TradeTheNews.com Staff
TradeTheNews.com
Notes/Observations
- Risk appetite finds fresh legs in New Year as optimism China's eventual emergence from COVID coupled with further evidence of peak inflation.
-Healthier economic data out of Europe as headline CPI came in below estimates and Services PMI beats, albeit remaining in contraction territory, beats for Spain, Italy, France, Germany, Euro Zone.
- France and Swiss Dec CPI both came in below consensus and off recent cycle highs, reinforcing theme of passing peak inflation in Europe. Focus still on Core CPI, with Euro Zone Core CPI releasing this Friday. French OAT yields pulled back notably after CPI release.
- German Nov Import Prices registered its biggest MoM drop on record and lowest annual pace in 17 months.
-Asia closed mixed with Nikkei225 underperforming at -1.5%. EU indices are +0.4% to +1.5%. US futures are +0.3% to +0.5%. Gold +1.1%, DXY -0.5%; Commodity: Brent -2.1%, WTI -2.1%, UK Nat Gas -5.1%; Crypto: BTC +0.6%, ETH +2.7%.
Asia
- Japan PM Kishida stated that would review price target agreement with the next Bank of Japan (BOJ) Gov (**Note: Kuroda term ends in Apr).
- BOJ announced another unscheduled bond buying operation for 1-3yr, 3-5yr, 5-10yr, and 10-25yr JGBs [4th straight session of emergency bond purchases].
- South Korea President Yoon said to consider suspending the 2018 Inter-Korea Military agreement if North Korea intrudes into South Korea again.
- China expected to stop expensive chip investments due to budget strains from coronavirus, was previously planning incentives totaling up to $145B.
- China said to be considering measures to support 'too big to fail' developers.
Ukraine conflict
- Russia President Putin said to be planning to talk to Turkey President Erdogan on Wednesday.
Europe
- EU Countries said to have agreed on a coordinated approach to the changing Covid 19 situation.
- UK Dec BRC Shop Price Index Y/Y: 7.3% v 7.4% prior (food prices hit a record rise of 13.3%).
Americas
- McCarthy lost a third round of voting for House speaker; will continue to vote until someone wins a majority. (**Note: House cannot conduct any business until a speaker is elected).
Speakers/fixed income/fx/commodities/erratum
Equities
Indices [Stoxx600 +0.92% at 438.16, FTSE +0.29% at 7,575.80, DAX +1.13% at 14,341.45, CAC-40 +1.28% at 6,708.50, IBEX-35 +1.33% at 8,509.32, FTSE MIB +0.80% at 24,633.00, SMI +0.90% at 11,076.90, S&P 500 Futures +0.43%].
Market Focal Points/Key Themes: European indices open higher across the board and advanced through the early part of the session; sectors leading to the upside include consumer discretionary and industrials; lagging sectors include energy and materials; oil & gas subsector under pressure as Brent drops towards $80/bbl; focus on release of FOMC minutes later in the day; no major earnings expected in the upcoming US session.
Equities
- Consumer discretionary: Ryanair [RYA.IE] +3% (reports Dec figures).
- Consumer staples: Heineken [HEIA.NL] +2% (analyst action - Barclays raises to equal weight).
- Energy: BKW [BKW.CH] +5.5% (raises FY22 EBIT guidance).
- Financials: Grenke [GLJ.DE] +4% (reports Q4/FY22), KBC Groep [KBC.BE] -1% (analyst action - Exane BNP Paribus cuts to underperform), Avanza Bank [AZA.SE] -6% (inflows data).
- Industrials: Kongsberg [KOG.NO] +1% (large order), Rheinmetall [RHM.DE] -1.5% (contract).
- Technology: ASML [ASML.NL] +1% (China said to stop expensive chip investments due to budget strains from coronavirus), Legrand [LR.FR] +1% (analyst action - Bernstein raises to outperform).
Speakers
- France Fin Min Le Maire reiterated stance that inflation should slow during 2023.
- Portugal Debt Agency (IGCP) published its 2023 Borrowing Strategy which saw net financing needs at €12.4B and gross govt bond issuance at €19.8B.
- China Foreign Ministry spokesperson Mao stated that it hoped nations could avoid politicizing virus situation; China had been sharing data on COVID responsibly. COVID measures should be based on science.
Currencies/fixed income
- Risk appetite found fresh legs in the session as optimism China's eventual emergence from COVID percolated coupled with hope of seeing peak inflation.
- USD was softer againt the pair pairs and reversing the gains exhibited on Tuesday. Focus on the upcoming release of FOMC December Minutes where the Fed slowed down the pace of tightening. EUR/USD back above the 1.06 handle with USD/JPY drifting back to 130.30 area.
- European bond yield declined 15-20bps in the both the core and peripheral countries. German Nov Import Prices continued to ease,h and France Dec Preliminary CPI moved off recent cycle highs.
Economic data
- (DE) Germany Nov Import Price Index M/M: -4.5% v -1.7%e; Y/Y: 14.5 % v 18.0%e.
- (CH) Swiss Dec CPI M/M: -0.2% v -0.1%e; Y/Y: 2.8% v 3.0%e; CPI Core Y/Y: 2.0% v 1.9%e.
- (CH) Swiss Dec CPI EU Harmonized M/M: -0.2% v -0.1% prior; Y/Y: 2.7% v 2.9%e.
