Biden/Xi meet ahead of G20 summit in Bali

(TradeTheNews.com Staff)

Notes/Observations

– Quiet day so far for economic data and macro news catalysts; US Mid-Term results continued to steadily come in over the weekend. This morning, Biden landed in Bali ahead of meeting with China Pres Xi; both leaders stressed the need to cooperate.

– FTSE100 outperforming European indices ahead of UK CPI on Wed and highly anticipated Autumn Budget Statement on Thurs.

– US equities pull back from a historic 2-day bull rally last week while the USD consolidates at a lower-level following weakening from last week’s cooler-than-expected CPI.

– Asia closed mostly lower with Nikkei225 underperforming at -1.1%. EU indices are modestly higher by 0.3%. US futures are -0.3% to -0.7%. Gold -0.6%, DXY +0.6%; Commodity: Brent -0.6%, WTI -0.8%, UK Nat Gas +11.6%; Crypto: BTC +1.2%, ETH +2.4%.

Asia

– BOJ Gov Kuroda reiterated its overall economic assessment that the domestic economy was picking up and that the BOJ to conduct appropriate policy by watching.

– China PBOC and insurance regulator are said to have told financial firms to extend financing support to property companies.

– President Biden and China President Xi to meet in Bali on the sidelines of G20.

Europe

– UK Office of Budget Responsibility (OBR) said likely to present a similar recession picture that the BoE presented last week.

– UK Nov Rightmove House Prices M/M: -1.1% v +0.9% prior; Y/Y: 7.2% v 7.8% prior.

– Czech Central Bank (CNB) Gov Michl: Calls for a 2023 wage growth cap at ~5.0%.

Americas

– Fed’s Waller (voter) noted that given the level of inflation, rates were not that high; the CPI report was “just one data point” and markets were “way out in front”; Rates would not fall until there was “clear, strong evidence” inflation was falling; market overreacted to one CPI data point; looking at a possible 50bps next meeting.

– Democrats maintain control of the US Senate, to have at least 50 seats following victory in Nevada.

Energy

– US Treasury Sec Yellen: Working with France on implementing Russia’s oil price cap.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.19% at 433.10, FTSE +0.60% at 7,361.95, DAX +0.31% at 14,269.44, CAC-40 +0.32% at 6,615.68, IBEX-35 +0.42% at 8,131.94, FTSE MIB +0.44% at 24,562.00, SMI -0.45% at 11,075.70, S&P 500 Futures -0.45%].

Market Focal Points/Key Themes: European indices open generally higher and remained positive through the early part of the session; sectors leading to the upside include financials and industrials; lagging sectors include real estate and consumer discretionary; Indivior to acquire Opiant Pharma; reportedly Caisse des Depots looking at taking a stake in Orpea; Cargotec to spin-off MacGregor unit; focus on speeches from G20 meeting starting overnight in Bali, Indonesia; major earnings expected in the upcoming US session include Aecom and Tyson Foods.

Equities

– Consumer discretionary: Informa [INF.UK] +5% (trading update).

– Healthcare: Roche [ROG.CH] -4%, MorphoSys [MOR.DE] -29% (trial data), Hutchmed [HCM.UK] +15% (study results), Merck KGaA [MRK.DE] +6% (analyst upgrade). Indivior [INDV.UK] +1.5% (acquisition).

– Technology: Sonova [SOON.CH] -1% (earnings).

– Telecom: Tremor International [TRMR.UK] -21.5% (earnings).

Speakers

– ECB’s Panetta (Italy) stated that needed to tighten monetary to ensure that inflation does not become entrenched but does not overreact. Monetary policy cannot ignore the risk of over-tightening.

– ECB’s Herodotou (Cyprus) stated that saw further rate hikes with the size of the increase depending on data.

– EU Commission President Von der Leyen stated that it could count on having a Russian oil price cap by end-2022 as the EU was basically ready to go on it. She added that a price for the Russian oil price cap was not decided yet.

– German Foreign Min Baebock stated that new EU sanctions on Iran target finance mechanism.

– Romania Central Bank (NBR) Gov Isarescu stated that inflation was hitting a plateau.

– German VCI (Chemical Industry Association) maintained its 2022 production outlook of -5.5%.

– Russia Foreign Min Lavrov said to have been taken to hospital after landing in Bali for G20 (**Note: refuted by Russia).

– China PBOC reportedly to allow small Chinese companies hit by COVID restrictions to delay loan payment until June 2023.

– President Biden stated that US and China should play key roles in addressing challenges and managing differences without conflict.

– China President Xi stated that was looking forward to working with Biden to bring the relationship back onto the right track. Needed to work with all nations for more hope for world peace.

Currencies/fixed income

– USD was steady but holding onto its recent losses despite some Fed members noting that it was softening its fight against inflation. Last week’s US CPI number put some hope that a potential peak in inflation meant less aggressive rate hikes from the Fed.

– GBP/USD was above the 1.18 level ahead of key events this week. UK inflation data is due on Wed and UK’s Autumn Statement is on Thursday. Markets believe UK Fin Min Hunt would set up tax hikes and spending cuts.

