S&P Futures Slide After Chinese Stock And Bond Rout; Spain Rebounds, Dollar Drops

U.S. futures slid 0.2% as investors await a barrage of announcements including Wednesday's Fed decision, Friday's jobs report and, most importantly Trump's imminent announcement of who the next Fed chairman will be, although after the latest trial balloons, Jay Powell is now largely priced in. Asian equities edged modestly higher despite a tumble in Chinese stocks and bonds with Japan's Nikkei closing 3 points in the green, while European shares hold steady after concerns eased about the Catalan crisis with no notable developments over the weekend, pushing Spanish stocks and bonds higher.

As reported last night, the big overnight event was the tumble in Chinese stocks, which fell the most since early August, dropping as much as 1.7% before closing below 3,400, down 0.8%, and breaking the calm that persisted through the recent Party Congress, as government bonds extended a monthly rout amid concern the government will step up efforts to reduce leverage in the financial sector. Small-cap shares bore the brunt of the selling, with the ChiNext gauge tumbling as much as 2.5%.

This was the biggest drop in the Shanghai Composite since August 11:

The rout was matched by China's bonds, where 10-year TSY bond futures dropped 0.88%, the biggest tumble in over 10 months... 

... with volumes surged to the highest since Mar this year. The 10Y yield rose for the 6th consecutive day...

... increasing by the most since December, climbing 8 basis points to 3.93% as of late Monday in Shanghai, a three year high; the yield on five-year notes surged 9 basis points to 3.97% as the Chinese yield curve remains inverted.


While China’s equity market was subdued for most of this month amid state efforts to limit volatility during the 19th Party Congress, sovereign yields have been climbing. This happened despite a tsunami of liquidity: the PBOC provided more than 1 trillion yuan ($150 billion) in funding this week, the most since February. On Monday, the PBOC added a net 40 billion yuan ($6 billion) via open-market operations, and used the 63-day reverse repos - meant to cover the liquidity period through year end - for a second day.

Formerly euphoric comments about China turned on a dime, and from exuberant enthusiasm in recent week, turned to fearful pessimism what happens next:

  • "Pessimism in the bond market is spilling over to the stocks," said Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong. "Surging yields of the government bonds are resulting in worsened sentiment and higher funding costs for companies, of which smaller ones will suffer most as they rely more heavily on the market rather than bank loans for financing."
  • “Previously the market was stable because the National Team was there during the Party congress,” said Ken Chen, an analyst at KGI Securities Co. “Now the meeting is over, and October’s economic data are expected to be worse than September’s, which worries investors.”
  • Sentiment is still fragile - as the government bond yield keeps hitting new highs, market sentiment is only getting worse and worse," SWS Research analysts led by Meng Xiangjuan wrote in a note according to Bloomberg who added that "irrationality will accelerate the declines of bonds."
  • China is facing the toughest financial regulations ever," according to Huachuang Securities analysts,  who said that "the adjustment in bonds will continue and yields will climb this year. Investors should be cautious, and shouldn’t bottom fish before a clear floor appears."
  • "The surge in China’s government bond yield last week and expectation for tighter financial regulation have triggered concern of tighter liquidity,” said Qiu Zhicheng, a strategist at ICBC International Research Ltd. in Hong Kong. “This prompted the slide in small caps as their valuations are still expensive, and thus they are more sensitive to changes in liquidity conditions

Short-term funding markets were also impacted, with the overnight repo rate rising 2 basis points to 2.78%, while the 7-day repo jumped 10 bps to 2.96%. One-year interest-rate swaps rose 3 basis points to 3.64% while the
onshore yuan climbs for the first time in four days, up 0.14% at 6.6425 per dollar.

China's weakness spilled to Hong Kong, where equity indexes reversing gains and closed down 0.4%, although other Asian markets were mostly immune, with Australia's  200 (+0.4%) benefiting from the latest record highs in the US and the Nikkei 225 rising +0.1% with the energy sector leading in Australia after Brent crude rose back above USD 60/bbl for the first time since July 2015, while gains in Japan were later pared due to a firmer JPY. Taiwanese Apple suppliers coat-tailed on the tech giant’s recent strength due to overnight reports of strong iPhone X demand. 10yr JGBs were mildly higher amid an indecisive risk tone in Japan and with the BoJ also active in the belly to short-end of the curve.

