S&P futures are fractionally in the red while traders await President Trump’s pick for Fed chair and more clues on the fate of tax reform; Asian stocks slide, European shares are little changed ahead of tomorrow's ECB tapering announcement as US 10Y yields finally break out of their multi-month range below 2.40%...
... pushing wider to 2.45%, the highest since March, following a rout in Chinese government bonds markets, where the 10-year yield rose by 6 basis points, the most since May 10, to 3.79% the highest level since December 2014 as the central bank halted cash injections and after comparable U.S. yields surged 5 bps on Tuesday. Of note, traders were concerned about the sudden shift in the PBOC posture, which did not inject money on a net basis for the first time in 6 days.
In addition to China, in the US, 10Y yields climbed toward 2.45% , while those of most government bonds in Europe followed the move higher after data showed German Ifo business confidence unexpectedly rose to a record high in October.
The record jump in the Ifo prompted some to wonder if a Bund crash is imminent:
Bond bubble in one chart: 10y Bund yields remain at depressed levels despite Ifo business index at all-time high. Is a Bund crash imminent? pic.twitter.com/pyRY6ykQAA
— Holger Zschaepitz (@Schuldensuehner) October 25, 2017
The breakout in yields also prompted Jeff Gundlach to tweet on Tuesday night that "the moment of truth has arrived for secular bond bull market! Need to start rallying effective immediately or obituaries need to be written."
The moment of truth has arrived for secular bond bull market! Need to start rallying effective immediately or obituaries need to be written.
— Jeffrey Gundlach (@TruthGundlach) October 24, 2017
On Tuesday, a source familiar with the matter said U.S. President Donald Trump had polled Republicans on whether they would prefer Stanford University economist John Taylor or current Fed Governor Jerome Powell to be the next U.S. central bank chief, and more senators preferred Taylor. That helped send the index that measures the dollar against a basket of peers up 0.3 percent, pushing the USDJPY above 114.
The dollar also got support from the yield on the U.S. 10-year Treasury. It was at 2.42 percent having finally broken above the long-standing 2.4 percent barrier this week. For Fed-focused traders, Taylor is seen as someone who could quicken the pace of interest rate increases compared with Fed Chair Janet Yellen, whose term expires next February.
“Anything that reduces the probability of Yellen being reappointed necessarily means the Fed looks more hawkish than it would otherwise,” said the RBC’s head of currency strategy Adam Cole, in London. “The general perception is that there’s no one more dovish than Yellen,” he said.
The sell-off in Treasuries gained momentum as gilts slid after better-than-expected U.K. GDP, pushing the 10-year yield above 2.45% for the first time in seven months. The Bloomberg Dollar Spot Index’s gains were held back by a rally in cable as the U.K. growth data kept BOE November-hike odds intact. The same didn’t apply for RBA as the latest Australian inflation data missed estimates and the Aussie hit a three-month low. The euro flat lined as all eyes are now on the ECB decision Thursday; bunds dropped a second day.
Sterling got a boost after data showed Britain’s economy picked up speed in the third quarter, bolstering the case for the Bank of England to raise UK interest rates next week for the first time in more than a decade.
There were several notable developments in Europe:
- Spanish Senate summoned the Catalan President for 10:00am local time this Friday.
- Spanish PM Rajoy states that the only option now is for elections in Catalonia.
- UK GDP Prelim QQ (Q3) 0.4% vs. Exp. 0.3% (Prev. 0.3%); UK GDP Prelim YY (Q3) 1.5% vs. Exp. 1.4% (Prev. 1.5%)
- German Ifo Expectations (Oct) 109.1 vs. Exp. 107.3 (Prev. 107.4, Rev. 107.5); German Ifo Current Conditions (Oct) 124.8 vs. Exp. 123.5 (Prev. 123.6, Rev. 123.7)
- The ECB are divided over the wisdom of declaring an end to QE with hawks admitting that the door cannot be locked when it comes to QE but it must be clear that the door is nowhere near as open as it once was. (FT)
Europe's Stoxx Europe 600 Index swung before advancing as companies in the region reported mixed results. Benchmarks in Asia were mixed with the MSCI Asia Pacific Index trading sideways, but all attention was on Japan where Japanese stocks fell for the first time in 13 days while the Nikkei 225 snapped its record 16-day rally, as technical indicators suggested the advance was too rapid. Defensive stocks, including telecommunications and pharmaceutical companies, were among the heaviest drags on the Topix. Still, even after Wednesday’s declines, the 14-day relative strength indexes for both the Nikkei 225 and Topix remained well above the level of 70 that indicates shares are overbought.
