Focus on upcoming ECB rate decision and US Q3 GDP data in session

Notes/Observations

- Busy European earnings session leaves FTSE100 outperforming in positive territory as rest of European indices falters in the red.

- Macro attention to tilt into ECB rate decision later with 75bps still expected, despite signs of Central Banks across globe slowing their pace (Bank of Canada latest to hike less than expected, at 50bps yesterday).

- US GDP data later in session to hint at severity of recession.

- Asia closed mixed with KOSPI outperforming at +1.7%. EU indices are broadly lower by -0.5%. US futures are 0.0% to +0.5%. Gold -0.2%, DXY +0.2%; Commodity: Brent -0.1%, WTI -0.1%, UK Nat Gas -0.2%; Crypto: BTC -0.1%, ETH +0.8%.

- Upcoming US premarket earnings from the likes of: AN, DANOY, CAT, EME, HON, HTZ, LIN, MA, MRK, PCG, SO, XEL.

Asia

- South Korea Q3 Advance GDP (1st reading) Q/Q: 0.3% v 0.3%e; Y/Y: 3.1% v 3.0%e.

- China Sept YTD Industrial Profits Y/Y: -2.3% v -2.1% prior.

- RBNZ Gov Orr stated that was firmly focused on meeting its inflation target of 1% to 3%; believed Inflation was still too high in an absolute sense.

- Japan Govt spending stimulus said to be around ~¥29T (up from prior speculation of ¥25.1T); expected to be approved on Fri, Oct 28th.

Europe

- UK PM Sunak said to be reconsidering tax increases and major public spending cuts following improvements in the nation’s finances (**Note: On Oct 23rd, Chancellor of the Exchequer (Fin Min) Hunt was said to be considering up to £20B in tax rises on high earners in his medium-term fiscal budget announcement).

Americas

- BOC Gov Macklem post rate decision press conference noted that it was still not there yet on ending tightening phase but was getting closer.

- Brazil Central Bank (BCB) left the Selic Target Rate unchanged at 13.75% (as expected). Would assess if the strategy of maintaining the SELIC rate for sufficiently long period will be enough to ensure the convergence of inflation.

- Mexico Central Bank (Banxico) Dep Gov Esquivel warned against raising monetary policy rate to an excessively restrictive level amid weak economy. Banxico should begin thinking about ending the rate hike cycle.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.27% at 409.20, FTSE +0.39% at 7,083.45, DAX -0.29% at 13,157.13, CAC-40 -0.46% at 6,247.47, IBEX-35 -0.53% at 7,828.66, FTSE MIB -0.43% at 22,294.00, SMI -0.43% at 10,770.20, S&P 500 Futures +0.28%].

Market Focal Points/Key Themes: European indices open modestly lower across the board and stayed lower through the early part of the session (with FTSE notable exception, supported by results from Shell); better performing sectors include energy and financials; sectors trending lower include technology and industrials; oil & gas subsector supported by earnings, higher Brent; Credit Suisse to sell significant portion of Securitized Products portfolio; Aegon to combine Dutch operations with SDR; focus on ECB meeting later in the day; earnings expected during the upcoming US session include Caterpillar, Merck, McDonald’s and Apple.

Equities

- Consumer discretionary: Lufthansa [LHA.DE] +1.5% (earnings), Carrefour [CA.FR] +6% (earnings).

- Consumer staples: Unilever [UNA.NL] -1% (earnings; raises outlook), Anheuser-Busch InBev [ABI.BE] +5.5% (earnings).

- Energy: Shell [SHEL.UK] +3.5% (earnings; buyback; dividend raise), TotalEnergies [TTE.FR] +2% (earnings).

- Financials: Credit Suisse [CSGN.CH] -11% (earnings; cost reduction plan; divestment), Lloyds Banking Group [LLOY.UK] -1.5% (earnings).

- Healthcare: GSK [GSK] +1% (FDA Advisory decision; trial data).

