EXECUTIVE SUMMARY
- ISRAEL OPEN TO SHORT TRUCE IN GAZA AS TALKS RESTART IN QATAR
- GOLDMAN CEO SEES SOFT US LANDING, OPTIMISTIC OUTLOOK FOR DEALS
- GUINDOS SAYS ECB SEES SUBSTANTIAL RISKS TO INFLATION OUTLOOK
- UK ANNUAL SHOP PRICES FALL FOR THIRD CONSECUTIVE MONTH
Figure 1: Germany IFO consumer-related price expectations vs. CPI excl. energy
Source: MNI/Bloomberg
NEWS
ISRAEL/MIDEAST (BBG): Israel Open to Short Truce in Gaza as Talks Restart in Qatar
Israeli Prime Minister Benjamin Netanyahu said he’s open to a short truce in the country’s war with Hamas that would lead to the release of a small number of the around 100 hostages still held by the Iran-backed militant group in Gaza. Netanyahu’s remarks followed a meeting between his top negotiator and senior Qatari and US officials in Doha on Monday, aimed at reviving stalled cease-fire talks following Israel’s killing of Hamas leader Yahya Sinwar this month. Discussions centered on a plan proposed by Egypt, one of the mediators between the warring sides.
MIDEAST (MNI): Dep Sec Gen Qassem Confirmed as New Hezbollah Leader
Naim Qassem, previously Hezbollah's Deputy Secretary General, has been confirmed as its new leader according to a statement. He replaces the late Hassan Nasrallah, who was killed in an Israeli airstrike in Beirut in September. Qassem had served as Hezbollah's deputy leader since 1991, and acted as interim leader in the month following Nasrallah's killing and Israel's war on Hezbollah. However, he was not seen as the initial heir apparent, with Executive Council leader Hashem Safieddine seen as the initial favourite to take over. However, he - like many other senior Hezbollah figures - was also killed in an Israeli airstrike earlier in October.
US/CHINA (BBG): Biden Finalizes Curbs on US Investing in China Chip, AI Tech
The Biden administration finalized restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence. The rules, which come after more than a year of deliberation, ban some investments into those industries and require the US government to be notified about others. The goal is to prevent American capital and know-how from helping China develop critical technologies that could lend Beijing a military edge.
US (BBG): Harris Readies National Mall Closing Pitch With Jan. 6, Economy
Vice President Kamala Harris will make her closing argument Tuesday night from Washington’s historic National Mall, looking to cast former President Donald Trump as a man consumed by grievance and retribution in the hope that Americans will prove willing to turn the page. Speaking from the Ellipse on Tuesday - from the same spot where Trump on Jan. 6, 2021 called for supporters to contest the results of the election - Harris will argue that her Republican opponent’s egoism crowds the needs of the American people, a senior Harris campaign official said.
US (BBG): Goldman CEO Sees Soft US Landing, Optimistic Outlook For Deals
Goldman Sachs Group Inc.’s chief executive talked up the underlying resilience of the US economy and an improving outlook for dealmaking in a wide-ranging interview, where he also expressed concern about the widening conflict in the Middle East. “The US economy is doing quite well, it has been very resilient,” CEO David Solomon said in an interview on Bloomberg Television in Riyadh on Tuesday, where he is attending Saudi Arabia’s Future Investment Initiative. “The base case in the US is a soft landing.”
US (BBG): Citadel’s Ken Griffin Expects Trump to Win Close US Election
Financier Ken Griffin expects the race to the White House will be close, but Donald Trump will ultimately win. “The expectation today is that Donald Trump will win the White House,” the billionaire founder of Citadel said on a panel at Saudi Arabia’s Future Investment Initiative summit. “We are at that moment of peak uncertainty. It is a race that Trump is favored to win but it is almost a coin toss.”
