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:
- EU-UK NEGOTIATIONS SET TO MISS MID-NOV DEADLINE (REUTERS)
- VETERANS DAY OBSERVED IN U.S., TREASURY CASH MARKETS CLOSED
Fig. 1: Sterling Pares Gains
BBG, MNI
NEWS:
EU-UK: Reuters quoting EU sources that the EU and UK are due to miss their self-imposed mid-November deadline for reaching an FTA.
- Story states that EU ambassadors are not expecting any update on FTA talks with the UK this week, and that talks on Brexit are tentatively penciled infor November 18, unless the talks make a major breakthrough or totally collapse earlier than this.
- Not a significant surprise given the apparent lack of progress made in the talks over the month so far.
- At present it remains wholly unclear whether the two sides can come to an agreement.
- Both London and Brussels have frequently highlighted the major differences that remain over fisheries and the level playing field.
- As the talks are in the tunnel phase there is very little communication from each negotiating team to the media.
E.U.: European Parliament President David Sassoli is set to hold a press conference on the breakthrough in talks on the EU's long-term budget yesterday between the EP and European Council negotiators.
- Due to take place at 1400CET (1300BST, 0800ET).
- Link: https://audiovisual.ec.europa.eu/en/ebs/both/20201111
- The European Parliament as a whole still needs to approve the budget (and the COVID-19 recovery fund contained within). Given the approval from leadership of the three largest groups in the parliament, the centre-right European People's Party, centre-left Socialists and Democrats, and centrist liberal Renew Europe, it is likely to pass.
- Potential hiccups more likely to come in the Council, or in member state parliaments which are required to ratify the Own Resources Decision, which will allow the Commission to begin raising money for the COVID-19 recovery package.
MIDEAST: Bahrain PM Prince Khalifa, In Office Since 1970, Passes Away
Prime Minister of Bahrain Prince Khalifa bin Salman Al Khalifa passed away on 11 November according to an official statement from the Royal Court.
- * Prince Khalifa was viewed as a shrewd and effective prime minister, although his harsh treatment of political opponents and Shia Muslims earned him a reputation as a brutal administrator. While his brother, the late Sheikh Isa bin Salman Al Khalifa, and Sheik Isa's son King Hamad bin Isa Al Khalifa have performed largely ceremonial and diplomatic duties as the head of state, itwas Prince Khalifa that ran domestic policy and the island's economy.
- The passing of Prince Khalifa means something of a power vacuum in the Bahraini leadership. Even though Prince Khalifa was viewed as a hardliner domestically, in foreign policy he was a close ally of Israeli PM Benjamin Netanyahu and was a part of the team led by US President Donald Trump that formalised relations between Bahrain and Israel as part of the Abraham Accords.
- Bahrain is a close ally to the US, and is the permanent base of the US Fifth Naval Fleet, and as such a crucial actor in Middle Eastern politics and security relations.
- A change in leadership is unlikely to see any notable change in the Kingdom's relationship with the US or other Western allies.
RIKSBANK: Sweden's Riksbank still sees elevated risks to financial stability in the near term, as continued virus-related restrictions continue to weigh on the economy. In the latest Financial Stability Report , published Wednesday, the central bank said risks pre-dating remain a risk as well, risks including weak banks and public finances in the euro area, the high level of indebtedness among Swedish households and large exposures to property among the major banks. These may both deepen and prolong the crisis, the FSR said.
DATA:
FIXED INCOME: Gilts underperform ahead of the ECB Forum on Central Banking
Gilts have been the underperformers in core fixed income space this morning, with other core fixed income generally a bit lower with risk appetite fairly positive this morning.
- There is no clear new news for the UK but it appears as though a number of factors have helped UK sentiment over the past few days: a Brexit deal is looking a bit more likely with the UK in a weaker negotiating position. The Lords have voted against the most controversial aspects of the Internal Market Bill while press coverage of President-elect Biden's first phone call with PM Johnson said to focus on maintaining peace in Northern Ireland and sticking to international law. Both of these factors make a Brexit deal more likely.
- Brexit talks will continue today and there is little on the calendar other than the ECB's Forum on Central Banking. Lagarde will give an introductory statement before de Guindos chairs two panels on the de-globalisation impacts of Covid and the macro-financial impacts of climate change before Lane hosts a panel on the inflation objective and central bank communication. The data calendar is bare.
- TY1 futures are down -0-3 today at 137-11 with 10y UST yields unch at 0.978% and 2y yields unch at 0.183%.
- Bund futures are down -0.02 today at 174.00 with 10y Bund yields up 0.1bp at -0.485% and Schatz yields down -0.4bp at -0.720%.
- Gilt futures are down -0.28 today at 133.77 with 10y yields up 2.4bp at 0.424% and 2y yields down -1.1bp at -0.13%.
FOREX: GBP Sapped as Markets Prime for Further Brexit Delays
After outperforming throughout the Tuesday session, GBP now sits at the bottom of the G10 pile after Reuters cited sources in saying that EU/UK negotiators will likely miss their self-imposed mid-November deadline for reaching a free trade agreement. GBP/USD was sold in size from highs of above the 1.33 to new session lows down at 1.3241.
The greenback trades modestly stronger, but well within recent ranges. Volumes and price action could prove muted Wednesday given the partial close in the US for Veterans Day.
NZD outperforms after the RBNZ rate decision overnight. As expected, the central bank left the OCR & LSAP settings unchanged and said it will deploy a Funding for Lending Programme in December. The Bank took note of the relative resilience of domestic economy, but continued to flag downside risks and poured cold water on vaccine enthusiasm.
With no tier one data due, focus rests on the central bank speakers slate, with ECB's Lagarde speaking at the ECB's central bank forum.
EQUITIES: Solid Move Higher From Overnight Lows
A solid start for equities, with European and US futures rising from Asia-Pac session lows. U.S. equity markets remain open for Veterans Day (as opposed to fixed income markets).
- Asian stock markets closed mixed, with Japan's NIKKEI up 444.01 pts or +1.78% at 25349.6 and the TOPIX up 28.27 pts or +1.66% at 1729.07. China's SHANGHAI closed down 17.946 pts or -0.53% at 3342.202 and the HANG SENG ended 74.5 pts lower or -0.28% at 26226.98.
- European equities are higher, with the German Dax up 43.3 pts or +0.33% at 13183.64, FTSE 100 up 34.86 pts or +0.55% at 6324.41, CAC 40 up 19.93 pts or +0.37% at 5453.36 and Euro Stoxx 50 up 6.31 pts or +0.18% at 3439.64.
- U.S. futures are gaining, with the Dow Jones mini up 186 pts or +0.63% at 29505, S&P 500 mini up 23.25 pts or +0.66% at 3564.25, NASDAQ mini up 114 pts or +0.98% at 11732.25.
COMMODITIES: WTI Eyeing Sep 2 High
Oil continues to push higher in impressive fashion - WTI now eyeing resistance at the Sep 2 high of $43.84.
- WTI Crude up $1.34 or +3.24% at $42.71
- Natural Gas up $0 or +0.1% at $2.952
- Gold spot up $2.25 or +0.12% at $1875.93
- Copper up $1.65 or +0.52% at $317.2
- Silver up $0.08 or +0.33% at $24.3189
- Platinum up $0.89 or +0.1% at $888.44
LOOK AHEAD:
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.