Original insights into market moving news

[PODCAST] European Open Rundown 9th November 2020

  • AP, NBC, CNN, Fox and Edison Research have all called the election for Democrat Presidential candidate Biden
  • Asian bourses traded higher across the board and US equity futures were also lifted with risk appetite heightened post-election outcome
  • Chinese trade balance and exports topped estimates, although imports disappointed to suggest a weak domestic consumer profile
  • The DXY languished around 2-month lows on a 92.00 handle; EUR/USD approached 1.19 and GBP/USD eyed 1.32
  • Turkish President Erdogan removed central bank Governor Uysal, while Finance Minister and Albayrak has resigned due to health issues
  • Looking ahead, highlights include EZ Sentix Index, ECB’s Lagarde, Mersch, BoE’s Bailey, Haldane, Fed’s Mester, Harker and US 3yr note auction


AP, NBC, CNN, Fox and Edison Research have all called the election for Democrat Presidential candidate Biden who became President-elect after winning 290 electoral votes so far vs. President Trump at 214 electoral votes. (Newswires)

US President-elect Biden declared victory in the election and stated that the people delivered a convincing victory, while he pledged to be a president that seeks to unify and understands the disappointment of those who voted for Trump. Furthermore, he stated that their mandate is to marshal forces of decency in battle against the virus and to build prosperity, while he is to unveil a task force to address the US coronavirus outbreak this Monday. (Newswires)

US President Trump has not yet conceded and tweeted that we should look at the votes and the allegations, while he added we’re seeing a number of affidavits that there was voter fraud and reiterated that this was a stolen election. (Twitter)

Republican National Committee were reported on Friday to be seeking to raise at least USD 60mln to fund Trump legal challenges to the Presidential election, according to sources. (Newswires)


US COVID-19 cases rose to a total 9.81mln from 9.71mln the day before and deaths rose to a total 236.5k from a prior total of 235.5k, while a major newswire tally stated that US cases rose by at least 103,314 to a total of 10.01mln and deaths rose by at least 473 to a total of 237.8k. (Newswires) Former FDA Commissioner Dr. Scott Gottlieb suggested the US has probably more than 500K new coronavirus infections per day and that probably at best, only 1 in 5 cases are being diagnosed right now, while he thinks it is going to explode in several weeks. (Newswires)

UK COVID-19 cases +20,572 (prev. +24,957) and deaths +156 (prev. +413). (Newswires)

France COVID-19 cases +38,619 (prev. +86,852 record increase) and deaths +271 (prev. +306). (Newswires)

Italy COVID-19 cases +32,616 (prev. +39,811) and deaths +331 (prev. +425). It was also reported that Italy’s cabinet drew up a plan to provide EUR 2.5bln in further pandemic aid. (Newswires)

Portugal PM Costa stated that a night-time curfew between 2300-0600 will be imposed from Monday across 121 municipalities to contain COVID-19 as part of a 15-day state of emergency. (Newswires)


Asian bourses traded higher across the board and US equity futures were also lifted with risk appetite spurred after Democrat candidate Biden was declared the winner of the US election, although the defeated incumbent has so far refused to concede and repeated allegations of voter fraud. The gains were also a continuation of last week’s post-election rally on Wall Street where despite the indecisive finish last Friday, stocks still notched their best weekly performance since April. ASX 200 (+1.8%) was higher with all sectors lifted on broad optimism following the election news and with outperformance in the tech sector front-running the advances in the index, while Nikkei 225 (+2.3%) surged over 500 points and extended on its best levels in nearly 3 decades with participants also digesting earnings results although Japan Airlines shares lost altitude fast after the announcement of a JPY 168bln share sale. Hang Seng (+1.6%) and Shanghai Comp. (+2.0%) conformed to the broad upbeat mood as the Biden victory raised hopes for improved US-China ties, which saw Chinese markets shrug-off a relatively slow start after the PBoC continued to drain liquidity and following mixed trade data over the weekend in which Trade Balance and Exports topped estimates although Imports disappointed to suggest a weak domestic consumer profile, while Indian markets joined in on the spoils in which both the Nifty (+1.1%) and Sensex (+1.2%) surged to all-time highs shortly after the open. 10yr JGBs were subdued after recent declines in T-notes and amid the strength in stocks but with downside stemmed following a recent rebound from nearby support at 152.00 and with the BoJ also present in the market for JGBs predominantly concentrated in 5yr-10yr maturities.

PBoC skipped reverse repo operations for a net daily drain of CNY 50bln. (Newswires) PBoC set USD/CNY mid-point at 6.6123 vs. Exp. 6.6117 (Prev. 6.6290); strongest fix since June 2018.

