Biden to sign overa dozen executive actions following inauguration to undo Trump policies

Notes/ObservationsAsia

- UK CPI data looked to have bottomed out and expected to return towards the BOE 2% target over 2021

- New era for US politics; incoming Biden administration likely to pursue a heavy stimulus program; to begin immediately unwinding President Trump’s policies on immigration, climate and other issues

Asia:

- China PBoC leaves both 1-year and 5-year Loan Prime Rates (LPR) unchanged for the 9th consecutive month of steady rates

- Japan PM Suga stated that would decide if special employment support would be extended beyond March based on jobs situation; Denied Virus policy had been delayed by groundless optimism

Coronavirus:

- Total global cases 96.1M (+0.6% d/d); total deaths: 2.06M (+0.8% d/d)

Europe:

- ECB said to be buying bonds to limit the difference between yields for the strongest and weakest economies in the Euro Zone, targeting what spreads were appropriate.

- Italy PM Conte won confidence vote in Senate to back his economic recovery plan; keep his fragile government afloat

Americas:

- Senate Majority Leader McConnell stated that President Trump was to blame for the attack on the capitol building adding he fed the mob lies and were provoked into using fear and violence in an effort to halt proceedings

- House Speaker Pelosi stated that would be sending articles of impeachment against Donald Trump to the Senate soon

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.67% at 410.66, FTSE +0.30% at 6,733.01, DAX +0.67% at 13,907.80, CAC-40 +0.64% at 5,634.24, IBEX-35 +0.18% at 8,214.00, FTSE MIB +0.18% at 22,611.50, SMI +0.34% at 10,914.10, S&P 500 Futures +0.34%]

Market Focal Points/Key Themes: European indices open modestly higher and continued to advance as the session progressed; industrials and technology sectors leading to the upside; health care and utilities sectors among weaker performers; earnings expected during the upcoming US session include UnitedHealth, Fastenal, P&G and Morgan Stanley

Equities

- Consumer discretionary: Richemont [CFR.CH] +4% (sales), Burberry [BRBY.UK] +4% (trading update), International Workplace Group [IWG.UK] -2% (trading update), Dixons Carphone [DC.UK] -1% (trading update)

- Industrials: BASF [BAS.DE] +1.5% (prelim results)

- Technology: ASML [ASML.NL] +3% (earnings)

- Materials: Antofagasta [ANTO.UK] +1% (production)

Speakers

- President-elect Biden to sign 15 executive actions following inauguration. Biden to begin immediately unwinding President Trump’s policies on immigration, climate and other issues on Wednesday

- Poland Central Bank member Kochalski stated that MPC did have some room for additional rate cuts but space for such cuts was small

- Malaysia Central Bank (BNM) Policy Statement reiterated stance that current monetary policy was appropriate and accommodative. It was committed to use policy levers as needed. Forward stance to be guided by new data and information on growth and inflation. Pandemic impact on growth seen as less severe in 2021 but near-term outlook was affected by the re-introduction of virus restrictions. Growth trajectory to improve from Q2

Currencies/Fixed Income

- USD was softer in the session. Greenback’s tone stemming from the outlook that the incoming Biden administration would likely to pursue a heavy stimulus program.

- GBP/USD edging back toward the 1.37 area after UK CPI data looked to have bottomed out. Dec saw inflationary pressures picked up despite the severe drag on economic activity from the reintroduction of harsh pandemic restrictions. Analysts noted that inflation was expected to return towards the BOE 2% target over the course of 2021

Economic data

- (UK) Dec CPI M/M: 0.3% v 0.2%e; Y/Y: 0.6% v 0.5%e; CPI Core Y/Y: 1.4% v 1.3%e; CPIH Y/Y: 0.8% v 0.7%e

- (UK) Dec RPI M/M: 0.6% v 0.6%e; Y/Y: 1.2% v 1.2%e; RPI-X (ex-mortgage interest payments) Y/Y: 1.4% v 1.3%e; Retail Price Index: 295.4 v 295.3e

- (UK) Dec PPI Input M/M: 0.8% v 0.9%e; Y/Y: 0.2% v 0.5%e

- (UK) Dec PPI Output M/M: 0.3% v 0.2%e; Y/Y: -0.4% v -0.6%e

- (DE) Germany Dec PPI M/M: 0.8%e v 0.3%e; Y/Y: +0.2% v -0.4%e

- (MY) Malaysia Central Bank (BNM) left the Overnight Policy Rate unchanged at 1.75% (as expected)

