Euro Zone CPI hits 5% for record high, awaiting US payroll data

Notes/Observations

- French and German Nov Industrial Production miss expectations while exports grew despite persisting supply bottlenecks.

- Euro Zone Dec Preliminary CPI at fresh record high; stalling hope that EU inflation would stabilize.

- Focus on upcoming US payroll data and the recent hawkish takeaways from the FOMC Dec minutes.

Asia

- Japan Dec Tokyo CPI Y/Y: 0.8% v 0.7%e CPI (ex-fresh food) Y/Y: 0.5% v 0.5%e (core matched the fastest annualized pace since Feb 2020].

- Japan Nov Household Spending Y/Y: -1.3% v +1.2%e.

- Japan Fin Min Suzuki reiterated the importance of FX stability; Monitoring spread of omicron at home and abroad.

- China CSRC (securities regulator) Chairman Yi Huiman stated that the government's policies would help stabilize the stock market in 2022; to adopt various measures to stabilize the stock market in 2022.

Americas

- Fed's Bullard (2022 voter, hawk) stated that FOMC could start raising rates as soon as March; Fed could also tighten policy with passive balance sheet drawdown.

- Fed's Daly (non-voter, dove) stated that would need to raise rates to keep economy in balance; We've come to a point where it is clear inflation was rising in sectors not affected directly by COVID.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.30% at 486.70, FTSE 0.00% at 7,450.48, DAX -0.41% at 15,986.47, CAC-40 -0.17% at 7,237.38, IBEX-35 -0.65% at 8,732.50, FTSE MIB +0.38% at 27,762.00, SMI -0.08% at 12,782.25, S&P 500 Futures +0.06%].

Market Focal Points/Key Themes: European indices open mixed with a modest upward bias but then switched to a downward bias later in the session; sectors trending higher include financials technology; while sectors trending downward include materials and consumer discretionary; tech sector supported by prelim results from STMicro; Russia and Ukraine closed for holiday; Royal Unibrew takes remaining stake in Hansa Borg Bryggerier; focus on upcoming release of NFP; no major earnings expected later during the US session.

Equities

- Consumer discretionary: Aston Martin Lagonda Global Holdings [AML.UK] +3% (trading update), Lookers [LOOK.UK] +2% (trading update).

- Energy: Royal Dutch Shell [RDSA.NL] +1% (Q4 update).

- Healthcare: Sanofi [SAN.FR] -1% (partnership), AstraZeneca [AZN.UK] -1% (partnership).

- Industrials: Aston Martin Lagonda Global Holdings [AML.UK] +3% (trading update).

- Technology: STMicroelectronics [STM.FR] +4% (prelim results).

Speakers

- Czech Central Banker Benda (hawk) stated that could raise the main rate by more than 50bps at the Feb meeting **Reminder: Czech Central Bank raised the 2-Week Repurchase Rate by 100bps to 3.75% in Dec).

- Poland PM Morawiecki announce new anti-inflation package which planned further VAT cuts on fuel.

- Kazakhstan President Kassym-Jomart Tokayev stated that order has been 'generally' restored and to address the nation later on Friday.

- Kazakhstan said to have NOT halted any oil and gas production.

Currencies/Fixed income

- FX markets steady ahead of the US payroll report. USD supported by the progressive rise in long-term US Treasury yields. Fed’s Bullard noted on Thursday that the Fed could start reducing its balance sheet soon after it began hiking rates.

- EUR/USD steady just holding above the 1.13 level. The miss in German and French Industrial Production data put some headwinds into the Euro for the time being. Hope that EU inflation would stabilize after recent readings from France, Germany and the Euro Zone.

Economic data

- (ZA) South Africa Dec Gross Reserves: $57.6B v $57.6B prior; Net Reserves: $55.3B v $55.2B prior.

- (CH) Swiss Dec Unemployment Rate: 2.6% v 2.7%e; Unemployment Rate (seasonally adj): 2.4% v 2.5%e.

- (DE) Germany Nov Industrial Production M/M: -0.2% v +1.0%e; Y/Y: -2.4% v -0.8%e.

