Bond issuance remains heavy

Notes/observations

- Sovereign and corporate bond issuance remains heavy amid expectations that interest rates have peaked; Spain syndicate drew over record €130B in bids.

- Norway central bank remains unlikely to raise interest rates any further as price inflation now looks stable.

- Focus turns to Thursday US CPI data to help predict the likelihood of a March rate cut; Fed's Williams (voter) to speak later today.

- Asia closed mixed with Nikkei225 outperforming at +2.1%. EU indices are +0.1% to -0.1%. US futures are -0.1% to +0.4%. Gold +0.3%, DXY -0.2%; Commodity: Brent -0.3%, WTI -0.3%, TTF -0.1%; Crypto: BTC -1.7%, ETH +5.4%.

Asia

- South Korea Dec Unemployment Rate registered its lowest since data release began in 2000 (2.7% v 2.9%e).

- Japan Nov Labor Cash Earnings Y/Y: 0.2% v 1.5%e; Real Cash Earnings Y/Y: -3.0% v -2.0%e.

- Australia Nov CPI registered its slowest annual rise since Jan 2022 (Y/Y: 4.3% v 4.4%e).

Taiwan

- China Ambassador Xie Feng: Chinese government simply has no room for compromise” with separatists.

Global conflict/tensions

- US and Chinese military officials held its first talks since 2021. Meeting stressed the importance of maintaining military-to-military communications “to prevent competition from veering into conflict”.

- UK Navy reports 'incident' in Red Sea near Yemen coast, west of Al Hudaydah.

- US Central Command stated that a “complex attack” was launched by the Houthis included bomb-carrying drones, cruise missiles and one anti-ship ballistic missile (**Insight" Houthi have launched over two dozen attacks on commercial shipping lanes in the Red Sea since Nov 19th).

- North Korea leader Kim Jong-un called South Korea the country's "principal enemy".

Europe

- ECB’s Villeroy (France) stated that must remain vigilant on inflation data; Short of any surprises, 2024 would be the year of our first rate cuts. Decisions will be based on data, would not be stubborn or rushed.

- ECB’s De Guindos (Spain) reiterated future ECB decisions to stay data-dependent, but economic prospects tilted to the downside; Saw first signs of labor-market correction.

Americas

- Senate minority leader McConnell (R-KY) stated that the Senate would have to pass a stopgap funding bill to keep the government open as work continues on full-year fiscal 2024 legislation.

- World Bank saw 2024 Global GDP growth slowing to 2.4% compared to 2023 pace of 2.6%.

Energy

- Weekly API Crude Oil Inventories: -5.2M v -7.4M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.10% at 477.76, FTSE -0.15% at 7,672.06, DAX +0.30% at 16,737.67, CAC-40 +0.18% at 7,439.67, IBEX-35 +0.02% at 10,062.50, FTSE MIB +0.34% at 30,511.00, SMI +0.04% at 11,252.70, S&P 500 Futures +0.18%].

Market focal points/key themes: European indices open generally lower; better performing sectors include real estate and consumer discretionary; among sectors pushing lower are health care and financials; UK grocers impacted after disappointing results from Sainsbury’s; Pennon acquires Sutton and East Surrey Water; Belvoir and Property Franchise agree to merge; earnings expected in the upcoming US session include KB Home.

Equities

- Consumer discretionary: Persimmon [PSN.UK] +3.5% (trading update), Greggs [GRG.UK] +7.5% (trading update), Bang & Olufsen [BO.DK] -8.5% (earnings; trims outlook), Campari [CPR.IT] -5.5% (completes placement), Dustin Group [DUST.SE] +15.5% (earnings).

- Consumer staples: Sainsbury [SBRY.UK] -4.5% (trading update on Christmas sales).

- Healthcare: Idorsia [IDIA.CH] -5.5% (considering out-licencing to extend cash runway; postpones full year results).

- Technology: Infineon Technologies [IFX.DE] -1.0% (TSMC monthly sales).

- Materials: Rio Tinto [RIO.UK] -1.0% iIron ore prices extend declines to 5th consecutive day).

Speakers

- ECB’s De Guindos (Spain) stated that future ECB decisions to stay data-dependent; Economic prospects tilted to the downside; Growth developments are more disappointing. Could not rule out technical recession in H2. Rapid disinflation likely to slow in 2024; Euro zone disinflation to pause at early 2024.

- German VDMA Engineering Association: Nov Orders -13% y/y.

- Thailand PM Srettha spoke about interest rates with BOT (central bank). Noted that had no right to intervene on policy rate.

Currencies/fixed income

- USD continued to consolidate within a narrow range during the session. Dealer focus was on Thursday’s release of US CPI data seen as a barometer to help predict the likelihood of a March rate cut. Market currently anticipate 140 bps of cuts this year by the Fed.

- EUR/USD steady around 1.0950 as ECB members continue to deflect any timing of a potential rate cut.

- USD/JPY retested the 145 handle in the session. Yen weighed down by some soft cash earnings data.

Economic data

- (NL) Netherlands Nov Manufacturing Production M/M: -0.8% v -1.2% prior; Y/Y: +10.0% v -1; Industrial Sales Y/Y: -8.1 v -3.1% prior.

- (FI) Finland Nov Industrial Production M/M: -0.2% v +0.5% prior; Y/Y: +1.1% v +0.5% prior.

- (SE) Sweden Nov GDP Indicator M/M: +0.2% v -0.6%e; Y/Y: 0.9% v 0.2% prior.

- (SE) Sweden Nov Private Sector Production M/M: -0.3% v -0.4% prior; Y/Y: -1.2% v -2.0% prior.

