EXECUTIVE SUMMARY
- HARRIS CALLS TRUMP A FASCIST IN BID TO SHARPEN 2024 CONTRAST
- GUARDIAN SOURCES REPORT PSNFL TO BE THE NEW UK FISCAL RULE
- JAPAN’S FINANCE CHIEF GIVES WARNING OVER YEN’S RAPID SLIDE
- GERMAN FLASH PMI ABOVE CONSENSUS IN OCTOBER, FRANCE BELOW
Figure 1: HCOB Germany Composite PMI in contractive territory for fourth consecutive month
NEWS
US (FT): Trump Takes Lead Over Harris on US Economy in Final FT Poll
Donald Trump has overtaken Kamala Harris as the candidate Americans trust with the economy, according to a new Financial Times poll that underlines the Democratic party’s struggle to convince voters they are better off now than they were four years ago. The final monthly poll for the FT and the University of Michigan Ross School of Business found 44 per cent of registered voters said they trusted Trump more to handle the economy versus 43 per cent for Harris. The findings, which come less than two weeks before the election, mark the first time Trump has led Harris on the issue in the FT-Michigan Ross poll.
US (WSJ): Trump Takes Narrow Lead Over Harris in Closing Weeks of Race
Donald Trump has opened a narrow lead in the presidential race, as voters have adopted a more positive view of his agenda and past performance and a more negative view of Kamala Harris, a new Wall Street Journal poll finds. The national survey finds that Trump is leading Harris by 2 percentage points, 47% to 45%, compared with a Harris lead of 2 points in the Journal’s August survey on a ballot that includes third-party and independent candidates.
US (BBG): Harris Calls Trump a Fascist in Bid to Sharpen 2024 Contrast
Vice President Kamala Harris deepened her closing argument to undecided voters that Donald Trump is unfit to serve a second term, classifying her opponent as a fascist in response to a question during a CNN town hall in key swing-state Pennsylvania. In the town hall Wednesday, Harris aimed to paint a stark contrast with her Republican rival, questioning his fitness to serve, part of an effort to put the focus on the former president and urge voters to turn the page on him.
US/CHINA (MNI): MOFCOM Decries US Sanctions on Firms Accused of Russia Drone Supply
MNI (London) Wires carrying comments from a Chinese Commerce Ministry spox. Says, in relation to US sanctions imposed on firms engaged in drone development, that "China firmly opposes unilateral sanctions and long-arm jurisdiction without the basis of international law and the authorisation of the UN Security Council". Says that "China will resolutely safeguard its ownle gitimate rights and interests." Spox: "China opposes any malicious acts of suppressing and sanctioning Chinese enterprises on the pretext of Russia".
UK (MNI): Guardian Sources Report PSNFL to Be the New Fiscal Rule
There has been a lot of focus this morning on a Guardian piece that states that the Reeves will confirm that a new debt rule will be used to allow a large increase in capital spending. The piece says that Reeves will not confirm at the IMF which measure will be used, but the Guardian noted that a source had confirmed that Public Sector Net Financial Liabilities (PSNFL) would be used. PSNFL avoids the pitfalls of public sector net wealth (PSNW) which would have required valuations to be placed on infrastructure such as hospitals, schools etc. PSNFL opens up a little less headroom than PSNW would.
ECB (BBG): ECB’s Holzmann Says Quarter-Point Rate Cut Probable in December
The European Central Bank will most likely lower interest rates by another 25 basis points this year even as upside inflation risks linger, said Governing Council member Robert Holzmann. At the same time, neither a larger step nor a pause can be excluded, the Austrian central-bank chief said in an interview in Washington, where he is attending the annual meetings of the International Monetary Fund. “I’d say a quarter-point step is probable in December,” Holzmann said.
