Corporate earnings remain in focus

Notes/Observations

- Companies expected to report during the NY morning include CyberArk Software, Generac, Kellogg, Kraft Heinz, Lab Corp, Pepsico, Restaurant Brands International, Ryder System, Molson Coors, Tempur Sealy, Tyson Foods, Zebra Technologies

Asia:

- Lunar New Year Holiday began in the Far East , Shanghai markets closed until Feb 17th; HK markets closed until Mon, Feb 15th

- India Defense Minister announced that it reached an agreement with China to disengage troops at the disputed Tso Lake area on the border

Coronavirus:

- Total global cases 107.3M (+0.4% d/d); total deaths: 2.35m (+0.6% D/D)

Europe:

- EU’s Sefcovic said to have written to UK’s Gove telling him that he welcomed the shared commitment between the UK and the EU to work together but preserving the Northern Ireland protocol. Teething problems need to be resolved

Americas:

- Fed Chair Powell stated that the Fed to be patiently accommodative with monetary policy and to maintain support until it had achieved job and inflation goals; Would not tighten monetary policy solely in response to strong labor market

- Biden’s administration said to look at adding ‘new targeted restrictions’ on tech exports to China

- White house Senior Official stated that would be changes to trade policy; Tariffs on China to remain in place while review on policy was taking place; Looking into targeted restrictions on sensitive technology exports to China; Trade policy would be based on premise US would be better off working with allies

- President Biden Admin issued readout of call with China President Xi; talked about trade, climate, human rights. Biden expressed concern on unfair economic practices

- USTR spokesman Adam Hodge: Know there is great interest in resolving the Boeing-Airbus dispute on both sides of the Atlantic and USTR looks forward to working with our European allies to find an outcome that levels the playing field

- Biden considering Lisa Cook for open Fed seat

- Treasury Sec Yellen noted that the US was seeing an explosion of risk relating to fraud/money laundering/data privacy/terrorist funding, misuse of cryptos and virtual assets was a growing problem. Supportive of digital assets but not blind to risks

Energy:

- IAEA spokesperson: Iran has announced it has begun producing uranium metal in violation of Iran JCPOA nuclear agreement

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.34% at 410.88, FTSE +0.16% at 6,534.77, DAX +0.56% at 14,010.70, CAC-40 -0.07% at 5,666.90, IBEX-35 -0.33% at 8,039.00, FTSE MIB +0.20% at 23,311.50, SMI +0.44% at 10,873.08, S&P 500 Futures +0.34%]

Market Focal Points/Key Themes: European indices open mixed and subsequently remained without direction later in the session; better performing sectors include technology and health care; underperformers lead by financials and real estate; Platinum will not revise offer for Marston’s; earnings expected in the upcoming US session include Pepsico, L’Oreal, Walt Disney and PayPal

Equities

- Consumer discretionary: Royal Mail [RMG.UK] +5% (trading update), Clariant [CLN.CH] -3% (earnings)

- Financials: Credit Agricole [ACA.FR] +4% (earnings), Unicredit [UCG.IT] -3% (earnings)

- Healthcare: Astrazeneca [AZN.UK] +2% (earnings)

- Industrials: SSAB [SAABB.SE] -1% (earnings)

- Materials: Unibail-Rodamco-Westfield [URW,NL] -4% (earnings; suspends dividend)

Speakers

- ECB's Villerory (France) stated that the new frontier was the greening of monetary policy. Accounting for climate change was imperative for the central bank. Balance sheet greening did not mean more easing but re-calibrating tools. Could implement climate program in 3-5 years

- ECB's De Guindos (Spain) stated that the economy in H1 to be worse than expected but expected a significant rebound afterwards

- German Chancellor Merkel: Goal was to lift virus restrictions when justified. Had achieved the goal of reversing the infection trend

- EU Finance Ministers to discuss how to manage corporate transition from State aid at its Eurogroup meeting on Mon, Feb 15th

- EU Commission Winter Forecasts cut the 2021 EU-19 GDP from 4.2% to 3.8% while raising the 2022 outlook from GDP from 3.0% to 3.8%. Economy should return to pre-pandemic growth levels in 2022 (except for Italy and Spain)

- UK Official Gove: We were overcoming difficulties over exporting seafood

- EU authorities said it would be vigilant if UK tried to circumvent rules

- German Association of Chambers of Trade and Industry (DIHK): Cuts 2021 German GDP growth from 4.4% to 2.8%

- Poland Central Bank's Hardt stated that interest rates should not change at this time as pandemic uncertainty was still high (**Note: in-line with rate setter views). Saw no scenario at March meeting in which rates would fall. Could not exclude a small rate hike if economy rebounded

- Philippines Central Bank (BSP) Policy Statement noted that it stance continued to support economic recovery. Inflation likely to remain elevated in the coming months as tighter pork supply was a pressure point. Needed to remain vigilant on any 2nd round effects of inflation. Inflation path to remain firmly within the 2.0-4.0% target range for the horizon period and added that CPI to return to target range later in 2021 as supply pressures eased

- Indonesia Fin Min Indrawati: To raise stimulus budget from IDR619T to IDR627.9T