"The stock market is wary of the rally, which could prompt some investors to take on profits," said Hiroaki Hiwada, a strategist at Toyo Securities Co. in Tokyo. “Yet, there are some investors who want to buy on price dips.” Stocks gained earlier in the session, with banks providing the biggest support for the broad market, after the yen traded near a three-month low against the dollar and the Dow Jones Industrial Average reached a record high.
Also in Asia, India’s S&P BSE Sensex soared as much as 1.6% after Prime Minister Narendra Modi’s government said late on Tuesday it will inject an unprecedented 2.11 trillion rupees ($32 billion) into the banks over two years to revive growth.
As the Chinese Party Congress concluded, President Xi Jinping was renamed as Communist Party General Secretary as expected. Furthermore, China kept the Politburo Standing Committee to 7 members with only President Xi and Premier Li retaining their positions in the highest body of the central committee, while there was also no clear successor for President Xi Jinping, suggesting he may remain in control for decades.
Back in the US, with equities at or near records globally, investors are looking hard at earnings and economic data for indications of broadening growth that may keep the rally alive. The big U.S. results from Tuesday certainly helped, with more to come this week as well as the latest American GDP reading. Whether the global economy is stable enough to exist on its own is a key question as the Federal Reserve and other central banks start to pull back on emergency monetary stimulus. The ECB will announce a reduction in the size of its monthly bond buying at its policy meeting Thursday, the biggest scheduled event for markets this week.
“Calling the end of this market at the moment is very, very tricky because interest rates are going to remain low, earnings are OK,” Neil Dwane, global strategist at Allianz Global Investors, said on Bloomberg Television. “‘We are seeing good economic performance out of Europe, but all the equity markets now need earnings to rise.”
In commodities, Crude oil futures caught their breath after rising more than 1 percent overnight after top exporter Saudi Arabia said it was determined to end a supply glut. Prices also drew support from forecasts of a further drop in U.S. crude inventories as well as nervousness over tensions in Iraqi Kurdistan. Brent crude was up 0.2 percent at $58.41 a barrel, while U.S. crude was down 0.3 percent at $52.31. Spot gold decreased 0.4 percent to $1,272.20 an ounce, the weakest in almost three weeks. Copper declined 0.7 percent to $3.18 a pound, the biggest fall in more than a week. LME nickel decreased 1.1 percent to $11,865 per metric ton, the largest dip in four weeks.
In currencies, the Bloomberg Dollar Spot Index increased 0.1 percent to the highest in almost 15 weeks. The euro climbed 0.1 percent to $1.1767. The British pound gained 0.6 percent to $1.3209, the strongest in more than a week on the largest climb in more than two weeks
In rates, as noted above, it's been a rout, The yield on 10-year Treasuries increased three basis points to 2.45 percent, the highest in about seven months. Germany’s 10-year yield climbed one basis point to 0.49 percent, the highest in 12 weeks. Britain’s 10-year yield gained four basis points to 1.397 percent, the highest in almost nine months.
Economic data include durable goods orders, new home sales. Scheduled earnings include Visa, Coca-Cola, Boeing.
Bulletin Headline Summary from RanSquawk
- UK beat expectations on both Y/Y and Q/Q GDP figures resulting in GBP buying.