Japan’s equity benchmarks were little changed after a rally that saw the Nikkei 225 Stock Average close above 22,000 for the first time since 1996 as declines by defensive stocks cancelled out gains by technology companies. The Topix index earlier declined as much as 0.5%, with banks, pharmaceuticals and retailers the biggest drags. More than 800 Japanese companies are expected to report results this week. “Profit-taking after stellar gains is possible,” said Nader Naeimi, who helps manage about $110 billion at AMP Capital Investors Ltd. “The U.S. dollar has had a strong run recently and a short-term pull-back is likely. With that, any short-term strength in the yen is triggering profit-taking in Japanese exporters.” The Topix remains near a 10-year high and above its 20-day and 50-day moving averages. A technology-related gauge was the biggest boost to the benchmark after the Nasdaq 100 rose to a record Friday on strong earnings from Amazon.com Inc. and Alphabet Inc. Komatsu Ltd. gained 3.5 percent after boosting its full-year operating profit forecast 39 percent.

European equities were subdued, with the Stoxx Europe 600 Index nudging lower, though markets showed little sign of distress as the Spanish government began the process of reasserting control after Catalonia’s declaration of independence. The country’s stocks outperformed and bonds gained, along with debt of other peripheral European nations after S&P Global ratings upgraded Italy on Friday. Spain's IBEX 35 led its peers, higher by 1.5%. Spanish sentiment was bolstered by the recent announcement of fresh Catalan elections on December 21st with the latest polling data suggesting that support for the independence push is beginning to wane.

Italian BTPs rallied after Friday’s upgrade of Italian sovereign rating by S&P. USD grinds lower against G-10 with focus on month end and positioning before potential announcement on Fed Chair this week. Bunds push higher after German regional CPIs suggest national reading could be below consensus, USTs dragged higher in tandem with 10Y yield back below 240bps, short end of UST curve flattens

On a sector breakdown, energy names outperform after Brent reclaimed USD 60.00/bbl to the upside, while UK housing names notably underperform amid a slew of downgrades at Barclays. Choppy, fickle and apprehensive trade in Bunds, which were marked up initially on the back of firmer US Treasuries, but swiftly hit offers as Eurozone peripheral bonds extended their post-ECB rally (Spanish Bono yield down 6bp and closer to 1.5% vs 1.80%+ at the recent peak) and intraday chart traders instigated shorts looking for a pull-back. However, the 10 year German debt future found bids at 162.25 and has managed to climb back above parity – softer state CPIs perhaps lending a hand.

In FX, EM currencies advanced as the dollar weakened on speculation U.S. President Donald Trump may name Jerome Powell, seen as a decidedly dovish candidate, as the next Fed chairman. “Asian currencies opened higher as the dollar pared back its recent rally after a report that the more dovish Powell is the top pick for the next Fed’s chair,” said Singapore-based Ken Cheung, senior FX strategist at Mizuho Bank. “Meanwhile U.S. equities at record high with a strong performance in the technology sector boosted regional sentiment.” The New Zealand dollar slid after Finance Minister Grant Robertson indicated an employment objective may need to be included in the central bank’s mandate which could potentially result in lower interest rates. The Bloomberg Dollar Spot Index declined for the first day in three. Key events this week include a possible announcement by U.S. President Donald Trump on the next Fed chair, policy decisions by the FOMC and Bank of Japan, and the start of Trump’s visit to Asia.

The dollar was also lower versus most of its G-10 peers and down by 0.2% as of 10:00am London according to the Bloomberg Dollar Spot Index; investors are now focusing on the expected announcement by Trump on the Fed’s next chair, a House committee’s release of a tax bill on which few details are known, and the FOMC meeting on Nov. 1. Before the release of German price-pressures data and the Fed’s preferred gauge of inflation - the core PCE - due later Monday, hedge funds took profit in euro-dollar shorts opened after the ECB decision on Thursday. Trailing stops extend all the way to 1.1660, traders in Europe and London say.

Investors will watch some of the world’s most influential policy makers this week for more clues about quantitative easing and the path of monetary tightening, with the Bank of Japan first up on Tuesday, followed by the Fed on Wednesday and the Bank of England on Thursday. Of those, only the Bank of England is expected to hike this time round. Meanwhile, speculation continues over who Trump will choose as the next Fed chair, with Governor Jerome Powell said to be the front-runner.