- (SE) Sweden Dec PMI Services: 53.0 v 54.3 prior; PMI Composite: 51.0 v 51.9 prior.
- (HU) Hungary Oct Average Gross Wages Y/Y: 18.4% v 18.0%e.
- (FR) France Dec Preliminary CPI M/M:-0.1% v +0.5%e; Y/Y: 5.9% v 6.4%e.
- (FR) France Dec Preliminary CPI EU Harmonized M/M: -0.1% v +0.4%e; Y/Y: 6.7% v 7.3%e.
- (FR) France Dec Consumer Confidence: 82 v 84e.
- (ES) Spain Dec Services PMI: 51.6 v 50.7e; Composite PMI: 49.9 v 49.6 prior.
- (HK) Hong Kong Nov Retail Sales Value Y/Y: -4.2% v +4.8%e; Retail Sales Volume Y/Y: -5.3% v +3.5%e.
- (IT) Italy Dec Services PMI: 49.9 v 49.5 prior (4th straight contraction); Composite PMI: 49.6 v 48.9 prior.
- (FR) France Dec Final Services PMI: 49.5 v 48.1 prelim (confirms 2nd straight contraction); Composite PMI: 49.1 v 48.0 prelim.
- (DE) Germany Dec Final Services PMI: 49.2 v 49.0 prelim (confirms 6th straight contraction); Composite PMI: 49.0v 48.9 prelim.
- (EU) Euro Zone Dec Final Services PMI: 49.8 v 49.1 prelim (confirms 6th straight contraction); Composite PMI: 49.3 v 48.8 prelim.
- (UK) Nov Net Consumer Credit: £1.5B v £1.0Be; Net Lending: £4.4B v £3.6B prior.
- (UK) Nov Mortgage Approvals: 46.1K v 53.0Ke.
- (UK) Nov M4 Money Supply M/M: -1.6% v +0.1% prior; Y/Y: 2.5% v 4.8% prior; M4 (ex-IOFCs) 3-Month Annualized: 3.8% v 8.8% prior.
Fixed income issuance
- (IN) India sold total INR210B vs. INR210B indicated in 3-month, 6-month and 12-month bills.
- (SL) Slovenia opened book to sell EUR-denominated 10-year and 20-year bonds via syndicate.
- (AT) Austria Debt Agency (AFFA) opened its book to sell EUR-denominated 10-year bond via syndicate; guidance seen at +10bps to mi.
- (HU) Hungary opened its book to sell USD-denominated 5-year, 10-year and 30-year bonds via syndicate.
- (DK) Denmark sold total DKK2.7B in 2024 and 2031 DGB Bonds.
Looking ahead
- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 6.75% (no set time).
- 06:00 (NZ) New Zealand Dec Corelogic House Prices Y/Y: N o est v -2.9% prior.
- 06:00 (EU) European Union to sell combined €2.5B in 3-month and 6-month bills.
- 06:30 (TR) Turkey Nov Real Effective Exchange Rate (REER): No est v 55.65 prior.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (US) MBA Mortgage Applications w/e Dec 30th: No est v 0.9% prior (2-weeks’ worth of data).
- 07:00 (MX) Mexico Dec Vehicle Domestic Sales: No est v 95.6K prior.
- 08:00 (CZ) Czech Dec Budget Balance (CZK): No est v -337.1B prior.
- 08:00 (BR) Brazil Dec Services PMI: No est v 51.6 prior; Composite PMI: No est v 49.8 prior.
- 08:00 (HU) Hungary Central Bank (MNB) Dec Minutes.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:55 (US) Weekly Redbook LFL Sales data.
- 10:00 (US) Dec ISM Manufacturing: 48.5e v 49.0 prior; Prices Paid: 42.9e v 43.0 prior.
- 10:00 (US) Nov JOLTS Job Openings: 10.050Me v 10.334M prior.
- 11:30 (US) Treasury to sell 17-Week Bills.
- 14:00 (US) Dec FOMC Meeting Minutes.
- 16:30 (US) Weekly API Oil Inventories.
- 17:00 (AU) Australia Dec Final PMI Services: No est v 47.3 prelim; PMI Composite: No est v 47.3 prelim.
- 18:50 (JP) Japan Dec Monetary Base Y/Y: No est v -6.4% prior.
- 19:30 (SG) Singapore Dec PMI (Whole economy): No est v 56.2 prior.
- 19:30 (HK) Hong Kong Dec PMI (Whole economy): No est v 48.7 prior.
- 20:00 (PH) Philippines Dec CPI Y/Y: 8.2%e v 8.0% prior.
- 20:01 (IE) Ireland Dec PMI Services: No est v 50.8 prior; PMI Composite: No est v 48.8 prior.
- 20:45 (CN) China Dec Caixin PMI Services: 46.8e v 46.7 prior; PMI Composite: No est v 47.0 prior.
- 22:30 (TH) Thailand Dec CPI M/M: -0.1%e v -0.1% prior; Y/Y: 5.9%e v 5.5% prior; CPI Core Y/Y: 3.3%e v 3.2% prior.
- 22:30 (JP) Japan to sell 3-Month Bills.
- 22:35 (JP) Japan to sell 10-Year JGB Bonds.
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