Notes/Observations

- China Jan FX Reserves data fell for the 3rd straight month to a 3-year low, the decline of $99.5B was less than the record decline of $107.9B seen in Dec; still concern that China would eventually devalue the Yuan further

- Bank of France Jan business confidence improves (101 vs 99e)

- A major focus this week will be on Fed Chair Yellen's semi-annual appearance before Congress


Economic data

- (JP) Japan Jan Eco Watchers Current Survey: 46.6 v 48.4e; Outlook Survey: 49.5 v 48.4e

- (FI) Finland Dec Preliminary Trade Balance: -€0.3B v -€0.2Be

- (FR) Bank of France Jan Business Sentiment: 101 v 99e

- (CZ) Czech Jan Unemployment Rate: 6.4% v 6.5%e

- (EU) Euro Zone Feb Sentix Investor Confidence: 6.0 v 7.4e

**Fixed Income Issuance:

- None seen


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -2.0% at 2,822, FTSE -1.6% at 5,757, DAX -2.1% at 9,093, CAC-40 -2.2% at 4,108, IBEX-35 -2.3% at 8,307, FTSE MIB -1.6% at 16,975, SMI -1.9% at 7,810, S&P 500 Futures -1.1%]

Market Focal Points/Key Themes: A sea of red currently engulfs the major European indices after most opening slightly higher than its Friday close but aggressively selling off in the late morning session; WTI and Brent crude giving back its gains after a strong start; upcoming notable US earnings include Cognizant Technology Solutions, Diamond Offshore Drilling, Hasbro, and Loews


Equities

- Consumer discretionary: [Casino Guichard-Perrachon CO.FR +1.7% (to sell stake in Big C Thailand for €3.1B), G4S GFS.UK -6.3% (analyst downgrade), Speedy Hire SDY.UK +8.2% (acquires OHP for £1.5M, Rail Hire UK secures new contracts)]

- Energy: [BW Ofshore BWO.NO -16.5% (Q4 results, impairment charge)]

- Financials: [Aegon AGN.NL -0.9% (Aegon UK in talks to sell £9B annuity book)]

- Industrials: [Assa Abloy ASSAB.SE -4.5% (Q4 results), Bilfinger Berger GBF.DE -2.4% (Sale of Water Technologies division), Technip TEC.FR -1.6% (GS analyst upgrade)]

- Technology: [DKSH Holding DKSH.CH +1.4% (FY15 results, dividend increase), Imagination Technologies IMG.UK -0.4% (CEO change, trading update)]


Speakers

- Spain Socialist laid out its platform to form a govt which included proposed fracking ban, progressive closure of nuclear facilities and outlaw mortgage floors. It targeted budget deficit to GDP ratio of 1.0% by 2019


Currencies

- FX markets continued to debate FOMC's policy trajectory but the greenback struggled to make back a small fraction from last week's losses. EUR/USD trying to edge towards the 1.12 level while USD/JPY hovered around the 117 level.

- Chinese currency reserve data was seen as sign that the govt was forced to up spending to keep the currency up and would eventually devalue the Yuan further

- Oil prices were initially higher on the day and this helped commodity-related pairs but oil process and equity price action resumed its soft tone as the session progressed.

**Fixed Income:

- Bund futures trade at 164.35 up 73 ticks breaking contract highs with yields at fresh 10 Month lows. With the break of 164.22 analyst eye 164.44 initial resistance with follow through targeting 164.90 . Support moves to 163.32 followed by 163.08 gap fill with a break seeing 162.70 then 162.28.

- Gilt futures trade at 120.93 up 58 ticks pushing towards contract highs on risk off trade. Analysts look for a test of contract highs at 121.14 with a break targeting 121.50 then 121.98. Support moves to 120.15 followed by 120.02 with a break seeing 119.76 initially followed by 119.58 with 119.34 to fill the gap.

