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Trading  | October 24, 2017

European shares are modestly lower as investors monitor tense events in Spain and as focus turns to Thursday’s ECB meeting; US equity futures have rebounded from yesterday’s sharp but shallow selloff and are in the green amid rising odds of U.S. tax reform and the imminent unveiling of the next Fed chair while Asian shares rise and Japan extends its winning streak to a record 16 days. The euro edged higher after data showed Europe’s economy is maintaining momentum, while the USDJPY managed to recover all of yesterday’s sharp losses.

The MSCI’s 47-country world share index stayed near all-time highs after a drop in General Electric shares on Wall Street had seen the ViX volatility index spike up, however that move has been largely faded since.

Overnight currency moves were mostly contained, but the greenback strengthened against most peers and U.S. equity futures edged higher amid continued speculation over who will lead the Federal Reserve, and as optimism over tax reform proved resilient. “There is some support building for Donald Trump’s tax reforms,” Ipek Ozkardeskaya, an analyst at London Capital Group, told Bloomberg by email. News reports suggest “that fiscal hawks may be willing to disregard deficit spending to allow Trump to go ahead with his tax cut plans to boost growth. If approved, the fiscal reforms will cost an arm to the government, but on the other hand, it is important for the congress to achieve some progress before the end of the year in order to restore confidence.”

The USD rallied across G-10 for bulk of the session, with the DXY back to top of recent range between 50- and 100-DMAs. The New Zealand’s dollar stumbled to a five-month low as the incoming Labour coalition’s policies unsettled investors. Prime Minister-designate Jacinda Ardern’s tough stance on foreign investment in housing and on immigration could prove negative for the currency, given the country runs a current account deficit. In addition, Ardern said on Tuesday her government plans to review and reform the Central Bank Act to possibly include employment, alongside inflation, as a dual target. “Everything happening so far is something that is creating uncertainty when it comes to central bank independence,” said Manuel Oliveri, currency strategist at Credit Agricole. “But you also have to keep in mind Labour did point in that direction during the election so it’s not a huge surprise that they want such changes.”

As Bloomberg notes, given that the timing of an announcement on the next Fed chair isn’t certain and that tax reform is a lengthy process, investors’ more immediate focus looks set to be Thursday’s European Central Bank meeting. The ECB is expected to offer more insight into its plans for tapering the QE program that is currently planned to continue until the end of 2017. Expectations are for a €30 billion QE extension for at least 9 months, with some more dovish variants possible. Officials have acknowledged that stimulus is still required to nurture inflation and that interest rates will remain “at or below” current levels for the foreseeable future.

Ahead of the ECB, the consensus trade is to go short the 10Y Bund which however has so far failed to move the benchmark paper substantially as any asset volatility now appears a thing of the past.

Overnight, the euro was a little stronger after strong PMI data showed Europe’s economy maintaining momentum, but the region’s stocks drifted downward as investors kept one eye on events in Spain and the all-important ECB gathering; Bunds sold off from the open with further momentum driven by PMIs and related inflation commentary; USTs and gilts dragged lower in tandem, UST curve steepens. German banks rallied after takeover speculation on Commerzbank (+3.9%); energy stocks rally as crude futures react positively to further reports of output cut extension.

Japanese stocks rose again, with the Nikkei 225 Stock Average extending its record-breaking rally to a 16th day to a fresh 21 year high, as investors shifted their focus to corporate earnings from Sunday’s general election helped by the weaker yen which failed to maintain its gains during the US session. The Topix erased an early decline, completing a 12-day gain, the longest since November, with banks and telecommunications companies providing the biggest boost. Japan’s earnings season kicked off in earnest this week, with Canon Inc. and Nidec Corp. releasing results today, followed by Fanuc Corp., Fujitsu Ltd. and NTT Docomo Inc. later this week. “There’s still more room for Japanese stocks to advance, given the firm prospects for companies’ earnings,” said Kyouko Amemiya, a senior market advisor with SBI Securities Co. in Tokyo. “The economy as well as corporate performance are on firm footing globally. Japanese stocks still look cheap in relative to U.S. equities.” While Sunday’s general election result has already been priced in to a degree, stocks still have some “upside”,

Elsewhere in Asia, equity markets traded with modest gains in what was a quiet and rangebound trading session amid a lack of drivers. Regional bourses shrugged off the weak performance by their US counterparts which pulled back from record levels, with ASX 200 (Unch.) indecisive and Hang Seng (Unch.) and Shanghai Comp. (+0.1%) just about kept afloat as another substantial liquidity operation by the PBoC (140BN net on the session and a whopping 840BN in the past week) only provided minimal support heading to the close of the National Congress. Finally, 10yr JGBs were flat with demand subdued by a modest risk tone and after an uneventful enhanced liquidity auction for super-long JGBs.

