Russia tests resolve of West with apparent first-time use of ICBM into Ukraine

EU mid-market update: Russia tests resolve of West with apparent first-time use of ICBM into Ukraine; Expectations are everything as traders assess if NVDA guidance was another "drop the mic performance".

Notes/observations

- Significant step up in conflict escalation after Ukraine Air Force declared that Russia fired an ICBM earlier this morning, the first time a missile of that power has been used in the war. In a direct response to US and UK use of long-range missiles earlier this week, Russia said to have used RS-26 ICBM with up to 5.8km operating range and can carry a nuclear weapon, although Ukraine has suggested it was equipped with conventional warhead only; Follow up press later from ABC News contradicted Ukraine Military comments, noting it was a ballistic missile only, not an ICBM.- Following Adani founder Gautam being charged by US federal prosecutors in $250M bribery scheme, Adani Enterprises trades ~20% lower, while group entities for Wilmar, Ports, Gas, Power, Energy and flagship Enterprises make statements that there are no allegations against the company, only the founder.

- Bitcoin edges closer to 100K, last seen at 97.5K against US dollar.

Google made a statement following DOJ proposal to divest Chrome browser; Google Exec notes to file their own proposals in Dec and make broader case in 2025.

- Asia closed mixed with Nikkei underperforming -1.0%. EU indices are -0.5% to +0.1%. US futures are -0.2% to -0.5%. Gold +0.6%, DXY 0.0%; Commodity: Brent +1.6%, WTI +1.7%; Crypto: BTC +4.8%, ETH +0.4%.

Asia

- Four China govt advisers said to advocate for 2025 GDP growth target of ~5%, similar to 2024; Two other advisers recommend slightly lower targets of "above 4%" and "4.5-5.0%".

- BOJ Gov Ueda noted that there would be a lot of data before the December meeting and not possible to predict outcome.

Europe

- ECB's Villeroy (France) reiterated stance that inflation could be sustainably at 2% in early 2025; victory against inflation was in sight in Europe. ECB should continue to reduce restrictive policy. Balance of risks on growth and inflation was shifting to the downside.

Americas

- Fed's Williams (voter) stated that saw full year inflation ~2.25% and 2025 GDP growth ~2.5%; Inflation to continue cooling and interest rates falling further.

- Fed's Collins noted monetary policy was well positioned for economic outlook; Some additional rate cuts needed as policy remained restrictive. Policy is not on a preset course; Final destination of rate cuts is not clear.

Energy

- OPEC+ could further extend voluntary cuts noting deeper cuts unpalatable given internal pressure to hike. Price war with rivals seen as unlikely (**Note: Next OPEC+ meeting scheduled for Dec 1st).

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 -0.17% at 499.64, FTSE +0.12% at 8,094.50, DAX +0.99% at 19,017.65, CAC-40 -0.33% at 7,174.37, IBEX-35 -0.19% at 11,566.49, FTSE MIB -0.45% at 33,077.00, SMI +0.04% at 11,544.60, S&P 500 Futures -0.29%].

Market focal points/key themes: European indices open modestly higher but quickly turned into the red; lack of risk appetite attributed to geopolitical developments; among better performing sectors are financials and energy; underperforming sectors include consumer discretionary and real estate; oil & gas subsector supported after reports of increased imports to China; Cohort acquires EM Solutions; reportedly a second firm is interested in Anglo American’s coal assets; reportedly Unilever halts sale of ice cream unit; earnings expected in the upcoming US session include Deere, PDD, Baidu and Gap.

Equities

- Consumer discretionary: JD Sports Fashion [JD.UK] -16.0% (weak trading update), IDS (Royal Mail) [IDS.UK] -1.0% (H1 results), CTS Eventim [EVD.DE] -8.5% (9M results), Jet2 [JET2.UK] +9.5% (earnings).

- Financials: BBVA [BBVA.ES] -0.5% (proposes measures to antritrust watchdog CNMV to obtain takeover authorization of Sabadell), Julius Baer [BAER.CH] +3.0% (trading update).

- Industrials: Rheinmetall [RHM.DE] +2.5% (Russia reportedly used an intercontinental ballistic missile (ICBM) in its war against Ukraine for the first time; Deutsche raised to Buy) - Technology: ASML [ASML.NL] -1.5% (NVIDIA results and guidance).

