Breakfast Bites - Yen reaches weakest point of the year

Rise and shine everyone.

It’s a relatively quiet start to a busy week ahead - with no shortage of macro data, earnings and global events for the week. For today, on the macro data front, the NY Fed releases their 1-Year inflation expectations at 11am ET.

After a bullish close on Friday, US equity futures are trading relatively lower this morning with yields mostly flat. The Yield Curve continues to invert, now at -0.41%. Gold and oil are marginally higher while the US Dollar Index remains flat. Bitcoin has pulled back below 37,000.

Asia and Australia

• Asian equities mixed in subdued Monday trade. Hang Seng gained helped by tech outperforming despite drag by China property developers. Mainland China logged mild gains. Japan closed little changed. Taiex underpinned by sharp gains in TSMC. Minor losses in Kospi and ASX.

• Japan’s PPI reached a 2-year low coming in at 0.8% YoY vs. 2.2% last month. Japan Machine Tool Orders came in at -20.6% vs. -11.2%. Clearly industrial activity is slowing down but, so is a supply chain inflation. While equities were not moved much by the news, the Japanese Yen traded to the worst level of the year with the USD/JPY at 151.854.

• Inflation in India continues to subside coming in at 4.87% YoY vs. 5.02%, the lowest level in 4 months. Food inflation however, edged slightly higher to 6.61% from 6.56% in the previous month. If this trend continues to hold in headline CPI, the RBI may consider a cut sometime next year.

• China loan data released. Chinese banks extended CNY 738.4 billion in new yuan loans in October 2023, the least in three months, compared to CNY 2310 billion in September. However, October is usually a low month seasonally and compared to last year, new loans were up 20% YoY. Household loans, including mortgages, contracted by CNY 34.6 billion after rising CNY 858.5 billion in September. Corporate loans fell to CNY 516.3 billion from CNY 1.68 trillion.

Europe, Middle East, Africa

• European equity markets higher. Travel/leisure, healthcare and banks outperform, while food/beverage and financial services underperform.

• Former UK PM Cameron has returned to government as foreign secretary with Rishi Sunak reshuffling his cabinet. Cameron is the first former PM to return to government in 60 years. Sunak also sacked home secretary Suella Braverman, who was replaced by former foreign secretary James Cleverley. No massive moves in the market on the news; UK Gilt Yields slightly lower across the curve.

• A survey by CIPD shows pay growth still too high to meet the BoE inflation target in the near-term. Employers private and public sector both planned 5% pay rises, meaning public sector workers on course for biggest pay increase since surveys began in 2012. Survey released ahead of tomorrow's official labor market data, which is tipped to show fall in employment number, but wage growth still stuck close to record levels of ~8%.

• OPEC’s latest report shows world oil demand upgraded by 100,000 barrels per day to 2.5million barrels per day for 2023. 2024 demand remains unchanged.

• ECB’s Guindos sees temporary rebound in inflation in the coming months, as the base effects from the sharp decrease in energy and food prices in Autumn 2022 drop out of the YoY calculation.

The Americas

• House Speaker Johnson this weekend proposed to push forward a clean stopgap funding bill, with a vote as soon as Tuesday before current funding bill runs out 17-Nov. Johnson's plan would extend funding for some departments until 19-Jan and others until 2-Feb, and excludes some demands by House conservatives, including the 30% immediate cut to spending and US asylum law changes.

• Good news for Boeing. China is considering resuming purchases of Boeing (BA-US )'s 737 Max aircraft during this week's APEC Summit in San Francisco when President Joe Biden and Xi Jinping meet. And Emirates has confirmed an order for 95 planes while flyDubai is set to purchase 30 Dreamliners. Boeing shares are up +3.2% pre-market.

• Goldman Sachs says investors are overly concerned about the weakening outlook for US corporate earnings

Chart of the Day: Goldman Sachs continues to see only a 15% probability of recession in the United States.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)