More speculation of OPEC and Non-Opec cooperations helps oil hold above $30/barrel

Notes/Observations

- Australia Dec Trade Balance registers its 20th straight deficit and largest in 6 months

- Oil stabilizes on more speculation of potential cooperation between OPEC and Non-Opec members

- Major European Services PMI mixed in session but highlight softening growth outlook (UK beats; Euro Zone in-line; Germany and France miss)

Economic data

- (JP) Japan Jan Consumer Confidence Index: 42.5 v 42.5e

- (IN) India Jan PMI Services: 54.3 v 53.6 prior (7th month of expansion); PMI Composite: 53.3 v 51.6 prior

- (RU) Russia Jan PMI Services: 47.1 v 47.0e (4th month of contraction); PMI Composite: 48.4 v 47.8 prior

- (IE) Ireland Jan Services PMI: 64.0 v 61.8 prior; Composite PMI: 61.1 v 59.2 prior

- (BR) Brazil Jan FIPE CPI (Sao Paulo) M/M: 1.4% v 1.4%e

- (TH) Thailand Central Bank (BoT) left its Benchmark Interest Rate unchanged at 1.50% (as expected)

- (SE) Sweden Jan PMI Services: 59.3 v 57.6e

- (TR) Turkey Jan CPI M/M: 1.8% v 1.7%e; Y/Y: 9.6% v 9.5%e; CPI Core Y/Y: 9.6% v 9.5%e

- (ES) Spain Jan Services PMI (beat): 54.6 v 54.3e (27th month of expansion); Composite PMI: 55.3 v 54.4e

- (IT) Italy Jan Services PMI: 53.6 v 54.0e (13th month of expansion); Composite PMI: 53.8 v 56.0 prior

- (FR) France Jan Final Services PMI (miss): 50.3 v 50.6e (confirms move back into expansion); Composite PMI: 50.2 v 50.5e

- (DE) Germany Jan Final Services PMI (miss): 55.0 v 55.4e (confirms 32nd month of expansion); Composite PMI: 54.5 v 54.5e

- (EU) Euro Zone Jan Final Services PMI (in-line): 53.6 v 53.6e ((confirms 31st month of expansion); Composite PMI: 53.6 v 53.5e

- (UK) Jan Services PMI (beat): 55.6 v 55.4e (37th month of expansion); Composite PMI: 56.1 v 55.0e

**Fixed Income Issuance:

- (IN) India sold total INR140B in 3-month and 12-month Bills

- (DK) Denmark sold total DKK2.33B in 2025 and 2039 Bonds

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2020 and 2025 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -1.4% at 2909, FTSE -1.0% at 5862, DAX -1.4% at 9450, CAC-40 -0.9% at 4247, IBEX-35 -1.8% at 8374, FTSE MIB -1.7% at 17623, SMI -0.3% at 8173, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes: European indices opened lower across the board after weak performance in the Asian session, as oil price volatility and concerns over global economic growth continues to be in focus; financial stocks weigh heavily with Deutsche Bank leading losses in the Dax, and Banco Popolare and Banca Monte Paschi the laggard in the FTSE-MIB; upcoming notable US earnings include Comcast, Eaton, Exelon, General Motors, Glaxosmithkline, International Paper, Man Power Group, Marathon Petroleum Corp, and Merck & Co

Equities

- Consumer discretionary: [Kesko KESBV.FI +1.0% (Q4 results), Schibsted SCH.NO -0.9% (To take impairment loss of NOK465M in Q4), Swatch UHR.CH -0.4% (FY15 results)]

- Consumer staples: [AAK AAK.SW +1.7% (Q4 results, raises dividend)]

- Energy: [Gas Natural GAS.ES -1.5% (Q4 results)]

- Financials: [BBVA BBVA.ES -2.0% (FY15 results)]

- Healthcare: [AstraZeneca AZN.UK -0.4% (Tagrisso approved in EU for cancer patients), Novo Nordisk NOVOB.DK -4.5% (Q4 results, cuts FY16 guidance, share buyback)]

- Industrials: [ABB ABBN.CH +0.3% (Q4 results), Draegerwerk DRW3.DE -5.2% (dividend cut, prelim FY15 results), Sandvik SAND.SE +2.7% (Q4 results), Syngenta SYNN.CH +5.8% (FY15 results, Confirms to be acquired by ChemChina for $465/shr in cash plus special dividend of CHF5 valued at $43B), Volkswagen VOW3.DE -2.6% (Reported Jan US sales)]

- Telecom: [Royal KPN KPN.NL -2.6% (Q4 results)]

- Technology: [Osram Licht OSR.DE -1.1% (Q1 results)]

Speakers

- Russia Central Bank: Q1 GDP contraction seen less than 1.0% in seasonally adj terms; contraction between 1.7 to 2.5% y/y (unadj)

- Japan PM Abe reiterated pledge to work with BOJ to achieve the 2% inflation target and defeat deflation