Speakers

- ECB's Stournaras (Greece): Believes a 25bps cut in Dec is the right approach; sees neutral rate around 2.00%. Should cut at every meeting until the neutral rate was hit. Trade tariffs likely to provoke a response.

- Norway Central Bank (Norges) Q4 Expectation Survey cut 12-month ahead inflation from 3.1% to 2.9% and cut 2 to 3 year ahead inflation from 4.1% to 3.9%.

- German Bundesbank's Financial Stability Report: Significant number of corporate insolvencies were likely next year in Germany; Default risk for non-financial corporations was likely to remain elevated in 2025 given ongoing structural change and the continued economic weakness.

- Ukraine Air Force announced that Russia had fired an ICBM as part of its overnight attack. (**Note: Intercontinental ballistic missile have a range of thousands of kilometres and could be used for delivering nuclear warheads, though they can also have conventional warheads).

- Russia Foreign Ministry Spokesperson reiterated that govt remained open to talks on Ukraine; Ready to look at any 'realistic initiative'.

- Russia Pres Putin and Iraq PM reportedly discussed OPEC+ cooperation.

Currencies/fixed income

- USD and other safe-haven currencies maintained their form tone as market participants balance geopolitical developments in Russia’s invasion of Ukraine as Russia launched intercontinental ballistic missile for first time in the conflict. The Russian move followed recent Ukraine strikes with western-made weapons inside Russian territory.

EUR/USD edged back down towards the lower end of the 1.05 level.

- GBP/USD tested 1.2630 as UK fiscal data saw a rise in borrowing due to increased debt interest payments following the autumn budget.

- USD/JPY approached the lower end of the 154 level. Focus on upcoming Japan CPI data for Oct. JOJ Gov Ueda said earlier this week that the bank would pay close attention to service prices.

Economic data

- (EU) Euro Zone Oct EU27 New Car Registrations: +1.1 v -6.1% prior.

- (NL) Netherlands Nov Consumer Confidence: -25v -22 prior.

- (NL) Netherlands Oct Unemployment Rate: 3.7% v 3.8%e.

- (UK) Oct Public Finances (PSNCR): +£11.1B v -£20.5B prior; PSNB (ex-banking groups): £17.4B v £13.3Be; Public Sector Net Borrowing (PSNB): £17.4B v £12.9Be; Central Government NCR: £19.7B v £13.2B prior.

- (SE) Sweden Q3 Industry Capacity: 87.5% v 88.4% prior.

- (NO) Norway Q3 Overall GDP Q/Q: -1.8% v +2.0% prior; GDP Mainland Q/Q: 0.5% v 0.3%e.

- (DK) Denmark Nov Consumer Confidence: -9.3 v -8.9 prior.

- (TR) Turkey Nov Consumer Confidence : 79.8 v 80.6 prior.

- (FR) France Nov Business Confidence: 96 v 97e; Manufacturing Confidence: 97 v 94e; Production Outlook Indicator: -14 v -13e; Own-Company Production Outlook: 5 v 0e.

- (CH) Swiss Oct M3 Money Supply Y/Y: 1.4% v 1.8% prior.

- (HK) Hong Kong Oct CPI Composite Y/Y: 1.4% v 1.7%e.

- (PL) Poland Nov Consumer Confidence: -17.1 v -15.2e.

- (PL) Poland Oct Construction Output Y/Y: -9.6% v -6.5%e.

- (BE) Belgium Nov Consumer Confidence: -8 v -5 prior.

Fixed income issuance

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

- (ES) Spain Debt Agency (Tesoro) sold total €4.09B vs. €4.0-5.0B indicated range in 2031, 2037 and 2042 SPGB bonds.

- Sold €1.38B in 3.10% July 2031 SPGB bonds; Avg Yield: 2.768% v 2.646% prior; bid-to-cover: 1.35x v 2.19x prior.

- Sold €1.16B in 4.20% Jan 2037 SPGB; Avg Yield: 3.187% v 1.043% prior; Bid-to-cover: 2.04x v 2.50x prior.

- Sold €1.55B in 1.00% July 2042 green SPGB bond; Avg Yield: 3.442% v 3.562% prior; Bid-to-cover: 1.35x v 1.42x prior.

- *(FR) France Debt Agency (AFT) sold total €10.997B vs. €9.0-11.0B in 2927, 2028 and 2030 bonds (4 tranches).

