HALISTER1: EUROPE RISK TIMELINE: Politics Key as Central Banks Take a Break

EUROPE RISK TIMELINE: Politics Key as Central Banks Take a Break

(Bloomberg) -- Political risks are at the forefront of investors’ minds as Europe edges closer to crunch time for Spain’s political parties, Italy’s referendum and Brexit and with the U.S. presidential election less than six weeks away.
  • MAIN RISK EVENTS:
  • Any flare-up in the travails of German banks eyed as markets weigh if this could affect Merkel’s decision to stand for re-election
  • The prospect of a hard Brexit seems to be solidifying
  • Attention also turns to the U.S. as the presidential election could spur a shift toward fiscal easing and/or more protectionism
  • DBRS is due to review Portugal’s rating; a downgrade could freeze the country out of the ECB’s QE program
    • PGBs may be set for a rebound as Portugal’s fiscal situation remains under control, JPM analysts including Gianluca Salford say
    • Meanwhile, UBS says PGBs have substantial room to sell off were Portugal to lose market access, or in a situation of generalized risk aversion
  • Italian and Spanish politics are back in focus; talks about Greece’s progress with its reform agenda continue
  • Central banks across the region have signaled they’re in wait-and-see mode for now
  • With CPI widely expected to rebound, question marks remain over whether OPEC will succeed in holding up oil prices
OCTOBER
  • Deadline to form a govt in Spain is end-October; no agreement would mean a third general election
  • Second progress review of Greece reforms expected
  • 1: Michel Barnier starts role as EU’s chief Brexit negotiator
  • 2: Hungary referendum on whether the EU should be able to order the country to accept the settlement of migrants
  • 2: Austria presidential election re-run
  • 2-5: U.K. ruling Conservative Party conference in Birmingham; may discuss Brexit, fiscal stimulus
  • 5: U.K. September services, composite PMI
  • 6: ECB policy meeting account
  • 7: DBRS may review Spain’s rating
  • 9: Second U.S. presidential debate; poll after first debate
  • 10: Eurogroup; decision on Greek bailout tranche expected
  • 11: ECOFIN meeting
  • 14: SEC’s money market reforms take effect
  • 15: Hearing begins for lawsuit on seeking to force U.K. PM to consult parliament before initiating Brexit
  • 15: Deadline for Spain, Portugal to take action on budget deficits
  • 19: U.K. Sept. claimant count; August average weekly earnings
  • 19: Third US presidential election debate
  • 20: ECB rate decision
  • 20/21: EU summit; migration, trade issues, Russia on the agenda
  • 21: U.K. September Public Sector Net Borrowing
  • 21: Fitch may review Italy’s rating; S&P may review France’s; DBRS may review Portugal
  • 23: Mooted date for PSOE primaries; if Sanchez loses vote, will likely lead to the formation of a PP-led govt in Spain: Barclays
  • 27: U.K. advanced 3Q GDP
  • 28: German October CPI
  • 28: S&P may review U.K. credit rating; the ratings company downgraded U.K. to AA vs AAA with a negative outlook in June
NOVEMBER
  • DBRS expects to review Italy in coming months, according to September statement; a “yes” vote in referendum would be good news
  • 3: U.K. Oct. services, composite PMI
  • 3: BOE rate decision, minutes, Inflation Report; MPC says more easing is possible this year
  • 3: ECB publishes economic bulletin
  • 8: U.S. presidential election
  • 11: S&P may review Italy’s rating
  • 15: U.K. Oct CPI
  • 16: U.K. Oct claimant count; Sept average weekly earnings
  • 20: French presidential candidate right and center primaries; Juppe leading Sarkozy in the polls
  • 23: U.K. Chancellor’s Autumn Statement, expected to include some fiscal measures to counteract the risk of recession
  • 23: Euro-area preliminary Nov. services, composite PMIs
  • 27: Italy may hold referendum on constitutional change
  • 27: Second round of French right and center primaries
  • 29: German Nov. CPI
DECEMBER
  • French president Hollande says he will say whether he’ll run for president this month
  • Second Greek review may be completed by year end
  • 4: Italian referendum; bonds, stocks and euro may see losses on a “no” vote, analysts say
  • 5: U.K. Nov. services, composite PMI
  • 5: Euro-area final Nov. services, composite PMI
  • 5 to 7: Germany’s CDU party holds national convention; Merkel may announce whether she intends to stand again next year
  • 9: Fitch may review U.K., France, EFSF, ESM ratings
  • 13: U.K. Nov. CPI
  • 14: Fed rate decision; Fed signaled may lift rates this month at its September meeting
  • 15: BOE rate decision
  • 15: TLTRO II take-up; banks took EU45b in September
  • 15: Provisional deadline for French left-wing presidential candidate applications
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Gianluca Salford (JPMorgan Chase & Co)

Topics
Italian Electoral Law of 2015

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HALISTER1: EuroEco: Recovery Stutters Through Shaky Summer Months

