Halister News

--ADELA LIN

Economic Release Details: {TAREDSC Index ECOD} --ADELA LIN

(Bloomberg) -- Growing dissent in Spain’s socialist PSOE opposition party marginally lifts likelihood of a minority government led by the incumbent PP before end-October, Barclays analysts Apolline Menut and Antonio Garcia Pascual write.

• Likelihood slightly higher than 50%; next three days could prove critical, according to a client note today
• If the PSOE Federal Committee votes against party leader Pedro Sanchez’s plans to hold a leadership vote among members and to stay opposed to facilitating the formation of a minority government led by acting PM Rajoy, there may be a vote of confidence in him
  • If rejected, temporary leadership will be put in place and would likely agree with Rajoy’s PP party to form a government with Ciudadanos
  • If majority backs Sanchez’s proposals, there will be a vote on party leadership on October 23; if he wins, avoiding a third national election won’t be easy
  • There’s moderate to low probability the party will be part of any new government
  • If Sanchez loses PSOE leadership, would most likely lead to talks and the formation of a PP-minority government

(Bloomberg) -- Whether India government bond yields extend today’s sudden move higher will depend on evolution of the geopolitical situation, Nagaraj Kulkarni, senior rates strategist at Standard Chartered says in an interview.

• No fundamental reason for rates to increase, he says
• Yield on 7.83% govt note due April 2018 jumps 11 bps to 6.78% while yield on 6.97% bond due Sept. 2026 surges 11 bps to 6.88%
• NOTE: India said it attacked terrorist camps in Pakistan late on Wednesday as Prime Minister Narendra Modi retaliated for a deadly strike against Indian soldiers earlier this month
• RBI said to have sold dollars to stem rupee’s drop, traders say

--PAUL GORDON

(Bloomberg) -- German Sept. unemployment change est. -5K vs prev -7K.

• German Sept. unemployment rate est. 6.1% vs prev 6.1%

(Bloomberg) -- OPEC’s surprise agreement to cut production for the first time in eight years may have lifted risky assets in the Asian session, but EUR investors should take advantage of near-term support to further trim holdings in fundamentally weaker oil & gas names, Commerzbank analysts including Marco Stoeckle write in client note.

• With OPEC deal not due to be formalized before the next meeting on Nov. 30, sees real risk markets get too excited in the short-term, with longer-term disappointment
• Recommends overall marketweight position; ongoing news-flow in the banking sector remains the “elephant in the room”
• Current tactical stance of keeping risk close to home in the cash space, sticking with CSPP-buying candidates
• Recommends a more careful stance in banks and higher-beta segments from subs to EUR HY
  • Outside protection of CSPP, expects better entry levels to materialize as result of decline in risk sentiment, or flurry of supply leading to indigestion