Bond Rout Ends As Trump "Reflation Rally" Fizzles Sending Dollar Lower; Iron Ore Plunges

As we suggested yesterday when we posted the first in what is likely to be many contrarian reports on the "Trump Reflation Rally", one in which Goldman predicted that no matter what policy mix is adopted by president Trump, the global outcome will be one of slowing economic growth, overnight the Bloomberg Dollar Spot Index finally ended its torried 3.2% rally from the past 4 days - the steepest since January 2009 - and retreated 0.3% from a nine-month high. After a historic pounding, benchmark Treasuries and emerging-market assets also rebounding as the dollar rally ended, while Iron ore plunged alongside other industrial metals.

Expectations Trump's administration will cut taxes, increase spending and accelerate inflation have lifted assets, including the dollar, bank stocks, and industrial metals, and driven bond yields higher. But concern the new administration could take a more protectionist stance on trade has hit Asian stocks and currencies.

"The market is getting a little bit cautious," said Commerzbank currency strategist Esther Reichelt in Frankfurt. "There might be some concern that the Fed gets more cautious due to the strong dollar (or) this might just be ... a pause to see how other market participants are reacting to dollar strength."

After getting massively oversold, with the US 10Y RSI hitting a level not seen since 1990 as the Bloomberg chart below shows, Treasury 10-year note yields fell from this year’s high and Italy’s bonds led gains in the euro area, outperforming German bunds. Trump’s election victory, which was seen as the catalyst for a massive fiscal stimulus including a pledges to cut taxes, spend more than $500 billion on infrastructure and restrict imports, triggered a record selloff in global bonds. Some, including Fidelity Investments’ Ford O’Neil, have already expressed skepticism that Trump’s proposals will be fully backed by Congress, while Goldman last week said the rally in iron and copper was “too much, too fast.”

“We’ve had a such a sharp move over a small period of time, and it can only extend so far without further information to fuel it,” said Richard Kelly, head of global strategy at Toronto Dominion Bank in London. “The market is going to have to see some sort of actual facts to drive this extension further. If we actually see a sizable shift of U.S. fiscal policy, it changes a number of the dynamics on growth and inflation.”

The yield US 10% TSYs dropped six basis points to 2.21% as of 10:24 a.m. London time. The 41 basis-point jump over the last three trading sessions marked the steepest climb in more than seven years and the 14-day relative strength index for the securities indicated they were the most oversold since 1990, a potential signal that they may be set for a reversal.  Richmond Federal President Jeffrey Lacker warned Monday that easier fiscal policy may require higher rates, but it’s too early for the central bank to react to potential policy changes by the incoming administration.

Euro zone government bond yields fell during a hiatus in a sell-off that has lasted six weeks.  Italy’s 10-year yield slid 11 basis points to 1.97 percent, after rising for five consecutive days, and that on Spanish securities with a similar due date dropped to 1.41 percent, from as high as 1.66 percent on Monday. German bund yields fell two basis points to 0.30 percent, as a report showed growth in Europe’s biggest economy slowed to the weakest pace in a year last quarter. Indian bonds rallied on expectations liquidity will improve in the wake of Prime Minister Narendra Modi’s surprise Nov. 8 crackdown on unaccounted wealth through the withdrawal of high denomination bills. The yield on government notes due Sept. 2026 plunged 10 basis points to 6.63 percent in Mumbai, according to prices from the RBI’s trading system. The rupee led losses in Asia as Indian markets opened after Monday’s public holiday.  The premium investors demand to own developing-nation government bonds over U.S. Treasuries narrowed three basis points to 380, according to JPMorgan Chase & Co. indexes.

Japan’s 10-year bond yield increased to zero, having been negative for almost eight weeks, as a gauge of demand weakened at a sale of five-year securities on Tuesday.

The yen rose 0.2 percent to 108.23 per dollar. It slipped to a five-month low of 108.54 on Monday, having climbed as high as 101.20 as the U.S. election results came out on Nov. 9. “The dollar’s surge from around 101 to 108, just in a few business days, is like going over the speed limit, so a bit of a correction is natural,” said Takuya Kanda, a senior researcher at Gaitame.com Research Institute Ltd. “The dollar is currently rallying on expectations only. But the policies Trump has called for are all dollar-positive. After pausing around 107 to 108, the dollar will resume its uptrend toward 110 yen by year-end.”

