EU Midday Digest - 13 Nov 2026

The ECB faces an 82% December rate-hike probability as French CPI hit 3.4% y/y and German wholesale prices rose 8.8% y/y.

Asia-Pacific & European Session

The Nikkei 225 traded at 61,142 (+0.53%) during the Asia-Pacific session on 13 November, while the Hang Seng fell to 23,638 (-1.55%) as Chinese AI equities sold off on fears of tighter Nvidia chip restrictions. The PBOC set its USD/CNY reference rate at 6.7152 versus an estimate of 6.6756, a larger-than-expected fix signalling tolerance for a weaker yuan, alongside net injections of 364 billion yuan of overnight reverse repos at 1.25% and 300 billion yuan of 7-day reverse repos at 1.4%. In Europe, the Euro Stoxx 50 held at 6,399 (+0.00%) and the DAX at 26,783 (+0.04%) at 11:27Z, with the FTSE 100 at 10,874 (+0.10%), as euro-area inflation data offset growth concerns. EUR/USD traded at 1.1051 (-0.40% from the 11 November close) and GBP/USD at 1.3225 (-0.39% from the 11 November close), while USD/JPY sat at 159.91, close to the 160 level that both Washington and Tokyo have previously defended. The divergence between a resilient European equity open and a weak Hang Seng reflects the Nvidia-driven Asia tech drag meeting euro-area inflation-driven rate repricing.

Key Themes

• ECB rate-hike pricing: Markets are pricing roughly 82% odds of an ECB rate hike in December as euro-area inflation re-accelerates across member states. French final CPI rose to +3.4% y/y from +3.1%, HICP to +3.7% y/y, with energy up 1.9% m/m and 24.1% y/y, core at 1.7% from 1.5%, and services at 2.6% from 2.4%, while Spain's October final CPI and HICP held at +4.9% y/y with core at +3.1% y/y. Eurozone Q3 GDP second estimate showed +0.4% q/q, down from +0.6% prior, and +1.3% y/y versus +1.2% prior, creating a stagflationary mix. The combination of firming prices and slowing growth puts the ECB in a bind: hiking risks over-tightening into weak activity, while holding risks unanchoring expectations. InvestingLive flags this as a policy dilemma, with the 82% December hike pricing the market's central case.
• German wholesale inflation and energy shock: Destatis reported German wholesale selling prices rose 8.8% y/y in October 2026, up from 8.7% in September and 6.8% in August, the fastest pace since February 2023 (+9.5%), with a 0.4% m/m gain confirming sequential momentum rather than base effects. Agricultural producer prices fell 4.6% y/y in September, decelerating sharply from -7.2% in August and -13.9% in July, with a 1.2% m/m gain, removing a key disinflationary buffer. The energy-driven pipeline inflation, linked by Destatis to geopolitical conflict in Iran and the broader Middle East, raises Eurozone stagflation risk and complicates the ECB easing horizon even as growth slows. Downstream corporate margins face compression unless firms can pass input costs to end-users. This supports continued pressure on European industrial credit spreads and complicates the case for aggressive ECB cuts.
• Structural euro-area competitiveness: ECB's Isabel Schnabel argues the euro area faces a severe structural competitiveness deficit, with labor productivity growing only ~0.3% annually over the past decade versus ~1.4% in the United States. Wholesale natural gas and electricity prices in the euro area remain 2 to 3 times higher than US equivalents, keeping energy-intensive industrial output more than 10% below pre-crisis levels, while European retail households hold over €10 trillion in low-yielding bank deposits and European venture capital represents less than 20% of total US venture capital deployment. Schnabel contends these supply-side constraints limit the ECB's ability to lower terminal rates without reigniting inflation, pressuring European equity valuations and exposing EUR/USD to downside. She advocates common European debt issuance to close an annual investment shortfall of over €800 billion through 2030, warning that without it peripheral sovereigns like Italian BTPs remain vulnerable to spread widening against German Bunds. This structural view argues against pricing aggressive ECB easing cycles and supports a higher terminal rate than markets currently discount.
• Goldman Sachs multi-sector European downgrades: Goldman Sachs downgraded ratings across European banks, insurance, and energy simultaneously, signalling a coordinated house view that risk/reward in these cyclical, rate-sensitive groups has deteriorated rather than a stock-specific call. The action covers financials and energy together, the two sectors most exposed to the rate and commodity cycle, implying Goldman sees a common macro driver behind the downgrades. A multi-sector downgrade from a bulge-bracket firm can weigh on European cyclical sentiment and may prompt other desks to revisit sector weights, though the article gives no price targets or specific names. This comes as Goldman Sachs separately argues in MarketWatch that earnings growth across major indices will nearly halve in 2027, yet the bull market can persist because equities have already discounted much of that deceleration, recommending concentration in companies still delivering strong growth. The tension between downgrading European cyclicals and maintaining a constructive US bull market thesis highlights a regional divergence in Goldman's house view.
• US housing and Fed rate path: NAR reported existing-home sales fell to a new cycle low of 3.75 million SAAR in October 2026, down 5.5% m/m and 8.8% y/y, with unsold inventory at 1.59 million units and a 5.1-month supply versus 4.7 months prior and 3.9 months in October 2019, while the median existing-home price edged up 0.4% y/y to $416,700. Wolf Street notes single-family sales are at their lowest since 2010 with supply at a 12-year high, and condo sales at the lowest in the data with supply highest since 2011, with West sales at 1990s lows. This housing weakness contrasts with New York Fed President Williams' remarks that inflation remains "stubbornly persistent" and the Fed must act "over time" to return to its 2% target, two days after the hotter-than-expected October CPI (headline +0.4% m/m, core +0.3%, both above forecasts) and ahead of the 9 December Fed decision. InvestingLive notes the market prices a high probability of a quarter-point December hike with only an outside chance of a half-point move, with Fed Governor Christopher Waller favouring a quarter-point step. The divergence between collapsing housing turnover and hawkish Fed guidance creates a tension: rate-sensitive sectors are already contracting, yet the Fed retains room to tighten given Williams' view that US growth is "strong" and "getting stronger" but not overheating.

