sept M3 Money Supply Y/Y: 3.0% v 1.9% prior; M2 Money Supply Y/Y: 3.0% v 1.9% prior; M1 Money Supply Y/Y: +3.2% v -3.7% prior.

- (IT) Italy Sept Unemployment Rate: 6.1% v 6.2%e.

- (ES) Spain Aug Current Account Balance: €5.6B v €5.8B prior.

- (NO) Norway Central Bank (Norges) Nov Daily FX Purchase: 150M v 400M prior.

- (IS) Iceland Q3 Unemployment Rate: 3.0% v 3.6% prior.

- (PL) Poland Oct Preliminary CPI M/M: 0.3% v 0.4%e; Y/Y: 5.0% v 5.0%e.

- (CZ) Czech Sept M2 Money Supply Y/Y: 5.4% v 5.8% prior.

- (PT) Portugal Oct Preliminary CPI M/M: 0.1% v 1.3% prior; Y/Y: 2.3% v 2.1% prior.

- (PT) Portugal Oct Preliminary CPI EU Harmonized M/M: -0.4% v +1.6% prior; Y/Y: 2.6% v 2.6% prior.

- (ZA) South Africa Sept PPI M/M: -0.3% v -0.1%e; Y/Y: 1.0% v 1.2%e.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel Sept Leading 'S' Indicator M/M: No est v 0.2% prior.

- (AR) Argentina Oct Consumer Confidence: No est v 39.0 prior.

- 06:00 (EU) Euro Zone Oct Advance CPI Estimate Y/Y: 1.9%e v 1.7% prior; Core CPI Y/Y: 2.6%e v 2.7% prior; CPI M/M: +0.2%e v -0.1% prior.

- 06:00 (EU) Euro Zone Sept Unemployment Rate: 6.4%e v 6.4% prior.

- 06:00 (IT) Italy Oct Preliminary CPI M/M: -0.1%e v -0.2% prior; Y/Y: 0.8%e v 0.7% prior.

- 06:00 (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.2%e v 1.2% prior; Y/Y: 0.9%e v 0.7% prior.

- 06:00 (BE) Belgium Sept Unemployment Rate: No est v 5.4% prior.

- 06:00 (GR) Greece Aug Retail Sales Value Y/Y: No est v -2.8% prior; Retail Sales Volume Y/Y: No est v -0.2% prior.

- 06:00 (GR) Greece Sept Unemployment Rate: No est v 9.5% prior.

- 06:00 (UK) DMO to sell £2.25B in 1.5% July 2053 Green Gilts.

- 06:10 (ES) ECB’s Escriva (Spain).

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (ZA) South Africa Sept PPI M/M: -0.1%e v -0.3% prior; Y/Y: 1.2%e v 2.8% prior.

- 06:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 06:40 (UK) BOE 7-day short-term repo operation (STR).

- 07:00 (IT) Italy Aug Industrial Sales M/M: No est v -0.4% prior; Y/Y: No est v -4.7% prior.

- 07:00 (IE) Ireland Sept PPI M/M: No est v -4.3% prior; Y/Y: No est v -1.7% prior.

- 07:00 (CA) Canada Oct CFIB Business Barometer: No est v 55.0 prior.

- 07:30 (US) Oct Challenger Job Cuts Y/Y: No est v 53.4% prior.

- 07:30 (BR) Brazil Sept Nominal (overall) Budget Balance (BRL): -59.1Be v -90.4B prior; Primary Budget Balance: -8.5Be v -21.4B prior; Net Debt to GDP: 62.3%e v 62.0% prior.

- 08:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 13.00%.

- 08:00 (ZA) South Africa Sept Trade Balance (ZAR): 5.0Be v 5.6B prior.

- 08:00 (BR) Brazil Sept National Unemployment Rate: 6.5%e v 6.6% prior.

- 08:30 (US) Q3 Employment Cost Index (ECI): 0.9%e v 0.9% prior.

- 08:30 (US) Sept Personal Income: 0.3%e v 0.2% prior; Personal Spending: 0.4%e v 0.2% prior; Real Personal Spending (PCE): 0.3%e v 0.1% prior.

- 08:30 (US) Sept PCE Deflator Index M/M: 0.2%e v 0.1% prior; Y/Y: 2.1%e v 2.2% prior.

- 08:30 (US) Sept Core PCE Deflator M/M: 0.3%e v 0.1% prior; Y/Y: 2.6%e v 2.7% prior.

- 08:30 (US) Initial Jobless Claims: 230Ke v 227K prior; Continuing Claims: 1.88Me v 1.897M prior.

- 08:30 (CA) Canada Aug GDP M/M: 0.0%e v 0.2% prior; Y/Y: 1.5%e v 1.5% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 25th: No est v $624.9B prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:01 (AU) Australia Oct CoreLogic Home Value M/M: No est v 0.5% prior.

- 09:45 (US) Oct Chicago Purchase Manager’s Index (PMI): 47.0e v 46.6 prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 6.54T prior.

- 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 9.7% prior; Urban Unemployment Rate: 9.8%e v 10.0% prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 50bps to 9.75%.

- 17:45 (NZ) New Zealand Sept Building Permits M/M: No est v -5.3% prior.

- 18:00 (AU) Australia Oct Final Manufacturing PMI: No est v 46.6 prelim.

- 20:00 (KR) South Korea Oct Trade Balance: $4.1Be v $6.7B prior; Exports Y/Y: 7.0%e v 7.5% prior; Imports Y/Y: 2.2%e v 2.2% prior.

- 20:30 (AU) Australia Q3 PPI Q/Q: No est v 1.0% prior; Y/Y: No est v 4.8% prior.

- 20:30 (AU) Australia Sept Household Spending M/M: No est v 0.0% prior; Y/Y: No est v 1.7% prior.

- 20:30 (AU) Australia Sept Home Loans Value M/M: 1.0%e v 1.0% prior; Investor Loan Value M/M: No est v 1.4% prior; Owner-Occupier Loan Value M/M: No est v 0.7% prior.

- 20:30 (JP) Japan Oct Final Manufacturing PMI: No est v 49.0 prelim- 20:30 (KR) South Korea Oct PMI Manufacturing: No est v 48.3 prior.

- 20:30 (TW) Taiwan Oct PMI Manufacturing: No est v 50.8 prior.

- 20:30 (TH) Thailand Oct PMI Manufacturing: No est v 50.4 prior.

- 20:30 (ID) Indonesia Oct PMI Manufacturing: No est v 49.2 prior.

- 20:30 (MY) Malaysia Oct PMI Manufacturing: No est v 49.5 prior.

- 20:30 (VN) Vietnam Oct PMI Manufacturing: No est v 52.4 prior.

- 21:01 (IE) Ireland Oct PMI Manufacturing: No est v 49.4 prior.

- 21:45 (CN) China Oct Caixin PMI Manufacturing: 49.7e v 49.3 prior.

- 22:00 (ID) Indonesia Oct CPI M/M: 0.0%e v -0.1% prior; Y/Y: 1.7%e v 1.8% prior; CPI Core Y/Y: 2.1%e v 2.1% prior.

- 23:30 (JP) Japan to sell 3-Month Bills.