Greece new govt reiterates view to negotiate debt relief

Notes/Observations

- Singapore becomes the 9th central bank to ease monetary conditions in recent weeks

- Austral Q4 CPI hits a 2-year low but the Trimmed Mean comes in higher than expectations and tempers potential RBA rate cut calls

- Germany Feb GfK Consumer Confidence hits its highest level since Nov 2001 (9.3 vs. 9.1e)

- Greece PM Tsipras reiterated his view to negotiate debt relief; Greek yields continue to rise

- Dealers ponder whether FED would react to 5-year inflation expectations as it falls towards a new cycle low

Economic data

- (DE) Germany Feb GfK Consumer Confidence (beats): 9.3 v 9.1e (highest since Nov 2001)

- (DE) Germany Dec Import Price Index (miss); M/M: -1.7% v -1.5%e; Y/Y: -3.7% v -3.4%e

- (CH) Swiss Dec UBS Consumption Indicator: 1.42 v 1.29 prior

- (TH) Thailand Central Bank (BoT) left its Benchmark Interest Rate unchanged at 2.00%; as expected

- (FR) France Jan Consumer Confidence (miss): 90 v 91e

- (HU) Hungary Dec Unemployment Rate (beat): 7.1% v 7.3%e

- (NO) Nov AKU Unemployment Rate (beats): 3.7% v 3.8%e

- (NO) Norway Q4 Industrial Confidence (miss): -2 v +1e

- (MY) Malaysia Central Bank (BNM) left its Overnight Policy Rate unchanged at 3.25% (as expected)

Fixed income:

- (UK) DMO opened its books to sell I/L 2058 Gilt via syndicate; guidance seen at +1.75-2.25bps to Treasury

- (IT) Italy Debt Agency (Tesoro) auction solid; sold €7.0B vs. €7.0B indicated in 6-month Bills; Avg Yield: 0.160% v 0.297% prior; Bid-to-cover: 1.74x v 1.39x

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 -0.5%, FTSE 100 -0.2% at 6,800, DAX flat at 10,630, CAC-40 -0.4% at 4,607, IBEX-35 -0.9% at 10,501, FTSE MIB -0.6% at 20,522, SMI -0.7% at 8,342, Athens Stock Exchange -4.7%, S&P 500 Futures +0.4% at 2,037]

- Market Focal Points/Key Themes: Equity markets open higher following Tuesday's losses, Fed meeting in focus; Markets later pare gains; Banks continue to weigh on Greek equity market, amid sharp rise in sovereign yields; Roche results weighed down by charge; Swedish firms report better than expected results amid positive fx impact (Electrolux, H&M, Nordea); Tech sector supported by Apple results (Dialog Semi, Arm Holdings); US Morning Earnings (Boeing, AmerisourceBergen, General Dynamics, International Paper, Hess Corp, Fiat); China equity futures trade sharply lower amid renewed margin probe speculation

By Sector

- Industrials [Electrolux ELUXB.SE +8% (Q4 results above ests), Finmeccanica FNC.IT (approved strategic plan); Siemens SIE.DE -4% (ex-dividend)]

- Health Care [Roche ROG.CH -1.5% (FY profits below ests)]

- Financials [Experian EXPN.UK +3% (buyback)]

- Stoxx50 Sectors [Consumer Cyclical +0.3%, Basic Materials +0.3%, Technology +0.3%, Utilities +0.2%; Industrials -2%, Energy -0.3%, Telecom -0.1%, Financials -0.1%, Consumer Non-Cyclical -0.1%]

Speakers

- BoE's Haldane reiterated view of not in any rush to raise interest rates

- German Bundesbank's Dombret reiterated view that ECB QE program risks creating asset bubbles. He also noted a potential Greek exit from Euro would have very large negative consequences

- German Bundesbank's Thiele reiterated view that negative rates for German savers would cause outrage

- German think-tank DIW raised its 2015 GDP growth forecast to 1.5% from 1.2%, citing weaker euro and lower oil prices

- Greece PM Tsipras reiterated his view to negotiate debt relief and easing of austerity terms. Priority was to seek compromise with EU peers and to avoid mutually destructive clash

- Russia published its anti-crisis plan which looked to balance the budget by 2017. The plan called for 10% cut in most spending for 2015 and would cut the real budget spending by at least 5%/year for 3 years.

