Italy PM Draghi stresses the need for unity

Notes/Observations

- UK Jan CPI beats expectations but remain far from BOE target

- Italy PM Draghi stresses that his new govt cannot succeed without support from Parliament, need to pass reforms and address emergencies

- Bitcoin fever overtake coronavirus in headline coverage

Asia:

- Japan Jan Trade Balance: ¥323.9B v ¥625.0Be; Exports Y/Y: 6.4% v 6.6%e; Imports Y/Y: -9.5% v -5.5%e

- RBA Assist Gov Kent noted that its policy measures saw A$ 5% lower than otherwise and would continue to put downward pressure on currency. Current level of AUD currency at upper end of recent range; to make "modest" changes to how RBA uses FX swaps

Coronavirus:

- Total global cases 109.5M (+0.3% d/d); total deaths: 2.42M (+0.5% d/d)

Europe:

- UK govt source noted that for any significant relaxation of lockdown measures case numbers would have to be in the hundreds (not thousands) (Reminder: PM is due to publish a roadmap out of restrictions during the week of Feb 22nd but the plan was unlikely to commit to a clear timetable)

Americas:

- US Treasury Sec Yellen said to have urged G7 counterparts to go big on fiscal support to promote a robust and lasting recovery

Energy:

- OPEC+ official stated that oil price rally makes further easing of oil supply curbs more likely after April; markets might be prepared for 500K bpd raise by April dependent on demand and pace at which Saudis bring back voluntary production cuts

- Oil production in Texas’s Permian Basin has plummeted by as much as 65% due to Artic weather conditions and power outages

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.46% at 417.32, FTSE -0.39% at 6,722.72, DAX -0.73% at 13,961.60, CAC-40 -0.16% at 5,777.46, IBEX-35 -0.30% at 8,129.00, FTSE MIB -0.52% at 23,319.50, SMI -0.82% at 10,818.00, S&P 500 Futures -0.11%]

Market Focal Points/Key Themes: European indices open lower across the board and stayed in the red as the session wore on; better performing sectors include energy and materials; underperformers lead by consumer discretionary and financials; Dole to merge with Total Produce and list on in the US; Signature Aviation sells ERO unit; Nestle divests its Americas waters unit; focus on release of FOMC minutes later; earnings expected in the upcoming US session include Owens Corning, NiSource, Henry Schein and Sonic Automotive

Equities

- Consumer discretionary: Kering [KER.FR} -7% (earnings), Beiersdorf [BEI.DE] -5% (earnings), Ahold Delhaize [AD.NL] -3% (earnings)

- Consumer staples: British American Tobacco [BATS.UK] -5% (earnings)

- Industrials: Sinch [SINCH.SE] +14% (acquisition)

- Technology: TeamViewer [TMV.DE] +2% (placement)

- Materials: Akzo Nobel [AKZA.NL] +2% (earnings)

Speakers

- Italy's PM Draghi: first duty is to fight pandemic and save lives. Stressed that the new govt could not succeed without support from Parliament and called for political unity. Recovery Fund might be reshaped but the main points remain those that were laid out by the Conte govt. Also stressed that the euro was an irreversible project.

- France Labor Ministry to extend support for unemployment by 3 months until end of Jun

- Iran Supreme leader Khamenei stated that wanted to see action not words from parties to the country's 2015 nuclear deal

Currencies/Fixed Income

- Focus continued to be on global bond yields. The recent move up in yields has been driven by increasing inflationary concerns amid a rise in energy prices along with the prospect of a big US fiscal stimulus. Dealers also note the growing hope of a lasting global recovery as vaccine roll out to lead to the reopening of economies

- EUR/USD back below the 1.21 level while USD/JPY hit a 5-month high at 106.22 during the Asian session . Greenback getting some support from higher US bond yields.

- US 10-year yield above the 1.30 level during the electronic session

- Bitcoin continued to hit fresh record highs as its moved above the $51K level

Economic data

- (UK) Jan CPI M/M: -0.2% v -0.4%e; Y/Y: 0.7% v 0.6%e; CPI Core Y/Y: 1.4% v 1.3%e; CPIH Y/Y: 0.9% v 0.8%e

- (UK) Jan RPI M/M: -0.3% v -0.4%e; Y/Y: 1.4% v 1.3%e; RPI-X (ex-mortgage Interest Payments) Y/Y: 1.6% v 1.4%e; Retail Price Index: 294.6 v 294.3e