- (TW) Taiwan Dec Export Orders Y/Y: 38.3% v 30.4%e

- (ES) Spain Nov House transactions Y/Y: +1.9% v -13.3% prior

- (AT) Austria Dec CPI M/M: 0.6% v 0.2% prior; Y/Y: 1.2% v 1.3% prior

- (ZA) South Africa Dec CPI M/M: 0.2% v 0.2%e; Y/Y: 3.1% v 3.1%e

- (ZA) South Africa Dec CPI Core M/M: 0.2% v 0.1%e; Y/Y: 3.3% v 3.3%e

- (UK) Nov House Price Index Y/Y: 7.6% v 5.6%e

- (EU) Euro Zone Dec Final CPI Y/Y: -0.3% v -0.3%e; CPI Core Y/Y: 0.2% v 0.2%e; CPI M/M: 0.3% v 0.3%e

Fixed income Issuanc

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills

- (DK) Denmark sold DKK 5.005B in new 0% 2031 DGB Bonds; Avg Yield: -0.32%; bid-to-cover: 2.60x

- (SE) Sweden sold SEK15.0B vs. SEK15.0B indicated in 3-month Bills; Avg Yield: -0.1777% v -0.1800% prior; Bid-to-cover: 1.52x v 1.61x prior

Looking Ahead

- (IL) Israel Jan 12-month CPI Forecast: No est v 0.5% prior

- (VN) Vietnam to sell combined 2036, 2041 and 2051 bonds

- 05:10 (EU) Daily ECB Liquidity Stats

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

- 05:30 (DE) Germany to sell €1.5B in 0% Aug 2050 Bunds

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 6-month and 12-month bills

- 06:00 (RU) Russia to sell RUB25B in July 2025 OFZ bonds

- 07:00 (US) MBA Mortgage Applications w/e Jan 15th: No est v 16.7% prior

- 07:00 (UK) Weekly PM Question time in House

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

- 08:30 (CA) Canada Dec CPI M/M: 0.1%e v 0.1% prior; Y/Y: 1.1%e v 1.0% prior; Consumer Price Index: 137.7e v 137.7 prior; CPI Core- Median Y/Y: 1.9%e v 1.9% prior; CPI Core- Common Y/Y: 1.5%e v 1.5% prior; CPI Core- Trim Y/Y: 1.7%e v 1.7% prior

- 08:30 (CA) Canada Dec Teranet HPI M/M: No est v 0.9% prior; Y/Y: No est v 9.0% prior; House Price Index (HPI): No est v 248.39 prior

- 08:55 (US) Weekly Redbook LFL Sales data

- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (7-20 years)

- 10:00 (US) Jan NAHB Housing Market Index: 86e v 86 prior

- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 0.25%

- 10:00 (CO) Colombia Nov Trade Balance: -$1.3Be v -$0.9B prior; Total Imports: $4.1Be v $3.7B prior

- 12:00 (UK) BOE' Gov Bailey and MPC member Brazier on Citizens' Panel

- 12:00 (US) Inauguration of Biden

- 13:00 (US) Treasury to sell 20-Year Bonds

- 16:00 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Rate Target unchanged at 2.00%

- 16:00 (KR) South Korea Dec PPI Y/Y: No est v -0.3% prior

- 16:30 (US) Weekly API Oil Inventories

- 16:45 (NZ) New Zealand Nov Net Migration: No est v 0.9K prior

- (MX) Mexico Dec ANTAD Same-Store Sales Y/Y: No est v 2.6% prior

- (MX) Mexico Citibanamex Survey of Economists

- 18:30 (AU) Australia to sell combined A$1.5B in 3-month and 6-month bills

- 18:50 (JP) Japan Dec Trade Balance: ¥930.5Be v ¥366.1B prior (revised from ¥366.8B); Adjusted Trade Balance: ¥719.2Be v ¥570.2B prior; Exports Y/Y: +2.4%e v

-4.2% prior; Imports Y/Y: -13.9%e v -11.1% prior

- 19:00 (KR) South Korea Jan (1st 20 days) Exports Y/Y: No est v 1.2% prior; Imports Y/Y: No est v -8.0% prior

- 19:00 (AU) Australia Jan Consumer Inflation Expectation Outlook: No est v 3.5% prior

- 19:30 (AU) Australia Dec Employment Change: +50.0Ke v +90.0K prior; Unemployment Rate: 6.7%e v 6.8% prior; Full Time Employment Change: No est v +84.2K prior; Part Time Employment Change: No est v +5.8K prior; Participation Rate: 66.2%e v 66.1% prior

- 20:00 (CN) China Dec Swift Global Payments (CNY): No est v 2.0% prior

- 20:00 (PH) Philippines Dec Trade Balance: -$1.7Be v -$1.7B prior; Exports Y/Y: 2.6%e v 3.0% prior; Imports Y/Y: -11.3%e v -18.9% prior

- 21:00 (NZ) New Zealand Dec Non Resident Bond Holdings: No est v 49.7% prior

- 18:30 (AU) Australia to sell combined A$1.5B in 3-month and 6-month bills

- (JP) BOJ Interest Rate and Policy Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintain 10-year Yield Curve Target (YCC) at 0.00%

- (JP) BOJ Quarterly Staff Projections