Chinese Trade Balance (USD)(Oct) 58.44B vs. Exp. 46.0B (Prev. 37.0B) Chinese Exports (USD)(Oct) Y/Y 11.4% vs. Exp. 9.3% (Prev. 9.9%) Chinese Imports (USD)(Oct) Y/Y 4.7% vs. Exp. 9.5% (Prev. 13.2%)

Chinese Trade Balance (CNY)(Oct) 401.8B vs. Exp. 332.7B (Prev. 257.7B) Chinese Exports (CNY)(Oct) Y/Y 7.6% vs. Exp. 6.5% (Prev. 8.7%) Chinese Imports (CNY)(Oct) Y/Y 0.9% vs. Exp. 6.3% (Prev. 11.6%)

US Embassy in China took a softer tone on China in which the acting top diplomat noted that Washington will seek a “results-oriented relationship” with Beijing after the US presidential election. (SCMP)

Chinese state media Op-Ed stated the Biden presidential election win opens the door for improved US-China relationship, while there were separate reports a national adviser stated that China will seek to renegotiate a trade deal with US President-elect Biden. Furthermore, Global Times cited comments from analysts that President-elect Biden could ease the tit-for-tat war with China but will be pressured to appear tough. (Newswires/Global Times/SCMP)

BoJ Summary of Opinions stated that it is appropriate to continue monitoring impact of current policy and must avoid premature withdrawal of easy policy with an eye on the chance that the battle with the pandemic could be prolonged. BoJ also stated that it must respond swiftly and appropriately as needed while in close cooperation with the government and major central banks, while it must seek ways to enhance sustainability of its ETF and J-REIT purchase programs. Furthermore, it stated that monetary easing measures conducted since March had positive effects and it is important to continue to support financing, mainly of firms, as well as maintain stability in financial markets. (Newswires)


UK PM Johnson and Chancellor Sunak reportedly agreed in principle to extend a GBP 20/week increase in universal credit for 6mln people which would cost GBP 6bln. (The Times)

UK Chancellor Sunak is said to be preparing to announce a review of the UK's public company listings regulations to help the City compete more robustly with New York and attract more technology "unicorns" to London. Furthermore, reports noted among the proposals the leading review is likely to consider include lowering the minimum "free float" requirement for a premium main market listing which would allow tech entrepreneurs to retain greater ownership of their businesses when they take them public, while a banker suggested the plan could be announced as early the week head. (Sky News)

UK PM Johnson stated that the US is the UK’s most closest and important ally and he thinks there is far more which unites the two governments than divides them, while he noted there is a good chance to do something with the US but noted that US are tough trade negotiators. Furthermore, PM Johnson stated that he has been a great enthusiast for a trade deal with the EU and that we need to get on and do a trade deal if we can. (Newswires)

UK PM Johnson is reportedly risking opening a rift with US President-elect Biden by insisting the internal markets bill which reneges on part of the EU withdrawal agreement would go ahead as planned and stated that the bill would protect and uphold the Good Friday Agreement. (Guardian)

US President-elect Biden will not prioritise UK-US trade deal talks in the first 100 days of his presidency, according to a figure advising his campaign regarding foreign policy. (The Telegraph)

UK Foreign Minister Raab said the UK government is very clear that it will never do anything to jeopardise the Good Friday Agreement and suggested there is a good chance for a trade deal with EU if we see flexibility. (Newswires)

European Commission President Von der Leyen stated that they took stock of the negotiations with UK PM Johnson and that some progress has been made, but large differences remain especially on level playing field and fisheries. Furthermore, she added teams will continue working hard next week and will remain in close contact in the next days. (Twitter) EU Chief Brexit Negotiator Barnier stated he is very happy to be back in London and that work continues. (Newswires)

EU seeks to reset trade relationship with the US in post-Trump era with the bloc's trade ministers to meet today to discuss rebooting relations despite preparing to set retaliatory tariffs to target USD 4bln worth of US goods. (FT)

German Economic Minister Altmaier responded that he thinks there will be a return to multilateralism, when asked if trade wars will end following the Biden victory, while he added we need a broad US-EU customs union. (Newswires)

Fitch affirmed Germany at AAA; Outlook Stable and Fitch affirmed Slovakia at A; Outlook revised to Negative from Stable, while Moody’s raised Greece sovereign rating one notch from B1 to Ba3; Outlook Stable. (Newswires) (Newswires)


