Original insights into market moving news

[PODCAST] European Open Rundown 10th November 2021

  • Asian equity markets traded negatively after a lacklustre handover from Wall Street where the major indices took a break from recent advances
  • Chinese consumer prices registered their fastest increase in more than a year and factory gate prices rose at a fresh record pace
  • A virtual meeting between US President Biden and Chinese President Xi is reportedly planned for as soon as next week
  • The DXY heads into the European session north of 94.00, antipodeans lags in the G10 space
  • Looking ahead, highlights include US CPI, Initial Jobless Claims, DoEs, ECB's Elderson, supply from the UK, Germany & the US
  • Earnings: Adidas, Allianz, Alstom, Continental, Credit Agricole, E.ON, EDF, Engie, RWE, Infineon, ITV, M&S, Disney


Pfizer (PFE) is to ask the FDA to extend booster eligibility to all adults and is to submit new data from a study involving 10k people which evaluated the safety and efficacy of a third dose of the Pfizer shot. (Newswires)

Moderna (MRNA) is expected to ask the US government to expand its COVID-19 boosters to all adults, while Moderna and NIH are said to be in a "bitter dispute" over who deserves credit for inventing the central component of the COVID-19 vaccine which reportedly has broad implications for the vaccine's distribution and future profits. (CNBC/NYT)

French President Macron said the rise in COVID-19 incidence rates and hospitalizations give an alarm signal, while he added that a booster shot will be required from December 15th to maintain the validity of the health pass. (Newswires)


Asian equity markets traded negatively after a lacklustre handover from Wall Street where the major indices took a break from recent advances and the S&P 500 snapped an eight-day win streak ahead of looming US inflation data. ASX 200 (-0.1%) was rangebound with early strength in financials gradually offset by losses in the commodity-related sectors and with the improvement in Westpac Consumer Sentiment data doing little to spur risk appetite. Nikkei 225 (-0.6%) was subdued with exporters pressured by unfavourable currency inflows and with the list of biggest movers in the index dominated by companies that recently announced their earnings, although Nissan and NTT Data Corp were among the success stories on improved results including a surprise return to quarterly profit for the automaker. Hang Seng (-1.1%) and Shanghai Comp. (-0.9%) underperformed amid ongoing developer default concerns as Evergrande approaches the end of a 30-day grace period for its missed coupon payments totalling USD 148.1mln which expires today. Rating agencies have also downgraded a couple of developers and Fantasia Holdings shares fell as much as 50% on resumption from a one-month trading halt after it missed bond payments due early last month. Furthermore, tensions continued to brew on the Taiwan Strait after US lawmakers made a surprise visit to Taiwan and with China conducting combat readiness patrols in the area ahead of a potential Biden-Xi virtual meeting that could occur next week, while participants also reflected on the firmer than expected inflation data from China which showed consumer prices registered their fastest increase in more than a year and factory gate prices rose at a fresh record pace. Finally, 10yr JGBs traded marginally higher amid the lacklustre mood in stocks and presence of the BoJ in the market for over JPY 1.3tln of JGBs with 1yr-10yr maturities, although gains were capped by resistance ahead of the 152.00 focal point and a pull-back in T-notes.

PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.20% for a CNY 50bln net injection. (Newswires) PBoC set USD/CNY mid-point at 6.3948 vs exp. 6.3952 (prev. 6.3903)

A virtual meeting between US President Biden and Chinese President Xi is planned for as soon as next week, according to a person briefed on the matter. There were later comments from Chinese President Xi that China stands ready to work with the US on regional and international issues, as well as properly manage issues. (Newswires)

White House said the US continues a national emergency regarding the threat from securities investment that finance certain Chinese companies. (Newswires)

  • Chinese CPI MM (Oct) 0.7% vs. Exp. 0.7% (Prev. 0.0%)
  • Chinese CPI YY (Oct) 1.5% vs. Exp. 1.4% (Prev. 0.7%); fastest pace of increase since September 2020
  • Chinese PPI YY (Oct) 13.5% vs. Exp. 12.4% (Prev. 10.7%); fresh record pace of increase


BoE Governor Bailey said the central bank mandate is hierarchical and that price stability comes first. (Newswires)

French President Macron said they are carrying out a key reform of the unemployment insurance programme and from 2022 onwards, they will need to make clear decisions about pension reform system. (Newswires)

European Commission VP Šefčovič will sound out EU nations on how they think they should react if the UK triggers Article 16. However, diplomats note "we are not yet talking about a sanctions package” at today’s meeting. (Politico)


In FX markets, the DXY eked marginal gains and traded both sides of the 94.00 level with some mild support from the risk aversion and as focus shifts to the approaching US CPI data due later. There was another bout of Fed rhetoric, but nothing too ground-breaking as Fed’s Daly suggested the Fed will remain steady and vigilant amid the uncertainty and Fed’s Bullard reiterated his view for two rate hikes next year, as well as suggesting the FOMC should debate allowing a balance sheet runoff once the taper ends. EUR/USD was lacklustre after yesterday’s indecisive performance. GBP/USD was also restricted amid overhang from the ongoing Article 16 threat and despite the EU side denying that they were preparing a package of retaliation measures for a pre-emptive strike against the UK. USD/JPY languished beneath the 113.00 handle as havens benefitted from the risk aversion, which also restricted antipodeans despite the improved Australian Westpac Consumer Confidence data and firmer than expected Chinese inflation.