JAPAN (BBG): Japan’s Finance Chief Gives Warning Over Yen’s Rapid Slide
Japan’s Finance Minister Katsunobu Kato said he is raising the level of urgency for monitoring currency moves, after the yen hit an almost three-month low against the dollar. “We are seeing one-sided, rapid moves” in the forex markets, Kato told reporters after attending Group of 20 finance chiefs and central bankers meetings in Washington Wednesday. “We will closely monitor the foreign exchange market with a stronger sense of urgency, including watching for speculative trading.”
BOJ (MNI): BOJ FSR Warns of High Rates Impact on Banks
Several banks have high interest rate risk, which will require careful management, according to the Bank of Japan’s Financial System Report on Thursday, which warned further vigilance against tail risks was needed. “As shown in the analysis in the previous Report in April, there are many banks whose core profitability has become lower than in the past, and it is possible that more banks would require a certain amount of time to restore their capital," the report said.
RBNZ (BBG): RBNZ’s Orr Wishes People Would Read Detailed ‘Record of Meeting’
New Zealand central bank governor Adrian Orr said he wishes more people would read the bank’s detailed report on its policy deliberations rather than relying on journalists or analysts. Speaking to the Peterson Institute in Washington early Thursday New Zealand time, Orr said the Reserve Bank’s record of meeting - a read-out of the issues the Monetary Policy Committee considered when making a rate decision - is the best way to understand the bank’s thinking.
RUSSIA (MNI): Putin Talks Up 'Multipolarity' In BRICS+ Address
Speaking in the city of Kazan at the BRICS summit, Russian President Vladimir Putin speaks on a number of geopolitical issues. Says that the BRICS+ group (encompassing the nine BRICS members as well as invitees) will 'discuss the peaceful settlements of conflicts [and the] Middle East situation'. Putin decrying actions of the West claims 'There are attempts to curb rival countries in Africa and Asia...there are illegal sanctions, manipulations of currencies'. Says "Ukraine is being used to create strategic threats to Russia...they [the West] are trying to inflict a strategic defeat [on] Russia...those are illusory goals".
TURKEY (BBG): Turkey Strikes Kurdish Militia After Deadly Attack on Ankara
Turkey is carrying out cross-border airstrikes against Kurdish militant groups it accused of a deadly bombing and gun attack on its capital. Turkish warplanes and drones struck targets in Iraq and Syria overnight in an air campaign over an unusually large area. It will likely continue in the near future, officials familiar with the matter said, asking not to be identified because of the sensitivity of the matter.
CORPORATE (BBG): Tesla Delivers Blowout Quarter, Lays Out Bold Ambitions for 2025
Tesla Inc.’s market value soared by $80 billion after the EV maker reported its biggest quarterly profit in more than a year and issued upbeat forecasts for 2025. Third-quarter results were buoyed by sales of the Cybertruck, which turned a profit for the first time, its energy-storage business and a spike in regulatory tax credits that other automakers pay to meet emissions rules.
DATA
EUROZONE DATA (MNI): Germany and France Drag On EZ October Flash PMI
- EUROZONE OCT FLASH MANUF PMI 45.9 (FCST: 45.1); SEP 45.0
- EUROZONE OCT FLASH SERVICES PMI 51.2 (FCST: 51.5); SEP 51.4
The Eurozone October flash composite PMI was in line with consensus at 49.7 (vs 49.6 prior), though weakness was once again centred in Germany and France. From the report: "The rest of the eurozone actually saw output increase at the fastest pace in four months". However, aggregate activity remains weak, and shows little sign of re-acceleration. This supports the recent dovish repricing in ECB rate cut expectations (ECB-dated OIS price a 40% implied probability of a 50bp cut in December, up from ~20% last week).
