Note

Optimism that recent Biden/Xi meeting was progressive

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EU Mid-Market Update: Optimism that recent Biden/Xi meeting was progressive; UK wage data hits 1-year high; German ZEW Survey improves.

Notes/Observations

- Japan Q3 GDP overnight misses substantially and measures contraction of Annualized QoQ: -1.2% v +1.2% estimate.

- German and Euro Zone ZEW surveys beat consensus registered improvements but remain in notable negative territory.

- Geopolitics news revolves around G20 Summit and recent Biden/Xi meeting which seemed more progressive and subdued than expected, lighting up some risk on sentiment on the basis of stability between US/China relationship.

- UK Sept unemployment rose but with a rising wages as a silver lining. UK in focus over next 48 hours with record 40-year high CPI reading expected tomorrow and Autumn Budget Statement on Thurs with plethora of tax rises and spending cuts predicted.

- Asia closed higher with Hang Seng outperforming at +4.1%. EU indices are mixed to flat. US futures are +0.4% to +1.0%. Gold +0.1%, DXY -0.4%; Commodity: Brent -1.1%, WTI -1.5%, UK Nat Gas +13.5%; Crypto: BTC +0.2%, ETH +0.2%.

Asia

- Japan Q3 Preliminary GDP Q/Q: -0.3% v +0.3%e; GDP Annualized Q/Q: -1.2% v +1.2%e.

- Reserve Bank of Australia (RBA) Nov Minutes noted that Board saw value in being consistent with policy after hiking by 25bps in October. Reiterated stance that Board was not on a pre-set path.

- China Oct Industrial Production Y/Y: 5.0% v 5.2%e.

- China Oct Retail Sales Y/Y: -0.5% v +0.7%e.

- China Oct Fixed Urban Assets YTD Y/Y: 5.8% v 5.9%e.

- China Oct YTD Residential Property Sales Y/Y: -28.2% v -28.6% prior.

- China Oct Surveyed Jobless Rate: 5.5% v 5.5%e.

- China PBoC conducted CNY850B vs. CNY1.0T maturing in 1-year Medium-term Lending facility (MLF) with yield unchanged at 2.75%.

- China National Bureau of Statistics (NBS) reiterated stance to balance COVID controls and economic development. Reiterated that foundation for economic recovery was not yet solid. Economic recovery slowed due to Covid outbreaks.

Europe

- ECB's Villeroy (France) stated that was clearly approaching normalization range seen around 2.00%. Favorable condition to interrupt rate hikes would be clear signs of turnaround in core inflation trend. He noted that possible rate hikes less aggressive after Dec meeting.

- PM Sunak signalsed that he would maintain the ‘triple lock’ on UK state pension.

- UK Chancellor Hunt said to accept a recommendation to increase living wage from £9.50hr to ~ £10.40h. The rise of nearly 10% would benefit 2.5M people.

- UK Chancellor said to be planning a 40% levy on UK electricity generators on their excess returns above a certain price per megawatt hour.

Americas

- Fed Vice Chair Brainard stated that core services and in particular housing remained strong; Probably would be appropriate soon to move to a slower pace on increases. Fed had done a lot but still had more to do.

- Fed Vice Chair for Supervision Barr stated that the US economic outlook had weakened amid tighter financial conditions. One priority was monitoring the risk of crypto asset related activities. Fed was heightening focus on liquidity, credit, and interest rate risks.

- International Brotherhood of Boilermakers (IBB) failed to ratify rail union labor agreement; 3rd union of 12 to reject the deal brokered by the White House.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.02% at 432.78, FTSE +0.09% at 7,391.72, DAX -0.13% at 14,295.14, CAC-40 +0.35% at 6,632.23, IBEX-35 -0.34% at 8,138.60, FTSE MIB -0.21% at 24,546.00, SMI +0.11% at 11,011.80, S&P 500 Futures +0.61%].

