Yen consolidates from 5-year lows against major pairs

Notes/Observations

-S&P affirmed Italy at BBB; outlook still negative

- Ireland to exit its bailout program this weekend; 1st EMU member to do so

- Various G7 officials (Australia and Canada) reiterate standard rhetoric on FX level that markets determine levels

- Spain Debt to GDP ratio hits record high in Q3 at 93/4%

- Italy general govt debt level hits record €2.085T

- Las Vegas sands said to drop $35B Madrid, Spain 'EuroVegas' casino plan

- US November PPI expected to confirm pipeline inflation pressures remain minimal

Economic Data

- (RU) Russia Narrow Money Supply w/e Dec 9th (RUB): 7.98T v 7.88T prior

- (SG) Singapore Oct Retail Sales M/M: -3.,2% v +0.9%e; Y/Y: -9.4% v -5.7%e; Retail Sales Ex Auto Y/Y: -0.9 v -0.3% prior

- (UK) Retailer John Lewis reports weekly LFL sales for week ending Dec 6th (y/y): +1.8% v +18.4% prior

- (DE) Germany Nov Wholesale Price Index M/M: -0.2% v -1.0% prior; Y/Y: -2.2% v -2.7% prior

- (FI) Finland Nov CPI M/M: -0.1% v +0.1% prior; Y/Y: 1.4% v 1.2% prior

- (FI) Finland Oct Final Retail Sales Volume Y/Y: 0.4% v 0.6% prior

- (FR) France Q3 Final Wages Q/Q: 0.2% v 0.2%e

- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 143.2K v 141.5K prior

- (HU) Hungary Oct Final Industrial Production M/M: -0.5% v -0.5% prelim; Y/Y: 6.0% v 6.0% prelim

- (ES) Spain Nov CPI M/M: 0.2% v 0.2%e; Y/Y: 0.2% v 0.2%e

- (ES) Spain Nov CPI Harmonized M/M: 0.0% v 0.0%e; Y/Y: 0.3% v 0.3%e

- (ES) Spain Nov CPI Core M/M: 0.4% v 0.8% prior; Y/Y: 0.4% v 0.2% prior

- (FI) Finland Oct Current Account: +€220M v -€90M prior

- (EU) ECB €206M borrowed in overnight loan facility vs. €409M prior; €37.0B parked in deposit facility vs. €36.9B prior - Daily Eurosystem Liquidity Conditions

- (CH) Swiss Nov Producer & Import Prices M/M: -0.1% v +0.1%e; Y/Y: -0.4% v -0.3%e

- (NL) Netherlands Oct Trade Balance: €4.2B v €3.4B prior

- (SE) Sweden Nov Average House Prices (SEK): 2.197M v 2.096M prior

- (CZ) Czech Oct Current Account Balance (CZK): 7.8B v 0.6Be

- (ES) Bank of Spain (BOS) 3Q Public Sector Debt Data: Debt to GDP at 93.4% (record level) v 92.2% q/q

- (ES) Spain Banks Oct ECB Net Borrowings: €223.8B v €234.8B prior (15 straight monthly decline)

- (RU) Russia Central Bank (CBR) leaves One-Week Auction Rate unchanged at 5.50%, as expected

- (UK) Oct Construction Output M/M: 2.2% v 1.6%e; Y/Y: 5.3% v 1.3%e

- (IT) Bank of Italy Oct Public Finance Supplement: General Government Debt: €2.085T (record high) v €2.0686T prior

- (EU) Euro Zone Q3 Employment Q/Q: 0.0% v 0.% prior; Y/Y: -0.8% v -1.1% prior

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities**

Indices [Stoxx50 +0.2%, FTSE 100 flat at 6,446, DAX +0.2% at 9,037, CAC-40 +0.2% at 4,075, IBEX-35 +0.5% at 9,316, FTSE MIB +0.5% at 17,884, SMI flat at 7,850, S&P 500 Futures +0.4% at 1,775]

- Market Focal Points: Equity markets trade mixed ahead of next week's Fed meeting (Dec 17-18), FTSE 100 underperforms on resource related firms, RSA Insurance declines by over 15% on profit warning, Cautious broker commentary weighs on Utilities, Dilution concerns continue to weigh on Peugeot's shares, Upcoming ECB speakers (Coeure, Praet, Constancio)

By Sector

- Consumer Discretionary [Peugeot UG.FR -9% (GM sold stake)]

- Energy [Gamesa GAM.ES +2.5% (to be added to IBEX-35 index)]

- Financials [Mediobanca MB.IT +2% (speculated investor interest); Royal Sun Insurance RSA.UK -15% (profit warning, CEO resignation)]

- Utilities [Endesa -1.5% (broker commentary)]

- Healthcare [AstraZeneca AZN.UK +2.5% (FDA Committee recommended DAPAGLIFLOZIN); Evotec EVT.DE -4% (cut sales forecast)]

- Stoxx50 sectors [Financials +0.5%, Consumer Cyclical +0.3%, Basic Materials +0.2%, Industrials +0.1%, technology flat; Utilities -0.4%, Consumer Non-Cyclical -0.3%, Energy -0.1%, Telecom -0.1%]

Speakers:

- S&P affirmed Italy sovereign rating at BBB; outlook negative

- ECB's Hansson (Estonia) reiterated view that ECB stands ready to act (in line with post rate decision press conference) as it understood the need to remain vigilant to guard against new risks to financial stability. Banking union must be followed by resolution mechanism

- BOE Gov Carney commented from Paris Treasury panel that it needed to complete 'too big to fail' reforms and must be strong enough to deal with bank failures. Impact of financial crisis had not ended and saw risks in emerging markets banking systems.