- IEA Monthly Oil Report saw stronger oil demand in H2 2021 on brighter economy; Oil demand to regain 60% of pandemic losses in 2021. Cut its 2021 global oil demand growth from 5.5M bpd to 5.4M bpd (overall demand at 96.4M bpd) while raising the 2021 global oil supply to 830K bpd (overall supply seen at 93.6M bpd)

Currencies/Fixed Income

- USD was steady after a recent bout of weakness. Dealers noted that the greenback likely to stay on the defensive after Fed Chair Powell signaled that monetary policy would remain loose for some time

- The Italian 10-year BTP stayed at recprd low levels as euphoria continued to surround a possible new Italian govt headed by former ECB chief Draghi

Economic data

- (SE) Sweden Jan PES Unemployment Rate: 4.6% v 4.6% prior

- (NL) Netherlands Jan CPI M/M: -0.2% v +0.2% prior; Y/Y: 1.6% v 1.0% prior

- (NL) Netherlands Jan CPI EU Harmonized M/M: -0.7% v +0.5% prior; Y/Y: 1.6% v 0.9% prior

- (DE) Germany Jan Wholesale Price Index M/M: 2.1% v 0.6% prior; Y/Y: 0.0% v -1.2% prior

- (PH) Philippines Central Bank (BSP) left the Overnight Borrowing Rate unchanged at 2.00% (as expected)

- (IS) Iceland Jan International Reserves (ISK): 805B v 817B prior

- (ZA) South Africa Dec Total Mining Production M/M: +0.5% v -0.9%e; Y/Y: +0.1% v -5.4%e; Gold Production Y/Y: -0.9% v -6.5% prior; Platinum Production Y/Y: -19.4% v -16.6% prior

- (GR) Greece Nov Unemployment Rate: 16.2% v 16.4% prior

Fixed income Issuance

- (IT) Italy Debt Agency (Tesoro) sold total €9.0B vs. €7.5-9.0B indicated range in 3-year, 7-year and 20-year BTP Bonds

- Sold €3.0B vs. €2.5-3.0B indicated range in 0.00% Jan 2024 BTP; Avg Yield: -0.33% (record low) v -0.23% prior; Bid-to-cover: 1.66x v 1.44x prior (Jan 14th 2021)

- Sold €4.0B vs. €3.5-4.0B indicated range in 0.25% Mar 2028 BTP; Avg Yield: 0.18% (record low) v 0.30% prior; bid-to-cover: 1.47x v 1.43x prior (Jan 14th 2021)

- Sold €2.0B vs. €1.5-2.0B indicated range in 1.80% Mar 2041 BTP; Avg Yield: 1.14%; bid-to-cover: 1.27x

Looking Ahead

- (PE) Peru Dec Trade Balance: No est v $0.3B prior

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

- 05:50 (HU) Hungary Central Bank One-Week Deposit Rate tender

- (EU) Daily ECB Liquidity Stats

- 06:00 (IL) Israel Jan Trade Balance: No est v -$2.5B prior

- 06:00 (ZA) South Africa Dec Manufacturing Production M/M: -0.6%e v -1.3% prior; Y/Y: -1.2%e v -3.5% prior

- 06:00 (NL) ECB Knot (Netherlands)

- 06:45 (US) Daily Libor Fixing

- 07:00 (MX) Mexico Dec Industrial Production M/M: 0.2%e v 1.1% prior; Y/Y: -2.4%e v -3.7% prior; Manufacturing Production Y/Y: +0.9%e v -2.1% prior

- 07:00 (BR) Brazil Dec IBGE Services Sector Volume Y/Y: -3.2%e v -4.8% prior

- OPEC Monthly Oil Report

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 5th: No est v $589.5B prior

- 08:00 (RU) Russia Dec Trade Balance: $9.4Be v $7.1B prior; Exports: $32.8Be v $29.8B prior; Imports: $23.5Be v $22.7B prior

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

- 08:00 (ES) ECB’s De Guindos (Spain)

- 08:30 (US) Initial Jobless Claims: 760Ke v 779K prior; Continuing Claims: 4.42Me v 4.592M prior

- 08:30 (US) Weekly USDA Net Export Sales

- 10:00 US) Q4 MBA Mortgage Foreclosures: No est v 0.59% prior; Mortgage Delinquencies: No est v 7.65% prior

- 10:00 (CO) Colombia Dec Trade Balance: -$0.8Be v -$1.4B prior; Total Imports: $4.0Be v $4.2B prior

- 10:30 (US) Weekly EIA Natural Gas Inventories

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills

- 12:00 (CA) Canada to sell 5-year bonds

- 13:00 (US) Treasury to sell 30-Year Notes

- 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to cut Overnight Rate by 25bps to 4.00%

- 14:00 (AR) Argentina Jan National CPI M/M: 4.2%e v 4.0% prior; Y/Y: No est v 36.1% prior

- 16:30 (NZ) New Zealand Jan Manufacturing PMI: No est v 48.7 prior

- 16:45 (NZ) New Zealand Jan Food Prices M/M: No est v 0.1% prior

- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 0.25%

- 22:30 (JP) Japan to sell 3-Month Bills