Below, courtesy of Bloomberg, are some of this week's key events: Trump has said he’ll reveal his choice to lead the Fed by Friday; The U.S. central bank’s next rate decision is on Wednesday, with economists expecting policy makers to hold rates for now and to increase them at the December meeting; The U.S. October payroll report comes out Friday. On Monday, personal income and spending data comes out, which features the Fed’s preferred inflation gauge; Trump starts an 11-day trip to Asia, his first as president, on Friday. Trade and security issues — particularly North Korea — will probably be in focus; A probable BOE rate hike on Thursday will be the first in a decade; Euro-area GDP growth is seen slowing, while GDP reports from France and Spain and national CPI prints from the big four euro-zone economies are also among data piling up this week; The slew of earnings releases will culminate with Apple Inc. results.

Bulletin headline summary from Ransquawk

  • IBEX leads EU bourses higher following the announcement of Catalonian snap-election
  • USD gives back some of Friday’s gains ahead of key risk events in the form of NFP, FOMC, tax reform and next Fed Chair
  • Looking ahead, highlights include German National CPI, US PCE and personal consumption

Market Snapshot

  • S&P 500 futures down 0.2% to 2,574.00
  • VIX Index trading 5% higher at 10.29
  • STOXX Europe 600 down 0.09% to 393.08
  • MSCI Asia up 0.3% to 167.78
  • MSCI Asia Ex Japan up 0.4% to 548.65
  • Nikkei up 0.01% to 22,011.67
  • Topix down 0.01% to 1,770.84
  • Hang Seng Index down 0.4% to 28,336.19
  • Shanghai Composite down 0.8% to 3,390.34
  • Sensex up 0.4% to 33,304.02
  • Australia S&P/ASX 200 up 0.3% to 5,919.08
  • Kospi up 0.2% to 2,501.93
  • German 10Y yield rose 0.5 bps to 0.388%
  • Euro up 0.2% to $1.1630
  • Brent Futures up 0.5% to $60.72/bbl
  • Italian 10Y yield unchanged at 1.682%
  • Spanish 10Y yield fell 5.9 bps to 1.527%
  • Gold spot down 0.3% to $1,270.04
  • U.S. Dollar Index down 0.2% to 94.69

Top Overnight News from Bloomberg

  • Charges possible on Monday against one or more people will be the first public glimpse into Special Counsel Robert Mueller’s six-month probe of Russian meddling in the 2016 presidential election and possible collusion by Donald Trump’s campaign
  • Bowing to concerns from Republican House members in high-tax states, the chamber’s chief tax writer said he’ll preserve a federal income-tax break for property taxes
  • Akzo Nobel NV is considering a merger with U.S. rival Axalta Coating Systems Ltd. in a bid to keep the embattled Dutch paintmaker independent and create a transatlantic specialty coatings giant
  • The 6,000 job cuts announced last week at Nordea Bank ABare just a down payment for an industry facing radical overhaul, says Chief Executive Officer Casper von Koskull
  • HSBC Holdings Plc’s $100 billion bet on Asia is bearing fruit, driving its third consecutive increase in quarterly revenue just months before Chief Executive Officer Stuart Gulliver hands the reins to John Flint.
  • Mnuchin: Fed decision is focused on choosing just Fed Chair, not the Vice Chair also
  • German Regional CPIs y/y (National consensus 1.7%): Saxony 1.8%; Hesse 1.6%; Bavaria 1.5%; NRW 1.6%; Baden Wurt. 1.5%
  • Spain: El Mundo poll shows pro-independence bloc would lose majority in new Catalan elections, reaching 65 seats compared to 68 needed for majority; separate poll shows support for independence falling to 33.5%
  • ECB’s Coeure: hopes this QE extension "will be the last"; short-term rates set by the ECB to remain very low for "quite some time"; long-term rates are set by the markets, these can be "expected to rise"
  • Spiegel: Merkel Bloc considering splitting Finance Ministry, responsibility for the Euro and international finance will move to the economy ministry controlled by the Merkel bloc
  • The Senate Foreign Relations Committee has scheduled a hearing with Defense Secretary Jim Mattis and Secretary of State Rex Tillerson to explore whether expanding U.S. operations to fight terrorism requires new Congressional authorization for the use of military force
  • Novartis Agrees to Buy Advanced Accelerator for $3.9 Billion
  • German Chancellor Angela Merkel meets leaders of the Free Democrats and Greens in the latest round of exploratory talks on forming a government with her Christian Democratic-led bloc.
  • GOP Leader Offers Little Clarity on House Bill’s 401(k) Plan
  • GE, Saudi Electricity Co. in Power Sector Research Pacts
  • Colombian President Juan Manuel Santos, Ukrainian Prime Minister Volodymyr Hroisman, and Canadian Minister of Foreign Affairs Chrystia Freeland are among speakers at the International Economic Forum of the Americas. In Toronto through Nov. 1.