- Russia Dep Fin Min Moiseev: Might stop holding the FX Deposit auctions

- Poland Central Bank Survey: Q1 business outlook was slightly improving with companies planning to hire in Q1 and implement wage increases. The survey saw no signs of rising inflation

- Czech Central Bank's Holub stated that disinflation pressures were coming from abroad and that domestic economic growth and rising wages were starting to generate slight price pressures

- Thailand Central Bank noted that it decision to keep policy steady was again not unanimous (vote was 5 to 2). It reiterated that interest rates remained accommodative for growth as the economy continued to recover aided by lower oil prices (Q4 GDP seen improving q/q); Inflation could breach lower end of target but was not seeing deflation. Inflation might pick up in H2. It also stated that its key rate was not the main factor for capital flows and would use other tools to manage capital flows

- Malaysia Central Bank stated that Monetary policy remained accommodative and saw ample liquidity. It noted that 2015 inflation to be lower than previously expected

- Philippine Central Bank (BSP) gov Tetangco: Jan inflation seen between 1.8-2.7% range (well within target)

- China Gov't Advisor: Yuan currency (CNY) will not see depreciation trend, might stabilize in H2. Reasonable to target 2015 GDP growth at 7%

- US Treasury Sec Lew commented from Kiev that the US was ready to increase sanctions on Russia if needed. Prepared to do more if necessary to pressure Russia on violence in Eastern Ukraine

Currencies

- The USD retraced some of its losses from Tuesday as the focus returned to the Greek situation. Greece PM Tsipras reiterated his view to negotiate debt relief. Greek yields continued to rise sharply amid the uncertainty about the future of Greece in the Euro Zone. To date the overall contagion has been seen as limited. Te EUR/USD was off by approx. 0.3% at 1.1350

- The AUD popped higher during the Asian session after 4Q inflation had come in above market consensus (trimmed mean gauge of core prices was 0.7%). This suggested that the RBA would remain rate-neutral for longer and not cut rates when its meets next week

- The SGD currency was weaker after Singapore's MAS unexpectedly cut the slope of monetary policy band. Singapore becomes the 9th central bank to ease monetary conditions in recent weeks

Political/In the Papers:

- (GR) New Greece Fin Min Varoufakis: Greek and euro zone interests coincide; we were not blackmailing or bluffing EMU

- (GR) Greece gov proposes to raise the minimum wage and reverse some pension cuts and tax hikes on regular people

- (GR) Greece Govt reportedly planning to end process to sell its majority stake in the Piraeus OLP Port (the largest in Greece)

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- (CH) Swiss Government holds Weekly Meeting

- (BE) ECB's Praet at global security summit

- 05:30 (DE) Germany to sell €2.0B in 2.5% 2046 Bunds

- 06:00 (IE) Ireland Dec Retail Sales Volume M/M: No est v 0.2% prior; Y/Y: No est v 4.7% prior

- 06:00 (IE) Ireland Dec Property Prices M/M: No est v 0.5% prior; Y/Y: No est v 16.2% prior

- 06:00 (DE) Germany Economic Ministry presents updated economic forecasts

- 06:30 (ES) ECB's Linde (Spain) in Madrid

- 06:45 (US) Daily Libor Fixing

- 07:00 (RU) Russia to sell RUB5.0B in 2017 OFZ bond

- 07:00 (US) MBA Mortgage Applications w/e Jan 23rd: No est v +14.2% prior

- 07:00 (UK) Prime Minister's Question Time in House of Commons

- 07:00 (EU) EU's Tusk with France President Holland in Paris

- 08:00 (RU) Russia Dec Real Retail Sales M/M: 20.1%e v 0.3% prior; Y/Y: 2.7%e v 1.8% prior

- 08:00 (RU) Russia Dec Unemployment Rate: 5.5%e v 5.2% prior

- 08:00 (RU) Russia Dec Real Disposable Income: -4.6%e v -4.7% prior

- 08:00 (RU) Russia Dec Real Wages Y/Y: -0.8%e v +0.5% prior

- 08:00 (RU) Russia Dec Investment in Productive Capacity Y/Y: -5.9%e v -4.8% prior

- 08:15 (US) Baltic Dry Bulk Index

- 09:45 (UK) BOE to purchase £1.45B in 7-15 years Gilts (residual)

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

- 11:30 (BR) Brazil Dec Total Federal Debt (BRL): No est v 2.209T prior

- 11:30 (US) Treasury to sell 2-Year Floating Rate Notes

- 13:00 (US) Treasury to sell $26B in 2-Year Notes

- 13:00 (EU) EU's Tusk with German Chancellor Merkel in Berlin

- 13:50 (UK) BOE's Carney in Dublin

- 14:00 (US) FOMC Interest Rate Decision: Expected to leave both Lower Bound and Upper Bound unchanged between 0.00-0.25%

- 15:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate unchanged at 3.50%

- 16:45 (NZ) New Zealand Dec Trade Balance (NZD): -0.8Be v -0.2B prior; Exports: 4.2Be v 4.0B prior; Imports: 4.1Be v 4.2B prior

- 18:50 (JP) Japan Dec Retail Sales M/M: +0.3%e v -0.2% prior (revised from -0.3% prior; Retail Trade Y/Y: 1.0%e v 0.5% prior (revised from 0.4%); Large Retailers' Sales: 0.3%e v 1.1% (revised from 1.2%prior

- 21:00 (PH) Philippines Q4 GDP Q/Q: 1.9%e v 0.4% prior; Y/Y: 6.0%e v 5.3% prior; 2014 GDP Annual Rate: 6.3%e v 7.2% prior

- 22:35 (JP) Japan to sell 3-Month Bills

- 22:45 (JP) Japan to sell 2-Year JGB Bonds