- China State Planner NDRC Chairman Xu reiterated govt view to maintain economic growth within a reasonable range and moderately expand aggregate demand. Forecast 2016 GDP growth between 6.5-7.0% range. Curb on overcapacity might lead to an employment problem. Target unemployment rate below 4.5%

- Hong Kong Chief Executive Leung reiterated no plans to end HKD link to USD

- Thailand Central Bank Policy Statement noted that vote was again unanimous (7-0) to keep policy steady. Policy would continue to be accommodative with current level supporting economic recovery. Fiscal spending driving growth; economy was seen growing close to forecast in 2016 but saw higher external risks. H1 inflation seen positive in H1

- Russia Foreign Min Lavrov reiterated view that Russia ready to talk to OPEC if there is a consensus

- Iran Supreme Leader: Calling for closer tieson energy with Russia, Iraq and Venezuela

- Oman Foreign Min: So far there is no agreement on a time for an OPEC meeting, but it will be soon

Currencies

- FX markets were relatively quiet in session with focus remaining on oil prices for guidance to risk-on or risk off sentiment

- EUR/USD stayed above the 1.09 level

- The GBP was firmer following a beat in the Jan PMI Services data. GBP/USD probed above 1.4450

- The USD/JPY maintained a soft tone overall with the pair testing 119.42 during Asia. Yen has recovered approx. two thirds of last Friday's post-BoJ move. The pair at 119.77 just ahead of the NY morning.

**Fixed Income:

- Bund futures trade at 163.58 up 12 ticks after trading just shy of contract highs at 163.75, following generally weaker services PMI data out of Europe. Analysts see a break of 163.78 high targeting 164.12 then 164.44. Support moves to 163.29 followed by 163.08 gap fill with a break seeing 162.70 then 162.28 and 162.01, with 161.55 seen capping the move.

- Gilt futures trade at 120.48 down 2 ticks following slightly stronger services PMI data out of the UK. Futures traded contract highs at 120.69 before retracing with a move back above targeting 120.86 then 121.15. Support moves to 120.02 with a break seeing 119.76 initially followed by 119.58 with 119.34 to fill the gap. A break targets 119.02 then 118.79.

- Wednesday's liquidity report showed Tuesday's excess liquidity rose to €675.6B a rise of €3.2B from €672.4B prior. This was primarily due to AFs and MonPol portfolios falling to negative €255.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to €33M from a prior €94M.

- Corporate issuance continues to remain subdued as another volatile session kept issuers on the sidelines. Issuance for the week has estimates ranging from roughly $20-25B for the week, with estimates for the month seen at around $85-100B.

**Political/In the Papers:

- (TR) Turkey Presidential advisor Kuzu: Turkey Presidential system to be like US but without the States

Looking Ahead

- (GR) Greece Debt Agency (PDMA) to sell €625M in 26-week Bills

- 05:30 (DE) Germany to sell €5.0B in new Apr 0.0% 2021 BOBL

- 06:00 (IE) Ireland Dec Industrial Production M/M: No est v -0.4% prior; Y/Y: No est v -10.9% prior

- 06:00 (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave the Base Rate unchanged at 1.50%

- 06:00 (RU) Russia to sell OFZ Bonds

- 07:00 (US) MBA Mortgage Applications w/e Jan 29th: No est v +8.8% prior

- 07:00 (BR) Brazil Jan PMI Services: No est v 43.5 prior; PMI Composite: No est v 43.9 prior

- 07:00 UN FAO Jan World Food Price Index: No est v 154.1 prior; M/M: No est v 1.0% prior

- 07:00 (UK) PM Cameron weekly Question Time in House of Commons

- 08:15 (US) Jan ADP Employment Change: +190Ke v +257K prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Treasury quarterly refunding announcement

- 09:00 (MX) Mexico Dec Leading Indicators M/M: No est v -0.02 prior

- 09:30 (BR) Brazil Weekly Currency Flows

- 09:45 (US) Jan Final Markit Services PMI: 53.7e v 53.7 prelim; Composite PMI: No est v 53.7 prelim

- 09:45 (UK) BOE to buy £1.4B in 7-15-year Gilts (residual)

- 10:00 (US) Jan ISM Non-Manufacturing Composite: 55.2e v 55.8 prior (revised from 55.3)

- 10:00 (MX) Mexico Weekly International Reserves

- 12:00 (CA) Canada to sell 2-Year Bonds 13:00 (DE) German Fin Min Schaeuble attends CDU business forum

- 14:00 (US) Fed Beige Book

- 16:30 (US) Weekly API Oil Inventories

- 19:30 (AU) Australia Q4 NAB Business Confidence: No est v 0 prior

- 22:30 (TH) Thailand Jan Consumer Confidence: No est v 76.1 prior; Consumer Confidence Economic: No est v 65.1 prior

- 22:35 (JP) Japan to sell 3-Month Bills