Europe’s key stock benchmark was little changed, as most European stocks dipped and bond yields drifted higher on Tuesday, as data from the euro zone’s top economies bolstered the case for the European Central Bank to signal a sizeable cut this week to its stimulus measures. Individual equities dominate moves amid earnings reports, while strong manufacturing data provided support to risk. The Stoxx Europe 600 Index fell less than 0.1%, ahead of an ECB meeting later this week. Apple supplier AMS saw a spectacular 15 percent jump after it pointed to strong demand ahead of the iPhone X release while Boliden drops 9.9% on worse-than-expected profit. France’s CAC 40 up 0.3% on earnings and after October manufacturing data beat estimates. Commerzbank outperformed following the company drafting in financial advisers, preparing for potential bids from European rivals. Europe’s earnings season has begun gaining some traction, notably, Essilor, affirming guidance and leading the CAC.

Also overnight as reported earlier President Xi Jinping of China consolidated his power before the Communist Party’s unveiling of its top leaders on the Politburo and supreme Standing Committee on Wednesday. The composition may determine the pace of Xi’s reform plans, from deleveraging to modernizing the military. Stocks in Shanghai gained, while those in Hong Kong dropped.

In commodities, gold dipped 0.3 percent to $1,278.29 an ounce, the weakest in more than two weeks. West Texas Intermediate crude climbed 0.1 percent to $51.94 a barrel. LME zinc gained 1.2 percent to $3,167.50 per metric ton. LME copper advanced 1.3 percent to $7,092.50 per metric ton.

Interest rates were generally higher, with the yield on 10-year Treasuries increased three basis points to 2.39 percent, the highest in more than five months. Germany’s 10-year yield gained four basis points to 0.47 percent, the highest in almost four weeks. Britain’s 10-year yield climbed three basis points to 1.339 percent, the highest in more than a week.

AT&T, Eli Lilly, Lockheed, GM and McDonald’s among companies due to report earnings. Economic data include Markit manufacturing PMI readings.

Bulletin Headline Summary from RanSquawk

  • Bunds drag global bonds lower
  • In FX, NZD underperformed amid potential reforms at the RBNZ. Trump claims to be close on Fed Chair decision
  • Looking ahead, highlights include US Manufacturing and weekly APIs

Market Snapshot

  • S&P 500 futures up 0.1% to 2,566.00
  • VIX Index falls -0.29 (2.62%) to 10.78
  • STOXX Europe 600 down 0.1% to 390.36
  • MSCI Asia up 0.1% to 167.20
  • MSCI Asia ex Japan down 0.2% to 547.90
  • Nikkei up 0.5% to 21,805.17
  • Topix up 0.7% to 1,756.92
  • Hang Seng Index down 0.5% to 28,154.97
  • Shanghai Composite up 0.2% to 3,388.25
  • Sensex up 0.2% to 32,559.34
  • Australia S&P/ASX 200 up 0.06% to 5,897.61
  • Kospi up 0.02% to 2,490.49
  • WTI crude futures down 0.5%
  • Brent Futures down 0.3% to $57.21/bbl
  • Gold spot down 0.3% to $1,278.46
  • U.S. Dollar Index down 0.1% to 93.82
  • Bloomberg spot dollar index advances 0.1%
  • German 10Y yield rose 3.3 bps to 0.465%
  • Euro up 0.1% to $1.1762
  • Brent Futures down 0.3% to $57.21/bbl
  • Italian 10Y yield fell 3.7 bps to 1.737%
  • Spanish 10Y yield rose 0.6 bps to 1.633%

