Quiet session with US holiday; focus on Italy PM in Parliament

Notes/ObservationsAsia

- Quiet session with US markets closed for holiday

- Better-than-expected Chinese economic data fails to stimulate risk-on appetite in Europe

- Biden set to be inaugurated as the next US President on Wednesday

- Plethora of debt issuance continues in week

- Plethora of central bank rate decisions in week (10 total including BOJ, ECB)

Asia:

- China Q4 GDP data mixed (QoQ: 2.6% v 2.7%e; YoY: 6.5% v 6.2%e). Overall 2020 GDP was the slowest growth in over 4 decades (2.3% v 2.1%e)

- China Dec Industrial Production registered its 9th straight month of increases ( Y/Y: 7.3% v 6.9%e)

- China Dec Retail Sales YoY: 4.6% v 5.5%e

- China National Bureau of Stats (NBS) Chief Ning Jizhe stated that govt met its 2020 major economic targets better than expected

- BOJ said to consider a proposal to allow wider fluctuations around its long-term yield target by 0.2% either side of zero

- Japan Economy Min Nishimura: Sees economy picking up due to COVID stimulus, but downside risks remain over virus resurgence

Coronavirus:

- Total global cases above 95.0M (+2.1% vs. Fri); total deaths: 2.03M (+1.9% vs. Fri)

Europe:

- Merkel ally Armin Laschet wins CDU leadership election

- Italy PM Conte to go ahead with parliament vote to clarify political situation. PM said to have the prospect of a thin majority. Former coalition partner Renzi said to have told his ministers to abstain in confidence votes (Note: recent reports circulated that PM Conte's allies appeared confident he could survive a confidence vote in the Senate on Tuesday (Senate vote said to be a harder challenge to win)

- Italy govt saw debt rising to 158.5% of GDP in 2021, a post-war record

- EU said to have drafted plans to strengthen the EUR currency international role, weaken the dominance of USD and reduce Europe’s vulnerability to US sanctions and other financial risks

- UK Foreign Min Raab reiterated govt stance that was too early to talk about easing lockdown in Feb but did hope to ease some restrictions in early spring

- Chancellor of the Exchequer Sunak (Fin Min) said to be planning on raising taxes in March’s budget if the coronavirus vaccination program remained on track

- Russia opposition leader Navalny was detained upon arrival in Moscow airport

- Fitch affirmed UK sovereign rating at AA-; outlook Negative

Americas:

- President-elect Biden said to be planning to use executive order to cancel the Keystone XL Pipeline permit

- Treasury Sec nominee Yellen said to affirm commitment to market-determined US dollar rate; to make clear US did not seek weaker dollar for competitive advantage

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.14% at 407.28, FTSE -0.11% at 6,728.15, DAX -0.12% at 13,771.10, CAC-40 -0.32% at 5,593.68, IBEX-35 -0.40% at 8,198.00, FTSE MIB +0.09% at 22,402.50, SMI -0.03% at 10,874.27, S&P 500 Futures -0.18%]

Market Focal Points/Key Themes: European indices open lower across the board but moderated losses as the session wore on; concern over increased covid restrictions weighing on risk sentiment; single sector performing in the green is consumer discretionary; energy and utilities sectors leading among underperformers; airline and travel names weighed on by extension of lockdowns; Peugeot-Fiat-Chrysler merger Stellantis starts trading in Europe; Tikkurila to be acquired by Azko Nobel; Total takes stake in Adani Green; US closed for holiday

Equities

- Consumer discretionary: Carrefour [CA.FR] -6% (joint statement with Couche-Tard), Warpaint [W7L.UK] +10% (trading update), Velocys [VLS.UK] -19% (project update)

- Materials: Tikkurila [TIK1V.FI] +7% (increased offer)

- Financials: Bonava [BONAVB.SE] +8% (prelim earnings)

Speakers

- EU Economic Commissioner Gentiloni (Italy): EU might take more anti-pandemic economic measures in spring

- German govt said to have finalized its 2020 budget with net new debt lower than €150B

- China Finance Ministry said to have decided to sanction US officials over Taiwan

Currencies/Fixed Income

- USD maintained its recent gains in a very quiet start to the week. The greenback at 1-month highs against major pairs as it has risen by 2% since the start of the year.

- EUR/USD at 1.2065 at mid-session and USD/JPY holding below the 104 level in subdued trade

Economic data

- (IT) Italy Dec Final CPI M/M: -0.2% v +0.3% prelim; Y/Y: -0.2% v -0.1% prelim; CPI Index (ex-tobacco): 102.3 v 102.0e

- (IT) Italy Dec Final CPI EU Harmonized M/M: 0.2% v 0.2% prelim; Y/Y: -0.3% v -0.3% prelim

- (CH) Swiss weekly Total Sight Deposits (CHF): 703.8 v 702.4B prior; Domestic Sight Deposits: 634.1B v 628.9B prior

Fixed income Issuance

- None seen

Looking Ahead

- (IL Israel Central Bank (BOI) Jan Minutes

- 05:30 (DE) Germany to sell €6.0B in 3-month and 9-month Bubills

- 05:30 Netherlands Debt Agency (DSTA) to sell €1.0-3.0B in 3-month and 6-month bills

- 06:00 (RO) Romania to sell RON500M in 3.65% 2031 Bonds

- 06:00 (IL) Israel to sell bonds

- (EU) Euro-Area Finance Ministers (Eurogroup) meeting

- 06:00 (SW) Sweden Central Bank (Riksbank) Jansson

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Nov Economic Activity Index (Monthly GDP) M/M: 0.5%e v 0.9% prior; Y/Y: -1.0%e v -2.6% prior

- 08:00 (PL) Poland Dec CPI Core M/M: -0.1%e v +0.2% prior; Y/Y: 3.7%e v 4.3% prior

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance (bonds)

- 08:15 (CA) Canada Dec Annualized Housing Starts: 230.0Ke v 246.0K prior

- 08:30 (CA) Canada Nov Int'l Securities Transactions (CAD): No est v 6.9B prior

- 08:30 (UK) BOE Governor Bailey with Lord Stern on Climate
08:50 (FR) France Debt Agency (AFT) to sell €4.8-6.0B in 3-month, 6-month and 12-month bills

- To sell €2.5B in 3-month Bills

- To sell €1.5B in 6-month Bills

- To sell €0.7B in 12-month Bills (45-week)

- To sell €1.3B in 12-month Bills (47-week)

- 09:00 (SE) Sweden Fin Min Andersson participates in IMF Press Conference

- 09:45 (EU) ECB weekly QE bond buying update

- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (3-7 years)

- 10:00 (CO) Colombia Nov Industrial Production Y/Y: No est v -8.0% prior; Manufacturing Production Y/Y: +1.0%e v -2.7% prior

- 10:00 (CO) Colombia Nov Retail Sales Y/Y: 5.6%e v 3.0% prior

- 14:00 (CO) Colombia Nov Economic Activity Index (Monthly GDP) Y/Y: -3.4%e v -4.5% prior

- 16:45 (NZ) New Zealand Dec Total Card Spending M/M: No est v 0.1% prior; Retail Card Spending M/M: No est v 0.1% prior

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 108.9 prior

- 21:00 (SL) Sri Lanjka Central Bank (CBSL) Interest Rate Decision: Current Standing Deposit Rate at 4.50%; Current Standing Lending Rate at 5.50%

- 22:00 (TH) Thailand Central Bank to sell THB60B in 3-month bills

- 22:30 (JP) Japan to sell 12-Month Bills

- 22:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month bills

- 22:35 (JP) Japan to sell 20-Year JGB Bonds