Filed Under:  Technical Analysis

Spain Central govt says Catalan did not properly reply to request on independence

17th October 2017   ·   0 Comments


– Catalonia’s leader failed to say whether he declared the region independent from Spain; raising the possibility of a reprisal in the coming days by the central government

– Austrian parliamentary election has conservative People’s Party keeping populism alive; led by 31-year-Kurz; wants tougher rules on immigration; Austria’s new government stands against Macron/Merkel EMU reforms



– China Sept CPI M/M: 0.5% v 0.3%e; Y/Y: 1.6% v 1.6%e; PPI Y/Y: 6.9% v 6.4%e

– China Sept New Yuan Loans (CNY): 1.27T v 1.23Te

– PBOC Gov Zhou saw H2 GDP growth reaching 7% driven by rapid growth in household consumption (**Note: China’s economy grew by 6.9% y/y in each of the first two quarters of 2017. Q3 data is expected on Thursday, Oct 19th)

– BoJ Gov Kuroda: Reiterates that BoJ will continue to pursue aggressive monetary policy easing. Current monetary policy can and should continue to achieve inflation target


– Some ECB members said to identify €2.5T limit for QE based on current rules. some officials believe there are enough bonds in the market to cut monthly purchases to €30B starting in Jan 2018 and lasting until Sept. General Council said to be deeply divided on whether to name an end date for program

– ECB President Draghi reiterated have to be patient and persistent with our monetary policy; confident that wages and inflation will gradually rise in self-sustaining manner

– Bank of England (BOE) Gov Carney reiterated view that might be appropriate to raise rates in the coming months

– UK PM May’s Office confirmed she will meet with EU officials Barnier and Juncker on Brexit on Monday

– Austria national election results: People’s Party (OVP) headed by Sebastain Kurz received 31.4% of the votes; results show that populism is not dead


– Fed Chair Yellen: New normal will be lower interest rates than we’ve seen historically; biggest surprise in the US economy this year has been inflation. Ongoing strength of the economy will warrant gradual increases in short-term interest rates (didn’t specify when the next rate increase would come)

– Fed’s Rosengren (moderate, non-voter): 3-4 rate hikes next year will probably be appropriate; may need to overshoot on rates if unemployment is below 4% while inflation reaches target

– White House econ advisor Cohn: strong, consistent economic growth is best insulator against financial crisis


– OPEC Sec Gen Barkindo: Have seen progressive improvement in compliance levels

– Kuwaiti Oil Min: Too early to talk about extending supply cut agreement but we are at the right direction

Economic Data

– (DE) Germany Sept Wholesale Price Index M/M: 0.6%e v 0.3% prior; Y/Y: 3.4% v 3.2% prior

– (NO) Norway Sept Trade Balance (NOK): 9.2B v 12.4B prior

– (IN) India Sept Wholesale Prices (WPI) Y/Y: 2.6% v 3.3%e

– (EU) Euro Zone Aug Trade Balance (Seasonally Adj): €21.6B v €20.2Be; Trade Balance NSA (unadj): €16.1B v €23.3Be

Fixed Income Issuance:

– None seen



Indices [Stoxx600 +0.20% at 392.2, FTSE +0.2% at 7546, DAX +0.20% at 13018, CAC-40 +0.3% at 5366, IBEX-35 -0.5% at 10203, FTSE MIB +0.1% at 22436, SMI -0.1% at 9305, S&P 500 Futures flat]

Market Focal Points/Key Themes:

European Indices trade mostly higher this morning with the exception of the the Spanish IBEX continued to be weighed down on uncertainty over Catalonia independence.
Leading advancers include TopDanmark after raising outlook and Shire which outperforms in the UK on reports activist fund urging sale or spin off. To the downside, Siemens Gamesa falls sharply after cutting its outlook while Convatec trades over 20% lower after cutting outlook and Q3 update.
Today in the US notable earnings include Netflix after the close as earnings are due to pick up during the week.