The end of the reflation rally also meant weakness across industrial metals, and sure enough iron ore plunged 9% in Singapore, extending the last session’s retreat from a two-year high. The price soared by a record 27 percent last week, driven by speculative interest in China and optimism Trump’s policies will boost steel demand. Goldman Sachs said Friday that iron ore’s reaction to the Trump win was excessive, while Capital Economics Ltd. warned prices will face growing pressure from rising supply. Zinc fell 1.9 percent in London, reversing earlier gains and retreating from the highest level in almost seven years. Copper dropped 2.5 percent, pulling back from near a one-year high.

Gold added 0.3 percent, rebounding from a five-month low. It slid 4.4 percent over the last three days as the dollar strengthened.

A weaker dollar was good news for oil, with crude rising as much as 2.6% to $44.43 a barrel in New York as OPEC nations were said to be making a final diplomatic effort toward securing a deal to curb production. Qatar, Algeria and Venezuela are leading the push for a deal, while Saudi Arabia, Iraq and Iran are at odds over how to share output cuts agreed at a September meeting in Algiers.

Equities have yet to process the decide if the end, if only for the time being, of the Trump surge is good or bad: the MSCI gauge of shares in developing nations rose with U.S. stock-index futures. Iron ore tumbled as much as 11 percent in Singapore and gold pulled out of its steepest slide in more than a year. S&P 500 Index futures rose 0.2% to 2,165 after shares ended a volatile session Monday little changed. 

The Stoxx Europe 600 Index was little changed. Bond-proxy sectors including utilities and real estate shares advanced as the global debt selloff abated. Among stocks active on corporate news:

  • Merck KGaA advanced 1.3 percent after reporting a jump in third-quarter profit and boosting its earnings forecast for the year on lower-than-expected research costs.
  • Deutsche Wohnen AG climbed 4.1 percent after posting an increase in nine-month profit and giving an upbeat outlook.
  • Vodafone Group Plc rose 1.6 percent after the carrier reported better-than-estimated second-quarter service revenue.
  • EasyJet Plc climbed 1.7 percent after saying it’s working to streamline operations as the slump in the pound following the Brexit vote weighs on earnings.
  • Hennes & Mauritz AB added 2.5 percent after the retailer posted a higher-than-expected increase in October sales.
  • British American Tobacco Plc gained 0.6 percent after Reynolds American Inc. was said to be seeking a higher price after dismissing the U.K. company’s $47 billion takeover offer as too low.
  • Nokia Oyj slipped 3.9 percent after predicting revenue will fall in line with the market trend.

Among the main overnight economic reports was the second estimate of Europe's Q3 GDP, which came in as expected at 0.3%, the same as the Q2 print. The breakdown by nation is below.

The rest of Europe's economic highlights:

  • (FR) Oct. CPI EU Harmonized 0.0% MoM; est. 0.0%, prior 0.0%; 0.5% YoY; est. 0.5%, prior 0.5%;
  • (SP) Oct. CPI EU Harmonised 0.8% MoM; est. 0.8%, prior 0.8%; 0.5% YoY; est. 0.5%, prior 0.5%
  • (UK) Oct. CPI 0.1% MoM; est. 0.3%, prior 0.2%; 0.9% YoY, est. 1.1%, prior 1.0%
  • (GE) Nov. ZEW Survey Current Situation est. 61.6, prior 59.5; (GE) Nov. ZEW Survey Expectations est. 8.1, prior 6.2
  • (EC) Nov. ZEW Survey Expectations, prior 12.3
  • (EC) 3Q P GDP SA QoQ est. 0.3%, prior 0.3%; (EC) Sept. Trade Balance NSA est. EU22.5b, prior EU18.4b

Data Tuesday on manufacturing in the New York area, retail sales and import prices will be scrutinized for indications of the health of the world’s biggest economy. The final trickle of earnings will also be in focus, with Home Depot Inc. posting results Tuesday. About 76 percent of companies that reported so far beat profit projections and 56 percent topped sales estimates. Analysts now expect quarterly earnings growth of 2.7 percent for the benchmark’s constituents, reversing forecasts for a 1.6 percent decline at the start of the month.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade with little firm direction as upside in energy names is offset by softness in miners
  • Some early signs that some USD correction is likely to play out over coming sessions, and this has been led by EUFt/USD which has duly held the 1.0700 level
  • Looking ahead highlights include US retail sales, Fed's Rosengren, Fischer and Tarullo