– USD/JPY initially began the session below the 140 level ahead of Tuesday’s GDP release from Japan. BOJ Gov Kuroda reiterated the stance that the domestic economy was picking up and the BOJ to conduct appropriate policy by watching risks.

Economic data

– (FI) Finland Oct CPI M/M: 0.9% v 0.8% prior; Y/Y: 8.3% v 8.1% prior.

– (FI) Finland Sept Final Retail Sales Volume Y/Y-2.4% v -3.6% prelim.

– (IN) India Oct Wholesale Prices (WPI) Y/Y: 8.4% v 8.5%e.

– (CH) Swiss Oct Producer & Import Prices M/M: 0.0 v 0.2% prior; Y/Y: 4.9% v 5.4% prior.

– (CH) Swiss weekly Total Sight Deposits (CHF): 529.8B v 532.1B prior; Domestic Sight Deposits: 529.8B v 572.1B prior.

– (CZ) Czech Sept Current Account Balance (CZK): -55.8B-22.0Be.

– (EU) Euro Zone Sept Industrial Production M/M: 0.9% v 0.5%e; Y/Y: 4.9% v 3.0%e.

Fixed income issuance

– (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month bills; Avg Yield: 3.11% v 2.84% prior; Bid-to-cover: 2.28x v 1.00x prior.

Looking ahead

– OPEC Monthly Oil Report.

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

– 05:30 ((DE) Germany to sell combined €5.0B in 3-month and 6-month BuBills.

– 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

– 06:00 (PT) Portugal Q3 labour Costs Y/Y: No est v 5.7% prior.

– 06:00 (RO) Romania to sell RON400M in 8.75% 2028 Bonds; Avg Yield:%; bid-to-cover: x.

– 06:00 (IL) Israel to sell combined ILS950M in 2025, 2028, 2030, and 2032 bonds.

– 06:45 (US) Daily Libor Fixing.

– 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

– 07:00 (BR) Brazil Sept Economic Activity Index (Monthly GDP) M/M: +0.2%e v -1.1% prior; Y/Y: 4.1%e v 4.9% prior.

– 07:00 (PL) Poland Central Bank (NBP) Quarterly Inflation Report.

– 07:00 (IN) India Oct CPI Y/Y: 6.7%e v 7.4% prior.

– 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

– 08:00 (PL) Poland Sept Current Account Balance: -€3.1Be v -€4.0B prior; Trade Balance: -€2.2Be v -€2.9B prior; Exports: €2765Be v €25.4B prior; Imports: €29.6Be v €28.3B prior.

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

– 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

– 09:00 (FR) France Debt Agency (AFT) to sell €4.9-5.1B in 3-month, 6-month and 12-month bills.

– 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

– 11:15 (ES) ECB’s de Guindos (Spain) in Frankfurt.

– 11:30 (US) Fed’s Brainard.

– 11:30 (CH) SNB President Jordan.

– 16:00 (KR) South Korea Oct Export Price Index Y/Y: No est v 15.2% prior; Import Price Index Y/Y: No est v 24.1% prior; Export Price M/M: No est v 3.2% prior; Import Price M/M: No est v 3.3% prior.

– 16:00 (US) Weekly Crop Progress Report.

– 16:45 (NZ) New Zealand Sept Net Migration: No est v 47 prior.

– 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v # prior.

– 18:50 (JP) Japan Q3 Preliminary GDP Q/Q: 0.3%e v 0.9% prior; GDP Annualized Q/Q: 1.2%e v 3.5% prior; GDP Nominal Q/Q: 0.2%e v 0.6% prior.

– 19:30 (AU) Reserve Bank of Australia (RBA) Nov Minutes.

– 21:00 (CN) China Oct Industrial Production Y/Y: 5.2%e v 6.3% prior; YTD Y/Y: 4.0%e v 3.9% prior.

– 21:00 (CN) China Oct Retail Sales Y/Y: 0.7%e v 2.5% prior; YTD Y/Y: 0.8%e v 0.7% prior.

– 21:00 (CN) China Oct Fixed Urban Assets YTD Y/Y: 5.9%e v 5.9% prior.

– 21:00 (CN) China Oct YTD Property Investment Y/Y: No est v -8.0% prior.

– 21:00 (CN) China Oct YTD Residential Property Sales Y/Y: No est v -28.6% prior.

– 21:00 (CN) China Oct Surveyed Jobless Rate: 5.5%e v 5.5% prior.

– 22:00 (KR) South Korea Sept M2 Money Supply M/M: No est v 0.7% prior; “L” Money Supply M/M: No est v 0.6% prior.

– 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month bills.

– 22:00 (TH) Thailand to sell combined THB36B in 2026 and 2052 bonds.

– 22:35 (JP) Japan to sell 5-Year JGB Bonds.

– 23:00 (ID) Indonesia Oct Trade Balance: $4.5Be v $4.99B prior; Exports Y/Y: 13.5%e v 20.3% prior; Imports Y/Y: 24.8%e v 22.0% prior.

– 23:30 (JP) Japan Sept Final Industrial Production M/M: No est v -1.6% prelim; Y/Y: No est v 9.8% prelim; Capacity Utilization M/M: No est v 1.2% prior.

– 23:30 (TW) Taiwan to sell NT$25B in 5-Year Bonds.

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