ECB (BBG): Guindos Says ECB Sees Substantial Risks to Inflation Outlook
The European Central Bank has made significant progress in bringing down inflation but can’t declare victory just yet, according to Vice President Luis de Guindos. “The incoming information shows that the disinflationary process is now well on track,” he said on Monday in Madrid. “The outlook, however, is surrounded by substantial risks.” Geopolitical conflicts threatening to push up energy and freight costs, extreme weather and sticky wage growth all have the potential to keep price pressures high for longer, Guindos said at a conference.
MNI UK BUDGET PREVIEW: Is This Just the Beginning?
Our overall expectation ahead of the Budget is that the impact on MPC policy will likely be more subdued than the market currently fears, given that we expect infrastructure spending to be ramped up more gradually. We look at he changes to fiscal rules and what they mean as well as the expected measures that will be announced. Furthermore we look at the implications for the financing situation and the gilt remit and potential market implications. On the political risk side, this will be the first major test of Labour's economic stance. We look at the wider political implications of the Budget.
JAPAN (BBG): Japan Opposition DPP Refuses Meeting With CDP, FNN Says
Japan’s Democratic Party for the People refused to meet with larger opposition Constitutional Democratic Party of Japan on Monday night, FNN reports, citing an unidentified person.
CHINA (RTRS): Eyeing US Election, China Considers Over $1.4 Trillion in Extra Debt Over Next Few Years, Say Sources
China is considering approving next week the issuance of over 10 trillion yuan ($1.4 trillion) in extra debt in the next few years to revive its fragile economy, a fiscal package which is expected to be further bolstered if Donald Trump wins the U.S. election, said two sources with knowledge of the matter. China's top legislative body, the Standing Committee of the National People's Congress (NPC), is looking to approve the fresh fiscal package, including 6 trillion yuan which would partly be raised via special sovereign bonds, on the last day of a meeting to be held from Nov. 4-8, said the sources.
MIDEAST (FT): Saudi Arabia’s Wealth Fund Retreats From International Investments
Saudi Arabia’s sovereign wealth fund plans to scale back the share of its international investments by about a third, drawing a line under the past decade’s multibillion-dollar global spending spree as it refocuses on the domestic economy. The Public Investment Fund, which has about $930bn worth of assets, said it intended to cut the proportion of funds invested overseas to between 18 and 20 per cent, down from 30 per cent.
BOK (BBG): BOK’s Rhee Sees Softer Economic Growth Closer to 2.2% This Year
Bank of Korea Governor Rhee Chang-yong said economic growth may be closer to 2.2% this year in a downgrade from a previous projection, as policymakers keep a watchful eye on the current health of the economy. The outlook for South Korea’s economic growth turned less optimistic last week after the central bank reported gross domestic product grew just 0.1% in the third quarter from the previous three-month period, as exports weakened.
N.KOREA/S.KOREA/RUSSIA (BBG): Seoul Warns North Korean Troops in Russia Moving to Frontline
South Korea warned that North Korean troops and generals dispatched to Russia to aid Moscow’s war on Ukraine are possibly moving to the frontline, in a sign the conflict is on the verge of spreading and dragging in new players. The National Intelligence Service is “trying to confirm the possible movement” of North Korean troops to the frontline, South Korean lawmaker Lee Seong-kweun said after the spy agency briefed parliamentarians in a closed-door session Tuesday.
COMMODITIES (BBG): Iron Ore Falls as Inventories Rise Despite China’s Stimulus Push
Iron ore retreated from the highest close in two weeks on rising port inventories in China, the biggest importer of the steelmaking ingredient. Stockpiles rose for a second week - to 147.7 million tons - at Chinese ports, according to data from Shanghai Steelhome E-Commerce, near the highest seasonal level in recent years. On the other hand, traders are also assessing the impact of Chinese monetary stimulus, which has been introduced since last month in order to shore up confidence in the economy.