Market Snapshot

  • S&P 500 futures up 0.2% to 2165
  • Stoxx 600 up less than 0.1% to 338
  • FTSE 100 up 0.8% to 6805
  • DAX down less than 0.1% to 10689
  • German 10Yr yield down 1bp to 0.31%
  • Italian 10Yr yield down 7bps to 2.01%
  • Spanish 10Yr yield down 7bps to 1.45%
  • S&P GSCI Index up 1% to 353.4
  • MSCI Asia Pacific up 0.2% to 134
  • Nikkei 225 down less than 0.1% to 17668
  • Hang Seng up 0.5% to 22324
  • Shanghai Composite down 0.1% to 3207
  • S&P/ASX 200 down 0.4% to 5326
  • US 10-yr yield down 6bps to 2.2%
  • Dollar Index down 0.43% to 99.68
  • WTI Crude futures up 2.5% to $44.41
  • Brent Futures up 2.1% to $45.36
  • Gold spot up 0.3% to $1,226
  • Silver spot up 0.6% to $17.04

Global Top Headlines

  • Apple Said to Explore Smart Glasses in Deeper Wearables Push: Early product testing comes as company searches for next hit, similar Google Glass project flopped
  • OPEC Said to Start Final Diplomatic Push on Oil-Cuts Plan: Qatar, Algeria, Venezuela in shuttle-diplomacy to secure deal
  • BP CEO Sees Oil Market ‘Pretty Pessimistic’ About OPEC Cuts
  • Euro-Dollar Parity Is Back on Traders’ Radar Since Trump Win: Deutsche Bank says euro will decline below $1 in 2017
  • Google, Facebook Move to Punish Fake News Sites With Ad Rules: Publishers running “misrepresentative content” restricted
  • U.S. Delays Dakota Pipeline as Trump Promises Quicker Reviews: More talks needed given land’s importance to tribe, Army Corps says
  • Amazon to Soften Employee Review Process After Critical Report: Amazon will change its employee review process in 2017 to soften its image as a survival-of-the-fittest environment
  • Citi Unseats Wells Fargo in Satisfaction Survey on Digital Gains: Wells Fargo drops to No. 2 spot by ‘standing still’ on digital
  • Icahn Said to Fail in Bid to Buy Federal-Mogul: NYP
  • Giuliani Emerges as Favorite for Trump’s Secretary of State: AP

Looking at regional markets, we start in Asia where stocks traded mixed following a similar lead from Wall St, where tech names underperformed again and financials extended on post-US election gains. Nikkei 225 (-0.1%) fluctuated between gains and losses as USD/JPY struggled to maintain a 108.00 handle. ASX 200 (-0.4%) declined as prospects of a protectionist trade policy by Trump weighed on the index. In China, multiple positive profit alerts for H1 led to outperformance in Hang Seng (+0.6%), however Shanghai Comp (-0.1%) was undecided, with a firm interbank liquidity injection overshadowed by trade concerns and ongoing expectations of a policy-prudent PBoC. 10yr JGBs were lower with 10yr yields increasing to above 0% for the first time since September when the BoJ overhauled its monetary policy, while underperformance was observed in the belly following a disappointing 5yr JGB auction in which b/c, lowest accepted and average prices all declined from the prior month. PBoC injected CNY 100bIn 7-day reverse repos, CNY 70bIn in 14-day reverse repos and CNY 15bIn in 28-day reverse repos. PBoC set yuan mid-point at 6.8495 (Prey. 6.8291), the weakest since 2008.

Top Asian News

  • India Wholesale Inflation Unexpectedly Eases Before Rate Review: Oct. wholesale prices rise 3.39% y/y vs est. +3.74%
  • Rupee Leads Asia Losses While Modi’s Cash Ban Boosts India Bonds: Currency drops 0.7% in third straight day of declines
  • China Plan Seen Signaling Harsher Line on Local Government Debt: Scope of such debt under plan narrower than expected, BofA says
  • RBA Grapples With Uncertain Job Market, Accelerating Housing: Global inflation risks are “more balanced” than for some time
  • Evergrande Boosts Stake In Vanke, Plans Lockup for Other Stakes: Evergrande holds 10.16% of Vanke’s Shenzhen-traded shares

In Europe, bourses also trade mixed as EUROSTOXX (-0.1%) and DAX (+0.1%) lag behind the FTSE (0.92%) in early trade. The FTSE has been bolstered by several factors this morning, energy names have seen a reprieve, after a few days of losses WTI and Brent crude futures have retraced on the back of reports that Saudi Arabia are looking to resolve their differences with Iran and Iraq. Also, supermarkets in the UK were boosted by the latest Kantar report which saw Sainsbury's (SBRY LN) gain some ground on Tesco's (TSCO LN), this saw Sainsbury's shares rise 2%. Property names also received a bid this morning as Land Securities (LAND LN) posted stellar results. Fixed income markets have remained quiet this morning with prices retracting some of the moves seen over the past of days. Bunds up by 60 ticks higher but supply is light in today's session.