Asian equity markets were slightly mixed amid a deluge of earnings and with the region tentative at the start of a risk-packed week. An initial positive tone was observed after Friday’s fresh records on Wall St where sentiment was inspired by a surge in the tech giants, stronger than expected GDP and reports that President Trump was leaning towards Powell for the Fed chair role. This benefitted the ASX 200 (+0.4%) and Nikkei 225 (+0.1%) at the open in which the energy sector led in Australia after Brent crude rose back above USD 60/bbl for the first time since July 2015, while gains in Japan were later pared due to a firmer JPY. Taiwanese Apple suppliers coat-tailed on the tech giant’s recent strength due to strong iPhone X demand, while Hang Seng (-0.2%) traded indecisive and Shanghai Comp. (-0.8%) underperformed on a retreat below the 3,400 level amid broad mainland weakness. Finally, 10yr JGBs were mildly higher amid an indecisive risk tone in Japan and with the BoJ also active in the belly to short-end of the curve. PBoC injected CNY 70bln via 7-day reverse repos, CNY 30bln via 14-day reverse repos and CNY 50bln via 63-day reverse repos. PBoC set CNY mid-point at 6.6487 (Prev. 6.6473). BoJ Governor Kuroda is likely to stay on for another 5-year term, according to reports.

Top Asian News

  • Ex-Man Group Trader Raises $70 Million for Japan Equity Fund
  • China Arrests N.Koreans Over Plot to Kill Kim’s Nephew: JoongAng
  • Posco Seeks Up to $197m Selling Nippon Steel Shares: Terms
  • Nintendo Lifts Outlook After Accelerating Switch Production
  • Kobe Abandons Net Income Forecast as Scandal Blurs Outlook

European equities have kicked the week off with little in the way of firm direction with the exception of the IBEX 35 (+1.5%) which leads its peers. Sentiment for Spanish assets has been bolstered by the recent announcement of fresh Catalan elections on December 21st with the latest polling data suggesting that support for the independence push is beginning to wane. On a sector breakdown, energy names outperform after Brent reclaimed USD 60.00/bbl to the upside whilst UK housing names notably underperform amid a slew of downgrades at Barclays. Choppy, fickle and apprehensive trade in Bunds, which were marked up initially on the back of firmer US Treasuries, but swiftly hit offers as Eurozone peripheral bonds extended their post-ECB rally (Spanish Bono yield down 6bp and closer to 1.5% vs 1.80%+ at the recent peak) and intraday chart traders instigated shorts looking for a pull-back. However, the 10 year German debt future found bids at 162.25 and has managed to climb back above parity – softer state CPIs perhaps lending a hand. A new session high has subsequently been posted at 162.56, and threatening reported buy-stops on a break. UK Gilts have plotted a similar course between 124.03-124.35, with attention on BoE super Thursday and an anticipated 25 bp hike. Back to USTs, upside interest noted via options with 126-00 call said to have been bought (vs 124-29 in the underlying Dec contract at best).

Top European News

  • Poll Shows Catalan Independence Falls to 33.5%: El Mundo
  • Spain’s Economy Maintained Momentum Before Crisis in Catalonia
  • Continental in Talks to Buy Argus Cyber for $400M: TheMarker
  • Novartis’ Planned AAA Deal Is Good Fit, Expensive, Vontobel Says

In currencies, the USD has given some of its ground back against its major counterparts with the USD index marginally lower (-0.5%) in what is set to be a big week for the greenback with highlights including NFP, FOMC, potential tax reform and Trump is set to unveil his selection for the Fed Chair. GBP traders are looking ahead to ‘Super Thursday’ with markets pricing in a 85-90% chance of a hike later this week with little in the way of tier 1 data between now and then. NZD underperforms with the currency pressured amid cross related selling, where AUD/NZD briefly reclaimed the 1.12 level, while NZD/JPY took a slight dip below 78.00.

In the commodities complex, prices have been relatively rangebound with crude prices taking a breather from last week’s ascent in which WTI briefly broke above USD 54/bbl and Brent reclaimed the USD 60/bbl for the first time since 2015. Gold prices also lack firm direction ahead of this week’s FOMC meeting and NFP jobs data, while copper has also consolidated amid a somewhat indecisive risk tone in the region.