- (UK) Jan PPI Input M/M: 0.7% v 0.5%e; Y/Y: 1.3% v 0.6%e

- (UK) Jan PPI Output M/M: 0.4% v 0.2%e; Y/Y: -0.2% v -0.4%e

- (EU) EU27 Jan New Car Registrations: -24.0% v -3.3% prior

- (ZA) South Africa Jan CPI M/M: 0.3% v 0.5%e; Y/Y: 3.2% v 3.3%e

- (ZA) South Africa Jan CPI Core M/M: 0.1% v 0.2%e; Y/Y: 3.3% v 3.4%e

- (PL) Poland Jan Employment M/M: -0.2% v +0.4%e; Y/Y: -2.0% v -1.3%e

- (PL) Poland Jan Average Gross Wages M/M: -7.3% v -7.0%e; Y/Y: 4.8% v 5.1%e

- (PL) Poland Feb Consumer Confidence: -25.2 v -24.0e

- (UK) Dec ONS House Price Index Y/Y: 8.5% v 7.5%e (highest since Oct 2014)

- (EU) Euro Zone Dec Construction Output M/M: -3.7% v +2.3% prior; Y/Y: -2.3% v -0.6% prior

Fixed income Issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills

- (DK) Denmark sold total DKK3.58 in 2031 and 2052 DGB bonds

- (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 3-month and 6-month Bills

- (UK) DMO sold £2.5B in 0.625% July 2035 Gilts; Avg Yield: 0.969% v 0.614% prior; bid-to-cover: 2.55x v 2.66x prior; Tail: 0.5bps v 0.2bps prior

Looking ahead

- (EU) Daily ECB Liquidity Stats

- 05:30 (DE) Germany to sell €1.5B in Aug 2048 Bunds

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell 3-month and 12-month bills

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills

- 06:00 (ZA) South Africa Retail Sales M/M: 0.5%e v 1.8% prior; Y/Y: -2.3%e v -4.0% prior

- 06:00 (RU) Russia OFZ Bond auction (2 tranches)

- 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e Feb 12th: No est v -4.1% prior

- 07:00 (UK) Weekly PM Question time in House

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

- 08:30 (US) Jan PPI Final Demand M/M: 0.4%e v 0.3% prior; Y/Y: 0.9%e v 0.8% prior

- 08:30 (US) Jan PPI (ex-food/energy) M/M: 0.2%e v 0.1% prior; Y/Y: 1.1%e v 1.2% prior

- 08:30 (US) Jan PPI (ex-food/energy/trade) M/M: 0.2%e v 0.4% prior; Y/Y: No est v 1.1% prior

- 08:30 (US) Jan Advance Retail Sales M/M: +1.0%e v -0.7% prior; Retail Sales (ex-auto) M/M: +0.9%e v -1.4% prior; Retail Sales (ex-auto/gas): +0.6%e v -2.1% prior; Retail Sales Control Group: +0.9%e v -1.9% prior

- 08:30 (CA) Canada Jan CPI M/M: 0.5%e v -0.2% prior; Y/Y: 0.9%e v 0.7% prior; CPI Index: 138.0e v 137.4 prior

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

- 09:15 (US) Jan Industrial Production M/M: 0.4%e v 1.6% prior; Capacity Utilization: 74.8%e v 74.5% prior; Manufacturing Production: 0.7%e v 0.9% prior

- 09:15 (US) Fed’s Rosengren (non-voter)

- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (7-20 years)

- 10:00 (US) Feb NAHB Housing Market Index: 83e v 83 prior

- 10:00 (US) Dec Business Inventories: 0.5%e v 0.5% prior

- 10:00 (BR) Brazil Central Bank Weekly Economists Survey

- 12:00 (CA) Canada to sell 2-year notes

- 13:00 (US) Treasury to sell 20-Year Bonds

- 14:00 (US) FOMC Jan Minutes

- 16:30 (US) Weekly API Oil Inventories

- 19:30 (AU) Australia Jan Employment Change: +30.0Ke v +50.0K prior; Unemployment Rate: 6.5%e v 6.6% prior

- 20:00 (CN) China Jan Swift Global Payments (CNY): No est v 1.9% prior

- 21:00 (NZ) New Zealand Jan Non Resident Bond Holdings: No est v 49.9% prior

- 22:30 (JP) Japan to sell 12-Month Bills

- 22:35 (JP) Japan to sell 20-Year JGB Bonds

- 23:00 (JP) Japan Jan Tokyo Condominiums for Sale Y/Y: No est v -15.3% prior

- 23:30 (TW) Taiwan to sell TWD30B in 10-year Bonds