Inflation readings and central bank decisions in focus, German ZEW expectations helped by rate cut hopes

Notes/observations

- All eyes on US Nov CPI, ahead of Fed rate decision tomorrow.

- ZEW Expectations Survey registered its 2nd month of positive reading.

- FTSE100 outperforming after job data miss in wages brings forward rate cut timing and lower gilt yields. CAC40 on track for record close.

- European telecommunications sector weighed on after UK Regulator Ofcom proposes ban on mid-contract inflation-linked price rises.

- UK parliament to vote on Rwanda bill with emergency legislation, widely seen as a confidence vote in PM Sunak.

- Asia closed mixed with Hang Seng out-performing at +1.3%. EU indices are -0.2% to +0.6%. US futures are +0.1-0.2%. Gold +0.2%, DXY -0.3%; Commodity: Brent +0.3%, WTI +0.4%, TTF -1.3%; Crypto: BTC -1.4%, ETH -1.0%.

Asia

- Japan Nov PPI M/M: 0.2% v 0.2%e; Y/Y: 0.3% v 0.1%e [annualized pace slowed for the 11th straight month].

- Australia Nov NAB Business Confidence: 82.1 v 79.9 prior.

- RBA Gov Bullock: Don't think we're falling behind world on CPI fight. Taking a cautious approach with monetary policy and would continue to watch incoming data.

- China govt advisers reportedly likely to recommend 2024 GDP growth target of about 5% at China's Central Economic Work Conference.

Mid-East

- US CENTCOM stated that a Norwegian-flagged Tanker Strinda was attacked by missile in the Red Sea that came from Houthi-controlled area said to strike ship in the Red Sea; UK Maritime Trade Operations (UKMTO) received report of incident impacting vessel in the vicinity of Bab Al-Mandab (west of the Port Mokha in Yemen).

Europe

- IMF Dep Managing Dir Gopinath stated at saw the beginning of signs of fragmentation in global economy, with meaningful shifts in underlying bilateral trade. Global losses could be 2.5-7% of global GDP if economy fragments into two blocs over Ukraine war.

Americas

- Rep Stan McClain (R-FL): House to vote on Biden impeachment inquiry Thursday.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.08% at 474.10, FTSE +0.76% at 7,602.31, DAX +0.24% at 16,833.95, CAC-40 +0.34% at 7,580.28, IBEX-35 -0.11% at 10,186.55, FTSE MIB +0.41% at 30,550.00, SMI +0.30% at 11,163.70, S&P 500 Futures +0.16%].

Market Focal Points/Key Themes: European indices opened with a bias to the upside and traded generally mixed through the early hours of the session; better performing sectors include real estate and consumer discretionary; underperforming sectors were led by materials and telecom; AstraZeneca to acquire Icosavax; Nokia aquires Feix Group in the US; earnings expected in the upcoming US session include Johnson Controls.

Equities

- Consumer staples: Carl Zeiss [AFX.DE] +9.0% (earnings, guidance).

- Materials: Arcelormittal [MT.NL] +3.0% (analyst upgrade).

- Financials: AJ Bell [AJB.UK] -8.5%, Hargreaves Lansdown [HL.UK] -9.5% (FCA writes to firms about the treatment of retained interest on customers’ cash balances).

- Healthcare: Astrazeneca [AZN.UK] +1.5% (acquires US-listed Icosavax).

- Industrials: Renault [RNO.FR] +0.5% (sells Nissan shares), Chemring Group [CHG.UK] -1.0% (earnings).

- Technology: SAP [SAP.DE] -1.0% (Oracle earnings), Nokia [NOKIA.FI] +1.0% (cuts FY26 targets - investor day).

- Telecom: BT Group [BT.A.UK] -3.5%, Vodafone [VOD.UK] -1.0% (UK Ofcom proposes ban on inflation-linked mid-contract price rises).

