'Cause I've been changing my mind...
I've changed my mind.

Markets looking a little tentative this morning. U.S. bonds are back and catching a bid after yesterday's break, U.S. futures are slightly lower, and the dollar remains firm.

A mixed bag in Asia.

A lack of conviction in the rotation trade should boost tech and bonds.  

We'll start with Brexit talks & the British government.

Asked about a Brexit deal yesterday, Irish foreign minister Coveney said;

“I think it’s unlikely this week... “I think it is likely to move into next week".
“If we don’t have a deal at some point next week, I think we have real problems,”
"At that point, the timelines start to get very tight - there are only 50 days left this year.”

Over to the British government...

Long-term ally of UK PM Johnson resigns in sign of tension

Prime Minister Boris Johnson’s director of communications resigned on Wednesday, a move that suggested tension at the heart of government as Britain prepares to complete its Brexit journey out of the European Union.
Lee Cain has been a loyal ally of the prime minister, working for him since he was foreign minister until 2018 and staying by his side, sometimes without pay, when Johnson resigned over predecessor Theresa May’s Brexit plans.
Cain is also close to Johnson’s senior adviser, Dominic Cummings, after working with him in the Vote Leave campaign to quit the EU, a partnership that was reborn in Downing Street when the Conservatives won a big election victory last year.
Some commentators suggested Cummings, seen as the driving force behind Johnson’s agenda on anything from Brexit and his domestic policy agenda to reforming government bureaucracy, could also resign in protest. BBC reported, however, that Cummings was likely to stay on for now.

This also led to speculation that Brexit negotiator David Frost could resign, just as Brexit talks are on the cusp.

Less than ideal. Will the EU dig in more now?  

On the topic of negotiations...

OPEC+ Focuses on Delay to Oil-Output Hike of Three to Six Months

Talks between OPEC and its allies are zeroing in on a delay to next year’s planned oil-output increase of three to six months, according to several delegates.
Saudi Arabia and Russia, leaders of the 23-nation coalition, have already indicated publicly that they are thinking twice about easing production cuts in January as the resurgent pandemic hits fuel demand.
The presidents of both Russia and the Organization of Petroleum Exporting Countries have even mentioned the option of cutting production deeper. This idea hasn’t garnered widespread support so far among other members, one delegate said.
Less than three weeks before members meet to take a final decision, the alliance is instead increasingly focused on maintaining the current cutbacks into early 2021, the delegates said, asking not to be identified as the talks are private. The alliance is keeping about 7.7 million barrels a day off-line right now, or 8% of global output.
OPEC is also having to contend with the return of supply from members that are exempt from cutting production. After a truce in its civil war, Libya has revived output to the highest level in almost a year. Traders expect Iran will resume exports in 2021 after President-Elect Joe Biden reactivates an accord on the country’s nuclear program.
But a surge of infections is triggering new lockdowns, sapping demand for transport fuels and making those hopes less feasible. The monthly report from OPEC’s Vienna-based secretariat cut projections for the amount of crude the world will need from the cartel for almost every quarter to the end of 2021. It warned the pandemic’s effects on consumption will “linger” next year.

A deeper cut looks highly improbable at this stage, and a final decision will be formally announced at the November 30th/1st December meeting.

RBNZ sticking with guidance on interest rates, senior official says

After yesterday's 'hawkish surprise' at the RBNZ, Assistant Governor Christian Hawkesby gave an interview to clarify current thinking.

The bank had said in March that it would keep the OCR unchanged for 12 months and has repeated this guidance at every meeting since, Assistant Governor Christian Hawkesby said in an interview.
“We have not changed this guidance,” he said.
Hawkesby said the economy performed better than expected in August, but still required substantial stimulus.
“Less stimulus than August but still a substantial amount, more than what we had been providing,” he said, adding this was the reason RBNZ launched the funding-for-lending programme (FLP) for banks that would offer cheaper loans to lenders and thereby stimulate the economy.
The New Zealand dollar NZD=D3 rose to the highest since March 2019 on Wednesday following the announcement.
Hawkesby said the market reaction was to economists changing their call, not an explicit change in RBNZ communication.
“A number of economists had called the OCR to be negative next year. A number of them changed their call through the afternoon, and we feel the market reaction was driven from that as opposed to the message we were giving,” he said.
RBNZ remains on the same path it has been throughout this year, which maintains a negative OCR as one of the tools it can use, he said.
“We are working really hard to get operationally ready by the end of the year so that it can be a live choice if required,” he said.

Whitbread to row back on job cuts

Positive news (maybe)!

Britain’s largest hotel group is set to reduce the thousands of job cuts it had proposed in a move that boosts hopes that the extension of the government’s furlough scheme and a breakthrough in the race to develop a Covid-19 vaccine could soften the job crisis facing the country.
Whitbread could more than halve the 6,000 job losses announced in September, The Times understands.
A consultation process ends tomorrow and the Premier Inn and Beefeater restaurants operator is expected to tell staff that a “significant number” of the job cuts will no longer be needed.
The revised number of redundancies is not confirmed, although one analyst suggested it could be well under half the original target. A spokesman for the company declined to be drawn, saying: “We are still working through the detail and potential implications.”
The move would be a rare piece of good news for the hospitality sector, which has been severely hit by the pandemic and lockdown restrictions.
Economists predicted that the government extending the furlough scheme to March and a Covid-19 vaccine being developed by Pfizer and Biontech could stop unemployment rising as much as feared.
Pantheon Macroeconomics said that a successful trial of the vaccine had brought a sustainable recovery into view and “as a result firms should be more willing to maintain headcounts in the first half of next year, even if they are trading at a loss”. It has cut its forecast for UK unemployment from a peak of 7.5 per cent next year to 6.5 per cent, well below the 8.5 per cent it hit after the 2008 financial crisis.

Looking forward to working from home?

Think of all the money you'd save on transport, the time you'd save on that commute.


Banks aren't willing to give up the super-villain role they cemented back in 2008.

Especially not Deutsche Bank...

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Looking ahead, a busier calendar with German inflation data kicking things off, followed by UK GDP, U.S. jobless claims, and U.S. CPI data.

Lots of central banker speeches, with the main event at 16:45BST when Powell, Lagarde & Bailey take part in an online panel at the ECB forum.