Original insights into market moving news

[PODCAST] European Open Rundown 22nd November 2021

  • Asia-Pac stocks traded mixed; US equity futures trade with mild gains
  • On Friday, Fed’s Clarida suggested discussing the speeding of tapering, whilst Fed’s Waller said his preference is for the Fed to accelerate the taper
  • PBoC-backed China Foreign Exchange Committee instructed bank traders to limit speculation on the Yuan
  • German coalition agreement could be attained as early as Monday or Tuesday this week, according to sources
  • Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices
  • Looking ahead, highlights include EZ Consumer Confidence (Flash), US Existing Home Sales, ECB’s de Guindos and Holzmann, and supply from the US


Social unrest and violence erupted in Belgium and the Netherlands over the newly imposed COVID restrictions. (Telegraph)

The UK is expanding its COVID-19 booster plan to all over the age of 40 years old from today in an effort to avoid imposing new restrictions. (Newswires)

US CDC advisers voted in favour of recommending the expansion of eligibility for COVID-19 vaccine booster doses to all adults. (Newswires)

Australia PM Morrison said fully vaccinated visa holders will be permitted entry into Australia from December 1st and fully vaccinated citizens from Japan and South Korea can enter from December 1st. Elsewhere, New Zealand PM Ardern said the country will move to a traffic light system from December 3rd. (Newswires)

Singapore government relaxed social distancing curbs that were imposed to contain the spread of COVID-19 and will permit gatherings of up to five people to dine out and socialise beginning this Monday. (Newswires)


Asia-Pac stocks traded mixed following last Friday's mostly negative performance stateside, where risk appetite was dampened by concerns of a fourth COVID wave in Europe and recent hawkish Fed rhetoric. Weekend newsflow was light and the mood was tentative heading into this week's risk events including FOMC minutes and US GDP data before the Thanksgiving holiday. The ASX 200 (-0.6%) was subdued with declines led by weakness in gold miners and the energy sector. The Nikkei 225 (+0.1%) was lacklustre after last week’s inflows into the JPY but with downside eventually reversed as the currency faded some of the gains and following the recent cabinet approval of the stimulus spending. The KOSPI (+1.4%) outperformed and reclaimed the 3k level with shares in index heavyweight Samsung Electronics rallying as its de facto leader tours the US which spurred hopes the Co. could deploy its USD 100bln cash pile. The Hang Seng (-0.5%) and Shanghai Comp. (+0.6%) diverged with the mainland kept afloat after the PBoC conducted a mild liquidity injection and maintained its Loan Prime Rate for a 19th consecutive month as expected, although Hong Kong was pressured by losses in energy and cautiousness among developers, as well as the recent announcement of increased constituents in the local benchmark. Finally, 10yr JGBs eked marginal gains amid the cautious risk tone in Asia and following firmer demand at the enhanced liquidity auction for 2yr-20yr JGBs, but with upside capped as T-note futures continued to fade Friday’s early gains that were fuelled by the COVID-19 concerns in Europe before the advances were later halted by hawkish Fed rhetoric calling for a discussion on speeding up the tapering at next month’s meeting.

  • PBoC injected CNY 50bln via 7-day reverse repos with the rate at 2.20% for a CNY 40bln net injection. (Newswires)
  • PBoC set USD/CNY mid-point at 6.3952 vs exp. 6.3880 (prev. 6.3825)

Chinese President Xi said China has, is and will forever be ASEAN's good neighbour, good friend and good partner, while he added that China as a big country will not bully smaller nations. (Newswires)

EU Commission said they do not regard the opening of a representative office by Taiwan in Lithuania as a breach of the EU’s One China policy and they made it clear to Chinese contacts that this is a predominantly bilateral matter between China and Lithuania, while it added that the EU has stood by Lithuania in the face of sustained economic coercive measures from China and it was also reported that China downgraded its ties with Lithuania. (Newswires)

French Foreign Minister Le Drian said Chinese authorities have to allow Chinese tennis player Peng Shuai to talk publicly if they want to clarify the situation and stated that there could be diplomatic consequences if Peng doesn’t speak, while it was separately reported that Peng Shuai held a video call with Olympics boss Thomas Bach in which she stated that she was safe and well. (Newswires/Sky News)

Chinese tech giants including Alibaba Group (9988 HK), Tencent Holdings (700 HK), Baidu (9888 HK) and (9618 HK) were fined for failing to report corporate acquisitions, involving 43 such instances that occurred up to eight years ago and with a penalty of CNY 500k for each violation. (Newswires/CITY A.M.)