- AUD/USD slid following softer than expected Australian Q3 CPI in which all components of the release missed estimates
- Looking ahead, highlights include US Durables, New Home Sales, BoC, DoEs and US 5yr Auction
Market Snapshot
- S&P 500 futures down 0.2% to 2,563.50
- STOXX Europe 600 down 0.07% to 389.05
- MSCI Asia down 0.01% to 166.94
- MSCI Asia ex Japan up 0.2% to 548.47
- Nikkei down 0.5% to 21,707.62
- Topix down 0.3% to 1,751.43
- Hang Seng Index up 0.5% to 28,302.89
- Shanghai Composite up 0.3% to 3,396.90
- Sensex up 1.4% to 33,072.26
- Australia S&P/ASX 200 up 0.1% to 5,905.60
- Kospi up 0.08% to 2,492.50
- German 10Y yield unchanged at 0.475%
- Euro up 0.06% to $1.1768
- Brent Futures down 0.2% to $58.20/bbl
- Italian 10Y yield rose 5.5 bps to 1.792%
- Spanish 10Y yield fell 3.5 bps to 1.622%
- Gold spot down 0.3% to $1,273.37
- U.S. Dollar Index up 0.1% to 93.90
Top Overnight News
- Australia’s core inflation unexpectedly slowed in the September quarter as electricity prices spiked by less than forecast
- German Ifo business confidence unexpectedly rose to a record high of 116.7 in October, signaling that growth momentum in Europe’s largest economy remains far from waning; that was up from a revised 115.3 in September while economists surveyed by Bloomberg expected a drop to 115.1
- Saudi Arabia’s sovereign- wealth fund will borrow to boost returns from its investments as it seeks to diversify the kingdom’s oil-dependent economy
- China’s twice-a-decade meeting of the Communist Party ended in triumph for President Xi Jinping. Not only was his name and ideology elevated into the party’s constitution, he broke with convention in the new leadership lineup unveiled Wednesday and chose not to anoint a successor
- U.K. Brexit Secretary David Davis sees Brexit breakdown with no deal at all as very unlikely
- Janet Yellen’s only advocate in the White House may be the one person who matters most: President Donald Trump. The incumbent Federal Reserve chair was impressive in an Oval Office interview with Trump on Thursday, several people familiar with the matter said.
- The U.S. Senate moved Tuesday to overturn a rule aimed at making it easier for customers to sue banks, handing financial firms a big win in their battle against post-crisis regulations
- Chinese President Xi Jinping unveiled a new leadership line-up that didn’t include a clear potential heir, breaking with a quarter-century-old succession system and raising the chances that he might seek to stay in office beyond 2022
- Blackstone May Double Assets to $800 Billion in Five Years
- Starbucks Is in Hot Water Over California’s Toxic Warning Law
- AT&T Outpaced in Subscriber Additions by T-Mobile, Verizon
- Innotek ’Just Starting’ IPhone X Camera Module Mass Production
Asia-Pac stock markets were mixed after another record setting day for the DJIA which was underpinned by industrials after strong Caterpillar results and with outperformance in financials on rising yields amid prospects of a hawkish Fed Chair. However, gains in the Asia-Pac region were minimal for want of a catalyst, with ASX 200 (+0.1%) and Nikkei 225 (-0.4%) mixed. Hang Seng (+0.6%) and Shanghai Comp. (+0.1%) traded the green amid continued liquidity efforts by the PBoC, but with upside contained in the mainland as China remained focused on stability and earnings, as well as the unveiling of the nation’s politburo standing committee. Finally, 10yr JGBs were flat with demand subdued after the downside seen in USTs and as the win streak in Japanese stocks remained intact, although losses were also stemmed amid the BoJ’s Rinban operation for JPY 880bln in JGBs across the curve. PBoC injected CNY 100bln via 7-day reverse repos and CNY 60bln via 14-day reverse repos. PBoC set CNY mid-point at 6.6322 (Prev. 6.6268)
Top Asian News
- Japan Stock Boom Seen Driven by Profits That Still Hinge on Yen
- Japanese Stocks Fall, Bringing Nikkei 225’s Record Run to End
- Japanese Insurers Plan to Pour More Funds Into Foreign Bonds
- New Zealand’s Ardern Unveils Cabinet as New Blood Takes the Helm
- How India’s $32 Billion Bank Recap Plan Is Expected to Play Out
- China Communist Party’s New Leadership Lineup: What We Learned
In Europe, the 9.30 UK data was highly anticipated as there was outside chatter that a miss in the UK GDP data would drastically diminish the chance of a 2017 hike from the BoE. The beats across the board from the data resulted in weight in Equity markets, sectors have been weighed on, with the exception of financials, which have scampered into the green. European equities continue the week in being dictated by earning, with Kering seeing out-performance following their Q3 figures. Gilts and Short Sterling contracts declined on the firmer than expected ONS release, which naturally raises the prospect of a November hike (now seen at 80%+ against 78.5% pre-GDP data and as low as 60% recently). The 10 year benchmark has now been down to 123.77 on a second wave of selling, while the 3 month strip is 1-2 ticks in the red, but as much as 3 ticks below Tuesday closes at one stage (6.5k lot buyers seen before 9.30BST – Mar18 at 99.360 most recently - perhaps liquidating positions swiftly). Focus now switches to the German Bund auction, with the Bund future now trading through 161.00.The core Eurex bond was already on the wane again in wake of an upbeat German Ifo survey, but extended its reversal from early session peaks (161.31) largely in sympathy with UK Gilts, which have now posted another fresh session base at 123.63 and are still wilting. Bunds have finally broken down through 161.00 to a low of 160.92, with the corresponding 10 year cash yield heading for 0.5% and as noted previously this could also be due to some supply hedging. Ironically, the extra concession may entice buyers and a solid auction result could see hedges unwind to the benefit of the German benchmark future, not to mention a bullish option trade that saw Nov 162 calls bought outright from 15-19 ticks in some 20k or even 23750 lots.