DATA
UK DATA (MNI): Annual Shop Prices Fall For Third Consecutive Month - BRC-NielsenIQ
- UK OCT BRC SHOP PRICES +0.1% M/M, -0.8% Y/Y
BRC-NielsenIQ Shop Prices remained in deflation territory for a third consecutive month in October, printing -0.8% Y/Y (-0.6% prior), the lowest rate since August 2021. On a monthly basis, Shop Prices edged up 0.1% M/M (vs a fall of 0.2% in September). The Non-Food component remained unchanged at -2.1% Y/Y, remaining in deflation for the seventh successive month. Meanwhile, Food Price inflation softened to 1.9% Y/Y, the lowest reading since November 2021. On a monthly basis, the food component was flat (0% M/M vs 0.2% prior), and the non-food component rose 0.1% (vs a fall of 0.5% in September).
UK SEP M4 MONEY SUPPLY +0.6% M/M, +3.5% Y/Y (MNI)
UK BOE SEP MORTGAGE APPROVALS 65,647 (MNI)
UK BOE SEP CONSUMER CREDIT GBP1.23 BLN (MNI)
UK BOE SEP SECURED LENDING GBP2.54 BLN (MNI)
GERMANY DATA (MNI): German IFO Consumer Price Expectations Rise in October
Consumer-related IFO price expectations for Germany rose overall in October, coming in at 20.0, up from 18.3 in September. This comes on the back of a higher balance in the retail sector (21.4 vs 19.1 Sep), whereas they fell for consumer-related service providers (18.5 vs 22.0). The data would be consistent with the narrative of service inflation slowly tapering off, and disinflation in the goods category largely having passed.
GERMAN DATA (MNI): Highest Cons Climate Since Apr'22 Sees Higher Willingness to Buy
- GERMANY NOV EXPECTED GFK CONSUMER CLIMATE -18.3
The German GfK consumer climate increased by 2.7 to -18.3 in November from an upward revised -21.0, outstripping expectations of -20.5 and reaching its highest level since April 2022. "Both income expectations and the willingness to buy show an improvement for the second time in a row and the willingness to save falls slightly." Real income gains since the beginning of the year (3.8% Y/Y Q1, 3.1% Q2) have fostered the narrative that domestic demand in Germany should pick up at some point - that has not really materialized to date, however (consumer expenditure -0.2% Q/Q Q2 after +0.3% Q1). One driver here could that real wages are still around 3% below comparable 2019 levels.
SWEDEN DATA (MNI): Weaker-Than-Expected Q3 GDP Indicator Will Fuel 50bp Cut Speculation
- SWEDEN Q3 GDP -0.1% Y/Y
- SWEDEN SEP RETAIL SALES +2.7% Y/Y
The Swedish Q3 GDP indicator was weaker than consensus at -0.1% Q/Q (vs -0.3% prior). Analysts had expected a 0.3% Q/Q reading while the Riksbank projected 0.2% Q/Q in the September MPR. The indicator should be interpreted with caution, as it has not been a good predictor of actual GDP outcomes this year. However, it still makes the November 7 Riksbank decision a closer call between a 25bp or 50bp cut in our view. Very few details of underlying drivers are provided in the flash release, which notes that weak readings in July and September drove the negative quarterly print. The final Q3 GDP release is due at the end of November.
JAPAN DATA (BBG): Japan’s Job Market Tightens in Positive Sign for Wages, BOJ
Japan’s labor market tightened in September, indicating sustained pressure on companies to raise wages ahead of the Bank of Japan’s policy meeting this week. The job-to-applicant ratio edged up to 1.24 from 1.23 in August, meaning that there were 124 jobs offered for every 100 applicants, the labor ministry reported Tuesday. Economists had forecast no change from 1.23. A separate report from the ministry of internal affairs showed that the jobless rate decreased to 2.4% in September, falling to the lowest since January.
