Germany once again uses revisions to avert technical recession

EU mid-market update: Germany once again uses revisions to avert technical recession; Alphabet and Microsoft to report after close.

Notes/Observations

- European focus around collection of preliminary Q4 GDP readings from Euro Zone, France, Spain, Germany, Italy, Czech, Austria and Portugal. Spain’s double beat for CPI and GDP lifted bond yields from lows across the continent. Germany Q4 contracts but avoids technical recession after Q3 upwards revision. Analysts find revision questionable as its the 2nd quarter in a row with a revision to avert technical recession.

- Still waiting on US response to Jordan drone strikes that killed three US soldiers, seeing speculation about scale of response and political implications for Pres Biden.

- Volkswagen follows Renault in doubts over EV/battery market, putting back plans for battery unit IPO, just one day after Renault cancelled Ampere EV unit IPO.

- US Premarket Earnings: DHR, GLW, GM, JBLU, JCI, MAN, MPC, OSK, PHM, SYY, UPS.

- US mega-caps Alphabet and Microsoft to report after the close, as well as AMD.

- Asia closed mixed with Hang Seng under-performing at -2.3%. EU indices are +0.2-0.9%. US futures are -0.1%. Gold +0.2%, DXY -0.1%; Commodity: Brent +0.2%, WTI +0.3%, TTF +1.0%; Crypto: BTC +2.4%, ETH +1.4%.

Asia

- Japan's JSDA (securities' dealers assn) mulls new investor protections for corporate bonds - Japan press.

- Japan Dec Jobless Rate: 2.4% v 2.5%e; Job-To-Applicant Ratio: 1.27 v 1.28e.

- Australia Dec Retail Sales M/M: -2.7% v-1.7%e [largest decline since Dec 2022].

- Bank of Korea (BoK) Jan Minutes: Board member said restrictive policies need to be kept until we are sure inflationary pressure has eased.

- China MOFCOM: Aware of reports of US searches on Chinese companies in US.

- China state banks said to have ‘ramped up’ US dollar sales – US financial press.

Global conflict/tensions

- Hamas Chief Haniyeh: Received Paris ceasefire proposal and will go to Cairo to study it.

- US said to have disabled some Chinese hacking network targeting critical infrastructure - press.

- Russia Dep Chair of Security Council Medvedev (former Pres): Russia plans to deploy new weapons on Kuril Islands in the Far East.

- EU leaders pledge to continue providing 'timely, predictable and sustainable' military support to Ukraine.

- South Korea says North Korea has fired multiple cruise missiles on Tues [Jan 30th] - Korea press.

Europe

- Germany Finance Ministry said 2023 German federal and state govt tax revenue €829.8B, +1.8% y/y.

- Germany reportedly to approve EU planned AI act - press.

- German IFO Institute sees Q1 GDP growth at -0.2%.

- UK Jan BRC Shop Price Index Y/Y: 2.9% v 4.3% prior.

- UK Kantar announces 12-week grocery market share and sales: UK grocery inflation accelerates to 6.8% v 6.9% prior revised.

- Northern Ireland DUP Leader: Party Executive have endorsed power-sharing proposals from negotiations with UK govt.

- Russia said to be discussing cross-border payments using digital FX - Russia press citing Bank of Russia Gov Nabiullina.

Americas

- US Justice Dept has launched an operation to fight a Chinese hacking operation that compromised thousands of devices - US financial press.

Energy

- Saudi Aramco receives directive not to continue raising maximum sustainable capacity (msc) to 13mbpd; To maintain it at 12mbpd - press.

Speakers/fixed income/FX/commodities/erratum 

Equities

Indices [Stoxx600 +0.33% at 486.42, FTSE +0.47% at 7,670.72, DAX +0.14% at 16,966.00, CAC-40 +0.29% at 7,662.93, IBEX-35 +0.96% at 9,985.56, FTSE MIB -0.11% at 30,347.00, SMI +0.24% at 11,457.70, S&P 500 Futures -0.10%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; among sectors leading the way higher are industrials and real estate; consumer materials; oil & gas subsector under pressure following retracement in Brent prices; FTSE-100 outperforming other indices following WPP’s update; Viridium’s acquisition of Zurich Insurance’s life legacy unit won’t go through; Ferrovial reportedly in talks with pension funds to safe the Heathrow deal; focus on release of US JOLTS later in the day; earnings expected in the upcoming US session include Alphabet, Microsoft, Pfizer, and Danaher.