– Consumer discretionary [ Teleperformance [RCF.FR] -1.3% (Q3 results, strategy update)]

– Industrials: [Kuehne & Nagal -4% (9M Results), Husqvarna [HUSQB.SE] -5% (Cuts outlook) ]

– Financials: [TopDanmark [TOP.DK] +2.7% (Raised outlook)]

– Technology: [SLM Solution [AM3D.DE] +4.1% (Awarded major order)]

– Healthcare: [ Shire PLC [SHP.UK] +2% (Said that activist fund Sachem Head Capital Management is urging Shire to explore a sale or spin-off some of its assets), ConvaTec Grp [CTEC.UK] -21% (Trading update, cuts outlook)]

– Energy: [ Siemens Gamesa [SGRE.UK] -7.7% (Cuts outlook)]


– Catalan President Puigdemont response via letter to PM Rajoy said to suspend independence mandate and seek dialogue. Defended claim to independence; called for Spain to end its repression dialogue. Would not respond with a yes or no on independence request as required by Spanish PM Rajoy

– Central Spanish Govt said not to see the Catalan response as appropriate

– Spain Deputy PM Saenz: Catalonia President Puigdemont did not reply to request; 2nd deadline has been activated (as speculated). Region has until Thursday, Oct 19th

– Italy could hold parliamentary elections on March 4th 2018 (**Insight: Elections in Italy are due by May 2018)

– France Fin Min Le Maire reiterated French gov’t would stick to EU’s 3% budget deficit limits

– Sweden Central Bank (Riksbank) Dep Gov Ohlsson reiterates view that inflation target was important. Expansionary policy was a prerequisite for inflation to be close to target

– Iraq Military Commander: Kurds agree to hand over control of all north oil company facilities to Iraqi forces

– Iraqi forces claim to have recaptured refinery in Kirkuk (Kurds deny claim)


EUR/USD was softer as the Catalan situation has yet to be resolved. Also the recent vote out of Austria showed that populism was not dead. Pair holding below the 1.18 level for the early part of today’s session. Focus looking ahead to next week ECB decision see the central bank seen announcing the bulk of its decisions on QE tapering

– GBP/USD was higher on reports that UK PM May planned to meet with European Union officials in Brussels in the hope of ending the Brexit stalemate. GBP/USD higher by 0.1% at 1.3296 area with e EUR/GBP cross at 0.8867

Fixed Income

– Bund futures trade at 162.08 up 1 tick as some analysts lower their range for the yield on the 10-year German government bond to range from 0.40-0.45%, down from 0.45-0.50%. Continued downside targets 161.53 while upside resistance stands initially at 162.50, followed by 163.27.

– Gilt futures trade at 123.75 down 17 as as PM May heads to Brussels to personally intervene in deadlocked Brexit negotiations and BOE Gov Carney reiterates intentions to raise rates. Continued downside eyeing 123.26. Upside targets 124.90 then 125.24.

– Monday’s liquidity report showed Friday’s excess liquidity rose to €1.820T from €1.807T and use of the marginal lending facility fell to €118M from €89M.

– Corporate issuance saw EM sovereign issuance climb to a record and soared above $200 Billion

Looking Ahead

– UK PM May to meet EU’s Barnier and Juncker in Brussels

– 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0B in 6-month bills

– 06:00 (IE) Ireland Aug Trade Balance: No est v €4.2B prior

– 06:00 (IT) Italy Cabinet meets on 2018 Budget law

– 06:25 (BR) Brazil Central Bank Weekly Economists Survey

– 06:45 (US) Daily Libor Fixing

– 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

– 07:30 (TR) Turkey TCMB Survey of Expectations

– 08:00 (PL) Poland Aug Current Account: -€0.7Be v -€0.9B prior; Trade Balance: -€0.5Be v -€0.6B prior

– 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

– 08:05 (UK) Baltic Dry Bulk Index

– 08:30 (US) Oct Empire Manufacturing: 20.5e v 24.4 prior

– 08:30 (CA) Canada Aug Int’l Securities Transactions(CAD): No est v 24.0B prior

– 08:50 (FR) France Debt Agency (AFT) to sell combined €4.3-5.5B in 3-month, 6-month and 12-month Bills

– 09:00 (BE) Belgium Aug Trade Balance: No est v -€0.3B prior

– 09:30 (EU) ECB announces Covered-Bond Purchases

– 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

– 10:30 (CA) Bank of Canada (BOC) Q3 Loan Officer Survey: No est v 2.1 prior

– 11:30 (US) Treasuries to sell 3-Month and 6-Month Bills

– 14:00 ECB’s Lautenschlaeger (Germany)

– 16:00 (US) Weekly Crop Progress Report

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