- Sold €3.811B in 2.50% Sept 2027 Oat; Avg Yield: 2.45% v 2.42% prior; Bid-to-cover: 2.47x v 2.46x prior.

- Sold €2.255B in 0.75% Nov 2028 Oat; Avg Yield: 2.60% v 2.85% prior; Bid-to-cover: 2.93x v 3.83x prior.

- Sold €3.708B in 2.75% Feb 2030 Oat; Avg Yield: 2.74% v 2.61% prior; Bid-to-cover: 2.71x v 2.58x prior.

- Sold €1.223B in 0.00% Nov 2030 Oat; Avg Yield: 2.76% v 0.30% prior; Bid-to-cover: 3.02x v 2.59x prior.

- (UK) DMO sold €2.0B in 0.125% Nov 2026 Gilts via tender; Avg Yield: 3.996%; bid-to-cover: 4.31x.

Looking ahead

- (EG) Egypt Central Bank (CBE) Interest Rate Decision: Expected to leave Key Rates unchanged.

(AR) Argentina Nov Consumer Confidence: No est v 42.4 prior.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:30 (PL) Poland to sell Bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 05:50 (FR) France Debt Agency (AFT) to sell €1.5-2.25B in inflation-linked 2032, 2034, 2036 and 2040 I/L Bonds (Oatei).

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One Week Repo Rate unchanged at 50.00%.

- 06:00 (UK) Nov CBI Industrial Trends Total Orders: -25e v -27 prior; Selling Prices: 5e v 0 prior.

- 07:00 (MX) Mexico Sept Retail Sales M/M: 0.2%e v 0.1% prior; Y/Y: -1.2%e v -0.8% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 15th: No est v $620.8B prior.

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

- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 7.75%.

- 08:30 (US) Nov Philadelphia Fed Business Outlook: 8.0e v 10.3 prior.

- 08:30 (US) Initial Jobless Claims: 220Ke v 217K prior; Continuing Claims: 1.88Me v 1.873M prior.

- 08:30 (CA) Canada Oct Industrial Product Price M/M: +0.9%e v -0.6% prior; Raw Materials Price Index M/M: +2.5%e v -3.1% prior.

- 08:30 (BR) Brazil Oct Tax Collections (BRL): 243.5Be v 203.2B prior.

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

- 08:45 (US) Fed’s Hammack.

- 08:45 (SE) Sweden Central Bank (Riksbank) Jansson.

- 09:00 (UK) BOE’s Mann.

- (EG) Egypt Central Bank Interest Rate Decision.

10:00 (US) Oct Existing Home Sales: 3.95Me v 4.11M prior.

- 10:00 (US) Oct Leading Index: -0.3%e v -0.5% prior.

- 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -12.4e v -12.5 prior.

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

- 10:30 (IE) ECB’s Lane (Ireland, chief economist).

- 10:30 (NL) ECB’s Elderson (Netherlands).

- 11:00 (AT)) ECB's Holzmann (Austria), Kazimir (Slovakia), Vujcic (Croatia) in Vienna.

- 11:00 (US) Nov Kansas City Fed Manufacturing Activity: -5e v -4 prior.

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

- 12:00 (CH) SNB's Tschudin at event in Geneva.

- 12:00 (CA) Canada to sell 5-year Bonds.

- 12:25 (US) Fed’s Goolsbee.

- 12:30 (US) Fed’s Hammack.

- 13:00 (US) Treasury to sell 10-Year TIPS Reopening.

- 17:00 (AU) Australia Nov Preliminary Manufacturing PMI: No est v 47.3 prior; Services PMI: No est v 51.0 prior; Composite PMI: No est v 50.2 prior.

- 18:30 (JP) Japan Oct National CPI Y/Y: 2.3%e v 2.5% prior; CPI Ex Fresh Food (Core) Y/Y: 2.2%e v 2.4% prior; CPI Ex Fresh Food, Energy (core-core) Y/Y: 2.2%e v 2.1% prior.

19:01 (UK) Nov GfK Consumer Confidence: -22e v -21 prior.

- 19:30 (JP) Japan Nov Preliminary Manufacturing PMI: No est v 49.2 prior; Services PMI: No est v 49.7 prior; Composite PMI: No est v 49.6 prior.

- 21:35 (CN) China to sell 10-year Bonds.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 23:00 (MY) Malaysia Oct CPI Y/Y: 1.8%e v 1.8% prior.