Halister News

(Bloomberg) -- Output of factories, mines and utilities seen increasing 0.2% in Oct. after rising 0.1% in Sept. (forecast range -0.4% to +0.5%); data track volume of production.

• ISM factory index, as well as employment report’s manufacturing diffusion index and data on hours worked, point to “mild” gain: Bloomberg Intelligence
• Capacity utilization rate seen at 75.5% last month vs 75.4% prior month (forecast range 75.1% to 75.7%); tracks industrial capacity in use as opposed to sitting idle

--NEIL CALLANAN

(Bloomberg) -- Producer price index seen rising 0.3% in Oct., same as Sept. (forecast range -0.2% to +0.6%); PPI is one of three monthly inflation reports from Labor Dept.

• Remains below Fed’s inflation threshold, though, infrastructure spending could have impact next year, i.e. increased demand for construction materials: Bloomberg Intelligence

(Bloomberg) -- Brazil’s central bank may only cut its rate by 25bps, rather than at a faster pace as previously expected, amid the volatility caused by uncertainties surrounding Trump government, Luciano Rostagno, chief strategist at Banco Mizuho do Brasil, says in a phone interview.

• BCB would likely only stop cutting in a scenario of more market stress with USD/BRL around 4.00
• Recent signs of slowing inflation allows BCB to keep cutting Selic rate at a moderate pace
• Central bank may also continue acting with FX swaps to stem BRL volatility; reserves sales so far haven’t been needed
• BCB auctions today are supportive for BRL, but unlikely to have a prolonged effect
  • “The market reflects the uncertainty over the policies to be implemented in the US”
  • Trump hints at fiscal expansionary policy, would lead Fed to hike more than previously expected, impacting EM currencies

(Bloomberg) -- Santander is close to a deal to buy back its 50 percent stake in Santander Asset Management from Warburg Pincus and General Atlantic, people familiar with the matter said.

• Agreement could be announced as soon as this week, one of the people says
• Representatives for Santander and Warburg Pincus declined to comment. A representative for General Atlantic didn’t immediately return a call and e-mail seeking comment
• NOTE: Santander agreed to sell the stake in 2013 in a deal that valued the unit at 2.05 billion euros NSN MNMS2I6S972I

(Bloomberg) -- Short TRY/RUB is trade of the week, but “conviction certainly spills over into the medium term,” Citi analysts led by David Lubin say in e-mailed note.

• Russia’s macroeconomics is “still strong enough” to support RUB’s outperformance vs EM high-yield peers
  • Bank of Russia remains in “hawkish mode”
• Markets cannot ignore rising likelihood of partial (or even total) roll-off in U.S. economic sanctions
• Long positioning in Russian fixed-income remains a worry