Market Focal Points/Key Themes: European indices open generally higher but later turned around to trade mixed; sectors among those leading to the upside are real estate and financials; lagging sectors include telecom and energy; oil & gas subsector under pressure after drop in crude prices following OPEC monthly report; telecom sector and FTSE dragged by disappointing results from Vodafone; Credit Suisse to divest portion of its SPG portfolio to Apollo; Intesa Sanpaolo sells its stake in Nexi; earnings expected in the upcoming US session include Alcon, Home Depot, Walmart and Advance Auto Parts.

Equities

- Consumer discretionary: Aston Martin Lagonda [AML.UK] -11% (analyst action).

- Consumer staples: Imperial Brands [IMB.UK] +1.5% (earnings).

- Energy: Nordex [NDX1.DE] -1% (earnings; cuts outlook).

- Financials: Credit Suisse [CSGN.CH] -2% (divestment).

- Healthcare: Ambu [AMBUB.DK] -12% (earnings).

- Industrials: BAE Systems [BA.UK] +3.5% (trading update), DX Group [DX.UK] +10% (earnings; Chairman retires).

- Technology: SimCorp [SIM.DK] -5% (earnings).

- Telecom: Vodafone [VOD.UK] -6% (earnings; cuts outlook).

Speakers

- Ireland Foreign Min Coveney saw encouraging signals that London was serious on Northern Ireland protocol talks and believed a deal could be done by year-end.

- President Biden spoke at G20 in Bali and stress that would come out of pandemic stronger.

- President Biden met with Turkey President Erdogan on sidelines of G20; discussed NATO and Black Sea grain.

- Russia Central Bank (CBR) Gov Nabiullina noted that 2022 domestic GDP to decline by 3.0-3.5% under its base case scenario with growth expected from H2 2023 onwards. Level of price increases could be elevated for some time as economy is rebuilding.

- Russia Foreign Min Lavrov stated that proposed G20 to remove discriminatory barriers on energy markets; Would make deal with UN on Russian grain and fertilizers in exchange for barriers being lifting.

- German ZEW Economists commented that improvement in Nov data likely related to hope that inflation rates would soon fall. Domestic economic outlook remained clearly negative.

- IEA Monthly Oil Report noted that oil markets faced strain with inventories at 18-year low. Approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services would add further pressure on global oil balance. A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain.

- According to UN estimates, world's population reached 8 billion people; World added 1 billion people since 2011.

Currencies/fixed income

- USD was softer on improved global sentiment in the session. Analysts noted that a prominent position of the photo between Xi and Biden on the front page of China’s main official newspaper spoke volumes that Beijing believed its relationship with Washington could improve. Greenback also weighed down after Fed’s Brainard noted it could likely to slow the pace of raising interest rates next month.

- GBP/USD was higher after UK wage data registered its fastest pace in more than a year. Focus turns to CPI data out on Wed and Thursday Autumn budget.

- USD/JPY pair was initially higher after Q3 GDP data from Japan. Analysts cited weak yen and high inflation eroded Japanese consumers’ buying power and sapped businesses’ strength. However, yen moved off its best level as risk appetite found positive vibes in the recent Biden/Xi G20 meeting.

Economic data

- (SE) Sweden Oct PES Unemployment Rate: 3.1% v 3.1% prior.

- (NO) Norway Q4 Consumer Confidence: -38.0 v -29.5 prior.

- (FI) Finland Sept GDP Indicator Y/Y: 1.6% v 1.7% prior - 01:30 (FR) France Q3 ILO Unemployment Rate: 7.3%e v 7.4% prior; Mainland Unemployment Rate: 7.1%e v 7.2% prior.

- (DE) Germany Oct Wholesale Price Index M/M: -0.6% v +1.6% prior; Y/Y: 17.4% v 19.9% prior.

- (UK) Oct Jobless Claims Change: +3.3K v +3.9K prior; Claimant Count Rate: % v 3.9% prior.

- (UK) Sept Average Weekly Earnings 3M/Y: 6.0% v 5.9%e; Weekly Earnings (ex-Bonus) 3M/Y: 5.7% v 5.5%e.

- (UK) Sept ILO Unemployment Rate:3.6 % v 3.5%e; Employment Change 3M/3M: -52K v -25Ke.