US Event Calendar

  • 8:30am: Personal Income, est. 0.4%, prior 0.2%; Personal Spending, est. 0.9%, prior 0.1%
    • Real Personal Spending, est. 0.5%, prior -0.1%
    • PCE Deflator MoM, est. 0.4%, prior 0.2%; PCE Deflator YoY, est. 1.6%, prior 1.4%
    • PCE Core MoM, est. 0.1%, prior 0.1%; PCE Core YoY, est. 1.3%, prior 1.3%
  • 10:30am: Dallas Fed Manf. Activity, est. 21, prior 21.3

DB's Jim Reid concludes the overnight wrap

Relative to what occurred in the dull summer, it does feel like bond markets have been having a mini baby like tantrum over the last three or four weeks. Indeed the US bond volatility MOVE index hit 5 month highs on Thursday even if that only puts us back to the bottom of its historical range pre the exceptionally becalmed summer. Last week saw a 11.5, 11.7, 14.1, 15.3, and 13.8bp range (including intra-day) for 10yr Treasuries, Bunds, Gilts, Italian and Spanish Government bond yields. However, with the ECB effectively dampening near-term domestic bond volatility after their decision on Thursday and helping Bunds out-perform USTs by 9.1bp on the week (10yr), it'll be left to the US to provide most of the vol if there is going to continue to be some. For now there is still some potential for this to happen.

Before the week is out we should know 1) who the next Fed Chair will be (Powell increasingly favourite), 2) whether the US tax reform bill moves to the next step with the House Ways and Means committee set to publish legislation on Wednesday, 3) whether Payrolls will see a large post storms bounce-back on Friday (+310k expected) and if average hourly earnings stays elevated, 4) if PCE (the Fed's preferred inflation gauge) today shows any sign of life, 5) if there are any signs of firming up a December hike probability after the FOMC meeting on Wednesday (no press conference) and 6) whether there is any political fallout from the first charges from special counsel Mueller's probe into Russia's involvement in last year's Presidential election. Reports suggest we may see some charges today.

Elsewhere this week we are likely to see the first BoE rate hike for a decade on Thursday, a BoJ meeting tomorrow, German flash CPI today with the same for the Euro area tomorrow, final PMIs (and US ISM) in the second half of the  week and 136 S&P 500 (Apple Thursday) and 58 Stoxx 600 company earnings due.

Back on Friday, President Trump was reported as leaning towards Fed Governor Powell as the next Fed Chair as per sources familiar to the matter (Bloomberg). The potential appointment of the less hawkish Powell likely contributed to the mini bond rally, with core bond yields down 3-5bp (UST 10y -5.5bp; Bunds -3.2bp; Gilts -3.5bp). Over the weekend the WSJ also followed up with a similar article on Saturday afternoon suggesting Powell was leading the race. Elsewhere, Treasury Secretary Mnuchin noted that Trump is unlikely to nominate two fed officials at the same time as “we’re focused on the Fed Chair decision. That’s really the focus at the moment”. Either way, we should find out Trump’s final decision sometime before this Friday.

For those who missed it, DB’s Peter Hooper noted that a Powell-led Fed makes more sense, in part as i) he would provide the highest degree of continuity to current policy, ii) he has had c5 years of experience working inside the Fed with a reputation as a consensus builder, and iii) while not a PHD trained economist, he has learned the trade well, as evidenced by his speeches and Q&A performance.

T urning to Spain where tensions have escalated as both sides stepped up their initiatives. On Friday, the Catalonia’s regional parliament voted in favour of independence, with Catalan President Puigdemont calling for “democratic opposition” and peaceful resistance. On the other side, Spain’s senate has approved the implementation of Article 155 measures, allowing Spanish PM Rajoy to retake control of the region, where he has named a new police chief, dissolved the Catalan Parliament and called new regional elections for 21 December. In response, Spain’s equities market (IBEX -1.45%) and bonds (10y +5.2bp) both underperformed peers. Then over the weekend, ousted Catalan VP Junqueras noted “the Catalan Republic has been born” and they will work on their independence roadmap in the coming days. On the other side, 300k to 1m demonstrators (depending on the source) marched through streets of Barcelona calling for unity, shouting “Viva Espana” and “Puidgemont in prison”.