Speakers

- Sweden Central Bank (Riksbank) Jansson noted that while upside risks to inflation persisted, our rate path forecast was likely to be held.

- German VDMA Engineering Association cut its 2024 production outlook from -2% to -4%. It noted that reversal in the trend for new orders was not in sight.

- German ZEW Economists commented that its assessment of domestic economy had improved despite budget crisis. Sentiment aided by expectations of ECB rate cut in the medium-term.

- Poland PM Tusk addressed Parliament with a policy speech and stressed that the country would remain a US ally and strong part of NATO.

Currencies/fixed income

- USD slipping a bit ahead of US CPI data on Tuesday with focus on FOMC on Wed. Fed seen keeping policy steady with focus on the so-called dot plots for rates and Chair Powell's press conference.

- EUR/USD reapproaching the 1.08 level with ECB decision coming on Thursday.

- GBP/USD was softer as UK wage data came in below consensus. Dealers thus brought forward expectation of the 1st BOE rate cut from August to Jun. GBP/USD at 1.2565 by mid-session.

Economic data

- (NL) Netherlands Nov CPI M/M: -1.0% v +0.4% prior; Y/Y (final): 1.6 v 1.6% prelim.

- (NL) Netherlands Nov CPI EU Harmonized (final) M/M: -1.5% v -1.5% prelim; Y/Y: 1.4 v 1.4% prelim.

- (NL) Netherlands Oct Trade Balance: €10.8B v €13.7B prior.

- (UK) Nov Jobless Claims Change: +16.0K v +8.9K prior; Claimant Count Rate: 4.0% v 4.0% prior.

- (UK) Oct Average Weekly Earnings 3M/Y: 7.2% v 7.7%e; Weekly Earnings (ex-bonus) 3M/Y: 7.3% v 7.4%e.

- (UK) Oct ILO Unemployment Rate: 4.2% v 4.2% prior; Payroll Employment Monthly Change: -13K v +5Ke.

- (DE) Germany Nov Wholesale Price Index M/M: -0.2% v -0.7% prior; Y/Y: -3.6% v -4.2% prior.

- (NO) Norway Oct GDP M/M: +2.1% v -2.2% prior; GDP Mainland M/M: 0.4% v 0.0%e.

- (ZA) South Africa Oct Total Mining Production M/M: .1% v 0.6%e; Y/Y: 3.9% v 1.2%e; Gold Production Y/Y: 2.2% v -0.2% prior; Platinum Production Y/Y: 16.9% v 3.8% prior.

- (DE) Germany Dec ZEW Current Situation Survey: -77.1 v -76.0e; Expectations Survey: 12.8 v 9.5e.

- (EU) Euro Zone Dec ZEW Survey Expectations: 23.0 v 13.8 prior.

Fixed income issuance

- (ID) Indonesia sold total IDR19.0T vs. IDR19.0T target in bills and bonds.

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2035, 2044 and 2048 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €1.73B vs. €1.0-2.0B indicated range in 3-month and 9-month bills.

- (UK) DMO sold £3.75B in 4.5% Jun 2028 Gilts; Avg Yield: 4.041% v 4.474% prior; bid-to-cover: 2.53x v 2.30x prior; Tail: 0.9bps v 1.0bps prior.

- (AT) Austria Debt Agency (AFFA) sold €632.5M vs. €632.5M indicated in 2.9% Feb 2033 RAGB bonds; Avg Yield: 2.751% v 3.293% prior, bid-to-cover: 2.71x v 4.21x prior.

- (IT) Italy Debt Agency (Tesoro) sold €7.5B vs. €7.5B indicated in 12-month Bills; Avg Yield: 3.528% v 3.860% prior; Bid-to-cover: 1.31x v 1.33x prior.

Looking ahead

- (CO) Colombia Nov Consumer Confidence: No est v -14 prior.

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

- 05:30 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (BE) Belgium Debt Agency (BDA) cancelled plan bill auction.