- Monday's liquidity report showed Friday's excess liquidity fell to €674.0B a fall of €2.3B from €676.3B prior. This was primarily due to AFs and MonPol portfolios rising to negative €261.7B. AFs are negative when the MonPol portfolios exceed the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to €20M from a prior €29M.


Weekly Supply

- EGB Supply is expected to amount to ~€16B this week, with Austria selling €1.1B in 10 and 29 year RAGBs, and Germany selling €0.5B index linked Bonds on Tuesday, followed by Portugal selling €1-1.25B in 10 year OGBs and Germany selling €5.0B in 2 year Shatz on Wednesday. Thursday sees Italy potentially sell 3, 7 and 25 year BTPs for €6-7B (To be confirmed end of the day.) and Ireland look to sell €1.0B in 10 year Bonds.

Cash flow for the week is negative with no C&R to be repaid.

- Gilt Supply: The DMO looks to tap a 10 year I/L 10 year Gilt for €1.3B on Tuesday and sell its 29 year Gilt for £1.5B on Thursday. Cash flow for the week is negative with no C&R to be repaid.

- US Supply: This week sees a total of $62B come to market. Net cash flow for the week is negative with no C&R to be repaid.

**Political/In the Papers:

- (SA) Saudi Oil Minister al-Naimi met with Venezuela minister on Sunday; No announcement of plans of any production cuts

- (KR) North Korea launches a long-range rocket claiming to take a satellite into orbit.


Looking Ahead

- (IL) Israel Jan Foreign Currency Balance: No est v 90.6B prior

- 05:25 (BR) Brazil Central Bank Weekly Economists Survey

- 05:30 (DE) Germany to sell €3.0B in 6-month BuBills

- (IT) Italy Debt Agency (Tesoro) announcement for upcoming BTP action scheduled for Thursday, Feb 11th

- 06:00 (CL) Chile Jan CPI M/M: 0.3%e v 0.0% prior; Y/Y: 4.6%e v 4.4% prior; CPI Ex Food and Energy M/M: 0.5%e v 0.3% prior

- 06:00 (CL) Chile Jan International Reserves: No est v $38.6B prior

- 06:00 (CL) Chile Jan Trade Balance: +$0.7Be v -$0.2B prior; Total Exports: $5.1Be v $5.2B prior; Total Imports: $4.5Be v $5.4B prior; Copper Exports: No est v $2.6B prior

- 06:00 (EU) Eurgroup Dijsselbloem

- 06:45 (US) Daily Libor Fixing

- 07:00 (IN) India announces details of upcoming bond auction (held on Fridays)

- 07:00 (IN) India Q4 GDP Y/Y: 7.1%e v 7.4% prior; GVA Y/Y: 7.1%e v 7.4% prior

- 07:00 (IE) Ireland Jan Consumer Confidence: No est v 103.9 prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (CA) Canada Dec Building Permits M/M: +5.6%e v -19.6% prior

- 08:50 (FR) France Debt Agency (AFT) to sell combined €5.8-7.0B in 3-month, 6-month and 12-month bills

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

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

- 10:00 (US) Jan Change in Labor Market Conditions Index: 2.5e v 2.9 prior

- 10:00 (HU) Hungary Jan YTD Budget Balance (HUF): No est v 1.2B prior

- 11:30 (US) Treasury to sell combined $67B in 3-Month and 6-Month Bills - 19:00 (AU) Australia to sell Index-Linked Bonds

- 11:45 (CA) Bank of Canada (BOC) Dep Lane speaks in Montreal

- 16:00 (NZ) New Zealand Jan ANZ Truckometer Heavy M/M: No est v 2.6% prior

- 16:00 (US) Weekly Crop Progress Report

- 19:01 (UK) Jan BRC Sales Like-For-Like Y/Y: 0.3%e v 0.1% prior

- 19:30 (AU) Australia Jan NAB Business Conditions: No est v 7 prior; Business Confidence: No est v 3 prior

- 22:45 (JP) Japan to sell 30-Year JGB Bonds

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