GERMAN DATA (MNI): October Flash PMI Above Consensus, But Underlying Conditions Weak
- GERMANY OCT FLASH MANUF PMI 42.6 (FCST: 40.8); SEP 40.6
- GERMANY OCT FLASH SERVICES PMI 51.4 (FCST: 50.6); SEP 50.6
In contrast to France, the German flash October PMI was stronger than expected for both services and manufacturing. However, the composite PMI remained in contractionary territory for the fourth consecutive month at 48.4 (vs 47.6 cons, 47.5 prior). Key notes from the release: "Businesses reported further decreases in output and employment amid a
backdrop of weak underlying demand"
FRANCE DATA (MNI): October Flash PMI Much Weaker Than Expected
- FRANCE OCT FLASH MANUF PMI 44.5 (FCST: 45.0); SEP 44.6
- FRANCE OCT FLASH SERVICES PMI 48.3 (FCST: 49.9); SEP 49.6
The French flash October PMIs were weaker than expected for the second consecutive month. Services fell further into contractionary territory at 48.3 (vs 49.9 cons, 49.6 prior), while manufacturing has been below 50 for almost two years now. Key notes from the release: "Restricting activity was a sharp and accelerated decrease in new order inflows".
FRANCE DATA (MNI): Manufacturing Sentiment Sees Largest Monthly Drop Since Nov 2008
- FRANCE OCT MANUF SENTIMENT AT 92
French Manufacturing Sentiment fell to 92 in October (vs 99 prior), the largest monthly drop since November 2008. The fall appears to be broad-based but was most concentrated in order books, in particular export order books deteriorated.
UK DATA (MNI): PMI Lower Than Expected; But Firms Pass on Cost Increases
- UK OCT FLASH MANUF PMI 50.3 (FCST: 51.5); SEP 51.5
- UK OCT FLASH SERVICES PMI 51.8 (FCST: 52.4); SEP 52.4
UK PMI came in a little lower than expected across both manufacturing and services - but remained above 50 for both. And on the price side firms reported that they were passing on cost increases - so that will be a concern from the MPC (particularly if growth concerns pick up). Given that there is budget uncertainty clouding this number - with new orders down on uncertainty - we don't think that this number is as negative as it first appears, and are not convinced it will really increase the probability of sequential cuts.
UK DATA (MNI): Expect 2025 Pay Awards to Soften to 3% - Brightmine
Brightmine (formerly XpertHR) data shows the median pay award is forecast to soften further in the next 12 months to 3%. This data will be welcomed by the MPC. The release states that the three factors most likely to negatively influence pay award decisions in the next 12 months are affordability, organisation performance and inflation; skills shortages and matching pay levels are factors most likely to increase pay awards. Brightmine median basic pay awards in the 3 months to the end of September remained at 4.0% for the third consecutive reading.
FOREX: Rates Volatility Prompts Dollar to Reverse Small Part of Recent Gains
- The greenback sits softer against all others, as markets erase a small part of the recent sharp dollar rally. The moves coincide with an uptick in near-term vols across DM rates markets, with US 10y yields fading off the week's best levels, taking the greenback with it.
- Initial interest in UK rates markets came alongside hawkish pressure on BoE rates pricing after an article in the Guardian suggested the government could opt for a different definition of public sector net debt, leaving considerable funds for infrastructure investment - but a soft set of UK PMI numbers soon reversed the move, which had already been biased lower after Bailey's dovish undertones in a late appearance yesterday.
- A lower close for GBPJPY today would be the first in four sessions, with markets having now opened a ~160 pip gap with the weekly high at 198.44. The 15min candle chart exposes 196.63 as a decent support today - having held on the earlier pullback.
- Weekly jobless claims data crosses later today, and given the split pricing between 25 and 50bps of Fed rate cuts into year-end, the market may remain sensitive across the release. Prelim PMI numbers for October are also due, with new home sales stats set to cross after the cash equity open. Central bank speak set for today includes BoE's Mann & Bailey and ECB's Kazaks & Lane.
EGBS: October Flash PMIs Underscore Growth Concerns, Bunds Stronger
The October flash PMIs underscored existing Eurozone growth concerns, leaving Bund futures +46 ticks today at 133.17.