Top Overnight News

  • BOJ: considering a small cut to its inflation forecast for FY2017;
    doesn’t see the need to expand stimulus as improving output gap and
    tightening labor market will continue to push inflation higher according
    to people familiar with the central bank’s discussions
  • As OPEC negotiates the extension of its oil production cuts until the end of 2018, it’s also quietly started working on a tapering-style exit strategy
  • The euro-area economy maintained its strong momentum at the start of the final quarter of this year, with rising workloads encouraging companies to take on new staff at the sharpest pace in more than a decade, PMIs showed
  • U.K. PM May’s cabinet will meet Tuesday as pressure mounts for it to agree the kind of trade pact Britain wants from the EU — a day after she damped expectations of a swift Brexit transition deal
  • The EU is also preparing for a “no deal” with the British says Michel Barnier, the EU’s lead Brexit negotiator in an interview to L’Echo newspaper; EU President Donald Tusk revived the notion that the U.K. will stay in the bloc after all
  • Flow Traders NV reported a 35 percent plunge in net trading income in the third quarter as Europe’s largest trader of ETFs continued to suffer from reduced trading activity
  • On Wednesday, China will finally get an answer to the big question looming over the Communist Party’s biggest political event: Will President Xi Jinping clearly signal a designated successor? On Tuesday Xi’s name was enshrined in the party’s charter under its guiding principles — an honor that eluded his two immediate predecessors
  • U.S. Govt: House Republicans aiming to release prelim tax reform legislation as soon as next week; plans to be released about seven days after Thursday’s vote on budget resolution, meaning bill text would be published on or before Nov. 3
  • Treasury Secretary Steven Mnuchin got a swift rebuttal after he went on
    national television to claim a hypothetical Indiana family would save
    $1,000 under President Donald Trump’s tax plan. At virtually the same
    time on another network, White House Budget Director Mick Mulvaney
    dismissed as flawed any attempt to predict the impact of the plan
  • European Oct. prelim composite PMIs: France 57.5 vs 57.0 est; Germany 56.9 vs 57.5 est; euro area 55.9 vs 56.5 est; manufacturing above consensus for all three regions; selling prices rose at the sharpest rate since June 2011
  • Global bonds: Sumitomo and Nippon Life both plan to buy unhedged foreign bonds in 2H FY2017
  • China’s ruling Communist Party approved a revised charter that enshrined President Xi Jinping’s name under its guiding principles, elevating him to a status that eluded his two immediate predecessors
  • White House’s Muddled Tax Message Clouds Pitch for Trump Plan
  • U.S. Lumber Companies Plan to Combine in $1.16 Billion Deal
  • U.S. Will Curb ‘Sneak-and-Peek’ Searches Microsoft Sued Over
  • Taylor’s Walk on Supply Side May Leave Him More Dove Than Yellen
  • Facebook Privacy Can Be Regulated in Germany, EU Court Aide Says
  • NZ PM-elect Ardern says will review, reform Reserve Bank Act
  • Tesla Calls on U.S. to Drop Perry’s Plan to Rescue Nukes, Coal
  • China Cuts Offshore Yuan Bond Sale on H.K. Market Correction: MOF
  • Novartis Plans to Give Ailing Alcon More Time for Turnaround
  • Rise in Texas Earthquakes Near Oilfields Prompts New Monitoring
  • Canon Boosts Op. Profit View Above Est., Plans Special Dividend
  • Boeing Is Said to Have Walked Away From C Series Deal: Globe

Asia equity markets traded with modest gains in what was a quiet and rangebound trading session amid a lack of drivers. Nonetheless, the regional bourses have shrugged off the weak performance by their US counterparts which pulled back from record levels, with ASX 200 (Unch.) indecisive and Nikkei 225 (+0.2%) mildly positive after the index recovered from early weakness triggered by a firmer JPY to print fresh 21-year highs. Hang Seng (Unch.) and Shanghai Comp. (+0.1%) just about kept afloat as another substantial liquidity operation by the PBoC only provided minimal support heading to the close of the National Congress. Finally, 10yr JGBs were flat with demand subdued by a modest risk tone and after an uneventful enhanced liquidity auction for super-long JGBs. PBoC injected CNY 130bln via 7-day reverse repos and CNY 120bln via 14-day reverse repos. PBoC set CNY mid-point at 6.6268 (Prev. 6.6205)

Top Asian News

  • Noble Group’s Next Battle Will Be Over $3 Billion Debt Pile
  • Bank of Japan Is Said to Consider Lowering Inflation Outlook
  • China Signals Steady Economic Policy as Liu Keeps Party Role
  • Sony Is Said to Plan Nov. Event for New Robot Roll-Out: WSJ
  • HK Stock Gains Evaporate as Caution Reigns Pre-Earnings
  • India Bonds Keep Gains as Jaitley to Make ‘Major Announcement’
  • Sumitomo Life Plans to Boost Foreign Bond Holdings in Fiscal 2H