13F Filings

13F holdings are as of quarter end (2026Q3) and describe positions then, not current trading; 22 of 115 tracked funds have now filed. State Street (US$ 3,431bn, 4,115 positions), Capital World Investors (US$ 824bn, 634 positions), Capital Research Global Investors (US$ 704bn, 421 positions), PRIMECAP Management (US$ 161bn, 327 positions), Renaissance Technologies (US$ 73bn, 3,151 positions), Fayez Sarofim & Co (US$ 42bn, 290 positions), Gardner Russo & Quinn (US$ 8bn, 84 positions), and Capital International Ltd (US$ 3bn, 150 positions) have filed since 12 November 2026. Renaissance Technologies opened SPCX (Space Exploration Technologies) at 0.8% of its portfolio. Among the 22 funds that have filed, most net buying was in SKHY (9 new, 0 added), SVV (1 new, 7 added), LSCC (2 new, 5 added), and STE (2 new, 5 added), while most net selling was in PODD (2 exits, 7 trims), PM (0 exits, 9 trims), DAL (1 exits, 7 trims), and SNPS (2 exits, 6 trims).

What to Watch

The 9 December Fed decision is the anchor event, with Williams' "over time" language leaving open whether one hike or several follow the hot October CPI (headline +0.4% m/m, core +0.3%); no consensus level identified for the next CPI print. The 82% December ECB hike pricing is the key European rate call, with French CPI at 3.4% y/y and Spanish CPI at 4.9% y/y supporting it while Eurozone Q3 GDP of +0.4% q/q argues against it — InvestingLive flags this divergence explicitly. Richemont (CFR.SW), Mitsubishi UFJ Financial (8306.T), Sumitomo Mitsui Financial (8316.T), Mizuho Financial (8411.T), Assicurazioni Generali (G.MI), and other financials report on 13 November with no time given; Cisco Systems (CSCO), Applied Materials (AMAT), and Nu (NU) have already reported after the US close on 12 November. Watch EUR/USD at 1.1051 for a break lower toward parity-adjacent levels if ECB hike pricing firms further, and USD/JPY at 159.91 for intervention sensitivity near 160. Bitcoin at US$ 69,227 (-2.97% intraday on 13 November) has dropped below its 200-week moving average, with Bitcoin ETFs down over $1.5 billion in net outflows YTD per CoinDesk. The open question: does the Fed deliver one December hike or several, given Williams' "over time" framing and Waller's preference for a quarter-point step?