UK Q4 GDP comes in just below expectations

Notes/Observations

- SNB reiterates that it could intervene; CHF currency weakens across the board

- UK Advance Q4 GDP comes in slight below expectations (QoQ: 0.5% vs. 0.6%e)

Economic data

- (JP) Japan Jan Small Business Confidence: 46.3 v 46.7 prior (10th straight month below the 50 level)

- (FI) Finland Jan Consumer Confidence Index: 6.0 v 6.0e; Business Confidence: -7 v -9 prior

- (HK) Hong Kong Dec Trade Balance (HKD): -59.3B v -55.0Be; Exports Y/Y: 0.6% v 3.0%e; Imports Y/Y: 1.9% v 3.0%e

- (SE) Sweden Dec Trade Balance (SEK): +0.4B v -0.1B prior

- (SE) Sweden Dec PPI M/M: -0.3% v -0.4% prior; Y/Y: -0.1% v +1.3% prior

- (PL) Poland 2014 GDP: 3.3% v 3.3%e

- (PL) Poland Dec Unemployment Rate: 11.5% v 11.6%e

- (UK) Q4 Advance GDP data (miss); Q/Q: 0.5% v 0.6%e; Y/Y: 2.7% v 2.8%e

- (UK) Dec BBA Loans for House Purchase: 35.7K v 36.5Ke

Fixed income:

- (NL) Netherlands Debt Agency (DSTA) sold €1.15B vs. €1.0-2.0B indicated in 2.75% 2047 DSL Bonds; Avg Yield: 1.152% (record low) v 1.816% prior

- (ES) Spain Debt Agency (Tesoro) sold total €2.561B vs. €2.0-3.0B induacted range in 3-Month and 9-Month Bills

- Sold €561M in 3-month Bills; Avg Yield: 0.018% v 0.200% prior; Bid-to-cover: 4.22x v 3.17x prior

- Sold €2.0B in 9-month Bills; Avg Yield: 0.137% v 0.373% prior; Bid-to-cover: 2.62x v 2.69x prior

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Zero Coupon 2016 CTZ; Avg Yield: 0.281% v 0.692% prior; Bid-to-cover: 1.59x v 1.46x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.6% at 3,393, FTSE 100 -0.3% at 6,830, DAX -0.4% at 10,754, CAC-40 -0.5% at 4,650, IBEX-35 -0.8% at 10,610, FTSE MIB -0.9% at 20,573, SMI +1.0% at 8,381, Athens Stock Exchange -0.4%, S&P 500 Futures -0.1% at 2,046]

- Market Focal Points/Key Themes: European equities moved on the downside after several days of straight gains following the ECB QE announcement; Greece equities continued to move lower following the weekend elections; US markets to open despite major snow storm and recommendations to stay home in New York; Siemens lead German equities lower after posting worse than expected Q1 results; Aer Lingus accepts conditions of IAG offer; EasyJet higher on better than expected results

By Sector

- Consumer Discretionary [EasyJet EZJ.UK +2.56% (Aer Lingus deal), International Consolidated Airlines IAG.UK +2.19% (Aer Lingus accpts deal) Entertainment One ETO.UK +2.27% (positive trading update)]

- Energy [SMA Solar S92.DE -14.3% (announces job cuts)]

- Financials [Foxtons FOXT.UK -5.59% (disappointing Q4 sales)]

- Industrials [BMW BMW.DE -1.77% (broker move), Peugeot UG.FR +1.19% (broker move)]

- Technology [Philips PHIA.NL -3.62% (cuts earnings targets), Siemens SIE.DE -3.15% (Q1 profits drop)]

Speakers

- SNB's Danthine: Still prepared to intervene in FX markets as they have yet to stabilize; FX floor could not have withstood ECB QE

- German Fin Min Schaeuble stated that EU needs treaty change to improve governance and reiterated that structural reforms were a necessity within the EU. Germany did not want criticism for adhering to budget rules

- France Econ Min Macron: Weaker EUR currency was good for French exports and hoped that France can exceed its 1.0% GDP growth forecast

- Bank of Spain (BOS) Monthly Bulletin: Saw dynamic consumption indicators in final part of 2014

- Czech Central Bank Vice Gov Tomsik: No need to shift CZK currency floor at this time. Changes in EUR/CZK floor is possible in principle but only if there is a long-term increase in deflationary pressure that would hurt demand

- Turkey Central Bank gov Basci: Monetary policy had been cautious over the past year and this has helped bank move towards its core inflation target. Significant decline in inflation seen in 2015 which could hit its lowest level in 45 years. Food prices were the biggest factor in keeping inflation above target. Could hold an emergency meeting as inflation declines; possible on Feb 4th (rather than Feb 24th)

- Moody's Greece election outcome was credit negative as it prolongs financing, liquidity and economic growth risks

- India Fin Min Jaitley: Country in position to meet fiscal target; growth rate likely to pick up

