US EARLY MORNING: US index futures continue upside; PPI, retail sales, Biden-Xi meeting ahead

US PRE-MARKETS: US equity futures continue the upside seen in wake of the cooler than expected CPI data for October, which resulted in an easing of global macro financial conditions, as bonds and equities rallied. Overnight, China released better-than-expected activity data, which overall suggests that the recovery was struggling to gain a strong footing at the start of Q4, but was not nearly as weak as some had feared, according to Capital Economics, while the UK reported cooler-than-expected CPI data too. Bond yields are mixed, with the short-end giving back some of Tuesday’s gains, while the longer-end is only marginally lower. The Dollar Index is around flat; ING warns the correction lower in the buck is gaining much attention: ING said Tuesday's moves were extreme, noting that its short-term fair value model now has the USD as undervalued against all G10 currencies except for the JPY, CAD, and NOK; "this is quite remarkable given the dollar had been generally overvalued in the short term for many months," the bank said. Its analysts will be watching today's PPI data for confirmation that the disinflation process effectively accelerated in October. Other than the PPI data, there are retail sales due from the US today (primer below), but the main focus will be on a meeting between Presidents Biden and Xi on the sidelines of the APEC summit; the two will meet at 10:45PST/18.45GMT/13:45EST, Biden will then hold a press conference at 16:15PST/00:15GMT/19:15EST; our primer is here.

PREVIEW – US RETAIL SALES (13:30GMT/08:30EST): Headline retail sales are seen slipping in October, with the consensus looking for -0.3% M/M (prev. +0.7%); the ex-autos gauge is seen unchanged (prev. +0.6%), while the Control Group is seen up +0.2% M/M (prev. +0.6%). Bank of America’s October credit and debit card spending data showed a decline of 0.2% M/M in October (vs prev. +0.2% M/M in September), taking the annual rate to -0.5% Y/Y (vs +0.7% in September). The bank said that in contrast to the trends seen in the summer, there is no longer a convergence of services and retail spending. “This month, we saw a meaningful convergence between lower- and higher-income households’ spending growth, which could be partly explained by the rebound in wage growth for the latter,” it writes, noting that rising mortgage payments have started to disproportionately weigh on some higher-income households. “This has led to slower spending for homeowners relative to high-income renters, and if rent inflation softens further, renter spending outperformance could play out in middle- and lower-income families too.” BofA adds that despite a jump in households resuming student loan repayments, it is still seeing little signs of a negative impact on spending, and says that household balance sheets still remain in robust shape.

PREVIEW – BIDEN-XI MEETING (meeting 10:45PST/18.45GMT/13:45EST, Biden press conference 16:15PST/00:15GMT/19:15EST): US President Biden and China’s President Xi will hold talks on the sidelines of the APEC forum in San Francisco, which will be only the second in-person meeting between the two. No big breakthroughs are expected from the talks. Instead, analysts will be looking for incremental signs of improvements in relations. An official has said Biden will discuss Ukraine, Israel, human rights, Taiwanese elections, South China Sea, North Korea and fair economic relations when the two meet on November 15th. The official added that Biden might raise Chinese election influence operations, Fentanyl, AI and US detainees in China. The US also plans to take necessary steps to restore military communication with China and will press the issue "assertively" with Xi, and underscore a desire for China to tell Iran to not escalate the crisis in the Middle East. Geopolitical analysts at RANE said that the talks will help to restart working-level dialogues on issues like trade disputes, but will fail to address the root cause of escalating US-China tensions and augur little progress on key policy disputes, including climate change mitigation. Newsquawk primer here.

TODAY’S AGENDA:

DAY AHEAD: Our interactive calendar can be accessed here; a pdf version can be downloaded here. Highlights include: Final French and Italian CP, EZ Trade Balance and Industrial Production; US Retail Sales and PPI; speeches due from Fed's Barr (voter), Barkin (2024), Biden-Xi Meeting (Biden-Xi to meet Wednesday at 10:45PST/18.45GMT/13:45EST, Biden to hold a press conference at 16:15PST/00:15GMT/19:15EST; our primer is here). US corporate earnings releases today will include JD, TGT, CTLT, FI, TJX, PANW, CSCO; our Daily US Earnings Estimates sheet can be accessed here.

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15 Nov 2023 - 09:30- Research Sheet- Source: Newsquawk

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