- A bear threat remains present in Bunds though, with key resistance still some way off at 134.25 (Oct 16/18 highs).
- Although the German PMIs were stronger than consensus, the underlying details of the report were still weak, keeping focus on tomorrow’s IFO survey.
- The French PMI was weaker than expected, while the rest of the Eurozone once again outperformed the region’s two largest economies.
- ECB-dated OIS price a 40% implied probability of a 50bp cut in December, but reached a dovish extreme of just over 50% after the French data.
- The German cash curve has moved away from intraday (and fresh ytd) highs of 24bps, now little changed today at 20bps.
- 10-year peripheral spreads to Bunds are a little tighter, with European equity futures up 0.75%.
- Focus once again turns to ECB-speak, with Kazaks and Lane scheduled to speak today.
GILTS: Volatile Start as Bailey, PMIs & Fiscal Risk Assessed, Yields Higher
The softer-than-expected UK PMI data saw gilts move back into positive territory, although opening gap lower in futures didn’t quite close and the knee-jerk bid seen on the data fades.
- Details of the PMIs were a little less concrete than the headline figure, limiting any lasting dovish feedthrough, particularly with the headline metrics still sitting in expansionary territory.
- We had previously noted that the fiscal worry generated by the Guardian sources report at the open was probably a little overdone given the likely spread of any related spending increases and pre-existing expectations.
- Late Tuesday comments from BoE Governor Bailey were dovish on net, but had little lasting impact given the focus on fiscal matters.
- Futures last -17 at 96.08.
- Note the bear trigger (95.83) was breached today, deepening the bearish technical picture.
- Initial support now seen at today’s low (95.70), while resistance comes in some way above prevailing levels at the 20-day EMA (97.46).
- Yields 2-3bp higher, curve steeper. 10+-Year yields hit the highest levels seen since May/June during the early sell off.
- BoE-dated OIS flat to 2bp less dovish on the day, showing 23bp of cuts for November, 40bp of cuts through year-end and 109bp of cuts through June.
- SONIA futures flat to -1.0.
- GBP STIRs have generally followed swings in gilts.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
|---|---|---|
Nov-24 | 4.718 | -23.2 |
Dec-24 | 4.552 | -39.8 |
Feb-25 | 4.329 | -62.1 |
Mar-25 | 4.148 | -80.2 |
May-25 | 3.950 | -100.0 |
Jun-25 | 3.858 | -109.2 |
Aug-25 | 3.737 | -121.3 |
Sep-25 | 3.699 | -125.1 |
Nov-25 | 3.645 | -130.5 |
EQUITIES: Eurostoxx 50 Futures Bounce Off Wednesday's Low
Eurostoxx 50 futures are trading closer to their recent lows. For now, a bear threat remains present. The contract traded sharply lower on Oct 15 and has pierced the 50-day EMA, at 4947.56. A clear break of this average would undermine a recent bullish theme and highlight a stronger reversal. This would open 4884.06, a Fibonacci retracement. Key resistance and the bull trigger is 5106.00, the Sep 30 high. A break of it resumes the uptrend. S&P E-Minis traded lower yesterday and the contract remains below its recent highs. Short-term weakness is considered corrective and the uptrend remains intact. Price has traded through the 20-day EMA, at 5831.56. A clear break of this EMA would signal scope for a deeper retracement towards 5745.75, the 50-day EMA. A resumption of gains would refocus attention on 5961.00, a Fibonacci projection.
- Japan's NIKKEI closed higher by 38.43 pts or +0.1% at 38143.29 and the TOPIX ended 1.39 pts lower or -0.05% at 2635.57.
- Elsewhere, in China the SHANGHAI closed lower by 22.541 pts or -0.68% at 3280.262 and the HANG SENG ended 270.53 pts lower or -1.3% at 20489.62.