Equities

- Consumer discretionary: Diageo [DGE.UK] -2.0% (earnings), Deliveroo [ROO.UK] -5.0%, Delivery Hero [DHER.DE] -8.5% (Delivery Hero files to sell 68M class A shares in Deliveroo (~4.5% of Deliveroo’s Class A share capital).

- Financials: BBVA [BBVA.ES] +3.5% (earnings; buyback).

- Industrials: Hapag-Lloyd [HLAG.DE] -2.5% (prelim results), Volkswagen [VOW3.DE] -0.5% (reportedly delays battery unit PowerCo IPO plans as market cools; Toyota sales), Renault [RNO.FR] -0.5% (cancel Ampere IPO).

- Technology: ASML [ASML.NL] +1.0% (Super Micro Computer guidance).

- Telecom: WPP [WPP.UK] +5.0% (guidance; AI strategy at CMD), Tele2 AB [TEL2A.SE] +2.5% (earnings; cost reduction program).

Speakers

- Russia Central Bank (CBR) Gov Nabiullina said Key Rate cut is more likely during H2.

- New Zealand Fin Min Willis stated inflation is too high; "Busting inflation is our goal".

-Indonesia Central Bank (BI) Gov Wajiyo said to continue to intervene in the FX market to keep Rupiah stable.

- Indonesia Fin Min said in 2024 we need to monitor slowdown of global powers and geopolitics tension.

- Japan Fin Min Suzuki confirmed will coordinate with Tokyo government regarding sale of Tokyo Metro shares.

Currencies/fixed income

- USD pared some of weakness seen from US Treasury’s Quarterly Funding Estimates yesterday, adding some very mild gains in morning session. Heads turn to watch US Jolts later and FOMC decision tomorrow.

- EUR/USD swings as European GDP readings some in and yields turn from opening lows to relatively unchanged on the day.

- GBP/USD lower as mortgage approvals and consumer credit/lending miss's consensus. Weighed on with upcoming BOE decision and weak GDP readings from European. peers.

Economic data

- (NL) Netherlands Jan Producer Confidence Index: -4.4 v -3.4 prior.

- (ZA) South Africa Dec M3 Money Supply Y/Y: 7.6% v 5.5%e; Private Sector Credit Y/Y: 4.9% v 4.1%e.

- (FI) Finland Dec Preliminary Retail Sales Volume Y/Y: +0.1% v -1.3% prior.

- (FR) France Q4 Preliminary GDP Q/Q: 0.0% v 0.0%e; Y/Y: 0.7% v 0.7%e.

- (FR) France Dec Consumer Spending M/M: 0.3% v 0.0%e; Y/Y: 1.3% v 1.1%e.

- (SE) Sweden Nov Non-Manual Workers’ Wages Y/Y: 4.9% v 4.6% prior.

- (CH) Swiss Dec Trade Balance (CHF): 1.4B v 3.8B prior.

- (TR) Turkey Jan Economic Confidence: 99.4 v 96.4 prior.

- (ES) Spain Q4 Preliminary GDP Q/Q: 0.6% v 0.2%e; Y/Y: 2.0% v 1.6%e.

- (ES) Spain Jan Preliminary CPI M/M: +0.1% v -0.2%e; Y/Y: 3.4% v 3.0%e (highest annual pace since Oct 2023 and 1st acceleration in 5 months); CPI EU Harmonized M/M: -0.2% v -0.6%e; Y/Y: 3.5% v 3.0%e; CPI Core Y/Y: 3.6% v 3.3%e.

- (CH) Swiss Jan KOF Leading Indicator: 101.5 v 98.2e.

- (CZ) Czech Q4 Advance GDP Q/Q: 0.2% v 0.2%e; Y/Y: -0.2% v -0.2%e.

- (AT) Austria Q4 GDP Q/Q: +0.2% v -0.5% prior; Y/Y: -1.3% v -1.6% prior.