European bourses trade subdued, as 9 out of 10 European sectors trade in the marginal red, supported by energy trading up around 0.30%. Despite the lack of direction in the index markets, stock specific news has resulted in volatility, as Commerzbank outperforms in the Dax, following the company drafting in financial advisers, preparing for potential bids from European rivals. Europe’s earnings season has begun gaining some traction, notably, Essilor, affirming guidance and leading the CAC. Early upside faded and reversed as trade turns defensive ahead of major risk events. Firmer than anticipated flash EZ PMIs probably gave sellers some fundamental/macro momentum, but in truth bears had already gained the upper hand in Bunds when the 10 year German bond topped out ahead of near term chart resistance again. Intraday longs are said to have thrown in the towel from the 161.46-40 area, with hefty stops triggered on a break of the lower level down to 161.28 and Bunds subsequently hitting 161.19. Next downside tech support 161.07, 10 year cash yield 0.47% with 0.5% and obvious target. UK Gilts also on the backfoot and down to 124.22, USTs likewise awaiting news on the next Fed chair.

Top European News

  • Deutsche Boerse Trading Probe Extended in Blow to Kengeter
  • Commerzbank Is Said to Hire Goldman, Rothschild as Advisers: FT
  • UniCredit Third-Quarter Net Rises on Gain From Pioneer Sale
  • Swedbank Falls as Investors Focus on Smaller Capital Buffers
  • Catalan Exiled CaixaBank’s Quarterly Profit Beats Estimates
  • Euro-Area Companies Expand Workforce as Order Growth Picks Up
  • Hawkish ECB Tapering Surprise to Give Bigger Jolt to Euro, Bunds
  • EU Still Floating Idea That Brexit Can Be Reversed Before 2019

In FX, a fresh setback for the NZD which print fresh 5-month lows at 0.6927. This came as NZ PM-elect Ardern unveiled government plans to review and reform the RBNZ’s Central Bank Act to possibly include employment, alongside inflation as a dual mandate. As it stands, unemployment is near decade lows, while jobs growth however, is at a 2-year low (figures for Q3 released at 2245BST). Although, given that the central bank does not exclude labour market data, its arguable whether a dual mandate will significantly alter the monetary policy skew. What has been brought into question however, is the autonomy of the RBNZ. AUDNZD further supported by the soft NZD, with the cross moving to its highest level since Apr’16. Near term resistance resides at 1.13, which could curb gains a see the cross top out, while the 2016 high is situated 1.1333. JPY: The bid in USD/JPY has been revived by the 16 consecutive days of gains for the Nikkei. Although, the upside could potentially top out just north of 114, with the highs seen in May and July at 114.38-49 within sight. Additionally, the price action may well be dictated by US yields as the 10yr approaches the key 2.4% yet again (currently 2.38%).

In commodities, oil commentary has once again leaked into the news, with Russia’s Energy Minister Novak stating that he plans to discuss an extension of oil cuts with Saudi’s Falih. Oil markets are fairly unfazed, dampened by the latest update of crude oil flows via the Iraqi Kurdistan pipeline to Turkey have modestly risen to around 300,000BPD, possibly indicating the restart of Iraqi/Kurdistan pipeline functionality. Copper continues to impress in metal markets, once again looking towards last week’s highs, aided by the stop hunt through USD 3.20. Elsewhere, gold has come off highs around 1300.00, looking at the key October 6th, 1261.30 low. OPEC is to work on exit strategy alongside cuts extension, according to sources.

Looking at the day ahead, the big highlight datawise are the October flash PMIs due in France (Mfg 56.7, exp. 56.0, Services 57.4, Exp. 56.9), Germany (Mfg 60.5, Exp. 60.2, Services 55.2, Exp. 55.6),  the Euro area (Mfg. 58.6. exp. 57.8, Services 54.9, exp. 55.6) and the US. French confidence indicators for October and the Richmond Fed PMI in the US for October are also due. Onto other events, the ECB Bank Lending Survey will also be worth watching while in the UK Chancellor Hammond is scheduled to face questions in the House of Commons. The Bundestag convenes for its inaugural session following the election while in China the CPC wraps up with the appointment of the Central Committee. AT&T, General Motors, Novartis and McDonalds all report earnings.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 53.5, prior 53.1
    • Markit US Services PMI, est. 55.2, prior 55.3
    • Markit US Composite PMI, prior 54.8
  • 10am: Richmond Fed Manufact. Index, est. 16.5, prior 19