- (SE) Sweden Oct CPI M/M: 0.2% v 0.4%e; Y/Y: 10.9% v 11.1%e; CPI Level: 384.04 v 384.49e.

- (SE) Sweden Oct CPIF M/M: -0.1% v +0.2%e; Y/Y: 9.3% v 9.8%e.

- (SE) Sweden Oct CPIF (ex-energy) M/M: 0.9% v 0.5%e; Y/Y: 7.9% v 7.6%e.

- (DK) Denmark Q3 GDP Indicator Q/Q: 0.5% v 0.7% prior.

- (DK) Denmark Oct PPI M/M: No est v -3.2% v -1.9% prior; Y/Y: 22.3% v 28.5% prior.

- (RO) Romania Q3 Advance GDP Q/Q (1st of 3 readings): +1.3% v -1.5%e; Y/Y: 4.0% v 5.6%e.

- (FR) France Oct Final CPI M/M: 1.0% v 1.0% prelim; Y/Y: 6.2% v 6.2% prelim; CPI (ex-tobacco) Index: 113.16 v 113.19e.

- (FR) France Oct Final CPI EU Harmonized M/M: 1.2% v 1.3% prelim; Y/Y: 7.1% v 7.1% prelim.

- (HU) Hungary Q3 Preliminary GDP Q/Q: -0.4% v -0.1%e; Y/Y: 4.0% v 4.7%e.

- (TR) Turkey Oct Central Gov't Budget Balance (TRY): -83.3B v -78.6B prior.

- (ES) Spain Oct Final CPI M/M: 0.3% v 0.4% prelim; Y/Y: 7.3% v 7.3% prelim.

- (ES) Spain Oct Final CPI EU Harmonized M/M: 0.1% v 0.1% prelim; Y/Y: 7.3% v 7.3% prelim.

- (ES) Spain Oct CPI Core M/M: 1.0 v 0.2% prior; CPI Core (final) Y/Y: 6.2% v 6.2% prelim.

- (NL) Netherlands Q3 Preliminary GDP Q/Q: -0.2% v 0.0%e; Y/Y: 3.1% v 3.9%e.

- (NL) Netherlands Sept Trade Balance: €8.4B v €4.4B prior.

- (NL) Netherlands Sept Consumer Spending Y/Y: 2.2% v 1.8% prior.

- (PL) Poland Q3 Preliminary GDP Q/Q: 0.9% v 0.0%e; Y/Y: 3.5% v 3.4%e.

- (PL) Poland Oct Final CPI M/M: 1.8% v 1.8% prelim; Y/Y: 17.9% v 17.9% prelim.

- (IS) Iceland Oct International Reserves (ISK): 878B v 886B prior.

- (IT) Italy Sept General Government Debt: €2.742T v €2.758T prior.

- (DE) Germany Nov ZEW Current Situation Survey: -64.5 v -68.6e; Expectations Survey: 36.7 v -52.0e.

- (EU) Euro Zone Nov ZEW Expectations Survey: -38.7 v -59.7 prior.

- (EU) Euro Zone Q3 Preliminary GDP (2nd reading) Q/Q: 0.2% v 0.2% advance; Y/Y: 2.1% v 2.1% advance.

- (EU) Euro Zone Q3 Preliminary Employment Q/Q: 0.2% v 0.4% prior; Y/Y: 1.7% v 2.7% prior.

- (EU) Euro Zone Sept Trade Balance (seasonally adj): -€37.7B v -€42.0Be; Trade Balance NSA (unadj): -€-34.4B v -€50.9B prior.

- (CY) Cyprus Q3 Preliminary GDP Q/Q: 1.3% v 0.3% prior; Y/Y: 5.5% v 5.9% prior.

Fixed income issuance

- (EU) European Union opened its book to sell EUR-denominated 10-year and 30-year NGEU bond via syndicate.

- (ID) Indonesia sold total IDR5.975T vs. IDR5.0T target in Islamic bills and bonds (sukuk).