Fed's Clarida (voter) said it may well be appropriate to discuss the speeding of tapering at the December meeting. Clarida also stated the economy is in a very strong position and that it looks like Q4 will be very strong, while he added that there is upside risk to inflation. (Newswires) N.B Comments were made on Friday

Fed's Waller (voter) said he and others are realizing they can't sit around and wait for inflation to disappear which is not an optimal policy response and that policy is also about setting expectations for the entire rate path. Waller added that it is really important the Fed maintains its credibility on inflation and is concerned markets don't think Fed can get inflation under control in the next 3-5yrs, while he would rather end the taper before raising interest rates and stated they can get ahead and accelerate the taper which is his preference. Furthermore, Waller said if the Fed doubles the pace of tapering in January, it could be done by the beginning of April, giving more policy space for a rate hike as early as Q2 2022. (Newswires) N.B Comments were made on Friday

BoE Governor Bailey justified the BoE's stance and said it is not the Bank’s job to fix supply chain issues hampering economies globally which cause inflation to increase, while he noted that the fear is inflation is elevated for longer but added that there is also a chance inflation does not prove as persistent as feared. Furthermore, Bailey said there are risks both ways and that UK economic activity is slowing and supply-side issues are stoking prices. (Newswires)

  • PBoC 1-Year Loan Prime Rate (Nov) 3.85% vs Exp. 3.85% (Prev. 3.85%)
  • PBoC 5-Year Loan Prime Rate (Nov) 4.65% vs Exp. 4.65% (Prev. 4.65%)

PBoC-backed China Foreign Exchange Committee instructed bank traders to limit speculation on the Yuan, while there were separate comments from a PBoC adviser Liu Shijin that China’s economy could enter a period of quasi-stagflation and excessively high producer price inflation. (Newswires)

REINZ Shadow Board is overwhelmingly in favour of the RBNZ raising rates amid surging inflation and stated that inflation pressures have surged over past year amid strong demand, disruption from port congestions and containment measures impacting output. (Newswires)


EY Item Club lowered its forecasts for UK economic growth for this year to 6.9% from 7.6% and for next year to 5.6% from 6.5% as it sees rising inflation and supply chain disruption to have an impact on growth. (The Times)

UK shoppers are expected to spend almost GBP 9.2bln during this year’s Black Friday sales, according to experts cited by The Guardian. (Guardian)

EU is planning to crackdown on patchwork of national arrangements which permit non-EU banks to sell services in the block, with the measures to impact London banks that rely on the cross-border permissions. (FT)

German coalition agreement could be attained as early as Monday or Tuesday this week, according to sources. (Newswires) Germany's FDP Leader Lindner, who is looking at the role of Finance Minister, said that fears he was a fiscal hawk are overblown. (Newswires)


In FX, DXY traded rangebound but held on to recent gains above the 96.00 level after the latest bout of hawkish central bank rhetoric in which Fed’s Clarida, on Friday, stated it may well be appropriate to discuss the speeding of tapering at the December meeting and that the economy is in a very strong position, as well as noted upside risk to inflation. There were also comments from Fed’s Waller that a rapid improvement in the labour market and high inflation make him favour faster tapering and a more rapid lift-off in rates. Market participants continue to await President Biden’s Fed Chair nomination with the White House noting that there will be more to report early this week when questioned regarding the timing of the Fed Chair decision and with the announcement anticipated before the Thanksgiving holiday this Thursday. EUR/USD was subdued beneath the 1.1300 handles after losing ground to the USD strength, with participants also eyeing COVID developments in the EU with lingering uncertainty in Germany and a full lockdown imposed in Austria for up to 20 days, whilst social unrest erupted in Brussels and Rotterdam over the weekend amid freshly imposed restrictions. GBP/USD was also lacklustre beneath 1.3450 with comments over the weekend from Governor Bailey not doing much to spur the currency as he underlined a two-sided argument on inflation with UK economic activity slowing and that supply-side issues are stoking prices. USD/JPY nursed losses and reclaimed the 114.00 status although upside was capped in related crosses due to the cautious mood, while antipodeans gradually nursed some of last week's weakness with NZD/USD attempting to reclaim 0.7000 status as markets fully price in a rate hike by the RBNZ at its meeting on Wednesday and with the REINZ Shadow Board overwhelmingly in favour of a rate increase.