FOREX: AUD Underperformance Results in New Pullback Low
- AUD is underperforming broader G10, helping AUD/USD plumb a new pullback low of 0.6559 in Asia-Pac trade. This puts the pair again at the lowest level since early August, although the price has stabilised ahead of the NY crossover.
- Headline risk has been few and far between so far Tuesday, with attention fixed on near-term risk events in the UK (Wednesday's Budget) and the US (Friday's payrolls, next week's election), however speculation around a Chinese fiscal package remains a sentiment driver. Reports out this morning suggest a package of CNY 10trl is being prepared - and would include proceeds to address debt risk (CNY 6trl) and for acquiring local land (CNY 4trl). The package could be larger in the event of a Trump victory, according to the report.
- EUR trades well for a second session, with EUR/USD testing the weekly high in early Tuesday trade. Nonetheless, the pair remains well within range of recent lows, with slippage through 1.0800 likely to again switch focus to 1.0761 and below.
- Datapoints remain few and far between Tuesday, with trade balance stats for September and the October consumer confidence print the only releases of note. The Fed remain inside their pre-decision media blackout period, leaving the only speakers of note today as BoC's Macklem and Rogers - who address lawmakers but are likely to stick to their communique from last week's rate decision, at which the Bank cut rates by 50bps.
BONDS: Sharp Sell-off Amid Light Regional Calendar
After trading in a tight overnight range, major EGB futures have fallen sharply, with Bund futures now -49 at 132.53. Next support is seen around 132.39, corresponding to the September high in the 10-year yield.
- There hasn’t been a clear headline driver for the selloff, but we note a pickup in volumes since the European cash equity open.
- Impending German Bobl supply could also being weighing ahead of the 1030GMT/1130CET bidding deadline.
- Meanwhile, German swap spreads have tightened to fresh multi-year lows, extending last week’s compression.
- Gilt futures have been dragged lower by EGBs since the open, currently -29 at 95.58.
- That leaves the 10-year Gilt/Bund spread 2bps tighter at 194.5bps.
- GBP4bln of the 4.125% Jul-29 Gilt will be issued today at 1000GMT/1100CET.
- Today’s UK/Eurozone calendar has been light, with focus on tomorrow’s UK budget, flash Q3 Eurozone GDP and the start of the October flash inflation round.
EQUITIES: Eurostoxx 50 Futures Within Recent Ranges, Bear Threat Still Present
Eurostoxx 50 futures continue to trade within the recent range. For now, a bear threat remains present. The contract traded sharply lower on Oct 15 and pierced the 50-day EMA, at 4949.55. 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 unchanged at 5106.00, the Sep 30 high. S&P E-Minis continue to trade below their recent highs. Short-term weakness is considered corrective and the uptrend remains intact. Price has recently traded through support at the 20-day EMA, at 5837.02, but is - for now - trading above this average once again. A clear bearish break of the EMA would open 5757.807, the 50-day EMA. For bulls, a stronger resumption of gains would refocus attention on 5961.00, a Fibonacci projection.
- Japan's NIKKEI closed higher by 298.15 pts or +0.77% at 38903.68 and the TOPIX ended 24.24 pts higher or +0.91% at 2682.02.
- Elsewhere, in China the SHANGHAI closed lower by 35.791 pts or -1.08% at 3286.407 and the HANG SENG ended 101.78 pts higher or +0.49% at 20701.14.
- Across Europe, Germany's DAX trades higher by 86.63 pts or +0.44% at 19618.51, FTSE 100 higher by 24.72 pts or +0.3% at 8310.33, CAC 40 up 44.45 pts or +0.59% at 7600.09 and Euro Stoxx 50 up 22.23 pts or +0.45% at 4991.48.
- Dow Jones mini up 16 pts or +0.04% at 42622, S&P 500 mini up 7 pts or +0.12% at 5868.25, NASDAQ mini up 44 pts or +0.21% at 20540.75.
