TURKEY: US Ambassador Says Turkey Closer to Getting Rid of Russian S-400s

Spanish domestic demand remains solid according to the October PMI round, with today’s stronger-than-expected services reading building on the signals from Monday’s manufacturing print. The services and composite readings reached year-to-date highs in October 

• MNI: SPAIN OCT SERV PMI 56.6 (54.5 FCAST, 54.3 SEP)
• MNI: SPAIN OCT COMP PMI 56.0 (54.3 FCAST, 53.8 SEP)

Key notes from the release:

• “Panellists linked growth of activity to a mixture of commercial actions, work on existing contracts and increased levels of incoming new work”
• “New business gains were principally driven by domestic clients as new export work rose only slightly. There were reports of an uncertain international environment weighing on foreign demand.”
• “Higher new work encouraged firms to take on additional workers, with employment reported to have risen again during October in line with a trend that stretches back over three years”
• “Panellists are forecasting an uplift in demand and are planning to expand their commercial activities. Overall, sentiment rose to its highest level since March”
• “Input cost inflation dropped to a three-month low”….“ In response to higher input costs, firms sought to protect their operating margins in October by increasing their own selling prices.”

• Bund futures posted a decent trading range across the APAC session and through the European cash open, helping trigger some early volatility for European equities. Futures markets are lower on the continent, with DAX and Eurostoxx 50 futures underperforming - off 0.7% apiece - however weakness appears contained for now.
• Softer equities come on the back of further concerns over valuations in the tech sector, with follow-through selling in Palantir shares (down 3% at the close) a nominal trigger, helping lead global markets since the beginning of the week.
• US stock futures are similarly off lows - helping drag Bunds and Treasuries off their respective highs into early European trade. Technically, this leaves support in focus for Bunds into 129.13 - a level pierced on Monday - but not cleanly broken for now. Any further equity weakness could instead prompt a test of resistance, today crossing at 129.73.

DATA: Private sector data is in focus for the US today given the extended government shutdown. US ADP Employment Change will be seen as a proxy for NFP, while ISM Services and the Treasury Quarterly Refunding announcement could prove key. Services PMIs will be final readings for France, Germany, EU, UK and the US.

SUPPLY: Germany look to sell 15s, 20s (equating to a combined 25k Bund) which could weigh into the bidding deadline.

• MNI: SPAIN OCT SERV PMI 56.6 (54.5 FCAST, 54.3 SEP)