- (DE) Germany Nov Current Account Balance: €18.9B v €17.0Be; Trade Balance: €12.0B v €12.8Be; Exports M/M: +1.7% v -0.2%e; Imports M/M: +3.3% v -1.3%e.

- (UK) Dec Halifax House Price Index M/M: 1.1% v 1.0% prior; Y/Y: 9.8% v 8,2% prior.

- (FI) Finland Nov Preliminary Trade Balance: -€0.4B v +€0.6B prior.

- (NO) Norway Nov Industrial Production M/M: -3.0% v -5.3% prior; Y/Y: 2.3% v 6.9% prior.

- (NO) Norway Nov Manufacturing Production M/M: 0.0% v -0.9% prior; Y/Y: 0.4% v 1.9% prior.

- (NO) Norway Nov Credit Indicator Growth Y/Y: 5.1% v 5.3% prior.

- (DK) Denmark Nov Gross Unemployment Rate: 2.8% v 3.0% prior; Unemployment Rate (seasonally adj: 2.4% v 2.6% prior.

- (MY) Malaysia end-Dec Foreign Reserves: $116.9B v $116.3B prelim.

- (CN) Weekly Shanghai copper inventories (SHFE): 29.2K v 38.2K tons prior.

- (CH) Swiss Nov Real Retail Sales Y/Y: 5.8% v 2.2% prior.

- (TH) Thailand end-Dec Foreign Reserves: $246.0B v $242.6B prior.

- (FR) France Nov Industrial Production M/M: -0.4% v +0.5%e; Y/Y: -0.5% v +0.6%e.

- (FR) France Nov Manufacturing Production M/M: --0.6% v +1.1% prior; Y/Y: -1.2% v +0.2% prior.

- (FR) France Nov Trade Balance: -€9.7B v -€7.2Be; Current Account Balance: -€3.6B v -€2.5B prior ‘.

- (FR) France Nov Consumer Spending M/M: 0.8% v 0.5%e; Y/Y: 14.8% v 13.9%e.

- (CH) Swiss Dec Foreign Currency Reserves (CHF): B v 921.7B prior.

- (AT) Austria Dec Preliminary CPI M/M: 0.6% v 0.7% prior; Y/Y: 4.3% v 4.3% prior.

- (CZ) Czech Q3 Final GDP (3rd reading) Q/Q: 1.6% v 1.5% prelim; Y/Y: 3.3% v 3.1% prelim.

- (CZ) Czech Nov National Trade Balance (CZK): +5.7B v -6.0Be.

- (CZ) Czech Nov Industrial Output Y/Y: 4.5% v 2.0%e; Construction Output Y/Y: 2.0% v 3.7% prior.

- (HU) Hungary Nov Industrial Production M/M: +2.9% v -0.4%e; Y/Y: +2.1% v -1.4%e.

- (HU) Hungary Nov Retail Sales Y/Y: 3.8% v 5.7% prior.

- (TW) Taiwan Dec Trade Balance: $5.8B v $5.8Be; Exports Y/Y: 23.4% v 26.4%e; Imports Y/Y: 28.1% v 31.9%e.

- (CN) China Dec Foreign Reserves: $3.250T v $3.230Te.

- (IT) Italy Q3 Budget Deficit to GDP ratio: 8.8% v 10.2% prior.

- (ZA) South Africa Dec Manufacturing PMI: 54.1 v 55.5e (5th month of expansion).

- (IS) Iceland Nov Final Trade Balance (ISK): -18.4B v -28.6B prelim.

- (PL) Poland Dec Preliminary CPI M/M: 0.9% v 0.6%e; Y/Y: 8.6% v 8.2%e (9th month above target and highest since 2001).

- (CZ) Czech Dec International Reserves: $172.7B v $170.7B prior.

- (SG) Singapore Dec Foreign Reserves: $417.9B v $413.0B prior.

- (UK) Dec Construction PMI: 54.3 v 54.0e (11th month of expansion).

