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Tuesday, October 4

4th Oct - Rumour of ECB-taper






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EUROPE
Renzi’s Gamble Gets Real for Investors as Euro Periphery Splits – BB
Italy pays most to borrow compared with Spain for two years * Different treatment by investors mirrors divergent risks

EU: Continuing in limbo, trying to stay on track – Deutsche Bank
The key issue on the EU policy agenda is mapping out a way forward for the EU27 after the Brexit vote. The annual State of the Union speech delivered by Commission President Juncker and the results of the informal Bratislava summit in September provide some indication, define key priorities and several specific suggestions for the next months. However, they mark but intermediate steps in a process. Further results are to be presented in March 2017.

  UNITED KINGDOM
'Global Britain' Is a Tactic, Not Just a Slogan – BB
Pound Drops to Lowest Since 1985 as Angst Builds Over Brexit – BB
Banks to Miss Out on Special Favors in May’s Brexit Plans – BB
Gideon Rachman: Theresa May walks into a Brexit trap – FT

  EUROPEAN CENTRAL BANK
Bonds: Not if, but when Draghi will change purchases – Nordea
Contemplating the case where Draghi actually stops the PSPP one could easily see this as capitulating in the battle to increase inflation. This is not likely to happen, and yet Draghi is pleading governments to boost growth, but with no easy fixes. Economists therefore almost unanimously expect an extension of the QE programme. If an extension is unavoidable the ECB has to change their buying behaviour – latest by December! This will have an impact on curves which are likely to go steeper.

QE floor removal will bull steepen bond curve – ABN AMRO
The pressure is mounting for the ECB to change the rules of its QE programme * We expect the ECB to announce at the December GC meeting that it will remove the floor from its purchases and extend the programme by six months * Removal of the floor and lowering the maturity limit will create just enough room for the ECB to fulfil its targets under the extended QE programme

ECB Said to Build Tapering Consensus as QE Decision Time Nears
– BB
Scenarios include slowing QE by 10 billion euros a month * Decision on when to start tapering depends on economic outlook
  
  DEUTSCHE BANK
Deutsche Bank's Troubles Touch a Nationalist Nerve – View / BB
Germany’s deputy chancellor attacks Deutsche Bank chief – FT
Deutsche Bank: 5 scenarios for the German bank – FT


OTHER

Guide to Markets Q4 2016 – JP Morgan

JPY: fair enough – Nordea
The JPY has stabilized in summer with the fiscal stimulus as the yield curve steepened. BoJ losing independence? USD/JPY close to "fair value". Weakening should resume, but short term strength still possible on US political risks...

The Yen in Three Charts – Marc Chandler

GBP: weakness buffers – Nordea
The GBP has failed to recover after the Brexit vote, and new fears emerge. The economy, however, has surprised on the upside, and should data hold firm further BoE action will be questioned...We expect a firmer GBP by year-end.

Quarterly Outlook: Before false gods – TF
Macro landscape remains characterised by policy easing, QE * Current structural setup implies eventual correction, but timing is uncertain * 'You can run from global macro for a while, but you can’t hide' * Precious metals, positive-yielding government debt key assets * 'Expect new year-to-date highs in a lot of the yield-heavy crosses'

Existential Threat to World Order Confronts Elite at IMF Meeting – BB
Anti-globalization backlash poses economic, market risks * World economy likened to driverless car stuck in the slow lane

A Russian Tragedy: How Deutsche Bank’s “Wiz” Kid Fell to Earth – BB
Mastermind or scapegoat, Tim Wiswell was at the heart of the bank’s $10 billion mirror-trade scandal.

There’s a Little Bit of Deutsche in Every Bank – WSJ
But if banks are so much better capitalized than before the financial crisis, why do their shares suggest they are riskier?

IMF Sees Political Discord as Major Risk to Weak Global Recovery – BB
Backlash to World Economic Order Clouds Outlook at IMF Talks – BB
Winners and Losers in the IMF's New Growth Forecasts – BB


REGULARS
Danske Daily – Danske Bank

Eye-Opener – Nordea
Higher yields, weaker GBP and Brent close to USD 51/bbl * US manufacturing is back. Yields pushed higher in both the US and the Euro area. GBP weakens on Brexit comments by PM May.

Morning Markets – TF
Incoming RBA governor Lowe's first meeting saw the central bank leave rates unchanged boosting the AUD. Elsewhere sterling and oil moved lower while the USD gained ground.

Daily Market Comment – Marc Chandler
Sterling's Slide Continues, but Greenback is Broadly Bid

Daily Market Comment – Macro Man
Another day, another downgrade

Daily Press Summary – Open Europe

Brussels Playbook – Politico

US Open – ZH
Sterling Tumbles To 31 Year Low Pushing The FTSE100 Near All Time High; US Futures Flat

Frontrunning – ZH

FX Update – TF
The post-BoJ meeting JPY strengthening never worked up a head of steam after the initial move and now we have signs that the yen is breaking down. Elsewhere RBA provides no drama at Governor Lowe’s first meeting at the helm.
        
From the Floor – TF
Theresa May's pledge for a move on Brexit no later than March 31 not only raises the prospect of a 'hard' exit but also offers little more than cold comfort to the banking sector and the City as a whole with potentially far-reaching ramifications for the economy.


FINNISH
Aamukatsaus – Nordea
Yhdysvaltain presidenttikisa kovenee * EKP:ltä odotetaan lisäelvytystä joulukuussa * Britannian syyskuun teollisuuden ostopäällikköindeksi osoittanee teollisuussektorin kasvun jatkuneen * Odotamme perjantaina julkaistavan USA:n työllisyyden muutoksen tukevan joulukuun koronnostoa