The Opening Belle

September 30, 2020 • Estimated Reading Time: 10 minutes

Trainwreck, Mayhem, Chaotic, Explosive.

Circus, Unintelligible Jumble

Those are some of the words used to report on the 'debate'.

My 'hot take'

Two septuagenarians (I know words, I have the best words) shouted over each other, traded insults for 90 minutes and I'm glad I didn't stay up (or get up early) to watch it.

Really, the only thing that happened was the thing that didn't happen.

Neither of them cocked anything up completely, Biden was definitely coherent and capable, and we learnt nothing new about either candidate or their policies.

The only thing that seems highly probable at this stage is that the election result will be contested beyond November the 3rd.  

Earlier today, Reuters noted a muted response in the betting markets;

For whatever its worth, the betting markets barely budged since the debate began.

In the PredictIt market, Biden bets got a 1 penny bump to 59 cents, while Trump lost a penny to 44 cents.

Which means, that similar to financial markets, the debate didn't appear to change too many people's minds.

On Betfair;

Via @themarketear

Betting markets clearly chalking this up as a slight Biden victory.  

I will post links to reports from Reuters & Politico at the bottom of the page.

Risk Sentiment

As you would expect, the uncertainty and heightened prospects of a contested vote has weighed on risk sentiment overnight.

U.S. Futures are in the red

European markets on the back foot.

 Sliding post-debate.

European Opening Calls:#FTSE 5879 -0.31%#DAX 12757 -0.53%#CAC 4806 -0.55%#AEX 547 -0.42%#MIB 18954 -0.56%#IBEX 6678 -0.54%#OMX 1829 -0.41%#STOXX 3194 -0.62%#IGOpeningCall— IGSquawk (@IGSquawk) September 30, 2020 

An official gauge of activity in China’s manufacturing gained in September on stronger production and orders, suggesting the recovery momentum remained solid, while activity in the services sector also strengthened.

  • The manufacturing purchasing managers’ index in September rose to 51.5 from 51 a month earlier, according to data released by the National Bureau of Statistics Wednesday, beating the 51.3 estimate in a Bloomberg survey.

  • The non-manufacturing gauge rose to 55.9 from August’s 55.2. That’s better than the median forecast and well above 50, which is the level that divides improvement from deterioration from the previous month.

  • “Although overall manufacturing demand has improved, the recovery of industries is uneven,” according to Statistics Bureau Economist Zhao Qinghe. More than half the companies in the textile, clothing and apparel, wood processing and other manufacturing industries said demand was insufficient, and with the global epidemic not yet fully and effectively controlled there are still uncertainties in China’s imports and exports, he said.

  • A sub-index of new export orders for factories climbed to 50.8, the first time it’s been in expansion territory this year. New orders was also higher at 52.8.

  • A sub-index of manufacturing employment rose slightly to 49.6, while non-manufacturing employment quickened to 49.1.

  • The construction PMI was above 60 for a third straight month, indicating that infrastructure spending is increasing, the NBS said.

  • A separate indicator from Markit showed a slight slowdown for manufacturing companies, with the PMI dropping to 53 from 53.1. That survey is more focused on smaller firms and exporters than the official data.

  • A set of early indicators showed China’s economic rebound flattened out in September, weighed down by lackluster home and car sales, a weaker stock market and worsening business confidence. That signals China’s recovery momentum could further fade if consumption fails to provide enough support.

The Caixin/Markit PMI corroborated the Chinese official data.

Stimulus Talks Ongoing 

All much the same, with reports that a counter-offer of $1.5-1.6 trillion is incoming.

In news that should surprise no-one

The European Union’s historic 1.8 trillion-euro ($2.1 trillion) budget and stimulus package is in danger of being delayed due to a disagreement among member states about how to enforce the adherence to democratic values, according to a spokesman for the German government.

“We observe with concern that the number of different blockades in the budget negotiations seems to be increasing rather than decreasing,” said the spokesman of the German presidency of the EU. “A delay of the EU budget and the recovery fund is becoming increasingly likely.”

This is exactly what I wrote about here;

There's also a big ECB event today.

Please, control your excitement.

Here's the wanted poster.

Here is the schedule.

Aside from the usual dovish commentary that we always look out for, the debates themselves could throw up some interesting snippets regarding changes to the ECB's mandate and policy tools.

No text will be released for the speeches so reports and headlines will roll in throughout the day.

Plenty more on the calendar today.

Focus this morning will be on the preliminary inflation data from France & Italy, plus German employment data and retail sales.

The U.S. ADP employment data is highly volatile, but will still be watched for 'clues' on the NFP figure on Friday.

This afternoon, Chicago PMI & U.S. pending home sales figures.

U.K. & U.S. GDP final data for Q2 will also be published, but is largely known, backward-looking, and shouldn't move the needle.  

The last day for those month/quarter end flows today so be alert for any outsized moves into the 4pm (BST) London fix.

BOE's Haldane, and the Fed's Kashkari & Kaplan (11PM) will also be sharing their thoughts.

Debate Reports: