Markets await tone of EU-Greek debt talks in Athens

Notes/Observations

- Japan Dec inflation rate slowed more than forecast adding to BOJ challenges; Core CPI misses and hits an 18-month low (0.5% v0.6e%); household spending continued to decelerate while employment improves

- Markets awaits tone of Eurogroup chief Dijsselbloem meeting with the new Greece PM Tsipras in Athens on debt talks

- European data mix; inflation softer-than-expected while growth, unemployment beat expectations

- Spain beats on Q4 GDP showing that its reform process is starting to bear fruit

- Italy Dec Unemployment Rate unexpectedly falls with its 1st decline in 7 months (12.9% vs. 13.5%e)

- Euro Zone Dec Unemployment Rate at lowest level since Aug 2012 (11.4% v 11.5%e)

- Euro Zone Jan Advance CPI falls further into negative territory (-0.-0.6% v -0.5%e); Core at record low level (0.5% v 0.7%e)

Economic data

- (JP) Japan Dec Annualized Housing Starts (miss): 883K v 900Ke; Housing Starts Y/Y: -14.7% v -14.8%e; Construction Orders Y/Y: 7.5% v 16.9% prior

- (DE) Germany Dec Retail Sales (mixed); M/M: 0.2% v 0.3%e; Y/Y: 4.0% v 3.6%e

- (TH) Thailand Dec Current Account Balance: $5.5B v $2.5Be (record)

- (FR) France Dec Consumer Spending (beats); M/M: 1.5% v 0.5%e; Y/Y: +0.5% v -0.5%e

- (FR) France Dec PPI M/M: -0.9% v -0.1% prior; Y/Y: -2.9% v -1.9% prior

- (ES) Spain Q4 Preliminary GDP (beats); Q/Q: 0.7% v 0.5%e; Y/Y: 2.0% v 1.9%e

- (ES) Spain Jan Preliminary CPI (miss); Y/Y: -1.4% v -1.2%e; CPI EU Harmonized Y/Y: -1.5% v -1.5%e

- (CH) Swiss Jan KOF Leading Indicator: 97.0 v 94.7e

- (HU) Hungary Dec PPI M/M: 0.0% v -0.8% prior; Y/Y: 0.1% v 0.6% prior

- (AT) Austria Q4 GDP Q/Q: 0.0% v -0.1% prior; Y/Y: -0.1% v +0.2% prior

- (TR) Turkey Dec Trade Balance: -$8.5B v -$8.5Be

- (IT) Italy Dec Preliminary Unemployment Rate (beat): 12.9% v 13.5%e (1st decline in 7 months)

- (NO) Norway Dec Retail Sales W/Auto Fuel M/M: 0.2% v 0.3%e

- (NO) Norway Jan Unemployment Rate: 3.1% v 3.1%e

- (NO) Norway Central Bank (Norges) Feb Daily FX Purchases (NoK): -700M v -500Me

- (UK) Dec Net Consumer Credit (miss): £0.6B v £1.2Be; Net Lending (miss): £1.6B v £1.9Be

- (UK) Dec Mortgage Approvals (beat): 60.3K v 59.0Ke

- (EU) Euro Zone Dec Unemployment Rate (beat): 11.4% v 11.5%e (lowest level since Aug 2012)

- (EU) Euro Zone Jan Advance CPI Estimate (miss) Y/Y: -0.6% v -0.5%e; CPI Core Y/Y: 0.5% v 0.7%e

Fixed income:

- (IN) India sold total INR130B in 2020, 2024, 2033 and 2044 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.1%, FTSE 100 -0.5% at 6,776, DAX flat at 10,736, CAC-40 -0.3% at 4,619, IBEX-35 +0.2% at 10,524, FTSE MIB flat at 20,597, SMI +0.3% at 8,467, Athens Stocks Exchange +0.5%, S&P 500 Futures -0.7% at 2,004]

- Market Focal Points/Key Themes: Equity markets open higher ahead of US GDP data; Greek banks extend rebound; Markets later pare gains ahead of euro zone CPI data and amid decline in S&P 500 Futures and the FTSE 100; Novo Nordisk rises on better than expected results; BT Group Q3 sales below ests; US Q4 GDP data in focus

By Sector

- Financials [Banco Popular POP.ES +1% (FY results above ests); CaixaBank CABK.ES -1% (FY results below ests)]

- Healthcare [Novo Nordisk NOVOB.DK +3.5% (Q4 results below ests)]

- Energy [SMA Solar S92.DE +4% (FY15 outlook, cost cuts)]

- Telecom [Tele2 TEL2B.SE -3% (Q4 EBITDA below ests), BT BT.UK -1% (Q3 sales below ests)]

- Basic Materials/Resources [Svenska Cellulosa SCAB.SE +8% (FY results above ests)] Stoxx50 Sectors [Industrials -0.5%, Consumer Non-Cyclical -0.5%, Utilities -0.3%, Consumer Cyclical -0.3%, Financials -0.1% Telecom -0.1%; Technology +0.3%, Energy +0.2%]

**Speakers**

- ECB's Visco (Italy) reiterated view that structural reforms need to be implemented in order for Europe to exit the crisis

- EU Commissioner Katainen reiterated EU did not rule out extending deadlines related to Greece but expected the country to meet its bailout commitments

- Portugal PM Coelho: On the right track regarding the budget

- Germany HDE Retail Association: sees 2015 nominal sales growth +1.5% (prior year +1.9%)

- Japan Chief Cabinet Sec Suga: Govt and BOJ doing its utmost in order to meet the 2% CPI target

Currencies

- EUR/USD was relatively steady as it awaited commentary from Eurogroup chief Dijsselbloem meeting with the new Greece PM Tsipras in Athens on debt talks

- USD/JPY remained range-bound despite Japan's industrial production recovery remaining weak, household spending falling by 3.4%Y and December core inflation easing to 2.5% from 2.7%. The USD/JPY was lower by 0.5% approaching the 117.50 area

- The CHF remained soft with the EUR/CHF testing the 1.05 handle for the first time since the the SNB abandoned its floor back on Jan 15th. The cross has recovered over half of the initial losses from the loss of the peg.

Political/In the Papers:

- The first round of balloting in Italy Presidential election failed to select a president in first round of voting (2/3 majority needed). Two more votes scheduled for Friday, Jan 30th (2/3 majority needed). A fourth vote on Saturday, Jan 31st (simple majority needed)

Looking Ahead

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

- (GR) Eurogroup chif Dijsselbloem to meet Greece PM Tsipras in Athens

- Moody's on EFSF/ESM rating

- Fitch on Belgium Sovereign Rating

- 05:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave 1-week Auction rate unchanged at 17.00%

- 05:30 (IN) India Dec Fiscal Deficit (INR): No est v 4.9B prior

- 06:00 (BR) Brazil Dec PPI Manufacturing M/M: No est v 1.2% prior; Y/Y: No est v 4.6% prior

- 06:00 (PT) Portugal Dec Retail Sales M/M: No est v 3.1% prior; Y/Y: No est v 0.2% prior

- 06:00 (PT) Portugal Dec Industrial Production M/M: No est v -0.1% prior; Y/Y: No est v -2.0% prior

- 06:00 (UK) DMO to sell combined £3.0B in 1-month, 3-month and 6-month Bills (0.5B, 1.0B and 1.5B respectively)

- 06:00 (EU) Weekly ECB 3-Year LTRO Repayment vs. €10.0Be

- 06:30 (CL) Chile Central Bank Meeting Minutes

- 06:30 (IN) India Weekly Forex Reserves

- 06:45 (US) Daily Libor Fixing

- 07:00 (IN) India Q1 GDP Annual Estimate Y/Y: No est v 4.5% prior

- 07:00 (ZA) South Africa Dec Budget Balance (ZAR): +24.3Be v -18.4B prior

- 07:00 (ZA) South Africa Dec Trade Balance (ZAR): +1.8Be v -5.7B prior

- 07:00 (CL) Chile Dec Unemployment Rate: 6.0%e v 6.1% prior

- 07:30 (BR) Brazil Dec Nominal Budget Balance (BRL): -30.0Be v -41.6B prior; Primary Budget Balance (BRL): +6.6Be v -8.1B prior; Net Debt % GDP Ratio: 36.0%e v 36.2% prior

- 08:00 (PL) Poland Central Bank (NBP) Jan Inflation Expectations Survey: 0.1%e v 0.2% prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Q4 Advance GDP Annualized Q/Q: 3.1%e v 5.0% prior; Personal Consumption: 4.0%e v 3.2% prior

- 08:30 (US) Q4 Advance GDP Price Index: 0.9%e v 1.4% prior; Core PCE Q/Q: 1.1%e v 1.4% prior

- 08:30 (US) Q4 Employment Cost Index (ECI): 0.6%e v 0.7% prior

- 08:30 (CA) Canada Nov GDP M/M: 0.0%e v +0.3% prior; Y/Y: 2.1%e v 2.3% prior

- 09:00 (BE) Belgium Q4 Preliminary GDP Q/Q: No est v 0.3% prior; Y/Y: No est v 0.9% prior

- 09:00 (US) Jan ISM Milwaukee: No est v 57.61 prior

- 09:45 (US) Jan Chicago Purchasing Manager: 57.5e v 58.3 prior

- 10:00 (US) Jan Final University of Michigan Confidence: 98.2e v 98.2 prelim

- 10:00 (MX) Mexico Dec Net Outstanding Loans (MXN): No est v 2.686T prior

- 11:00 (CO) Colombia Dec National Unemployment Rate: No est v 7.7% prior; Urban Unemployment Rate: No est v 8.7% prior

- 11:30 (DE) German Bundesbank Nagel in Munich

- 12:45 (US) Fed's Tarullo (voter) on macroprudential policy

- 15:00 (AR) Argentina Dec Construction Activity M/M: No est v -1.0% prior; Y/Y: No est v 0.1% prior

- (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 4.50%

- (MX) Mexico Dec YTD Budget Balance (MXN): No est v -461.3B prior