- (SE) Sweden Nov Industrial Orders M/M: +0.5% v -4.6% prior; Y/Y: 1.0% v 0.2% prior.

- (SE) Sweden Nov Industry Production Value Y/Y: +0.2% v -0.5% prior; Service Production Value Y/Y: -2.2% v -2.2% prior.

- (SE) Sweden Nov Household Consumption M/M: -0.5% v 0.5% prior; Y/Y: 0.1% v 0.7% prior.

- (SE) Sweden Nov Retail Sales M/M: -0.5% v +1.7% prior; Y/Y: -1.7% v -0.4% prior.

- 02:00 (NO) Norway Dec CPI M/M: 0.1% v 0.2%e; Y/Y: 4.8% v 4.9%e.

- (NO) Norway Dec CPI Underlying M/M: 0.2% v 0.2%e; Y/Y: 5.5% v 5.6%e.

- (NO) Norway Dec PPI (including oil) M/M: -7.4% v -0.3% prior; Y/Y: -25.6% v -15.6% prior.

- (DK) Denmark Dec CPI M/M: -0.5% v -0.3% prior; Y/Y: 0.7% v 0.6% prior.

- (DK) Denmark Dec CPI EU Harmonized M/M: -0.5% v -0.4% prior; Y/Y: 0.4% v 0.3% prior.

- (DK) Denmark Nov Industrial Production M/M: 9.9% v 1.7% prior.

- (TR) Turkey Nov Unemployment Rate: 9.0% v 8.6% prior.

- (TR) Turkey Nov Industrial Production M/M: -1.4% v -0.3% prior; Y/Y: % v 1.3% prior.

- (FR) France Nov Industrial Production M/M: 0.5% v 0.0%e; Y/Y: 0.6% v 0.3%e.

- (FR) France Nov Manufacturing Production M/M: 0.3% v 0.2 % prior; Y/Y: -0.9% v +1.2% prior.

- 03:00 (AT) Austria Nov Industrial Production M/M: -1.1% v -0.6% prior; Y/Y: -4.4% v -2.2% prior.

- (IT) Italy Nov Retail Sales M/M: 0.4% v 0.4% prior; Y/Y: 1.5% v 0.5% prior.

Fixed income issuance

- (IN) India sold total INR270B vs. INR270B indicated in 3-month, 6-month and 12-month bills.

- (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 10-year bonds via syndicate; guidance seen +11bps to SPGB.

- (EE) Estonia opened its book to sell EUR-denominated 10-year bond via syndicate; guidance seen +85bps to mid-swaps.

- (DK) Denmark sold total DKK3.815B in 2025 and 2033 DGB Bonds.

- (UK) DMO sold £3.0B in new 3.75% Mar 2027 Gilts; Avg Yield: 3.887% v 3.958% prior; bid-to-cover: 3.44x v 2.60x prior; Tail: 0.2bps v 0.4bps prior.

- (IT) Italy Debt Agency (Tesoro) sold €8.0B vs. €8.0B indicated in 12-month Bills; Avg Yield: 3.442% v 3.528% prior; Bid-to-cover: 1.35x v 1.31x prior.

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills.

- (NO) Norway sold total NOK4.0B in 2026 and 2031 Bonds.

Looking ahead

- (CO) Colombia Dec Consumer Confidence: No est v -20.9 prior.

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

- 05:30 (CH) Switzerland to sell 2038 and 2055 Bonds.

- 05:30 (DE) Germany to sell €5.0B in new 2.2% Feb 2034 Bunds.

- 06:00 (IE) Ireland Dec Unemployment Rate: No est v 4.8% prior.

- 06:00 (IL) Israel Dec Consumer Confidence: No est v 38.0 prior.

- 07:00 (US) MBA Mortgage Applications w/e Jan 5th: No est v -10.7% prior.

- 07:00 (MX) Mexico Oct Gross Fixed Investment M/M: +2.0%e v -1.5% prior; Y/Y: 23.1%e v 21.9% prior; Private Consumption Y/Y: No est v 4.5% prior.

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

- 08:00 (HU) Hungary Central Bank (MNB) Dec Minutes.

- 08:00 (BR) Brazil Dec Vehicle Production: No est v 202.7K prior; Vehicle Sales: No est v 212.6K prior; Vehicle Exports: No est v 24.1K prior.

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

- 09:00 (DE) ECB’s Schnabel (Germany).

- 09:15 (UK) BOE Gov Bailey with member Breeden in Parliament.

- 10:00 (US) Nov Final Wholesale Inventories M/M: -0.2%e v -0.2% prelim; Wholesale Trade Sales M/M: +0.4%e v -1.3% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 13:00 (US) Treasury to sell 10-Year Notes Reopening.

- 15:15 (US) Fed's Williams on 2024 Economic Outlook.

- 14:30 (ES) ECB’s De Cos (Spain).

- 16:45 (NZ) New Zealand Nov Building Permits M/M: No est v 8.8% prior (revised from 8.7%).

- 19:30 (AU) Australia Nov Trade Balance (A$): 7.5Be v 7.1B prior; Exports M/M: No est v 0.4% prior; Imports M/M: No est v -1.9% prior.

- 20:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to leave 7-day Repo Rate unchanged at 3.50%.

- 21:00 (JP) Japan Dec Tokyo Avg Office Vacancies: No est v 6.0% prior.

- 22:00 (TH) Thailand Dec Consumer Confidence: No est v 60.9 prior; Economic Confidence: No est v 55.1 prior.

- 23:00 (MY) Malaysia Nov Industrial Production Y/Y: 1.3%e v 2.7% prior; Manufacturing Sales Value Y/Y: No est v -1.4% prior.