WTI crude futures briefly slipped beneath the USD 75/bbl overnight in an extension of last Friday's losses of almost 4% that were attributed to the COVID-19 concerns in Europe. There were weekend reports that Japan and the US are planning a joint announcement regarding the SPR release, although a key Japanese official later noted there was no fixed plan yet on releasing reserves. Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices. Elsewhere, gold heads into the European session open flat beneath the 1850/oz level with the precious metal contained as the greenback held on to most its recent gains with participants looking ahead to the FOMC minutes and US GDP data mid-week prior to the Thanksgiving holiday, while copper was pressured amid the flimsy overnight risk appetite.

US Baker Hughes Rig Count (w/e Nov 19th): Oil +7 at 461, Nat Gas +2 at 102, and Total +7 at 563. (Newswires)

White House said that OPEC should meet current demand and ensure adequate supply. (Newswires)

Japanese PM Kishida confirmed that they are considering releasing oil reserves to curb prices and there were also reports that Japan and the US are planning a joint announcement regarding SPR release. However, the Japanese Chief Cabinet Secretary said that there was no fixed plan yet about releasing oil reserves and they continue to pay attention to global energy market trends, as well as the impact on Japan's economy. (Newswires/Yomiuri)

French Finance Minister Le Maire said that France is to work with UAE on renewable and hydrogen projects, while he added that reaching zero carbon emissions by 2050 is an important goal and that they want to work with the UAE on fighting climate change. (Newswires)

Iran and Azerbaijan are eyeing finalising energy deals soon involving development of oil and gas fields in the Caspian Sea. (Platts)


US intelligence showed a mass build up of Russian troops near Ukraine and outlined a likely invasion strategy with US intelligence focusing on a possible incursion early next year, although other reports noted that Russian President Putin denied there was any intention of invading Ukraine. (Newswires)

Saudi-led coalition stated air defences destroyed a drone that targeted Najran airport in south of the kingdom, while it later warned that it detected indications of imminent danger to navigation and global trade south of the Red Sea. (Newswires/Al Arabiya)


Treasuries were bid on Friday but off highs in choppy trade as the curve battled cross-Atlantic demand from COVID/lockdown woes in Europe and hawkish Fed remarks from Waller and Clarida, with both suggesting a hawkish taper adjustment may be necessary. At settlement, 2s +0.3bps at 0.505%, 3s +0.3bps at 0.848%, 5s -1.8bps at 1.205%, 7s -3.3bps at 1.440%, 10s -4.9bps at 1.538%, 20s -6.0bps at 1.942%, 30s -6.4bps at 1.909%. 5yr TIPS +8.1bps at -1.835%, 10yr TIPS +0.4bps at -1.133%, 30yr TIPS -4.8bps at -0.525%. Bunds led a broader govvie rally on comments that Germany could not rule out another lockdown, while Austria would impose a full lockdown. There was a kneejerk lower in Bunds and USTs later in the session on reports in German press that the Foreign Minister said Germany is not conjuring a nationwide lockdown, but the move pared, with uncertainty still high on the state of Europe. However, sellers resurfaced later in the session as Waller advocated for a faster taper purchase and the potential for rate hikes as soon as Q2. Those moves gained weight as Clarida came later and said for the first time he could consider a taper speed adjustment at the December meeting, seeing curve-flattening pick-up as the belly sold off the most. It's also worth noting we have the doubleheader, cut-size 2s and 5s new issue auctions on Monday ahead of the deeper cut 7yr on Tuesday, with thinner trade expected due to Thanksgiving, likely adding pressure to Friday's flattening. T-note (Z1) futures settled 9+ ticks higher at 130-28.

US President Biden is said to have informed his inner circle in the Democrat party that he plans to run for re-election in 2024. (Newswires)

A mass casualty event was reported in Waukesha, Wisconsin where five people were killed and over 40 were injured after a vehicle plowed into people at a holiday parade and with gunshots also reported, while the Wuakesha police chief said there is a person of interest in custody and that there were some fatalities from the parade incident, although it was not known if the incident is related to terrorism. (Newswires)


The Financial Conduct Authority (FCA) is spending half a million Pounds on blockchain data analysis and the training of its staff on spotting criminal activities via crypto. (Telegraph)