DB’s Jim Reid concludes the overnight wrap

The dull start to the important ECB week should get a little impetus today with the release of the various flash PMIs which are currently at around multiyear highs in many countries. For example the Eurozone and both Germany and France’s manufacturing PMI are at 10 and 6 year highs respectively. For today consensus is expecting a small pullback in October, with manufacturing PMI in the Eurozone expected to be 57.8 (vs. 58.1 previous), Germany at 60 (vs. 60.6 previous) and France at 56 (vs. 56.1 previous). This morning, the Nikkei Japan manufacturing PMI was slightly lower at 52.5 (vs. 52.9 previous).

The quiet start to the week so far is partly due to market participants waiting for ‘Super Thursday’ when the ECB will announce their long awaited updated tapering decision. As we’ll see later it’s also the day the Catalan  parliament meet to respond to Madrid’s threat of direct rule and possibly declare independence. There was also a story from and Politico yesterday that Thursday may see the US House vote on passing the Senate version of the budget that was approved last week. If so, and successful, this would accelerate the possibility of tax cuts as the weeks of reconciling the two budgets would be sidestepped. So all in all potentially a big day on Thursday.

Ahead of all that, tensions around Catalonia continue to bubble along as we build to a potential crescendo towards the end of the week. Overnight, Bloomberg reported that Catalan activists are considering mobilising human shields near government buildings to deter the Spanish government from taking control of the region. The leader of the main separatist group (Lluis Corominas) said “we’re calling for a peaceful and democratic defence of the
institutions”. Looking ahead, the full Catalan Parliament will meet this Thursday (9am local time), with prior Bloomberg reports suggesting Catalan President Puidgement may consider formally declaring independence. On the other side, the Spanish Senate will debate the Article 155 measures proposed by PM Rajoy on Thursday afternoon with final votes on Friday morning (9:30am local time). If the measures are passed, Rajoy’s new constitutional powers would take effect from next Monday. Elsewhere, El Confidential reported the Spanish Senate would approve intervention of Catalan government even if President Puigdemont calls for early regional election.

Staying with the trend, over in Italy, two of its wealthiest Northern regions have also voted on Sunday in referendums for more autonomy from the central government. The Lombardy region (includes Milan) had a 38% eligible voter turnout and of that, 95% voted for in favour of higher autonomy, while the  Veneto region (includes Venice) had 57% voter turnout with 98% voting in favour. The two regions account of c25% of Italy’s population and c30% of economic output. Note the votes are non-binding and unlikely to lead to referendum for independence, in part as Milan and Venice had relatively lower voter turnout, at 31% and 45% respectively. However, it does partly highlight the recent shifts in European politics and perhaps lends greater support to the Northern League Party ahead of next year’s Italian election.

Staying with politics, it seems that a swift Brexit transition deal is increasingly less likely and may instead be part of a wider agreement that will be finalised later on. The PM’s spokesman James Slack said “everybody has always been clear that we’re looking to wrap all this up in one single go….everything will be agreed at the same time”. When asked later on, PM May avoided directly answering the question, but alluded that transitions is about “practical arrangements to reach the future partnership”, but you don’t know those arrangements “until you know what the future partnership is”. Her parliament address was relatively upbeat, signalling progress has been made on Brexit talk, in particular on EU citizen rights and the northern Irish border, but conceded that “we’re preparing for every eventuality to ensure that we leave in a smooth and orderly way”.

Elsewhere, the EC President Junker noted “nothing is true” in reference to a German newspaper article (Frankfurter Allgemeine) which noted the UK PM May “begged for help” from him during their working dinner last week and appeared disheartened and discouraged. Earlier on, Juncker reiterated that the UK must agree on a financial settlement with the EU before parallel talks can begin on the country’s future trade ties with the bloc.

Turning to the US and its search for the next Fed Chair. President Trump told reporters on Monday that he is “very very close” to finalising the winning candidate, but did not provide further details. DB’s Peter Hooper takes an updated look at the three candidates and believes if Ms Yellen do not get re-elected, then a Powell-led Fed makes more sense, in part as i) he would provide the highest degree of continuity to current policy, ii) he has had c5 years of experience working inside the Fed with a reputation as a consensus builder, and iii) while not a PHD trained economist, he has learned the trade well, as evidenced by his speeches and Q&A performance. For more details, refer to link.