- Technology: STMicroelectronics [STM.FR] -5% (earnings; Samsung results).

Speakers

- France Fin Min Le Maire stated that would provide several billions of euros worth in support to SMEs with energy bills.

- Russia Econ Min Reshetnikov stated that the country would resume quarterly GDP growth in Q4.

- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raised the end-2022 inflation from 60.4% to 65.2% and also raised the end-2023 inflation from 19.2% to 22.3%.

- Egypt Central Bank raises Benchmark Rates by 200bps with Deposit Rate raised to 13.25% and Lending Rate to 14.25%. Statement noted it was moving to durably flexible FX regime.

- China Commerce Ministry (MOFCOM spokesperson Shu Jueting) stated that saw the risk of overseas demand slowdown rising in Q4 but look to keep trade within a reasonable range. Domestic retail sales to maintain its stable recovery.

Currencies/fixed income

- USD remained on the defensive for a 3rd straight session as markets continued to bet the Fed would slower the pace of its rate hike. US 10-year yield hovered just above 4.0% area. Grrenback was off its worst levels by mid-day as yield drifted higher.
EUR/USD faded away from session highs with focus on ECB rate decision. Markets expect ECB to continue front-loading of its tightening cycle and likely to signal its stance on future rate path with possible hints on its plans for reducing its balance sheet. ECB looking to reach the neutral level for its key rate at year-end.

- USD/JPY continued to move away from recent 32-year highs. Focus on upcoming BOJ rate decision where markets expect the central bank to maintain it’s its super-easy monetary policy. Dealers note that Japanese MOF could use the opportunity to step up intervention if the Yen currency weakened after the decision.

Economic data

- (FI) Finland Oct Consumer Confidence: -17.6 v -18.3 prior; Business Confidence: -5 v -1 prior.

- (DE) Germany Nov GFK Consumer Confidence: -41.9 v -42.3e.

- (NO) Norway Aug AKU Unemployment Rate: 3.2% v 3.1% prior.

- (SE) Sweden Sept Household Lending Y/Y: 5.1% v 5.6% prior.

- (DK) Denmark Sept Retail Sales M/M: -0.4% v 0.3% prior; Y/Y: -5.4% v -5.2% prior.

- (ES) Spain Q3 Unemployment Rate: 12.7% v 12.5% prior.

- (HU) Hungary Sept Unemployment Rate: 3.8% v 3.7%e.

- (TR) Turkey Sept Trade Balance: -$9.6B v -$10.4Be.

- (TR) Turkey Oct Economic Confidence: 97.1t v 94.3 prior.

- (SE) Sweden Oct Consumer Confidence: 48.3 v 52.1 prior (lowest since 1995); Manufacturing Confidence: 105.1 v 109.9 prior; Economic Tendency Survey: 84.6 v 90.8 prior.

- (IT) Italy Oct Consumer Confidence: 90.1 v 93.5e; Manufacturing Confidence Index: 100.4 v 100.0e; Economic Sentiment: 104.5 v 105.1 prior.

- (AT) Austria Oct Manufacturing PMI: 46.6 v 48.8 prior (3rd straight contraction and lowest since Jun 2020).

- (TR) Turkey Sept Foreign Tourist Arrivals Y/Y: 55.8% v 58.3% prior.

- (TW) Taiwan Sept Leading Monitoring Indicator: 17 v 23 prior.

- (IT) Italy Aug Industrial Sales M/M: +3.6% v -0.2% prior; Y/Y: 23.1% v 16.2% prior.

- (IS) Iceland Oct CPI M/M: 0.7% v 0.1% prior; Y/Y: 9.4% v 9.3% prior.

Fixed income issuance

- (IN) India sold total INR220B vs. INR220B indicated in 3-month, 6-month and 12-month bills.

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2030 and 2039 I/L Bonds.