Elsewhere, reactions from offshore were similar to before, with EU President Tusk noting that nothing has changed in the policy towards Catalonia and that Spain “remains our interlocutor”, while NATO secretary Stoltenberg noted that the “Catalonia issue must be resolved within Spain’s constitutional order”. Finally, the El Mundo reported that opinion polls suggest Catalan secessionists could win 65 seats in a new election, but fall short of the 68 seats needed for new majority.

DB’s Marc de-Muizon noted that Spain deserves some attention as it has one of the largest negative net international investment positions (NIIP). The composition of the NIIP is worse than the smaller peripherals because relatively less is financed by the official sector, making it more vulnerable to capital flight. For more detail, refer to link.

This morning in Asia, markets are trading slightly weaker. The Kospi (+0.08%) is up marginally, but the Hang Seng (-0.03%), Nikkei (-0.02%) is down and Chinese bourse are down 0.6% to 1.6% as we type, partly impacted by increased concerns that the government may intensify its deleveraging campaign. Domestic bond yields are around 4bps higher and around 3 year highs. Elsewhere, UST 10y bond yields are trading slightly firmer (-1bp) this morning.

Quickly recapping other markets performance on Friday. US equities strengthened further to record highs, led by a rally in the Nasdaq (+2.20%; up the most since March 2016) following sound results from Amazon (shares up +13.2%), Microsoft (+6.4%) and Alphabet (+4.3%). The S&P 500 (+0.81%) and Dow (+0.14%) also closed higher, with gains led by the tech and consumer discretionary sectors, with partial offset from consumer staple names. Across Europe, core markets were broadly higher with the Stoxx (+0.55%), DAX (+0.64%) and FTSE (+0.25%) up slightly, while peripherals such as Spain’s IBEX (-1.45%) and Italy’s MIB (-0.62%) underperformed. The VIX index dropped 13.3%  to below 10 (9.80), the first time in a week.

Key currencies were little changed, with the US dollar index up 0.32% following a solid 3Q GDP beat (3% qoq vs 2.6% expected), while the Euro and Sterling softened 0.37% and 0.25% respectively. In commodities, WTI oil rose 2.39% to $53.90/bbl, partly supported by expectations that OPEC may extend its supply cuts beyond March 2018. Precious metals were slightly higher (Gold +0.50%; Silver +0.44%) while other base metals weakened (Copper -1.23%; Zinc -0.62%; Aluminium -0.43%).

Away from the markets, ECB’s executive board member Coeure noted that “I’m hopeful that this (QE extension) will be the last extension”. On rates, he reiterated that the ECB’s policy “will remain very accommodative” and that short term rates will “remain low for quite some time, well past September 2018”, but long term rates “can be expected to rise” along with the global recovery. On broader risks, he noted that “there’s no financial bubble at Euro area level, but there are price tensions on real estate markets in some countries”.

Over in the US, President Trump’s job approval rating has declined to the lowest point of his presidency. As per a poll by NBC news & WSJ, 38% of Americans approve of Trump’s job performance, down 5ppt since September, while 58% disapprove. His approval rating also lags other former Presidents at similar stage of their presidency, with George W. Bush at 88%, Obama at 51% and Clinton at 47% in the autumn of their first year as president. Perhaps this will bring a greater urgency and focus on President Trump to deliver some sort of tax reforms by end of the year as planned.

Staying in the US and turning to the earnings season, which we are now half way through. DB’s asset allocation strategists note that 75% of companies have beat on EPS (vs. historical average of 73%). They further highlight two notable aspect of this reporting season: 1) the number of companies providing positive guidance climbed to a 6-year high, 2) analyst estimates for 4Q have remained steady over the last two weeks, despite a fairly high bar of 12% yoy EPS growth.

We briefly wrap up with other data releases from Friday. In the US, 3Q GDP beat expectations at 3.0% qoq (vs. 2.6% expected; 3.1% previous) - marking the strongest consecutive quarters of growth in GDP since December 2014. The 3Q personal consumption also beat at 2.4% (vs. 2.1% expected). Elsewhere, both 3Q core PCE (1.3% qoq) and the university of Michigan consumer confidence were in line (100.7), but the latter still represent the highest confidence level since January 2004.

In France, October consumer confidence was a tad softer at 100 (vs. 101 expected) and back to pre-election levels, while Germany’s import price index beat expectations at 0.9% mom (vs. 0.5% expected) and 3.0% yoy (vs. 2.6% expected). In Spain, retail sales was stronger than expected (2.1% yoy vs. 1.9% expected) in September and mortgage approvals also increased 29.1% yoy (vs. 32.9% previous) in August.