Archives of “November 3, 2020” day

rss

European shares enjoy their 2nd consecutive up day

  
Analysis, Global Indices

The recovery from last week’s rout continues

The major European indices are enjoying their 2nd consecutive up day and clawing back losses from last week. The German DAX fell -8.6% last week. Italy’s FTSE MIB fell by around -7%. France’s CAC and Spain’s Ibex fell by -6.4% in the UK FTSE fell by about -5%. It was ugly.

Lower this week has seen a nice rebound. The provisional closes are showing:
  • German DAX, +2.5%
  • France’s CAC, +2.4%
  • UK’s FTSE 100, +2.2%
  • Spain’s Ibex, +2.6%
  • Italy’s FTSE MIB, +3.0%
in the European debt market, the benchmark 10 year yields are mixed with investors pushing into the more risk year countries including Spain, Italy, and Portugal (rates are lower  in those countries), while selling Germany, France and the UK (rates are higher in those countries).
The recovery from last week's rout continues_In other markets as London/European traders exit for the day.
US stocks throwing caution to the wind ahead of the election:
  • S&P index is up 78 points or 2.36% 3388.30
  • NASDAQ index is up 244 points or 2.23% at 11200
  • Dow industrial average is up 680 points or 2.5% at 27603
In the US debt market, yields are higher with the yield curve steepening. The 2 – 10 year spread is up to 71.88 basis points from 68.89 basis points at the close yesterday:

Brexit: Trade negotiations fail to agree on level playing field, fisheries, state aid – report

  
  Analysis

Reuters reports, citing EU and UK sources familiar with talks

  • Negotiations on fisheries are “stuck”
  • No agreement on level playing field either
  • EU wants to prescribe joint standards in more detailed way, but UK is against it
  • Talks failed to overcome differences over state aid
  • Also failed to address EU demand for independent oversight body in the UK to police any agreement between both parties
  • But expect good progress on joint legal texts for other areas
The pound is not really budging to the news but the market may very well keep this in view until after the US election is out of the way. Nonetheless, the above reaffirms that despite all the political theater and talks that followed after, nothing has changed.
It looks like we may be going down to the December deadline before more shenanigans come into play. This is just about as Brexit as things can get.

France says looking at possibility of setting a formal closing time for Paris shops

  
  Analysis

This would apply to shops that are currently allowed to open

France
The remarks are by the French prime minister’s office, adding that no formal decision has been take yet regarding an evening time curfew in Paris. However, it is an option that they will consider alongside the headline measure.
As tighter restrictions are introduced, it will just weigh more on economic activity and dampen the outlook for Q4 – even more so than it already has.
In the bigger picture, this ties back to how the ECB views economic developments and will be part of the consideration when they announce more easing measures next month.

China to halt purchases of at least seven categories of Australian commodities – report

  
  Analysis

China has ordered traders to halt key Australian commodity imports

According to Bloomberg, China has ordered commodities traders to stop importing products including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster from Australia, citing people familiar with the situation.

The notice is said to have been delivered verbally to major traders in China during meetings in recent weeks. Iron ore – Australia’s biggest export to China – are not to be included in the trading halt though, according to the sources.
This confirms the report from yesterday and then some, and just signifies a further escalation in tensions between the two countries as of late.
In the bigger picture, the latest development here isn’t good news for the Australian economy and the outlook will only worsen if trade tensions escalate down the road.

Twitter blocks another Trump tweet – here is what he said

  
  Analysis

Twitter has blocked a tweet from Trump, this is the tweet now:

Twitter has blocked a tweet from Trump, this is the tweet now:
The original text was:
‘The Supreme Court decision on voting in Pennsylvania is a VERY dangerous one. It will allow rampant and unchecked cheating and will undermine our entire systems of laws. It will also induce violence in the streets’ 
Twitter blocked it for disputed and misleading information. Not for the ‘violence in the streets’ at the end. The court ruling Trump refers to is (in a nutshell) is re allowing voters votes to be counted.

WSJ reports the US election “is tightening in 12 battleground states”

  
  Analysis

Key point in this polling piece from the Wall Street Journal is it may be 2016 all over again:

  • Mr. Biden’s advantage in swing states is within the poll’s margin of error and corresponds with the many swing-state surveys that show close races and a potential path for Mr. Trump to build an Electoral College majority without winning the national popular vote, as he did in 2016.
In brief:
  • Trump trails by 10 percentage points among voters nationally 
  • Former Vice President Joe Biden leads Mr. Trump, 52% to 42%, in the poll’s final reading of voter opinion before Election Day, essentially unchanged from Mr. Biden’s 11-point advantage in mid-October.
  • the survey finds the race tightening when the landscape is narrowed to a set of 12 battleground states. Mr. Biden holds a 6-point lead across those states, 51% to 45%, compared with a 10-point lead last month
If you are after more, here is the WSJ link (may be gated)

Federal Reserve FOMC meeting Thursday – preview (spoiler … “a very quiet meeting”)

  
  Analysis

The Federal Open Market Committee is on 5  November,

  • Announcement due at 1900 GMT
  • Chair Powell news conference follows at 1930 GMT
This via Citi, the main points they make (bolding mine, it could be a snoozer):
  • We expect no policy action or significant guidance on future policy
  • The meeting will be held just following US elections and in the wake of a very substantial upward revision to Fed growth forecasts in September. This backdrop argues for a very quiet meeting. 
  • MBS purchases will likely be tapered, but we expect an announcement no earlier than December. 
  • Fed officials “not even thinking about, thinking about, thinking about” rate hikes
Citi on 2021 for the FOMC is interesting:
  • The Fed’s low rate pledge may be challenged by markets in H1 2021. In spring 2021 core PCE inflation is likely to be registering above 2%YoY as a consequence of base effects. Risks to Fed growth forecasts continue to lie to the upside. This may lead the market to begin pricing at least the possibility of earlier rate hikes and/or less accommodative asset purchases. 
The Federal Open Market Committee is on 5  November, 

Bank of England Monetary Policy Committee meet Thursday, preview

  
  Analysis

Coming up later this week, on November 5, BoE

  • Policy announcement comes at 1200GMT
  • Governor Bailey speaks at 1230 (press conference)
I’ll have more upon approach, but a real quick heads up of what is likely:
  • Most analysts expect the MPC to raise the asset purchase target
  • Minimum expectations are by around an additional 100m GBP (to take the total to 845m GBP)
  • Nothing further re discussion on negative rates is likely
Coming up later this week, on November 5, BoE

More than 500,000 b/d of crude still offline in the US after Hurrican Zeta

  
Analysis, Crude

Platts report on the damage still being felt from Hurricane Zeta.

Just under 30% of crude oil volumes from the US Gulf of Mexico remained offline as of  November 2:
  • estimated 518,441 b/d of crude production and 431.48 MMcf/d of natural gas production was still shut-in on Nov. 2, reflecting 28% and 15.9% of US Gulf output, respectively,
The story on rigs is not so bad though:
  • Fewer than 5% of the Gulf’s platforms and rigs, or 28 facilities, remained evacuated
Here is the link to the Platts piece for more.
Go to top