Top European News

  • German Economy Slows More Than Estimated as Trade Weakens: GDP increased 0.2% in third quarter versus 0.3% estimate
  • U.K. Inflation Unexpectedly Slows as Carney Prepares to Testify: Consumer-price growth rate drops to 0.9 percent from 1 percent
  • Vodafone Quarterly Service Revenue Rises on European Revival: Carrier’s quarterly service growth beats analysts’ estimates
  • Tesco Charge Curbs Discounter Growth as Grocer Regains Shoppers: Aldi and Lidl record slowest growth since 2011, Kantar says
  • Fiat Declines After U.S. Dodge Truck Owners Sue Over Emissions: The consumer lawsuit against Fiat’s Michigan- based unit is the first against a U.S. carmaker over emissions cheating
  • Merck KGaA Raises Profit Forecast Aided by Health-Care Unit: German drugmaker has 24 percent jump in 3Q profit
  • Paschi Offers Up to 100% Face Value in $4.6 Billion Debt Swap: Debt-for-equity swap is part of lender’s recapitalization plan

In currencies, the Bloomberg Dollar Spot Index retreated 0.3 percent from a nine-month high. It jumped 3.2 percent over the last four trading sessions, the steepest rally since January 2009, amid speculation Trump’s proposed policies will fuel economic growth and hasten interest-rate increases by the Fed. Futures indicate a 92 percent chance that rates will be raised at the central bank’s December policy meeting.The yen rose 0.2 percent to 108.23 per dollar. It slipped to a five-month low of 108.54 on Monday, having climbed as high as 101.20 as the U.S. election results came out on Nov. 9. “The dollar’s surge from around 101 to 108, just in a few business days, is like going over the speed limit, so a bit of a correction is natural,” said Takuya Kanda, a senior researcher at Gaitame.com Research Institute Ltd. “The dollar is currently rallying on expectations only. But the policies Trump has called for are all dollar-positive. After pausing around 107 to 108, the dollar will resume its uptrend toward 110 yen by year-end.” The pound fell for a second day versus the dollar, dropping 0.5 percent to $1.2429, as a report showed U.K. inflation unexpectedly slowed in October. The MSCI Emerging Markets Currency Index rose 0.3 percent, spurred by a 1.7 percent jump in South Africa’s rand, the best performer among 31 major currencies tracked by Bloomberg. China’s yuan slipped to its weakest level since 2008, while India’s rupee dropped 0.6 percent as trading resumed following a holiday on Monday.

In commodities, iron ore tumbled 9 percent in Singapore, extending the last session’s retreat from a two-year high. The price soared by a record 27 percent last week, driven by speculative interest in China and optimism Trump’s policies will boost steel demand. Goldman Sachs said Friday that iron ore’s reaction to the Trump win was excessive, while Capital Economics Ltd. warned prices will face growing pressure from rising supply. Zinc fell 1.9 percent in London, reversing earlier gains and retreating from the highest level in almost seven years. Copper dropped 2.5 percent, pulling back from near a one-year high. Gold added 0.3 percent, rebounding from a five-month low. It slid 4.4 percent over the last three days as the dollar strengthened. Crude oil rose as much as 2.6 percent to $44.43 a barrel in New York as OPEC nations were said to be making a final diplomatic effort toward securing a deal to curb production. Qatar, Algeria and Venezuela are leading the push for a deal, while Saudi Arabia, Iraq and Iran are at odds over how to share output cuts agreed at a September meeting in Algiers. Natural gas futures extended gains after rising the most since July as colder-than-normal temperatures are seen hitting the U.S. East Coast next week.