- BoE Head of Financial Stability Haldane: Now not the time to clamp down on housing market (*Reminder: On Nov 28th Bank of England (BOE) Financial Stability Report noted that it would end FLS (funding-for-lending) support for new mortgage loans on Jan 1st 2014)

- Cyprus Central Bank: No intention to sell gold reserves

- Czech Social Democrat leader Sobotka: Will not set any entry date for EMU at this time

- Canada rating agency DBRS's McCormick: Spain growth is a concern, but rating safe at the moment

- Brazil Fin Min Mantega: Country will not pare its fiscal effort in 2014

- BOJ Gov Kuroda: Set to continue with 2% inflation target; will stick with easy policy to keep inflation at 2% even after target is achieved

- Japan Chief Cabinet Sec Suga: No comment on FX; Critical for Japan to escape deflation

- China gives initial 2014 first batch rare earth export quota 15,090 tons v 15,500 tons y/y

- Iran halted its technical nuclear talks with global powers in Vienna and its delegation returned to Tehran for consultation

- EU official stated that more work was needed on implementation of Iran/P5+1 after 4 days of lengthy talks

Currencies/Fixed Income:

- Relatively calm price action in Europe but Fed taper talk remained on the sentiment

- The EUR/USD was at session lows at 1.3750 ahead of the NY morning. Dealers noted that Las Vegas sands decision to pull out of its $35B investment in Spain could be a headwind.

- The JPY currency hit 5-year lows against the USD and Euro during the Asian session aided by speculation builds for more BOJ easing. BOJ Gov Kuroda stated that it was set to continue with 2% inflation target and would stick with easy policy to keep inflation at 2% even after target was achieved. The yield on the benchmark 10-year JGB hit its highest level in two and a half months on selling triggered by the Nikkei stock index's rebound.

Political/In the Papers:

-(DE) ECB's Asmussen (Germany): Hope to have agreement on the Single Resolution Mechanism (SRM) within the next two weeks; ECB prepared to act if necessary

- (DE) German Banking associations have complained to the EU about French and Italian financial transaction tax

-(FR) ECB's Noyer: Banks in France are prepared for the upcoming asset quality review (AQR); Stress testing sovereign debt will be complicated

-(IE) Ireland Fin Min Noonan: Irish debt to peak this year - financial press

-(UK) Fitch: It will take time for the UK to regain AAA sovereign rating and needs to see if the medium-term projections of debt/GDP will decline in a sustainable manner - London Telegraph

- (AU) Australia PM Abbott: Market should determine the value of AUD currency (standard G7 view); RBA may sometime intervene in currency markets

- (CN) China gives initial 2014 first batch rare earth export quota 15,090 tons v 15,500 tons y/y

- (CN) PBoC should keep liquidity at moderate loose level but should terminate its proactive fiscal policy and move back towards 'prudent

- (KR) North Korea Supreme leader orders that his former right-hand advisor is executed just days after being removed from political duties; South Korea monitoring for any military instability following the purge

- European Banking Authority (EBA): Warns consumers have no protection when dealing in Bitcoins

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- 05:30 (BR) Brazil Oct Economic Activity M/M: 0.5%e v 0.0% prior; Y/Y: 2.2%e v 3.3% prior

- 06:00 (IE) Ireland Oct Trade Balance: No est v €3.2B prior

- 06:00 (FI) Finland govt confidence vote

- 06:00 (BE) Belgium to sell OLO Bonds

- 06:00 (IC) Iceland to sell Bonds

- 06:00 (EU) ECB announces weekly 3-year LTRO Funds repayment

- 06:10 (UK) DMO to sell combined £2.0B in1-month, 3-month and 6-month Bills

- 06:15 (BE) ECB's Praet (Belgium)

- 06:30 (IN) India Forex Reserves w/e Dec 6th: No est v $291.3B prior

- 06:45 (EU) ECB Constancio (Portugal) with member Hansson (Estonia), Latvia's Rimsevics Speak in Tallin

- 06:45 (US) Daily Libor Fixing

- 07:00 (IS) Iceland Nov Unemployment Rate: No est v 3.9% prior

- 07:30 (UK) BOE's Dale

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

- 08:00 (IT) Italy Fin Min Saccomanni in Parliament

- 08:00 (PL) Poland Oct Current Account Balance: -€448Me v -€1.0B prior; Trade Balance: €597Me v €673M prior; Exports: €14.9Be v €13.9B prior; Imports: €14.3Be v €13.2B prior

- 08:00 (PL) Poland M3 Money Supply M/M: 0.5%e v 0.9% prior; Y/Y: 6.4%e v 5.9% prior

- 08:00 (PL) Poland Nov CPI M/M: 0.1%e v 0.2% prior; Y/Y: 0.9%e v 0.8% prior

- 08:00 (ES) Spain Debt Agency (Tesoro) to announce specific bonds in upcoming auction

- 08:30 (US) Nov PPI M/M: 0.0%e v -0.2% prior; Y/Y: 0.8%e v 0.3% prior

- 08:30 (US) Nov PPI Ex Food and Energy M/M: 0.1%e v 0.2% prior; Y/Y: 1.4%e v 1.4% prior

- 10:30 (EU) ECB Coeure (France) speaks in Monaco

- 10:30 (UK) DMO to announce Gilt issuance calendar for Jan-Mar period

- 11:00 (US) Fed to purchase $1.25-1.75B in Notes

- 11:00 (US) Senate committee votes on nomination of Raskin as Dep Treasury Secretary

- 14:00 (AR) Argentina Nov CPI M/M: 1.0%e v 0.9% prior; Y/Y: 10.6%e v 10.5% prior

- 14:00 (AR) Argentina Nov Wholesale Price Index M/M: No est v 1.1% prior; Y/Y: No est v 13.9% prior

- (CO) Colombia Central Bank Minutes

- (US) S&P Index Quarterly Review