  • Australian Westpac Consumer Sentiment Index (Oct) 105.3 (Prev. 104.6)
  • New Zealand Preliminary Business Confidence (Nov) -18.1 (Prev. -13.4)
  • New Zealand Preliminary Activity Outlook (Nov) 15.6 (Prev. 21.1)


Price action for commodities left much to be desired during Asia hours amid the cautious mood in stocks which was brought on by inflationary and developer default concerns in China. WTI crude futures head into the European open flat although remain above the USD 84/bbl level and hold on to the majority or yesterday's spoils after it found support from the bullish current year revisions in the latest EIA STEO forecasts. Furthermore, the White House reiterated its calls for OPEC+ to boost supply, and the latest private sector inventory showed a surprise draw in headline crude stockpiles which briefly lifted oil prices to just shy of the USD 85/bbl before gradually fading the move. Gold was rangebound amid a steady greenback, while copper prices were constrained by the cautious risk appetite and with firmer than expected Chinese inflation data further narrowing the scope for PBoC rate cuts.

US Private Energy Inventories (bbls): Crude -2.5mln (exp. +2.1mln). (Newswires)

White House reiterated calls on OPEC+ to increase oil supply and said Line 5 negotiations are not a signal of a shutdown, while it expects US and Canada to engage in process and negotiations on the pipeline. Furthermore, the White House welcomes the forecast of oil prices moderating as it sees prices as a top issue and will act as needed amid concern about energy prices in the cold months. (Newswires)


EU is close to imposing new round of travel bans and asset freezes on 30 Belarusian officials and entities, while EU envoys are set to agree that "hybrid attack" by Belarus serves as legal criteria for sanctions and economic sanctions on Belarusian re-insurance sector are under consideration, according to reports citing three diplomats. (Newswires)


Treasuries bull-flattened amid Brainard Fed Chair speculation, soft Core PPI, choppy risk appetite, and further short-covering; 10yr auction tailed; real yields continue to lead the move. TYZ1 volumes below averages but higher than Monday. By settlement, 2s -4.0bps at 0.409%, 3s -4.1bps at 0.718%, 5s -5.0bps at 1.070%, 7s -6.1bps at 1.316%, 10s -5.9bps at 1.438%, 20s -5.4bps at 1.854%, 30s -6.3bps at 1.825%. 5yr TIPS -7.1bps at -1.896%, 10yr TIPS -8.0bps at -1.190%, 30yr TIPS -7.2bps at -0.566%. T-Notes rose into the NY handover, with some citing stateside traders waking up to reports that Brainard had been interviewed for the Fed Chair role, in addition to renewed China property market concerns. Note that it was the long-end of the curve driving the rally. The inline with expectations headline US PPI report (+0.6% M/M) and soft core figure (+0.4% vs exp. +0.5%) saw duration lifted further. T-Notes advanced to session highs of 131-29+ into the 10yr auction, with cash 10s hitting a session low of 1.415%, while the long bond saw lows of 1.795%, the lowest since the July low of 1.78%, before the 1.2bp 10yr tail saw strength capped. IFR, dissecting the moves, said hedge funds were on balance better buyers, "mainly short-covering motivated with fast money curve flattening bets exacerbating the short covering squeeze in the long end". It was sideways trade into the settlement after the disappointing auction (more below), while traders look to the week's data highlight Wednesday, US CPI, as well as the 30yr bond auction. T-note (Z1) futures settled 17+ ticks higher at 131-27.

Fed's Daly (2021, 2024 voter) said the thing to do amid uncertainty is to stay steady and be vigilant and noted a great deal of uncertainty in the labour market. Daly commented that the modal outlook is for prices to moderate, while she also has to worry about the non-modal outlook and is watching carefully to see if inflation expectations rise. (Newswires)

Fed's Bullard (2022 voter) said he expects the Fed to hike rates twice next year after the completion of its tapering, although cautioned that this could change in either direction during H1 next year and he also noted that the Fed have a two-pronged strategy on containing inflation. (CNBC)

Fed's Kashkari (2023 voter) says prices have been elevated longer than he expected and does not know how long supply-chain disruptions will last, while he added the next 3, 6 and 9 months will be very important on getting more clarity on economic outlook. Kashkari added that whether it's a demand shock or a supply shock, either way, the story should be temporary and that right now there's a lot of uncertainty but should reach equilibrium in the next few quarters. Furthermore, Kashkari said once the Fed finishes taper, it would consider when it is appropriate to raise rates and that long-term inflation expectations are very much in check, although if the labour force does not return in the next few quarters, it will suggest high inflation may be sustained and economic growth will be slower. (Newswires)

US President Biden proposed a USD 4bln plan to upgrade aimed at addressing immediate supply-chain challenges and other disruptions affecting global commerce. (CNBC)

US Commerce Secretary Raimondo said she has spoken to many chip firm CEOs over the last several weeks seeking compliance on data and that they need Congress to pass chips act as soon as possible so that they can get more chips made in the US. (Newswires)

US Treasury Secretary Yellen said infrastructure and the social spending/climate bills will boost the size of the US labour force and expand productive capacity. (Newswires)

White House Economic Advisor Brian Deese anticipates a vote in the House next week on the larger social infrastructure package and said some House members will receive more information this week regarding the bill not adding to the debt, according to Fox Business' Edward Lawrence. (Twitter)