EuroEco: Recovery Stutters Through Shaky Summer Months

Alert: HALISTER1
Source: BBF (Bloomberg Brief Newsletters)

Tickers
0629846D BB (European Commission)
HEN3 GR (Henkel AG & Co KGaA)
UCG IM (UniCredit SpA)

People
Eric Maskin (President and Fellows of Harvard College)
Mario Draghi (European Central Bank)
Mihai Patrulescu (UniCredit Tiriac Bank SA)

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HALISTER1: EM RISK TIMELINE: GDP Data, U.S. Elections, China SDR

EM RISK TIMELINE: GDP Data, U.S. Elections, China SDR

(Bloomberg) -- EM investors enter fourth quarter with data, U.S. elections and geopolitics in focus. India’s attack on terrorist camps in Pakistan introduces a sobering note for financial markets already nervous with North Korea’s bluster.
  • MAIN RISKS
  • CEEMA
    • As the U.S. elections approach on November 8, investors will take a close look at the next presidential debates which may set the tone for USD and emerging market currencies
    • Bullish conviction in Russian ruble remains high among market participants after the hawkish rhetoric from the central bank of Russia which meets again at the end of October; the agreement reached by OPEC is also playing in favor of Russia’s currency, even as the execution of the deal leaves the market skeptical
    • Turkish lira is the only under-performer of CEEMEA basket; some analysts, including Morgan Stanley, are waiting for better levels to reload bullish positions on TRY and bonds; central bank meets on October 20
  • LATAM
    • Polls and debates on U.S. elections, more particularly, Trump’s campaign performance as vote approaches are likely to continue to be key for MXN; peso sees the highest 2-month implied volatility among major FX to account for election’s risk
      • Banxico hiked another 50 bps on Sept. 29 attempting to curb currency depreciation due to “Trump’s risk” as peso near its record low, showing more than 10% decline this year
    • BRL traders will eye Brazil Central Bank decision Oct. 19 as well as the advance of fiscal reforms; If spending cap vote approved on 1st round in Lower House Oct. 11 as expected, BCB more likely to start an easing cycle
    • Further development of surprising OPEC agreement likely to be the most significant catalyst for COP; banks remain skeptical with the actual execution of the deal, but some see room for oil to rise as much as $10/barrel if pact evolves
  • ASIA
    • Volatility may increase for USD/CNH after China’s week of National Day holidays; some investors see yuan inclusion in SDR allowing more flexibility for intraday FX trading
    • Singapore dollar may extend post-Brexit trading range if central bank holds policy steady at its semi-annual meeting in October; August core CPI at 1.0% posting its seventh month above its 12-month average suggests inflation expectations may be turning higher; click here for chart
  • CALENDAR (based on local dates)
  • Oct. 1: China PMI; Korea exports
  • Oct. 2: Hungarian referendum on EU migrant quotas
  • Oct. 3: Singapore PMI
  • Oct. 4: India central bank meeting
  • Oct. 5: Poland central bank decision, Colombia CPI; Chile IMACEC
  • Oct. 7: China foreign reserves; Malaysia trade balance and foreign reserves; Taiwan exports; U.S. nonfarm payrolls; Brazil CPI; Mexico CPI; Chile CPI
  • Oct. 10-14: 3Q GDP and central bank meeting; second U.S. presidential debate; Brazil 1st round of spending cap bill
  • Oct. 13: China trade balance; South Korea central bank meeting; Mexico minutes
  • Oct. 14: China CPI, PPI, Colombia minutes
  • Oct. 17: Singapore exports
  • Oct. 18: Chile rate decision
  • Oct. 19: China 3Q GDP, IP, retail sales; Malaysia CPI; third U.S. presidential debate; Brazil rate Decision
  • Oct. 20: Bank Indonesia meeting; Turkey central bank decision
  • Oct. 21: Malaysia foreign reserves;
  • Oct. 24: Singapore CPI
  • Oct. 25: South Korea 3Q GDP; Hungary central bank decision; Brazil Minutes
  • Oct. 28: Russia central bank meeting
  • Oct. 31: Taiwan 3Q GDP; Thailand current account; Mexico GDP. Colombia rate decision
  • NOTE: Davison Santana and Mark Cranfield are FX strategists who write for First Word. The observations they make are their own and not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: INSIDE G-10: Dollar Broadly Advances Amid Thin Trading at 3Q-End