Looking at the day ahead, while the overriding focus will again be on election related newsflow, the diary is a little busier for data. This morning in Europe we’ll get the preliminary Q3 GDP report out of Germany where the market consensus is running at +0.3% qoq. We then get the November ZEW survey in Germany and also the Q3 GDP report for the Euro area (+0.3% qoq expected). It looks set to be busy in the US this afternoon too, headlined by the October retail sales print where the market is expecting a +0.6% mom headline print and +0.5% mom ex-auto reading. Also due out will be the import price index for October, along with the NY Fed empire manufacturing survey and finally business inventories data for September. Away from the data it’s another busy day for Fedspeak with Rosengren (1pm GMT), Tarullo (2.05pm GMT), Fischer (6.30pm GMT) and Kaplan (6.30pm GMT) all scheduled to speak. It’ll also be worth keeping an eye on comments from BoE Governor Carney when he testifies to lawmakers on the November inflation report. As we highlighted yesterday, across the pond the House Republican Conference will hold its closed-door leadership election with the chatter being that Speaker Paul Ryan is likely to be re-elected.

  • US Event Calendar
  • 7:30am: Fed’s Rosengren speaks in Portland, Maine
  • 8:30am: Empire Manufacturing, Nov., est. -2.5 (prior -6.8)
  • 8:30am: Import Price Index m/m, Oct. est. 0.4% (prior 0.1%)
  • 8:30am: Retail Sales Advance m/m, Oct., est. 0.6% (prior 0.6%)
  • 8:55am: Redbook weekly sales
  • 10am: Business Inventories, Sept., est. 0.2% (prior 0.2%)
  • 1:30pm: Fed’s Fischer speaks in Washington, D.C.
  • 4:30pm: API weekly oil inventories

DB's Jim Reid concludes the overnight wrap

The bond market sell-off continues to take the market by surprise too although the rebound this morning and the move off the highs yesterday in yield for Treasuries is evidence perhaps that we are starting to finally see a bit of resistance at these levels. Having reopened following the public holiday, 10y Treasury yields initially surged nearly +15bps by mid-morning in the European session yesterday to touch 2.300%. That marked the high point however with yields moderating since, closing at 2.262% last night (although still up +11.1bps on the day and the highest since January 1st) and have since retraced a bit more this morning to around 2.208% as we go to print. It’s the same across Asia too where yields in the likes of Australia (-1.1bps), South Korea (-3.2bps), New Zealand (-4.2bps) and also EM Asia like Indonesia (-14.5bps) and Thailand (-3.7bps) are all lower. It’s emerging markets which have really bore the brunt of this bond selloff however and particularly in LatAm where yesterday hard currency 10y bond yields in Mexico and Brazil were +20.7bps and +22.3bps higher respectively taking the post election move to +98.5bps and +94.0bps now. So it’ll be interesting to see if the swing in momentum over the last 18 hours or so for Treasuries also plays out across the EM space today.

Elsewhere, all things considered European bond markets were a bit calmer yesterday. Yields in the periphery were ‘only’ 4-6bps higher, 10y Gilt yields rose +4.3bps to 1.404% and pre-Brexit levels again while 10y Bunds outperformed in relative terms with the yield just over 1bp higher at 0.316%. It doesn’t feel like all that long ago that the Bund curve was negative out to just past the 15y tenor. Yesterday 8y Bunds turned positive for the first time since April meaning the curve is only negative now out to the 7y tenor.

Away from bonds the stronger US Dollar theme continues to play out. Yesterday the Dollar index closed up +0.91% while on the other side of that EM currencies had another day to forget. The Colombian Peso (-2.17%), Argentine Peso (-1.86%), Hungarian Forint (-1.52%) and Turkish Lira (-1.19%) were amongst those that stood out. Where we did see some a bit of calm and resilience yesterday was in equity markets. That was even for EM equities where bourses in Mexico (+0.73%), Brazil (+0.80%) and Argentina (+0.22%) actually bounced back following 3 days of heavy falls, perhaps taking some comfort from Trump’s CBS interview and also the announcement of some of his early personnel appointments. In Europe the Stoxx 600 also closed +0.22% while last night the S&P (-0.01%) finished more or less flat. That did however hide another strong performance for financials with the S&P 500 Banks rallying another +3.53% and taking that index to the highest level since early 2008.

There wasn’t a huge amount else to report in markets yesterday with the overwhelming focus still very much on all things President-elect Trump related and the subsequent knock on impact to markets. That’s unlikely to change anytime soon although yesterday we did also hear from UK PM Theresa May during her first foreign policy speech. In a nutshell the speech was, at the margin, at little bit more business friendly than when she spoke at her first party conference as leader a few weeks back. May talked about using the freedoms that come from negotiating with partners directly ‘to be flexible’ and ‘to set our own rules and forge new and dynamic trading agreements that work for the whole UK’ but that also ‘it is about how business and government work together to get the best deal and the right deal for Britain and the right deal for businesses working across the continent’. In a nutshell she defended globalisation and liberalism as being the best system but said it must work better for all or be at risk of being rejected by electorates around the world.