Time: 08:55 GMT
COMMODITIES: Monday's Gap Lower Reinforces Bearish Theme in WTI Futures
A bearish theme in WTI futures remains intact and Monday’s gap lower reinforces this theme. A continuation down would expose $65.99, the Oct 1 low, and $64.16, the Sep 10 low and a key support. For bulls, a clear reversal would 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. Initial resistance is at $72.34, the Oct 24 high. The trend condition in Gold is unchanged and bulls remain in the driver’s seat. The latest climb has resulted in a break of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. Sights are on $2767.1 next, a Fibonacci projection point, ahead of the $2800.0 handle. Firm support is $2686.2, the 20-day EMA. A clear break of this EMA would signal scope for a deeper retracement.
- WTI Crude up $0.56 or +0.83% at $67.95
- Natural Gas down $0.04 or -1.91% at $2.265
- Gold spot up $11.67 or +0.43% at $2754.41
- Copper up $3.1 or +0.71% at $439.25
- Silver up $0.43 or +1.29% at $34.1185
- Platinum up $17.07 or +1.65% at $1050.71
Time: 08:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 29/10/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 29/10/2024 | 1255/0855 | ** |  US | Redbook Retail Sales Index |
| 29/10/2024 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 29/10/2024 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/10/2024 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/10/2024 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 29/10/2024 | 1400/1000 | ** | US | housing vacancies |
| 29/10/2024 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 29/10/2024 | 1400/1000 | *** | US | JOLTS quits Rate |
| 29/10/2024 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 29/10/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 29/10/2024 | 1530/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 29/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 29/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 29/10/2024 | 1930/1530 |  CA | BOC Governor Macklem at House finance committee | |
| 30/10/2024 | - |  JP | Bank of Japan Meeting | |
| 30/10/2024 | 0030/1130 | *** |  AU | CPI inflation |
| 30/10/2024 | 0030/1130 | *** | AU | CPI Inflation Monthly |
| 30/10/2024 | 0600/1400 | ** |  CN | MNI China Money Market Index (MMI) |
| 30/10/2024 | 0630/0730 | ** |  FR | Consumer Spending |
| 30/10/2024 | 0630/0730 | *** | FR | GDP (p) |
| 30/10/2024 | 0700/0800 | *** |  DE | GDP (p) |
| 30/10/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 30/10/2024 | 0800/0900 | *** | ES | GDP (p) |
| 30/10/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 30/10/2024 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 30/10/2024 | 0855/0955 | ** | DE | Unemployment |
| 30/10/2024 | 0900/1000 | *** |  IT | GDP (p) |
| 30/10/2024 | 0900/1000 | ** | IT | PPI |
| 30/10/2024 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 30/10/2024 | 0900/1000 | *** | DE | Bavaria CPI |
| 30/10/2024 | 1000/1100 | *** |  EU | EMU Preliminary Flash GDP Q/Q |
| 30/10/2024 | 1000/1100 | *** | EU | EMU Preliminary Flash GDP Y/Y |
| 30/10/2024 | 1000/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 30/10/2024 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 30/10/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 30/10/2024 | - | GB | UK Budget | |
| 30/10/2024 | 1215/0815 | *** | US | ADP Employment Report |
| 30/10/2024 | 1230/0830 | *** | US | GDP |
| 30/10/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 30/10/2024 | 1230/0830 | *** | US | Treasury Quarterly Refunding |
| 30/10/2024 | 1300/1400 | *** | DE | HICP (p) |
| 30/10/2024 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 30/10/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 30/10/2024 | 1500/1600 | EU | ECB's Schnabel speech at SAFE-CEPR conference | |
| 30/10/2024 | 1800/1400 | US | Fed Beige Book | |
| 30/10/2024 | 2015/1615 | CA | BOC Governor Macklem at Senate banking committee | |
| 31/10/2024 | 2350/0850 | * | JP | Retail Sales (p) |
| 31/10/2024 | 2350/0850 | ** | JP | Industrial Production |