Confidence finds some footing as oil prices try to stabilize

Notes/Observations

- Year-end trading finding stabilization in overall sentiment as lower oil prices seen as a boost for most economies.

- Oil rises for a 2nd session after Saudi Arabia voiced confidence that prices would rebound

- German Nov import price inflation comes in softer than expected (MoM -0.8% vs. -0.7%e) and entirely driven by lower energy prices,

Economic data

- (DE) Germany Nov Import Price Index misses; M/M: -0.8% v -0.7%e; Y/Y: -2.1% v -1.9%e

- (JP) Japan Nov Convenience Store Sales misses Y/Y: -1.7% v -1.1% prior (8th straight monthly decline)

- (TW) Taiwan Nov Export Orders misses; Y/Y: 6.0% v 8.4%e

- (DK) Denmark Nov Retail Sales beats M/M: 0.8% v 0.5%e; Y/Y: 0.8% v 3.0% prior

- (DK) Denmark Dec Consumer Confidence beats: 6.0 v 4.8e

- (NL) Netherlands Nov House Price Index misses; M/M: -0.3% v +0.3% prior; Y/Y: 2.3% v 2.2% prior

- (SE) Sweden Nov Retail Sales data beats; M/M: 0.5% v 0.0%e; Y/Y: 4.5% v 3.0%e

- (UK) Citi/YouGov Dec poll: 12-month inflation expectations: 1.5% v 1.8% prior (lowest since Feb 2009)

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.8%, FTSE 100 +1% at 6,607, DAX +0.6% at 9,851, CAC-40 +1% at 4,282, IBEX-35 +0.3% 10,405, FTSE MIB +1% at 19,186, SMI +0.6% at 9,033, S&P 500 Futures +0.3% at 2,072]

- Market Focal Points/Key Themes: Equity markets open higher following slight declines on Friday amid continued gains in oil prices, stability in the Russian ruble and dovish ECB commentary (Coene); S&P 500 Futures continue to trade near prior record high; Oil producers extend Friday's gains

By Sector

- Energy [Afren AFR.UK +10% (takeover approach), Neste Oil NES1V.FI +4.5% (raised outlook) ]

- Technology [Myriad MYRN.CH +5% (agreement with Telefonica); Soitec SOI.FR -54% (cut outlook)]

- Industrials [Daimler DAI.DE +1% (speculation related to higher dividend), Bilfinger Berger GBF.DE +1% (unit sale)]

- Consumer Discretionary [Bang & Olufsen BO.DK -8% (profit warning)]

- Financials [Delta Lloyd DL.NL -4% (€22.8M fine)]

- Stoxx50 sectors [Energy +1.3%, Basic Materials +1.2%, Telecom +1%, Industrials +1%, Consumer Non-Cyclical +1%, Consumer Cyclical +0.8%, Technology +0.8%, Financials +0.7%, Utilities +0.5%]

Speakers

- BoEs Weale (dissenter) reiterated his view that the time was right for BoE to raise rates

- Sweden govt said to hold secret talks with Alliance opposition that might allow country to avoid snap elections. Additional press reports noted Sweden govt still planned to announce new election on Dec 30th

- Russia Fin Min Shuvalov reiterated view that Govt not preparing currency controls

- Russia Energy Min Novak: Not looking at any artificial cut in oil production

- Russia PM Medvedev stated that Time for Russia to consider temporary grain export limit

- Japan Cabinet released a basic plan for FY15 budget which stressed it would do the utmost to reach target of having primary balance and maintain new JGB issuance below FY14 level. To compile plan for FY20 fiscal target by next summer

- Japan BoJ Gov Kuroda reiterated view that monetary policy did not target an exchange rate nor was trying to influence Fx to gain competitiveness. FX moves would not cause problems if it reflected fundamentals. Lower oil prices was generally beneficial for Japan

- China PBoC Q4 Quarterly Household Survey had inflationary expectations rise q/q and 58.8% of households considered property prices too high

Currencies

- As year-end trading conditions and diminishing liquidity take effect, the USD was consolidating from multi-year highs as the theme of central bank divergence continue to aid the greenback

- The EUR/USD fell to its lowest level since Aug 2012 at 1.2220 before consolidation. The continued hope for full-blown ECB QE continued to push bond yields lower. Spanish 10-year yield posted a new record low below 1.68while Italy dipped back below the 2% level

- The Russian Ruble currency continued to stabilize around the 56 area as dealers noted that lower oil prices also meant a boost for most economies

Political/In the Papers:

- (IT) Italy PM Renzi wins a confidence vote in the Senate, approving his 2015 budget by a vote of 162-37; Lower House approval needed by year-end

- (GR) Support for Greece's anti-bailout Syriza party seen at 27.1%, above 23.7% that of PM Samaras' New Democracy party - press; lead of 3.4pts is down from 5.3pts in the November polls.

Looking Ahead

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

- (PT) Portugal Oct Current Account Balance: No est v €0.6B prior

- 05:30 (BR) Brazil Central Bank Weekly Economists Survey

- 06:00 (IL) Israel Nov Unemployment Rate: No est v 5.7% prior

- 06:00 (PL) Portugal House Price Index

- 06:45 (US) Daily Libor Fixing

- 07:00 (RO) Romania to sell RON500M in 6-month Bills

- 07:30 (BR) Brazil Nov Total Outstanding Loans (BRL): No est v 2.926T prior; M/M: No est v 0.8% prior; Banks' Lending (BRL): No est v 1.364T prior; Personal Loan Default Rate: No est v 6.4% prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Nov Chicago Fed Nat Activity Index: 0.25e v 0.14 prior

- 08:50 (FR) France Debt Agency (AFT to sell combined €3.0B in 6-month and 12-month Bills

- 09:00 (MX) Mexico Q3 Aggregate Supply and Demand: 3.2%e v 1.9% prior

- 09:30 (EU) ECB announces Covered-Bond Purchases

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 10:00 (US) Nov Existing Home Sales: 5.20Me v 5.26M prior

- 10:00 (EU) Euro Zone Dec Advance Consumer Confidence: 11.0e v -11.6 prior

- 11:30 (BR) Brazil Nov Tax Collections (BRL): 100.1Be v 106.2B prior

- 11:30 (US) Treasury to sell $50B in 3-Month and 6-Month Bills

- 13:00 (US) Treasury to sell $21B in 2-Year Notes

- 16:00 (CO) Colombia Oct Trade Balance: -$1.0Be v -$0.5B prior; Total Imports: $5.6Be v $5.8B prior

- 16:45 (NZ) New Zealand Nov Trade Balance (NZD): -0.6Be v -0.9B prior; Exports: 4.0Be v 4.0B prior; Imports: 4.6Be v 4.9B prior