Top European News
- Capgemini CEO Says IT and Ad Sectors Together Is Culture Stretch
- The Seven Men Who Will Rule China for the Next Five Years
- Nordea To Be Systematic Internalizer in FX, Bonds, Derivatives
- Barclays May Face Investor Jitters on Credit-Card Defaults
- Swiss Fund Manager Vontobel Plans Active Role in Geneva Bank M&A
- Lloyds Drops as Rising Impairments Outweigh ‘Solid’ 3Q Results
In FX, the aforementioned UK data led to volatility in GBP pairs, which the majority of FX traders waiting for the 9.30 figures, with many of the other pairs seeing subdued trade. Following the figures, GBP/USD saw a 50-pip bullish push, spiking through 1.3170, as EUR/GBP looks toward 0.8930. The main mover overnight was the AUD in which the currency fell to a low of 0.7715 after the latest inflation figures fell across the board. In turn, the subdued CPI figures are likely to push back RBA tightening expectations. Levels to look out for to the downside is the 200DMA at 0.7694. The move in AUD has replaced NZD as being the driver for AUD/NZD which has pulled back from its recent highs to trip through 1.12. Mexican Economy Minister says has no issue with any NAFTA pledge to prevent FX manipulation, provided it doesn't affect domestic monetary policy. New Zealand PM designate Ardern names Grant Robertson as Finance Minister
In commodities, oil has seen a downtick in the European morning, as many of the API gains have been retraced. The offers were fuelled by the rejection of yesterday’s 52.60 WTI high, with a push for 52.00 now likely. Elsewhere, gold has followed the recent tone and seen selling pressure alongside treasuries, as the global hawkish tone growing, supported by outside chances of a hawkish Fed Chair, alongside the increased likelihood of BoE tightening. With Gold’s break of the weekly low, a bearish attack of October’s 1261.07 low. Crude oil flow rate through Iraqi Kurdistan pipeline to
Turkey up slightly at around 250kbpd from 300kbpd, according to
Shipping source.
Looking at the day ahead, it’s a fairly busy day for data. In the morning the
German IFO survey for October and advance reading of Q3 GDP for the UK are
due, both of which beat expectations, with German IFO hitting record highs on both expectations and current conditions. In the US the flash durable and capital goods orders data for September are
due, along with September new home sales and the August FHFA house price
index. Coca-Cola, Boeing and
Lloyds are among the companies due to release earnings.
US Event Calendar
- 7am: MBA Mortgage Applications, prior 3.6%
- 8:30am: Durable Goods Orders, est. 1.0%, prior 2.0%; Durables Ex Transportation, est. 0.5%, prior 0.5%
- Cap Goods Orders Nondef Ex Air, est. 0.3%, prior 1.1%; Cap Goods Ship Nondef Ex Air, est. 0.1%, prior 1.1%
- 9am: FHFA House Price Index MoM, est. 0.4%, prior 0.2%
- 10am: New Home Sales, est. 554,000, prior 560,000; New Home Sales MoM, est. -1.07%, prior -3.4%
DB's Jim Reid concludes the overnight wrap
If you're sat next to Mr Draghi on your commute in Frankfurt over the next
couple of days then maybe you can ask him what he has in store for us. As
we approached ECB day, global bond yields decided to take-off yesterday, with
core European 10y bond yields up c4bp (Bunds +4.4bp; Gilts +4.3bp; OATs
+4.1bp) and c1-2bp at the 2y part of the curve. In the US, 10 year Treasuries
traded as high as 2.426% before closing 5.3bp higher at 2.42% - the highest
since March. There didn't seem to be one reason for the bond moves but the
news we reported yesterday that the House are accelerating US tax plans seemed
to help as did the Euro flash PMIs. As we'll see below the overall numbers
were disappointing - dragged down by service sector misses, however the much
smaller manufacturing sector beat and perhaps this was seen as slightly hawkish
as it shows that the sector is not being unduly impacted by the recent rise in the
Euro. As such it may give the ECB more comfort at the margin about being more
hawkish and risking upward pressure on the Euro if it materialises as a result.