There were also some comments out of the Fed yesterday. Late last night the Richmond Fed President, Jeffrey Lacker, said that in light of the Trump victory ‘if a more stimulative fiscal stance would materialize that would bolster the case for raising rates’ and that ‘as a general matter, doing monetary policy with a more stimulative fiscal outlook usually warrants higher policy rates’. Prior to this the Dallas Fed President, Robert Kaplan (who is a voter next year), said that he had favoured a rate increase at either the September or November meeting and reiterated that he was hopeful that a hike is coming soon.
In terms of other markets this morning, it’s been a fairly subdued session for equity markets in Asia. The Nikkei (+0.01%) is little changed along with the Kospi (-0.02%) while the Shanghai Comp (-0.27%) is a touch weaker along with the ASX (-0.42%) however the Hang Seng (+0.42%) has gained. We’ve also seen a bit of a bounceback in EM FX this morning with the USD rally abating somewhat, while Asia-Pacific credit indices are 2-3bps tighter. WTI Oil (+1.99%) and Gold (+0.32%) are also enjoying their first gains since Wednesday. So we are seeing some signs of those markets most beaten up reversing somewhat this morning.

Moving on. Aside from the early data in China and Japan in the morning, yesterday was a very quiet day for economic reports. With nothing out in the US the only data of note in Europe was a slightly better than expected Euro area industrial production print for September (-0.8% mom vs. -1.0% expected). The focus is on the political calendar however and with the clock ticking for Italy next month the latest poll run by EMG Acqua showed that 39.2% of respondents would reject PM Renzi’s constitutional reform versus 34.9% who would say yes. That leaves a still very high proportion (25.9%) of undecided voters out there. It’s worth noting that that poll was conducted over November 11th-13th and showed that the number of voters who would reject the reform as rising 0.9% versus the same poll a week earlier and before the US election.

Staying in Europe, yesterday we also got the latest ECB CSPP holdings data. As of November 11th, total holdings under the programme totalled €41.256bn. That implies net purchases settled last week of €1.8bn or an average daily run rate in that week of €360m which is a touch below the €383m daily run rate since the program started. Given that data only partly covers the post election period it’ll be interesting to see if next week’s data shows any impact from the bond selloff and general volatility in bond markets on the ECB’s overall pace of purchases.

Before we move onto today’s calendar, a quick mention that this morning our European equity strategists have published a summary on the outlook for European equities after the US election. In summary, while the markets are clearly giving Trump the benefit of the doubt and our economists expect US growth to accelerate to above 3% in H2 next year, our European equity strategists remain cautious on the outlook for their market, given: a) the Italian referendum on December 4 (peripheral spreads have already widened, but equities have not reacted yet); b) intensifying Chinese capital flight, which our Asian FX strategists think has returned to H2 2015 levels; c) the risk of further downside for the oil price and, hence, renewed upside for US high-yield credit spreads (with the broad USD index, back above its January peak levels, consistent with oil below $30/bbl); d) the impact of rising real bond yields on equity valuations; and e) the remaining Trump tail risk that some of the less savory items on his campaign agenda returns to the fore.

Looking at the day ahead, while the overriding focus will again be on election related newsflow, the diary is a little busier for data. This morning in Europe and shortly after this hits your emails we’ll get the preliminary Q3 GDP report out of Germany where the market consensus is running at +0.3% qoq. In France we’ll then get the final October CPI report before the focus turns to the UK where the CPI/RPI/PPI data docket will be released. Euro area trade data follows that before we then get the November ZEW survey in Germany and also the Q3 GDP report for the Euro area (+0.3% qoq expected). It looks set to be busy in the US this afternoon too, headlined by the October retail sales print where the market is expecting a +0.6% mom headline print and +0.5% mom ex-auto reading. Also due out will be the import price index for October, along with the NY Fed empire manufacturing survey and finally business inventories data for September. Away from the data it’s another busy day for Fedspeak with Rosengren (1pm GMT), Tarullo (2.05pm GMT), Fischer (6.30pm GMT) and Kaplan (6.30pm GMT) all scheduled to speak. It’ll also be worth keeping an eye on comments from BoE Governor Carney when he testifies to lawmakers on the November inflation report. As we highlighted yesterday, across the pond the House Republican Conference will hold its closed-door leadership election with the chatter being that Speaker Paul Ryan is likely to be re-elected.