This morning in Asia, markets have dismissed the negative lead from US last night and are trading marginally higher. The Nikkei (+0.17%), Hang Seng (+0.15%), Kospi (+0.08%) and Shanghai Comp. (+0.07%) all slightly up as wetype. Before this US bourses softened yesterday ahead of a bumper week for corporate results, with the S&P (-0.40%), Dow (-0.23%) and Nasdaq (-0.64%) all slightly lower. Within the S&P, most sectors excluding utilities (+0.05%) were in the red, with modest losses led by telcos (-0.96%) and industrial stocks. Seagate Technology bucked the trend to rise 12.62% after reporting higher profits and sales. The VIX reversed its three consecutive days of decline and jumped 11.0% to 11.07.

European equities were slightly higher, with the Stoxx 600 up 0.16%, driven by gains in tech and utilities stocks. Across the region, the DAX (+0.09%) and FTSE (+0.02%) were little changed while Spain’s IBEX fell 0.60% following continued tensions at Catalonia.

Over in government bonds, markets were slightly firmer to partly recover the larger losses back on Friday. Core 10y bond yields fell c2bp (UST -1.8bp; Bunds: -2.1bp, Gilts -2bp) while peripherals outperformed with Spanish and Italian yields down c4bp. At the 2y part of the curve, yields were also lower, with UST (-1.2bp), Bunds (-1.1bp) and Gilts (-0.4bp) all down slightly. Turning to currencies, the US dollar index edged higher (+0.16%) while the Euro fell 0.30%. Sterling bucked the trend to be marginally up (+0.06%), partly supported by UK PM May’s more positive address on progress with Brexit talks. In commodities, WTI oil was little changed (+0.12%) and precious metals increased following the risk off bias (Gold +0.14%; Silver +0.33%). Elsewhere, other base metals have also increased slightly (Copper +0.68%; Zinc +1.52%; Aluminium +0.18%).

Away from markets and back to US tax reforms where there has been a bit more clarity on its timing before its expected delivery by the end of the year. The House Ways and Means Chairman Kevin Brady said the timing for the bill “is very shortly”. The House Freedom Caucus Chairman Meadows noted that he has been promised by the House Ways and Means committee that they will release the tax plans on or before 3 November. Following on, he also noted that “I fully expect us voting on this by the middle to third week” of November. Elsewhere, Trump has weighed into the tax reform debate and tweeted “there will be NO change to your 401(k)” as this has “always been a great and popular middle class tax break that works and it stays”.

Over in Germany, the FT reported that according to an internal CDU party paper it obtained, the government has €30bn to spend over the next four years, yet the wish list from CDU and the other coalition partners (FDP & Greens) for tax cuts, social benefits and other spend has already totalled €100bn, which if true is a meaningful departure from Germany’s fiscal discipline. So will this election result force the purse strings to open a little in Germany? Elsewhere, Germany’s long serving finance minister Schäuble is expected to take up the role as the speaker of the Parliament when the Bundestag reconvenes today.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday, which saw a relatively quiet start to the week. In the US, the September Chicago Fed’s national activity index was higher than consensus at 0.17 (vs. -0.13 expected), with any reading above zero consistent with above trend growth. In Europe, the October flash consumer confidence improved slightly mom to -1 (vs. -1.1 expected), marking a fresh 16 year high. In the UK, the October CBI industrial trends survey was lower than expected, with the orders index falling to an 11-month low of -2 (vs. 9 expected), but the pricing indicator was steady at similar level as the past two months at 18. In Japan, the BoJ’s 3Q senior loan officer Survey reported similar results to the last quarter, with a small net balance of banks reporting household and corporate loan demand have increased slightly and a small net balance reporting that credit conditions had eased slightly.

Looking at the day ahead, the big highlight datawise will be the October flash PMIs due in France, Germany, the Euro area and the US. French confidence indicators for October and the Richmond Fed PMI in the US for October are also due. Onto other events, the ECB Bank Lending Survey will also be worth watching while in the UK Chancellor Hammond is scheduled to face questions in the House of Commons. The Bundestag convenes for its inaugural session following the election while in China the CPC wraps up with the appointment of the Central Committee. AT&T, General Motors, Novartis and McDonalds all report earnings.

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