Over in Germany, the Handelsblatt reported that according to sources familiar
with the discussions, the Bundesbank President Weidmann is more likely to vote
for an earlier expiry of the ECB bond purchase program, but may agree to an
extension as part of that. So a path to a consensus seems to have been built at the
ECB. DB’s expectations is for taper to halve to €30bn per month and an extension
of the program to 9 months from January. We shall find out more tomorrow.
Back to fixed income, we also saw a surge in Treasury activity and a brief mini
spike to 2.426% late in the session as a report surfaced that Mr Trump had
asked for a show of hand at a Senate Republicans lunch as to who they would prefer to lead the Fed. Apparently Senator Scott said that although Trump "didn't
announce a winner, (but) I think Taylor won". However, according to Senator
Rounds, it was tough to judge who won as most senators did not raise their hand.
So not particularly scientific but shows the sensitivity of fixed income markets to
the imminent decision.
Staying in the US, the Politico has reported that House Republicans will
introduce their tax reform bill on 1 November. This is broadly consistent with
earlier comments from the House Freedom Caucus Chairman Meadows who
noted that tax plans could be released on or before 3 November.
Elsewhere, President’s Trump arguments with his fellow Senators continue
to be aired in public. During morning shows, Senator Corker referred to the
President as “utterly untruthful” and that “I don’t know why he lowers himself
to such a low, low standard and debases our country…” In response, Trump
tweeted “Bob Corker, who helped President O give us the bad Iran deal & couldn’t
get elected….is now fighting tax cuts”. Following on, Republican Senator Flake
said he won’t seek re-election and without naming names, he noted “when
such (reckless, outrageous and undignified) behaviour emanates from the top of
our government…it is something else…It is dangerous to democracy”. So while
it feels these public spats won’t shift the Republican’s support for tax cuts, it
remains close enough that Mr Trump can’t afford to pick too many more fights.
Staying in politics, this morning China’s new Politburo Standing Committee
(PSC) is being unveiled as we type. However in a break from tradition, there
were no new members aged in their mid-50’s in the line-up, which in the past
could be seen as potential successors to the existing president. Based on the age
rule (if aged >67, members should retire), only two of the existing seven PSC
members have stayed, which includes President Xi and Premier Li – in line with
expectations. Of the five new members, they include: Chief of Staff (Li Zhanshu
- aged 67), Vice Premier (Wang Yan - 62), Party theorist (Wang Huning – 62),
Party personnel chief (Zhao Lejin - 60) and Shanghai party secretary (Han Zheng
– 63). All of them would be >67 in the next ten years. Notably, it does feels the
significance of the committee make up is a bit tempered after President Xi’s status
has likely been elevated to new heights after successfully enshrining his thoughts
on socialism into the Party constitution, which is no small feat, considering the
other two leaders before him who did this included: i) Mao Zedong who was of the
founding father of China and ii) Deng Xiaopeng who was credited with reforms
that led to the modern China, and even then, his thoughts were only included after
he died in 1997. So perhaps, there will be some form of continuity with President
Xi for years to come. This morning in Asia, markets have followed the positive
lead from the US and are trading higher. The Nikkei (+0.12%), Kospi (+0.06%),
Hang Seng (+0.69%) and the Chinese bourses (up c0.3%) are slightly higher as
we type. The UST 10y is trading 0.5bp lower.
Onto the market’s performance from yesterday. US bourses strengthened
further, with the Dow (+0.72%) hitting a fresh record high following positive
corporate results from 3M (shares +5.91% and Caterpillar (+4.98%). The latter,
usually seen as a bellwether for global growth reported increased demand
in every jurisdiction it does business in, which does support the recent
manufacturing PMI beats around the globe. Elsewhere, the Nasdaq (+0.18%) and
S&P (+0.16%) rose modestly, with the latter driven by gains in the financials and
materials sectors, with partial offsets from health care and real estate stocks. The VIX edged 0.81% higher and remains above 10 for the second consecutive day
(11.16).
European market were broadly higher, but changes were minimal, with the DAX
(+0.08%), FTSE (+0.03%) and CAC (+0.15%) marginally higher, while peripherals
outperformed with Spain’s IBEX and Italy’s MIB up 0.44% and 1.12% respectively.
