Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EXECUTIVE SUMMARY:
- U.K. READY TO REWRITE LAWBREAKING BREXIT BILL TO GET E.U. DEAL (BBG)
- MAIN P.B.O.C. RATES LIKELY ON HOLD UNTIL H2 2021 (MNI EXCLUSIVE)
- U.S. STIMULUS DEAL BEFORE ELECTION HANGS ON PELOSI'S TUESDAY CUTOFF
- E.C.B. MAY CUT DECEMBER MACRO PROJECTIONS - LAGARDE (MNI POLICY)
- "TECHNICAL ERROR" HALTS EURONEXT TRADING
Fig. 1: A Tightening Race - 2020 U.S. Presidential Election Implied Probabilities (Betfair Odds)
From Betdata.io, using underlying Betfair data
U.K.-E.U. (BBG): British officials are prepared to water down Boris Johnson's controversial lawbreaking Brexit legislation in a move that could revive failing talks with the European Union, according to people familiar with the matter.Negotiations over the two sides' future relationship have stalled, with the prime minister announcing on Friday that he will focus on preparations to leave the EU's single market and customs union at the year-end without a trade deal -- though he is still open to talks if the bloc changes its stance.
U.K.-E.U.: @BBCkatyaadler: "EU+UK chief negotiators are speaking this afternoon. What will it take to re-start talks? I'd argue it's not about specifics. It's about political will. Do the PM and EU really want a deal? If answer is yes, then both sides know they must compromise + a deal is there to be done"
P.B.O.C. (MNI EXCLUSIVE): The People's Bank of China is likely to save any broad monetary policy easing measures for the second half of next year when the economy is expected to slow, continuing to rely in the meantime on targeted measures aimed at particular sectors benefitting less from 2020's rebound, a former official and policy advisors told MNI. For full story contact sales@marketnews.com
US (BBG): The fate of additional stimulus for the U.S. economy before next month's election will be decided this week, with House Speaker Nancy Pelosi setting a Tuesday deadline to reach an agreement with the White House -- though it remains doubtful that the Republican-controlled Senate will accept any deal they strike. President Donald Trump said he's ready to match the $2.2 trillion spending levels demanded by Democrats -- or go higher -- despite repeated warnings by Senate Majority Leader Mitch McConnell that most GOP senators will oppose any coronavirus relief package that big.
ECB: Europe's recovery from the economic effects of the Covid-19 pandemic faces increased uncertainty as a result of recent increases in the infection rate, Christine Lagarde said Monday, raising the possibility the European Central Bank may be forced to downgrade its macroeconomic projections. The euro zone already faced an "uneven, uncertain and incomplete" recovery prior to the pandemic's second wave, which has hit France especially, the ECB president told a French newspaper, with the resulting new restrictions "adding to the uncertainty and weighing on the recovery." The recovery "now risks losing momentum," she added.
R.B.N.Z. (MNI INTERVIEW): A former chairman of the Reserve Bank of New Zealand has criticised the bank's low interest rate policy, telling MNI it is fueling financial instability by inflating a housing bubble. For full interview contact sales@marketnews.com
EQUITIES: The Euronext platform has been down for around 20 minutes - they are citing a "technical error" for halting trading in "all Euronext products". For status updates, click here for the official page:https://prod.euronext.com/en/market-status/
DATA:
FIXED INCOME: Stimulus and Internal Market Bill Hopes See Core FI Lower
It has been a mildly risk-on start to the session with Brexit and US stimulus hopes seeing Treasuries and gilts in particular lower.
- Speaker of the House Pelosi has set a Tuesday deadline for negotiations for a fiscal stimulus package to be completed ahead of the election. Treasuries have been on a downward trajectory through the Asian and European morning sessions since markets opened.
- A Bloomberg sources piece suggests that the Internal Markets Bill may be "watered down" to try to appease the EU as Brexit negotiations continue. Gilts have seen the news as a positive and are underperforming Bunds.
- Against this backdrop, Covid-19 concerns still persist and European peripheral spreads have widened as a result.
- TY1 futures are down -0-6 today at 138-26 with 10y UST yields up 2.5bp at 0.771% and 2y yields up 0.6bp at 0.150%.
- Bund futures are down -0.08 today at 175.99 with 10y Bund yields up 0.3bp at -0.619% and Schatz yields down -0.2bp at -0.781%.
- BTP futures are down -0.50 today at 149.72 with 10y yields up 4.0bp at 0.690% and 2y yields up 1.5bp at -0.351%.
- Gilt futures are down -0.21 today at 136.40 with 10y yields up 1.4bp at 0.195% and 2y yields up 0.6bp at -0.54%.
FOREX: Dollar Dropped, Sterling Stronger
- GBP is stronger early Monday, with GBP/USD bid to just shy of the 1.3015 50-dma as reports suggesting the UK could edit and rewrite the more quarrelsome elements of the UK Internal Market Bill support sentiment. The BBC have further reported that EU/UK negotiators are to re-engage today.
- The USD is the poorest performer in G10 so far today, with higher equity futures largely responsible. The e-mini S&P sits just below Friday's 3,508.50 high.
- Chinese GDP data missed expectations, with China growing 2.7% in Q3 vs. Exp. 3.3%, anchoring the Y/Y growth rate to 4.9% vs. Exp. 5.5%. This initially pulled stocks and commodity-tied currencies a little lower, but the likes of AUD and NZD are regaining ground ahead of NY hours. The latter is outperforming following the landslide victory for Ardern's Labour party in weekend elections.
- Data is few and far between Monday, with focus turning to a plethora of central bank speakers - most notably ECB's Lagarde, Fed's Powell and BoE's Broadbent.
EQUITIES: Higher To Start The Week
Stocks have edged higher on some Brexit deal optimism as well as renewed hopes that Washington can reach a stimulus deal this week.
- Asian stocks closed mixed, with Japan's NIKKEI up 260.5 pts or +1.11% at 23671.13 and the TOPIX up 20.29 pts or +1.25% at 1637.98. China's SHANGHAI closed down 23.691 pts or -0.71% at 3312.667 and the HANG SENG ended 155.47 pts higher or +0.64% at 24542.26.
- European equities are higher, with the German Dax up 38.9 pts or +0.3% at 12947.96, FTSE 100 up 4.76 pts or +0.08% at 5923.88, CAC 40 up 40.29 pts or +0.82% at 4976.15 and Euro Stoxx 50 up 22.65 pts or +0.7% at 3267.92.
- U.S. futures are up, with the Dow Jones mini up 224 pts or +0.79% at 28631, S&P 500 mini up 31.25 pts or +0.9% at 3493.25, NASDAQ mini up 141.25 pts or +1.2% at 11938.5.
COMMODITIES: Precious Metals Outperforming
A broadly weaker US dollar has helped boost precious/semi-precious metals to start the week.
- WTI Crude down $0.08 or -0.2% at $40.8
- Natural Gas down $0.07 or -2.34% at $2.71
- Gold spot up $10.64 or +0.56% at $1909.93
- Copper up $0.9 or +0.29% at $307.65
- Silver up $0.54 or +2.25% at $24.6968
- Platinum up $9 or +1.04% at $873.72
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.