- (SE) Sweden Jan Consumer Confidence: 82.3 v 74.8 prior; Manufacturing Confidence: 99.3 v 95.1 prior; Economic Tendency Survey: 90.5 v 84.7 prior.

- (IT) Italy Q4 Preliminary GDP Q/Q: 0.2% v 0.0%e; Y/Y: 0.5% v 0.2%e.

- (DE) Germany Q4 Preliminary GDP Q/Q: -0.3% v -0.3%e; Y/Y: -0.2% v -0.2%e (avoids technical recession due to Q3 revision); GDP NSA (unadj) Y/Y: -0.4% v -0.4%e.

- (IS) Iceland Jan CPI M/M: -0.2% v 0.4% prior; Y/Y: 6.7% v 7.7% prior.

- (PT) Portugal Q4 Preliminary GDP Q/Q: 0.8% v 0.3%e; Y/Y: 2.2% v 1.9% prior.

- (PT) Portugal Jan Consumer Confidence: -26.9 v -28.2 prior; Economic Confidence: 1.5 v 1.2 prior.

- (UK) Dec M4 Money Supply M/M: +0.5% v -0.1% prior; Y/Y: -0.9% v -2.3% prior; M4 (ex-IOFCs) 3-month Annualized: +4.4% v -3.0% prior.

- (UK) Dec Mortgage Approvals: 50.5K v 53.0Ke.

- (UK) Dec Net Consumer Credit: £1.2B v £1.5Be; Net Lending: -£0.8B v £0.2Be.

- (EU) Euro Zone Q4 Advance GDP Q/Q: 0.0% v -0.1%e; Y/Y: 0.1% v 0.1%e.

- (EU) Euro Zone Jan Economic Confidence: 96.2 v 96.1e; Industrial Confidence: -9.4 v -9.0e; Services Confidence: 8.8 v 8.3e.

- (IT) Italy Dec PPI M/M: -1.2% v -1.4% prior; Y/Y: -20.5% v -16.5% prior.

Fixed income issuance

-Thailand sells THB60B vs. THB60B indicated in 3-month bills: Avg Yield: 2.26806% V 2.29697% prior; bid-to-cover: 1.91x v 1.79x prior.

-Japan sells ¥2.9T vs ¥2.9T indicated in 2-year JGB bonds; Avg Yield: 0.0750% V 0.0640% prior; Bid-to-cover: 3.74x v 3.34x prior.

- Greece Debt Agency (PDMA) opened book to sell 10-year bonds; guidance seen +85bps to mid-swaps.

- Germany opened book to sell €5.0B in Aug 2054 Bund via syndicate; guidance seen +5.5bps to DBR.

- European Investment Bank (EIB) opened book to sell €3.0B in 15-year bonds via syndicate; guidance seen +40bps to mid-swaps.

- Denmark sells total DKK300M in 1-month and 3-month Bills.

- UK DMO sells £900M in 0.125% Mar 2051 Inflation-linked Gilts (UKTi); Real Yield: 1.333% v 1.314% prior; bid-to-cover: 3.10x v 3.18x prior.

- Italy Debt Agency (Tesoro) sells total €7.0B vs. €5.5-7.0B indicated range in 5-year, 10-year and 15-year BTP bonds.

- Italy Debt Agency (Tesoro) sells €2.0B vs. €1.5-2.0B indicated range in Oct 2031 CCTeu (floating rate Notes); Real Yield: 5.23% v 4.62% prior; bid-to-cover: 1.50x v 1.93x prior.

Looking ahead

- 05:30 (DE) Germany to sell €5.0B in new Mar 2026 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.8B in 3-month and 9-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:30 (BE) Belgium Jan CPI M/M: No est v 0.4% prior; Y/Y: No est v 1.4% prior.

- 06:00 (PT) Portugal Dec Retail Sales M/M: No est v 3.1% prior; Y/Y: No est v 2.1% prior.

- 06:00 (IE) Ireland Dec PPI M/M: No est v -0.1% prior; Y/Y: No est v 1.4% prior.