- Across Europe, Germany's DAX trades higher by 161.5 pts or +0.83% at 19539.21, FTSE 100 higher by 78.12 pts or +0.95% at 8336.92, CAC 40 up 66.22 pts or +0.88% at 7563.7 and Euro Stoxx 50 up 45.43 pts or +0.92% at 4967.98.
- Dow Jones mini down 16 pts or -0.04% at 42726, S&P 500 mini up 26.5 pts or +0.45% at 5864.25, NASDAQ mini up 161.75 pts or +0.8% at 20381.5.
Time: 09:55 BST
COMMODITIES: Bearish Theme in WTI Futures Still Present
WTI futures have recovered from their recent lows. However, a bearish theme remains intact following last week’s sell-off. A resumption of weakness would threaten the recent bullish theme and expose $65.99, the Oct 1 low, and $64.16, the Sep 10 low and a key support. For bulls, a stronger reversal would instead refocus attention on the key short-term resistance at $77.70, the Oct 8 high. Clearance of this level would resume to the recent uptrend. Gold bulls remain in the driver’s seat and price is trading closer to its recent highs. Last week’s gains resulted in a break of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. This week’s extension reinforces the bull theme. Sights are on $2767.1 next, a Fibonacci projection point, ahead of the $2800.0 handle. Firm support is $2666.6, the 20-day EMA. A clear break of this EMA would signal scope for a deeper retracement.
- WTI Crude up $1.07 or +1.51% at $71.88
- Natural Gas up $0.05 or +2.26% at $2.395
- Gold spot up $22.3 or +0.82% at $2737.64
- Copper up $5.1 or +1.18% at $438.8
- Silver up $0.54 or +1.59% at $34.2375
- Platinum up $16.28 or +1.59% at $1037.81
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 24/10/2024 | - |  EU | ECB's Lagarde and Cipollone in G20 FMs and CB governors meeting | |
| 24/10/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 24/10/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 24/10/2024 | 1245/0845 | US | Cleveland Fed's Beth Hammack | |
| 24/10/2024 | 1300/1400 |  GB | BOE's Mann panellist at Reinventing Bretton Woods session | |
| 24/10/2024 | 1345/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 24/10/2024 | 1345/0945 | *** | US | S&P Global Services Index (flash) |
| 24/10/2024 | 1400/1000 | *** | US | New Home Sales |
| 24/10/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 24/10/2024 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 24/10/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 24/10/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 24/10/2024 | 1700/1900 | EU | ECB's Lane remarks at 'Inflation: Drivers and Dynamics' event | |
| 24/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for TIPS 5 Year Note |
| 25/10/2024 | 2301/0001 | ** | GB | Gfk Monthly Consumer Confidence |
| 25/10/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 25/10/2024 | 0600/0800 | ** |  SE | PPI |
| 25/10/2024 | 0645/0845 | ** |  FR | Consumer Sentiment |
| 25/10/2024 | 0700/0900 | ** |  ES | PPI |
| 25/10/2024 | 0800/1000 | ** | EU | M3 |
| 25/10/2024 | 0800/1000 | ** |  IT | ISTAT Business Confidence |
| 25/10/2024 | 0800/1000 | ** | IT | ISTAT Consumer Confidence |
| 25/10/2024 | 0800/1000 | *** |  DE | IFO Business Climate Index |
| 25/10/2024 | 0800/1000 | ** | EU | ECB Consumer Expectations Survey |
| 25/10/2024 | 1230/0830 | ** |  CA | Retail Trade |
| 25/10/2024 | 1230/0830 | ** | US | Durable Goods New Orders |
| 25/10/2024 | 1230/0830 | ** | CA | Retail Trade |
| 25/10/2024 | 1300/1500 | ** |  BE | BNB Business Sentiment |
| 25/10/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 25/10/2024 | 1500/1100 | US | Boston Fed's Susan Collins | |
| 25/10/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) |