The Stoxx 600 bucked the trend to be down 0.36%, likely impacted by Norvatis
post its result (-2.99%) and the weaker Swiss market.
Key currencies were little changed with the US dollar index down 0.17%, while
the Euro advanced 0.10% but Sterling falling 0.48%. The New Zealand dollar
(NZDUSD) dropped 0.83% after the new centre-left government revealed its
policy programme, which includes potentially providing its central bank with a
dual mandate on employment. In commodities, WTI oil increased 1.1%, in part as
OPEC members are reportedly working on a plan that involves extending supply
cuts in 2018 and then tapering the cuts the year after. Elsewhere, precious metals
retreated slightly (Gold -0.44%; Silver -0.80%) while other base metals were mixed
but little changed (Copper -0.22%; Zinc +0.43%; Aluminium +0.71%).
Away from markets, UK Chancellor Hammond backed away from reaffirming
his prior comments that “the longer it took to secure transition deals, the less
it was worth”, instead, he noted that the government was aware of the needs
by businesses and was confident it could deliver reassurance. Interestingly, EU
President Tusk signalled there may be no Brexit after all, saying “it’s in fact up
to London how this will end…with a good deal, no deal or no Brexit”. Elsewhere,
Hammond reiterated that the UK economy is “fundamentally strong” and
pointed to the record low unemployment of 4.3% and that “the output gap is
extremely small”. These comments echoed that of BOE’s Carney where he noted
that rates may need to rise in the “coming months” as the UK’s economy is
running out of spare capacity.
Over in Spain, Catalonia’s biggest bank (CaixaBank) posted a quarterly profit
beat, with CEO Gonzalo noting that deposit withdrawals had been “moderate”
since Catalonia’s referendum vote on October 1 and that customers stopped
pulling money away when the bank shifted its domicile. Elsewhere, he has full
faith in the leaders that this issue will be resolved soon, but warned that the
economy “will start to have an impact if it drags on”. As a reminder, the full
Catalan Parliament is expected to meet tomorrow (9am local time) to discuss next
steps.
Before we take a look at today’s calendar, we wrap up with other data releases
from yesterday. In the US, the October flash PMIs were all above consensus,
with the manufacturing PMI at 54.5 (vs. 53.4 expected) – highest since January,
while the services PMI (55.9 vs. 55.2 expected) and composite PMI (55.7 vs. 54.8
previous) also beat, with the latter being the highest reading since November
2015. Elsewhere, the October Richmond Fed index was lower than expected at
12 (vs. 17), but likely remains consistent with a manufacturing ISM reading in the
high 50s.
In Europe, the Eurozone’s manufacturing PMI was above consensus at 58.6
(vs. 57.8 expected) – marking a fresh 10 year high, but the services (54.9 vs.
55.6 expected) and composite PMI (55.9 vs. 56.5 expected) were lower than
expected. Across the region, a similar theme at Germany, with its manufacturing
PMI above expectations at 60.5 (vs. 60 expected), but both the services (55.2 vs. 55.5 expected) and composite PMI (56.9 vs. 57.5 expected) were a tad lower than
expected. Over in France, all the flash PMIs beat expectations, with the services
(57.4 vs. 56.9 expected), manufacturing (56.7 vs. 56 expected) and composite PMI
(57.5 vs. 57 expected) all slightly higher. Elsewhere, its manufacturing confidence
was also higher at 111 (vs. 110 expected).
Overall, the PMIs continue to present a marginal upside risk to DB’s European
economists’ near-term growth view. The highlight in the euro PMI trend over
recent months has been the increased divergence between stellar manufacturing
and some moderation in services.
Elsewhere, the ECB released the results of its 3Q Bank lending survey. Banks
reported their lending standards have eased over the quarter, especially for
mortgages. For loan demand, banks continue to report increases in both the
corporate and household sector. Notably, banks are the most upbeat they have
been in 12 months about prospects for growth in corporate and mortgage loan
demand.
Looking at the day ahead, it’s a fairly busy day for data. In the morning the
German IFO survey for October and advance reading of Q3 GDP for the UK are
due. In the US the flash durable and capital goods orders data for September are
due, along with September new home sales and the August FHFA house price
index. Onto other events, Brexit will be under the spotlight again with Brexit
Secretary David Davis due to testify before lawmakers. Coca-Cola, Boeing and
Lloyds are among the companies due to release earnings.