Slightly negative markets yesterday with volumes 40% below the average as there is a temporary lack of catalysts and it was Veterans day in US (Debt market closed).

Trump is expected to announce this week to delay tariffs on EU automobiles. Just to remind you the EU threatened to retaliate with tariffs on $39Bln of American goods. Tonight he is due to speak at the Economic Club of New York.

 It was notable the strength on Gbp after the news that Nigel Farage said his Brexit Party will not contest the 317 seats won by the Conservatives in 2017 to avoid damaging Boris Johnson’s efforts to secure a parliamentary majority to end the impasse over leaving the European Union. In this way he has boosted PM Johnson chance of winning a majority at next elections.

GDP figures showed UK Gdp returned to growth in third quarter avoiding a technical recession, but figures were weaker than expected (+0.3% vs +0.4% expected). Beneath the headline gain, widespread strength in services activity continues to buttress activity amid a manufacturing slowdown. A negative outlook downgrade from Moody’s on Friday highlighted those challenges, and it is clear that clarity on the Brexit front is needed before markets will breathe any sigh of relief on the economic front.

We are starting to have some data about the 1st week of QE from the ECB and we can definitely see that they have started with a strong pace as the have bought almost 2.8bn€ of corporate bonds vs much lower estimates. Analysts have predicted that the ECB would have allocated roughly 15% of its purchases vs corporate debt (in line with previous QEs) which would have meant roughly 3bn€ per month, not per week!

Some analyst on street (MS, BNP,Citi) are saying that if OPEC+ will not cut production in December, then crude prices may tumble almost 30% due to oversupply in 2020. Despite this, it seems that several members will decide not to cut production.

Gold has hit a 3-month low briefly touching 1450$ and yesterday there possibly some “stops” trigging in as over 3mln ounces were exchanged in just 30 minutes, more than 3x the normal daily average.

 

 

As a remainder, we suggested to take some profit on Gold at the beginning of September but since is now down already 5.5% we would start increasing it on the downside with the idea that it should not break below 1400$ as Global Central Banks are continuing to buy. It is however a very crowded asset and the chart underneath is showing the number of future contracts long Gold. We might see some further stops if it will break 1450$.

 

 

Several Earnings today in Europe among which Vodafone, Infineon, Linde. On Macro, important Germany and Euro aggregate ZEW Survey at 11 AM.