INSIDE G-10: Dollar Broadly Advances Amid Thin Trading at 3Q-End

(Bloomberg) -- Dollar broadly strengthens, led by market participants unwinding USD/JPY short positions amid thin trading conditions.
  • Fed’s Yellen says there could be benefits to Fed buying equities or corporate bonds
  • Some Deutsche Bank clients reduce their exposure to bank
  • BBDXY rises for second day, up 0.12% at 1,184.92
    • U.S. Aug. personal income and spending data due later today
    • 10-year Treasury yield falls 1 bp to 1.548%
    • Oil and copper decline; gold rises
  • USD/JPY gains for fourth day, up 0.42% at 101.45
    • This looks to be unwinding of USD/JPY shorts as FX pair’s floor is solid near 100 area, with quite “a lot of buying interest” toward that level, says Tsutomu Soma, general manager of fixed-income at SBI Securities
    • Spiked briefly to intraday high at 101.78 amid quarter- end book squaring and option-related hedging, says trader
    • BOJ summary of opinions from Sept. meeting says they don’t intend to peg 10-year JGB yields at 0% for long
  • AUD/USD falls for second day, down 0.09% at 0.7629
    • Sell stops being left under Monday’s 0.7603 low, with momentum and leveraged selling seen already this morning, say traders
    • FX pair traded a bearish outside day yesterday
  • NOTE: Mark Cranfield is an FX strategist who writes for First Word. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: INDIA RATINGS: Ruchi Worldwide Cut; Aarti Industries Raised

INDIA RATINGS: Ruchi Worldwide Cut; Aarti Industries Raised

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.
  • To get this story sent to your inbox real-time, run NI INRATINGS , click on Display & Edit, then Set Alert Delivery
DOWNGRADES
  • Mithila Motors
    • Long-term loan facilities cut to BB from BB+ at Crisil
    • Cites deterioration in liquidity, financial profile
  • Ruchi Worldwide
    • LT bank facilities cut to B(SO) from BB+(SO) at Care
    • Cites high leverage due to significant erosion of its net worth
  • Shri Ambica International
    • LT bank loan cut to D from BB at Crisil
    • Cites instances of delay in servicing debt
UPGRADES
  • Aarti Industries
    • LT loan facilities raised to AA- from A+ at Crisil
    • Cites strong operating performance
  • Kongovi Electronics
    • Term loan raised to BBB+ from BBB at ICRA
    • Cites healthy growth in revenues, operating margins
  • Pasupati Acrylon
    • LT loan facilities raised to BBB- from BB+ at Crisil
    • Cites healthy growth in sales volume
  • Shankaranarayana Constructions
    • Working capital limits raised to A- from BBB+ at ICRA
    • Cites improvement in profit margin
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
ARTO IN (Aarti Industries)
6596316Z IN (Mithila Motors Ltd)
PSA IN (Pasupati Acrylons Ltd)
RSI IN (Ruchi Soya Industries Ltd)

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HALISTER1: China’s Manufacturing Bottomed, PBOC to Hold Interest Rate: ANZ

China’s Manufacturing Bottomed, PBOC to Hold Interest Rate: ANZ

(Bloomberg) -- September Caixin Manufacturing PMI reading signals China’s manufacturing sector has bottomed, says Raymond Yeung, greater China chief economist at ANZ.
  • China Sept. official PMI likely to stay expansionary and may beat ANZ est. of 50.3
  • PBOC to keep interest rates on hold without any more aggressive easing, says Yeung
    • Sees 7-day repo rate stay at 2.25%
  • Sept. industrial production and retail sales data to remain resilient, indicating downside risk for growth subsiding
    • Forecasts 2016 GDP growth at 6.7%
  • NOTE: Sept. Caixin China Manufacturing PMI rises to 50.1 from 50.0 in Aug.
    • Official PMI is due 9am tomorrow, est. 50.5 vs 50.4 prior
  • PBOC seen switching to broad monetary tightening as soon as 2017; story here
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Raymond Yeung (Australia & New Zealand Banking Group Ltd)

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HALISTER1: BOJ May Want to Keep 10-Year JGB Yields Above -0.10%: Analysts

BOJ May Want to Keep 10-Year JGB Yields Above -0.10%: Analysts

(Bloomberg) -- BOJ probably doesn’t want a drop in 10-year JGB yield to -0.10% after yields approached that level, says Makoto Yamashita, Tokyo-based chief strategist at Deutsche Securities.
  • Today’s reduction in central bank’s debt purchases can be seen as a sign that BOJ is looking to avoid lowering 10-year yields to -0.10% until next policy meeting, says Souichi Takeyama, a rates strategist at SMBC Nikko Securities
  • Cut in BOJ’s debt purchases is likely to strengthen market’s perception that -0.10% is lower bound of what central bank will tolerate, says Hiroki Tsuji, a Tokyo-based market analyst at Mizuho Securities
  • NOTE: BOJ cuts bond purchases of 5- to 10-year maturities to 410b yen today from 430b yen at last operation on Sept. 26
    • This marks first time since March that BOJ changes a purchase amount before releasing its bond-buying plan for the next month; Oct. plan is due at 5pm Tokyo time
  • 10-year yield up 2 bps at -0.070%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Makoto Yamashita (Deutsche Bank AG)
Hiroki Tsujimura (Nikko Asset Management Co Ltd)
Souichi Takeyama (SMBC Nikko Securities Inc)

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