• *** ECONOMIC DATA ***
  • SZ Nov CPI: M/M 0.5% v 0.2%e || Y/Y 1.8% v 1.5%e
  • SZ Q3 GDP: Q/Q 0.8% v 0.7%e || Prior revised from 0.7% to 0.8% |||| Y/Y 2.9% v 2.6%e
  • GE Oct Retail Sales: M/M –3.3% v –0.4%e || Prior revised from 2.3% to 1.2%e |||| Y/Y –0.6% v 0.1%e || Prior revised from –2.2% to –2.7%
  • IT Sep Large Company Employment: 0.3% v 0.4% prior
  • EU Nov CPI Estimate: 3.0% v 2.9%e
  • EU Nov Business Climate: 1.04 v 0.79e || Prior revised from 0.87 to 0.88
  • EU Nov Consumer Confidence: -8 v –7e
  • EU Nov Economic Confidence: 104.8 v 105.0e || Prior revised from 106.0 to 105.9
  • EU Nov Industrial Confidence: 3 v 1e
  • EU Nov Services Confidence: 14 v 17e
  • EU Q3 Preliminary GDP: Q/Q 0.7% v 0.7%e || Y/Y 2.7% v 2.6%e
  • EU Q3 Preliminary Household Consumption: 0.5% v 0.6%e || Prior revised from 0.5% to 0.6%
  • EU Q3 Preliminary Gross Fixed Capital Formation: 0.9 v 1.0%e || Prior revised from –0.2% to 0.0%
  • EU Q3 Preliminary Government Expenditure: 0.6% v 0.4%e || Prior revised from 0.1% to 0.2%
  • IT Nov Preliminary CPI: M/M 0.4% v 0.3%e || Y/Y 2.4% v 2.3%e
  • IT Nov Preliminary Harmonized CPI: M/M 0.3% v 0.3%e || Y/Y 2.5% v 2.5%e
  • UK Nov GFK Consumer Confidence: -10 v –9e
  • *** SPEAKERS/COMMENTS ***
  • GE Economic Minister: The inflation spike will be short-lived
  • GE Economic Minister: US must not allow the USD to fall too much
  • GE Economic Minister: 2008 GDP growth forecast is on the safe side
  • Arab Monetary Fund: Gulf states should drop peg to USD [wire citing paper]
  • Arab Monetary Fund: Revaluations of Dollar pegged gulf currencies will not solve problems of inflation [wire citing paper]
  • *** FIXED INCOME/FX/COMMODITIES/ERRATUM ***
  • Front month crude oil prices are trading lower in the session. Crude oil prices began their decline yesterday after Enbridge announced that the fire that resulted in the shutdown of four pipelines had been extinguished. Following stronger than expected y/y Q3 GDP and a stronger than expected Nov CPI estimate, both in the Euro-Zone, crude prices are on the decline today on increasing speculation that the ECB may have to raise interest rates to fight off inflation despite the financial market situation. Declining crude prices are feeding optimism to global equity markets, which is causing a rebound in the carry trades.
  • Commodity currencies are currently trading off of their best levels in the session as a result of declining crude oil prices. The Swiss franc failed to react to better than expected readings on GDP and CPI data early on in the session. Yen carry trades are in vogue today as equity markets trend higher in the session.
  • Fixed income futures are trading lower in the session. While the futures have been following a downward trend throughout the session, stronger than expected inflation and growth data in the Euro-Zone added some downward pressure mid-way through the session. In the UK long-gilt futures are off of their worst levels of the session, but remain lower. Gilt traders are awaiting the release of the DMO’s fourth-quarter issuance schedule due out at 15:30 GMT. Italy bought back a €3.5B in a buyback operation. The buyback was spread across three 2009/10 BTP and three 2009/10 CCT issues.
  • All has been quiet on the speaker front overnight, with the only comments coming from the German economic minister. There are a few Fed speakers scheduled to speak during the US session, including Plosser, Kroszner, and Poole. Over the weekend the ECB’s Bini Smaghi is scheduled to speak at the Winter University Confindustria, however no topic has been disclosed.
By: John J. Phillips IV