NEWS STORIES OF NOTE FROM OVER THE EU & US SESSIONS

ASIA

New Zealand REINZ House Prices YY (Oct) -15.8% (Prev. -26.2%)

BoJ Governor Kuroda reiterated the Bank’s commitment to ultra-lose monetary policy as he highlighted that inflation expectations in Japan are slightly picking up. (Newswires)

US

US PPI Final Demand YY (Oct) 2.8% vs. Exp. 2.4% (Prev. 2.6%)

US PPI ex-Food/Energy YY (Oct) 2.4% vs. Exp. 2.3% (Prev. 2.2%)

Fed's Kaplan (voter) stated that the Fed are actively discussing lifting rates next month. (Newswires)

Fed's Evans (voter) suggested that the Fed needs to prepare public for unconventional policies. (Newswires)

Fed's Bostic (non-voter) said that he continues to back a December hike; he would pause rate hikes if he sees continued weakening in US inflation. He also noted that it is appropriate to raise rates gradually over the next couple of years. (Newswires)

Fed’s Bullard (non-voter) reiterated his dovish credentials, stating that current level of interest rate is appropriate, and that a hike could jeopardise the progress on inflation. 

Reports suggested that Allianz’ Mohamed El-Erian is in contention for the Fed Vice Chair job. (Newswires)

US Treasury Secretary Mnuchin said that he wants to ensure the 20% corporate tax rate is not going to be phased out and is permanent. (Newswires)

US Senator Hatch said that ACA repeal is not part of the revised Tax Bill, says talk of Obamacare mandate repeal is a distraction. (Newswires)

US House Majority Leader McCarthy stated that the House will have tax bill on floor this Thursday and says it will pass. (Newswires)

There was also a number of mixed reports suggesting that the GOP may try to add an amendment to gut Affordable Care Act in tax bill, per an amendment by Rand Paul. However, some Senators have denied this, and other senior republicans, like Orin Hatch, have suggested that it would not be helpful. Either way, it once again highlights the disunity among the GOP, which some believe will hinder the progress of fiscal reform.

White House economic advisor Cohn said the next thing on the Trump administration's agenda is infrastructure in January after tax reform. (Newswires)

With a distinct risk-off tone through the session – some say due to weak China data overnight, others suggest that the continuing difficulties in progressing on tax reform in the US, and others cite the tier-one data and other central bank speakers on the slate for the rest of the week – US stocks were on the back foot. The energy sector sagged, following a torrid session for crude, in which it finished negative; ConocoPhillips and Exxon were the laggards.

The Treasury curve was once again mixed today; yields on 2-year notes again touched the highest in nine years, though yields were lower along the rest of the curve, leaving the curve to flatten once again (much attention was on 5s30s, which narrowed to just below 77bps, while 2s10s also narrowed to 69bps). Fed's Bostic mentioned the shape of the yield curve in his speech today, and said an inverted yield curve wouldn't necessary signal a recession ahead; it may be in part due to safe haven buying. He added that a flattening yield curve might be a sign of confidence in US economy.

EU/UK

EU GDP Flash Estimate QQ (Q3) 0.6% vs. Exp. 0.6% (Prev. 0.6%)

German GDP Flash QQ SA (Q3) 0.8% vs. Exp. 0.6% (Prev. 0.6%)

ECB's Coeure said that the present inflation outlook requires financing conditions to remain accommodative for a considerable period of time. (Newswires)

UK CPI YY (Oct) 3.0% vs. Exp. 3.1% (Prev. 3.0%)

BoE Deputy Governor Cunliffe says that the Bank can afford to wait until there is 'clear evidence' that wage growth is picking up before hiking rates. He also highlighted that domestic inflation pressures are low, and that the depreciation of sterling has not caused any second-round effects. (Newswires)

UK PM May's govt defeated opposition amendment on Brexit Bill in the first vote; vote split was 318-52. (Newswires)

German MEP Weber stated that it is less likely that Brexit talks will make it to the second stage in December. (Newswires)

GEOPOLITICS

Russian PM Medvedev said that Russia-US relations are at the lowest point in decades. (Newswires)

US Trade Secretary Ross suggested that NAFTA is on a very short time fuse. (Newswires)

FX

The euro stole the limelight in Tuesday trade, rising above 1.18 against the dollar – the latter soft more-or-less across the board. The single currency was buoyed by a decent Eurozone GDP report, a decent German GDP report, as well as solid survey data from German, and rose by the most in a month. Traders also noted that the EUR 5y5y inflation forward swap rose to 1.7% today, giving traders confidence that the ECB’s largesse may be showing signs of guiding inflation expectations higher.  

The yen and Swissy also took advantage of a weaker buck and risk0-off sentiment, while gold rose to test the top end of its recent range at ~$1,282 area.

Cable was given some reprieve from a weak dollar, though succumbed to the euro strength; the weakness was driven by October’s CPI data, which came in at 3.0% - short of the consensus view as well as the BOE’s own forecasts, meaning Governor Carney will not need to write a letter to the UK Chancellor this month explaining the situation.

While commodity FX took its cue from weak crude and weakening industrials prices, following the soft data out of China overnight, the Aussie remained firm after data from NAB overnight showed business conditions were firm, as was confidence.

COMMODITIES

The UAE opined that oil producers need to `definitely' extend output cuts. (NewswireS)

WTI futures settled USD 1.06 lower at USD 55.70/bbl; Brent settled USD 0.95 cents lower at USD 62.21/bbl.

Positive news from OPEC and the EIA, as well as tensions in the Middle East this week were offset by continued signs that US output was ticking up. In its report today, the IEA warned that global oil balances were likely to show oversupplied crude markets into Q2 2018, and cut its demand growth forecast for 2017 and 2018.

Regarding OPEC, some press outlets reported that Russia was said to hesitate on the length of extending the OPEC-led oil output cuts deal; the world’s largest energy producer believes it is too soon to announce anything in November, and is said to be evaluating different proposals, like a three-month extension. Russian energy minister Novak is meeting with energy companies tomorrow, and is expected to canvas their opinions on the deal.

US API weekly crude stocks 6.513M vs. Exp. -2.200M (Prev. -1.562M)

US API weekly dist. stocks -2.527M vs. Exp. -1.300M (Prev. -3.130M)

US API weekly gasoline stk 2.399M vs. Exp. -0.900M (Prev. 0.520M)

US API Cushing number -1.803M vs. Exp. -1.900M (Prev. 0.800M)

The API report pushed WTI crude futures to fresh session lows.

14 Nov 2017 - 22:00- EnergyBank Speaker- Source: RANsquawk

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