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2032, 2037 and 2040 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €1.96B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £3.25B in 1.0% Jan 2032 Gilts; Avg Yield: 3.426% v 4.109% prior; bid-to-cover: 2.11x v 2.42x prior; Tail: 0.7bps v 0.3bps prior.

Looking ahead

- (NG) Nigeria Oct CPI Y/Y: 21.3%e v 20.8% prior.

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

- 05:25 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (DE) Germany to sell €4.0B in 2.10% Nov 2029 Bunds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (IE) Ireland Sept Trade Balance: No est v €6.6B prior.

- 06:00 (FI) Finland to sell combined €1.5B in 2027 and 2047 RAGB Bonds.

- 06:30 (UK) DMO to sell £2.25B 0.875% Jan 2046 Gilts.

- 06:30 EU) ESM to sell €1.1B in 6-month Bills.

- 06:45 (US) Daily Libor Fixing.

- 07:30 (SE) Sweden Central Bank (Riksbank) Floden.

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:30 (US) Nov Empire Manufacturing: -6.0e v -9.1 prior.

- 08:30 (US) Oct PPI Final Demand M/M: 0.4%e v 0.4% prior; Y/Y: 8.4%e v 8.5% prior.

- 08:30 (US) Oct PPI (ex-food/energy) M/M: 0.3%e v 0.3% prior; Y/Y: 7.2%e v 7.2% prior.

- 08:30 (US) Oct PPI (ex-food/energy/trade) M/M: 0.2%e v 0.4% prior; Y/Y: 5.5%e v 5.6% prior.

- 08:30 (CA) Canada Sept Manufacturing Sales M/M: -0.5%e v -2.0% prior; Wholesale Trade Sales M/M: -0.2%e v +1.4% prior.

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

- 09:00 (CA) Canada Oct Existing Home Sales M/M: No est v -3.9% prior.

- 09:00 (EU) Weekly ECB Forex Reserves.

- 09:00 (US) Fed’s Harker.

- 09:00 (US) Fed’s Cook.

- 10:00 (CO) Colombia Sept Trade Balance: -$1.2Be v -$2.2B prior; Total Imports: $6.4Be v $7.3B prior.

- 10:00 (US) Fed’s Barr.

- 11:00 (CO) Colombia Q3 GDP Q/Q: 0.5%e v 1.5% prior; Y/Y: 6.5%e v 12.6% prior.

- 11:00 (CO) Colombia Sept Economic Activity Index (Monthly GDP) Y/Y: 5.4%e v 8.6% prior.

- 11:00 (PE) Peru Sept Economic Activity Index (Monthly GDP) Y/Y: 2.0%e v 1.7% prior.

- 11:00 (PE) Peru Oct Unemployment Rate: 7.5%e v 7.7% prior.

- 11:30 (IL) Israel Oct CPI M/M: 0.5%e v 0.2% prior; Y/Y: 4.9%e v 4.6% prior.

- 12:30 (NL) ECB’s Elserson (Netherlands, SSM member).

- 14:00 (AR) Argentina Oct National CPI M/M: No est v 6.2% prior, Y/Y: No est v 83.0% prior.

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

- 18:30 (AU) Australia Oct Westpac Leading Index M/M: No est v -0.1% prior.

- 18:50 (JP) Japan Sept Core Machine Orders M/M: +0.7%e v -5.8% prior; Y/Y: 8.0%e v 9.7% prior.

- 19:30 (AU) Australia Q3 Wage Price Index Q/Q: 0.9%e v 0.7% prior; Y/Y: 3.0%e v 2.6% prior.

- 20:30 (CN) China Oct New Home Prices M/M: No est v -0.3% prior; Y/Y: No est v -1.5% prior.

- 20:30 (KR) Bank of Korea (BOK) to sell KRW1.0T in 3-Year Bonds.

- 21:00 (NZ) New Zealand Oct Non-Resident Bond Holdings: No est v 57.7% prior.

- 23:30 (JP) Japan Sept Tertiary Industry Index M/M: 0.6%e v 0.7% prior.

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