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

- 05:30 (PL) Poland to sell Bonds.

- 06:00 (US) Nov NFIB Small Business Optimism: 90.7e v 90.7 prior.

- 06:00 (ZA) South Africa Oct Manufacturing Production M/M: +0.3%e v -0.5% prior; Y/Y: +1.7%e v -4.3% prior.

- 06:30 (CL) Chile Central Bank Economist Survey.

- 07:00 (BR) Brazil Nov IBGE Inflation IPCA M/M: 0.3%e v 0.2% prior; Y/Y: 4.7%e v 4.8% prior.

- 07:00 (MX) Mexico Oct Industrial Production M/M: 0.0%e v 0.2% prior; Y/Y: 4.1%e v 3.9% prior; Manufacturing Production (unadj) Y/Y: 0.9%e v 0.8% prior.

- 07:00 (IN) India Nov CPI Y/Y: 5.8%e v 4.9% prior.

- 07:00 (IN) India Oct Industrial Production Y/Y: 10.4%e v 5.8% prior.

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

- 08:00 (RU) Russia Oct Trade Balance: No est v $15.3B prior; Exports: No est v $40.0B prior; Imports: No est v $24.7B prior.

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

- 08:30 (US) Nov CPI M/M: 0.0%e v 0.0% prior; Y/Y: 3.1%e v 3.2% prior;

- 08:30 (US) Nov CPI (ex-food/energy) M/M: 0.3%e v 0.2% prior; Y/Y: 4.0%e v 4.0% prior.

- 08:30 (US) Nov CPI Index NSA: 306.952e v 307.671 prior; CPI Core (seasonally adj): 312.245e v 311.365 prior.

- 08:30 (US) Nov Real Avg Hourly Earning Y/Y: No est v 0.8% prior; Avg Weekly Earnings Y/Y: No est v -0.1% prior (revised from 0.0%).

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

- 12:00 (FR) ECB’s Villeroy (France).

- 13:00 (US) Treasury to sell 30-Year Bond Reopening.

- 14:00 (US) Nov Monthly Budget Statement: -$301.1Be v -$66.6B prior.

- 16:00 (KR) South Korea Nov Import Price Index M/M: No est v 0.5% prior; Y/Y: No est v -10.2% prior; Export Price Index M/M: No est v 0.5% prior; Y/Y: No est v -9.5% prior.

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

- 16:45 (NZ) New Zealand Q3 Current Account Balance (NZD): -11.0Be v -4.2B prior; Current Account to GDP Ratio YTD: -7.4%e v -7.5% prior.

- 16:45 (NZ) New Zealand Nov Food Prices M/M: No est v -0.9% prior.

- 18:00 (KR) South Korea Nov Unemployment Rate : 2.6%e v 2.5% prior.

- 18:50 (JP) Japan Q4 Tankan Large Manufacturing Index: 10e v 9 prior; Large Manufacturing Outlook: 9e v 10 prior; Large All Industry Capex: 12.7%e v 13.6% prior; Large Non-Manufacturing Index: 27e v 27 prior; Large Non-Manufacturing Outlook: 25e v 21 prior; Small Manufacturing Index: -4e v -5 prior; Small Manufacturing Outlook: -5e v -2 prior; Small Non-Manufacturing Index: 12e v 12 prior; Small Non-Manufacturing Outlook: 9e v 8 prior.

- 22:00 (KR) South Korea Nov Total Bank Lending To Household (KRW): No est v 1,086.6T prior.

- 22:00 (KR) South Korea Oct M2 Money Supply M/M: No est v 0.5% prior; ‘L’ Money Supply M/M: No est v -0.2% prior.

- 22:30 (AU) Australia Nov CBA Household Spending M/M: No est v -1.0% prior; Y/Y: No est v 2.0% prior.

- (SG) Singapore Central Bank (MAS) Survey of Professional Forecasters.