The DXY languished around 2-month lows on a 92.00 handle as the heightened risk appetite from President-elect Biden’s election victory fuelled risk momentum and outflows from the greenback. The greenback’s major counterparts were lifted with EUR/USD eyeing the 1.1900 handle as a Biden administration is seen as likely to be more sympathetic to healing transatlantic ties with the bloc, while GBP/USD also gained amid hopes a change in US administration could restrict the UK from pursuing harmful Brexiteer policies considering that President-elect Biden had warned that any future trade deals with the US would be contingent on the UK respecting the Good Friday Agreement. In addition, focus after US elections is likely to revert to the Brexit negotiations with European Commission President Von der Leyen stating during the weekend that there was some progress although large differences remain especially on the level playing field and fisheries, while EU chief Brexit negotiator Barnier is back in London amid continued efforts to resolve the impasse. Elsewhere, JPY-crosses were mostly boosted by the risk appetite, while antipodeans were underpinned by their high-beta statuses and amid strength in the CNY as it benefitted in-fitting with the Biden playbook and after the PBoC set the reference rate to its strongest since June 2018. TRY was also a notable gainer overnight after President Erdogan ousted the CBRT Governor Uysal following the steep declines in the currency which had recently depreciated to record lows.

Turkish President Erdogan removed central bank Governor Uysal and appointed former Finance Minister Naci Agbal as the new central bank Governor, while current Finance Minister and President Erdogan’s son-in-law Berat Albayrak has resigned due to health issues. (Newswires)

NZIER Shadow Board sees less of a need for a negative OCR and boost to QE by the RBNZ over the coming year, while some members noted that the expected implementation of a Funding for Lending programme was an influence regarding their view on the need for further stimulus. (NZIER)


Commodities were higher overnight with oil prices boosted by the risk appetite following the announcement of the US election winner which boosted WTI crude futures to above USD 38.00/bbl level and Brent crude to around USD 40.50/bbl where prices then stalled with further upside restricted by bearish undertones including a continued surge in COVID-19 cases and rising supply in Libya, while there was also concerns from an OPEC+ source that potential return of Iranian supply after the Biden election victory could pose a risk to the OPEC+ production cut deal. Furthermore, participants will also be on the lookout for comments from the Abu Dhabi International Exhibition & Conference which takes place from today through to Thursday given that there is a slate of key OPEC+ speakers at the virtual event including energy ministers from Saudi, Iraq, Iran, Russia and OPEC Secretary General Barkindo. Gold extended on gains to trade around USD 1965/oz level with the precious metal benefitting from a subdued greenback and with hopes of incoming fiscal stimulus also supporting the precious metal as an inflation hedge, while copper was also underpinned by the broad constructive risk tone.

Baker Hughes US rig count oil +5 at 226, natgas -1 at 71, total +4 at 300. (Newswires)

OPEC source reportedly fears a return of supply from Iran could put the OPEC+ deal at risk. (Newswires)

Libya’s NOC stated that the country’s production surpassed 1mln bpd. (Sputnik/Twitter)


Iran President Rouhani stated that the next US government should compensate for the President Trump’s mistakes and that Iran has always favoured constructive interaction with the world. (Newswires) Iran Foreign Minister Zarif stated that US President Trump is gone while Iran and its neighbours will stay, while he added that betting on foreigners does not bring security. Furthermore, he added that Iran extends its hands to its neighbours to cooperate in achieving common interests and called on all to embrace dialogue as the only way to end differences and tensions. (Twitter)

Turkish warplanes reportedly bombarded a PKK target in northern Iraq’s Sinjar District. (Twitter)


The TPLEX bear-steepened on Friday, despite the broader value/cyclical underperformance, with participants gearing for next week’s Treasury refunding and sold rates on US jobs data. By settlement, 2s +0.4bps at 15.5bps, 10s +4.2bps at 82bps, 30s +5bps at 159.5bps; futures volumes were still above average although not as vibrant as the prior two sessions. The selling in USTs got underway in the wake of the stronger than expected NFP print, then catching momentum as Decision Desk called the election in for Biden. The 10- and 30-year yields hit highs of 84bps and 162bps respectively, before Treasuries caught a modest bid off the lows as Europe departed and cyclical/value sectors pared earlier strength. It’s noteworthy that despite the rise in nominal yields, inflation breakevens were mostly lower. Part of that is likely due to some concession for next week’s refunding (3-year auction on Monday, ahead of record size 10s and 30s), although also potentially a reflection on Senate majority Leader McConnell’s appetite for some stimulus, although not comparable to the multi-trillion dollar package and policies associated with a Dem sweep that is more likely to catalyse inflation. T-note (Z0) futures settled 10+ ticks lower at 138-17+.

US Senate Majority Leader McConnell will take the lead on new coronavirus relief talks and although the current administration will engage in tailoring details, Treasury Secretary Mnuchin will step back for McConnell to take lead, according to Fox's Lawrence citing sources. (Twitter)

US House Speaker Pelosi said on Friday that she rejects GOP calls for a smaller stimulus package and that it doesn't appeal to her at all, while it was separately reported on Friday that US Treasury Secretary Mnuchin will step back for Senate Majority Leader McConnell to take the lead on new coronavirus relief talks. (Newswires/Fox)