- S&P sovereign analyst Kraemer: Did not foresee Russia implementing capital controls. Russia sanctions added to sovereign risks. Level of Russia interest rates might prevent capital outflows

- Russia Dep Foreign Min: Sovereign rating cut seen as coordinated action against the Russian economy

- EU Leaders said to ask Foreign Ministers to consider any appropriate action on Russia including further sanctions. Russia has responsibility for violence in Eastern Ukraine

- Goldman Sachs on China PBoC: Sees 1 interest rate cut and two RRR cuts in H1

Currencies

- The CHF weakened throughout most of the session after SNB's Danthine noted that it still was prepared to intervene in FX markets as they have yet to stabilize/ Dealers noted the week rise in Sight Deposits was seen as an indication that the SNB has been in the market the week after its de-pegging announcement on Thursday, January 15th.

- The EUR/CHF cross tested the 1.03 area while USD/CHF pair tested the 0.91 level. The CHF was well off its worst levels as the NY mornig approached

- The cross affected the EUR/USD pair which moved higher with EUR/CHF

- The GBP was only marginally softer despite the slight miss in Q4 GDP data. The GBP/USD was little changed from its Far East open and just under the 1.51 handle ahad of the NY morning.

Political/In the Papers:

- (RU) S&P cuts Russia Sovereign Rating to BB+ from BBB- (now junk status): outlook negative

- (GR) EU's Dijsselbloem: Too early to tell what will happen in Greece; Eurogroup will discuss the issue at next meeting

- (CN) China Ministry of Industry and Information Technology (MIIT): Lowers China 2015 industrial production to 8% y/y from 9.4% in 2014

Looking Ahead

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

- (PT) ECB's Constancio (Portugal) at EcoFin

- (EU) EU Finance Ministers (EcoFin) hold Meeting in Brussels

- (BR) Brazil Dec Total Federal Debt (BRL): No est v 2.209T prior

- (GR) Greece Nov Current Account Balance: No est v -€0.2B prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (RU) Russia to announce weekly OFZ bond auction

- 07:30 (BR) Brazil Dec Total Outstanding Loans (BRL): No est v 2.963T prior; M/M: No est v 1.3% prior; Private Banks Lending (BRL): No est v 1.377T prior; Personal Loan Default Rate: No est v 6.5% prior

- 07:45 (US) Chain Store Sales

- 08:00 (HU) Hungary Central Bank (NBH) Interest Rate Decision: Expected to leave Base Rate unchanged at 2.10%

- 08:00 (US) US-Brazil hold economic and political outlook

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Dec Durable Goods Orders: 0.3%e v -0.9% prior (revised from -0.7%); Durables Ex Transportation: 0.6%e v -0.5% prior (revised from -0.4%); Capital Goods Orders (Non-defense/ex-aircraft): 0.9%e v 0.0% prior' Capital Goods Shipments (Non-defense/ex-aircraft): 1.0%e v 0.2% prior; Durables Ex-Defense: No est v -0.1% prior

- 08:55 (US) Weekly Redbook Sales

- 09:00 (US) S&P/CaseShiller 20 City M/M: 0.60e v 0.76% prior; Y/Y: 4.30%e v 4.50% prior; HPI NSA: 172.96e v 173.36 prior

- 09:00 (MX) Mexico Dec Trade Balance: +$0.7Be v -$1.1B prior

- 09:00 (MX) Mexico Nov Economic Activity Index (Monthly GDP) Y/Y: 2.3%e v 2.5% prior

- 09:00 (EU) Weekly ECB Forex Reserves

- 09:45 (US) Jan Preliminary Markit Services PMI: 53.8e v 53.3 prior; Composite PMI: No est v 53.5 prior

- 09:45 (UK) BOE to purchase £1.45B in over 15-year bonds (residuals)

- 10:00 (US) Dec New Home Sales: 450Ke v 438K prior

- 10:00 (US) Jan Consumer Confidence Index: 95.5e v 92.6 prior

- 10:00 (US) Jan Richmond Fed Manufacturing Index: 5e v 7 prior

- 10:00 (MX) Weekly Mexico International Reserves Weekly

- 10:30 (UK) DMO announces size of upcoming 0.125% I/L 2024 Gilt

- 11:30 (US) Treasury to sell 4-Week Bills

- 11:30 (US) Treasury to sell 2-Year Floating Rate Notes

- 12:00 (FR) France Dec Net Change in Jobseekers: +15.5Ke v +27.4K prior; Total Jobseekers: 3.504Me v 3.488M prior

- 13:00 (US) Treasury to sell $26B in 2-Year Notes

- 14:45 (CA) Bank of Canada (BOC) Dep Gov Wilkins

- 16:30 (US) Weekly API Oil Inventories

- 19:30 (AU) Australia Q4 CPI Q/Q: 0.3%e v 0.5% prior; Y/Y: 1.8%e v 2.3% prior