- (EU) Euro Zone Dec Advance CPI Estimate Y/Y: 5.0% v 4.8%e; CPI Core Y/Y: 2.6% v 2.5%e.

- (EU) Euro Zone Nov Retail Sales M/M: +1.0% v -0.5%e; Y/Y: 7.8% v 5.6%e.

- (EU) Euro Zone Dec Economic Confidence: 115.3 v 116.0e; Industrial Confidence: 14.9 v 14.1e; Services Confidence: 11.2 v 16.1e; Consumer Confidence (final): -8.3 v -8.3 advance.

Fixed income issuance

- (ZA) South Africa sold total ZAR1.2B vs. ZAR1.2B indicated in I/L 2033, 2046 and 2050 Bonds.

- (IN) India sold total INR245B vs. INR240B indicated in 2023, 2026, 2035 and 2051 bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (IE) Ireland Nov Retail Sales Volume M/M: No est v -1.7% prior; Y/Y: No est v 1.5% prior.

- 06:00 (CL) Chile Dec CPI M/M: 0.6%e v 0.5% prior; Y/Y: 7.0%e v 6.7% prior.

- 06:00 (CL) Chile Dec Trade Balance: $0.2Be v $0.8B prior; Total Exports: No est v $8.4B prior; Total Imports: No est v $7.6B prior; Copper Exports: No est v $4.9B prior.

- 06:00 (CL) Chile Dec International Reserves: No est v $53.3B prior.

- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).

- 06:30 (IN) India Weekly Forex Reserve w/e Dec 31st: No est v $635.1B prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (IN) India FY21/22 GDP Annual Estimate (current fiscal year) Y/Y: +9.3%e v -7.3% prior.

- 07:00 (MX) Mexico Dec CPI M/M: 0.5%e v 1.1% prior; Y/Y: 7.5%e v 7.4% prior; CPI Core M/M: 0.8%e v 0.4% prior.

- 07:00 (MX) Mexico Dec Vehicle Production: No est v 249.0K prior.

- 08:00 (BR) Brazil Dec Vehicle Production: No est v 206.0K prior; Vehicle Sales: No est v 173.0K prior; Vehicle Exports: No est v 28.0K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Dec Change in Nonfarm Payrolls: +447Ke v +210K prior; Change in Private Payrolls: +405Ke v +235K prior; Change in Manufacturing Payrolls: +35Ke v +31K prior.

- 08:30 (US) Dec Unemployment Rate: 4.1%e v 4.2% prior; Underemployment Rate: No est v 7.8% prior; Labor Force Participation: 61.9%e v 61.8% prior.

- 08:30 (US) Dec Average Hourly Earnings M/M: 0.4%e v 0.3% prior; Y/Y: 4.2%e v 4.8% prior; Average Weekly Hours: 34.8e v 34.8 prior.

- 08:30 (CA) Canada Dec Net Change in Employment: +25.0Ke v +153.7K prior; Unemployment Rate: 6.0%e v 6.0% prior; Full Time Employment Change: +5.3Ke v +79.9K prior; Part Time Employment Change: +10.0Ke v +73.8K prior; Participation Rate: 65.3%e v 65.3% prior; Hourly Wage Rate Y/Y: 3.2%e v 3.0% prior.

- 09:30 (TR) Turkey Dec Cash Budget Balance (TRY): No est v 30.3B prior.

- 10:00 (CA) Canada Dec Ivey Purchasing Managers Index (Seasonally adj): No est v 61.2 prior; - PMI (unadj): No est v 91.2 prior.

- 10:00 (US) Fed’s Daly on monetary policy (participates on AEA Panel).

- 11:00 (EU) Potential sovereign ratings after European close.

- 12:00 (US) Fed’s Barkin Discusses Economic Outlook.

- 12:15 (UK) BOE's Mann speaks on US economy.

- 12:15 (US) Fed’s Bostic participates on AEA Panel.

- 13:00 (US) Weekly Baker Hughes Rig Count.

- 15:00 (US) Nov Consumer Credit: $20.0Be v $16.9B prior.