- 06:00 (BR) Brazil Jan FGV Inflation IGPM M/M: 0.2%e v 0.7% prior; Y/Y: -3.2%e v -3.2% prior.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (ZA) South Africa Dec Monthly Budget Balance (ZAR): 29.2Be v -17.8B prior.

- 07:00 (MX) Mexico Q4 Preliminary GDP Q/Q: 0.3%e v 1.1% prior; Y/Y: 3.0%e v 3.3% prior.

- 07:00 (CL) Chile Dec Unemployment Rate: 8.7%e v 8.7% prior.

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:30 (EU) ECB's Vasle (Slovenia).

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expect to cut Base Rate by 100bps to 9.75%.

- 08:00 IMF Updates World Economic Outlook: 2024 GDP Growth Forecast: No est v 2.9% prior.

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

- 09:00 (US) Nov FHFA House Price Index M/M: 0.3%e v 0.3% prior.

- 09:00 (US) Nov S&P/CoreLogic House Price Index (20-City) M/M: 0.50%e v 0.64% prior; Y/Y: 5.80%e v 4.87% prior; House Price Index (overall) Y/Y: No est v 4.77% prior.

- 10:00 (US) Jan Consumer Confidence: 114.5e v 110.7 prior.

- 10:00 (US) Dec JOLTS Job Openings: 8.750Me v 8.790M prior.

- 10:30 (US) Jan Dallas Fed Services Activity: No est v -8.7 prior.

- 10:30 (DE) ECB's Nagel (Germany).

- 13:00 (BR) Brazil Dec Total Federal Debt (BRL): No est v 6.325T prior.

- 16:30 (US) Weekly API Oil Inventories.

- 18:00 (KR) South Korea Dec Industrial Production M/M: -0.1%e v +3.3% prior; Y/Y: 4.3%e v 5.3% prior; Cyclical Leading Index Change: No est v 0.2% prior.

- 18:50 (JP) Japan Dec Retail Sales M/M: 0.1%e v 1.1% prior (revised from 1.0%); Y/Y: 4.9%e v 5.4% prior (revised from 5.4%); Dept. Store, Supermarket Sales Y/Y: No est v 4.4% prior.

- 18:50 (JP) Japan Dec Preliminary Industrial Production M/M: +2.5%e v -0.9% prior; Y/Y: +0.1%e v -1.4% prior.

- 19:00 (NZ) New Zealand Jan ANZ Business Confidence: No est v 33.2 prior; Activity Outlook: No est v 29.3 prior.

- 19:01 (UK) Jan Lloyds Business Barometer: No est v 35 prior.

- 19:30 (AU) Australia Q4 CPI Q/Q: 0.8%e v 1.2% prior; Y/Y: 4.3%e v 5.4% prior.

- 19:30 (AU) Australia Q4 CPI Trimmed Mean Q/Q: 0.9%e v 1.2% prior; Y/Y: 4.3%e v 5.2% prior.

- 19:30 (AU) Australia Dec Private Sector Credit M/M: 0.4%e v 0.4% prior; Y/Y: No est v 4.7% prior.

- 19:30 (AU) Australia Dec CPI Y/Y: 3.7%est v 4.3% prior.

- 20:30 (CN) China Jan Manufacturing PMI (Govt Official): 49.2e v 49.4 prior; Non-Manufacturing PMI: 50.6e v 50.4 prior; Composite PMI: No est v 50.3 prior.

- 21:00 (PH) Philippines Q4 GDP Q/Q: 1.8%e v 2.4% prior; Y/Y: 5.2%e v 5.9% prior; GDP Annualized Y/Y: 5.6%e.

- 21:00 (SG) Singapore Dec M2 Money Supply Y/Y: No est v 5.3% prior; M1 Money Supply Y/Y: No est v 1.7% prior.

- 21:00 (SG) Singapore Dec Deposits and Balances (Residents outside Singapore) (S$): No est v 571.2B prior.

- 21:30 (SG) Singapore Dec Unemployment Rate: 2.0%e v 2.0% prior.

- 23:00 (TH) Thailand Dec ISIC Manufacturing Production Y/Y: -2.5%e v -4.7% prior; Capacity Utilization: No est v 57.9% prior.