- (IT) Italy Debt Agency (Tesoro) sold €5.5B vs. €5.5B indicated in 6-month bills; Avg Yield: 2.049% v 1.978% prior; Bid-to-cover: 1.39x v 1.42x prior.

Looking ahead

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

- 05:30 (ZA) South Africa Sept PPI M/M: +0.1%e v -0.5% prior; Y/Y: 15.6%e v 16.6% prior.

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

- 06:00 (UK) Oct CBI Retailing Reported Sales: -15e v -20 prior; Total Distribution Reported Sales: No est v -26 prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (CA) Canada Oct CFIB Business Barometer: No est v 52.5 prior.

- 07:00 (MX) Mexico Sept Unemployment Rate NSA (unadj): 3.5%e v 3.5% prior.

- 07:00 (MX) Mexico Sept Trade Balance: -$4.5Be v -$5.5B prior.

- 07:30 (CL) Chile Central Bank (BCCh) Oct Minutes.

- 08:00 (BR) Brazil Sept National Unemployment Rate: 8.7%e v 8.9% prior.

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

- 08:15 (EU) ECB Interest Rate Decision: Expected to raise Key Rates by 75bps; Expected to raise Main 7-day Refinancing Rate by 75bps to 2.00%. Expected to raise Marginal Lending Facility by 75bps to 2.25%. Expected to raise Deposit Facility Rate by 75bps to 1.50%.

- 08:30 (US) Q3 Advance GDP Annualized (1st Reading) Q/Q: +2.4%e v -0.6% prior; Personal Consumption: 1.0%e v 2.0% prior.

- 08:30 (US) Q3 Advance GDP Price Index (1st Reading): 5.3%e v 9.0% prior; Core PCE Q/Q: 4.5%e v 4.7% prior.

- 08:30 (US) Sept Preliminary Durable Goods Orders: +0.6%e v -0.2% prior; Durables (Ex-Transportation): 0.2%e v 0.3% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.3%e v 1.4% prior; Capital Goods Shipments (non-defense/ex-aircraft): 053%e v 0.4% prior.

- 08:30 (US) Initial Jobless Claims: 220Ke v 214K prior; Continuing Claims: 1.39Me v 1.385M prior.

- 08:30 (BR) Brazil Aug Total Outstanding Loans (BRL): 5.123Te v 5.067T prior; M/M: 1.1%e v 1.6% prior; Personal Loan Default Rate: No est v 5.6% prior.

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

- 08:45 (EU) ECB chief Lagarde post rate decision press conference.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Oct 21st: No est v $544.4B prior.

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

- 10:30 (SE) Sweden Central Bank (Riksbank) Jansson.

- 11:00 (US) Oct Kansas City Fed Manufacturing Activity Index: -2e v+ 1 prior.

- 11:30 (UK) BOE’s Woods.

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

- 12:00 (CA) Canada to sell 30 Year Bonds.

- 13:00 (US) Treasury to sell 7-Year Notes.

- (AR) Argentina Oct Consumer Confidence: No est v 37.2 prior.

- 17:00 (NZ) New Zealand Oct Consumer Confidence Index: No est v prior; M/M: No est v 0.0% prior.

- 19:30 (JP) Japan Oct Tokyo CPI Y/Y: 3.3%e v 2.8% prior; CPI (Ex-Fresh Food) Y/Y: 3.2%e v 2.8% prior; CPI (ex-fresh food/energy) Y/Y: 2.0%e v 1.7% prior.

- 19:30 (JP) Japan Sept Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 1.33x v 1.32 prior.

- 20:30 (SG) Singapore Final Q3 URA Private Home Prices Q/Q: No est v 3.4% prelim.

- 20:30 (AU) Australia Q3 PPI Q/Q: No est v 1.4% prior; Y/Y: No est v 5.6% prior.

- 22:30 (SG) Singapore Sept Unemployment Rate: 1.9%e v 2.1% prior.

- 23:00 (JP) Bank of Japan (BOJ) Interest Rate Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.1%.