Jan inflation readings continue to beat consensus expectations

Notes/Observations

- EU area Jan Inflation readings continue to move higher

- Riksbank keeps policy steady and no change to its forward guidance of steady rates for years to come

Asia:

- China Jan CPI Y/Y: -0.3% v 0.0%e

- BoJ's Nakamura reiterated Board stance that domestic economy trend was improving, must be prepared to respond effectively and timely to changes in economy, prices and financial developments; ETF purchases remain necessary tool

- Japan Parliament approved nomination of economic professor Asahi Noguchi to Bank of Japan (BOJ)

- South Korea Jan Unemployment Rate: 5.4% v 4.5%e (highest level since 1999)

Coronavirus:

- Total global cases 106.9M (+0.4% d/d); total deaths: 2.34M (+0.7% d/d)

Europe:

- UK Chief Negotiator Frost stated that EU was still adjusting to the UK as an independent actor; we've had some small border issues like shellfish

- UK official Gove noted that tensions on Northern Ireland were inflamed by the EU's actions but rejected the DUP’s call for the Northern Ireland protocol to be scrapped

Americas:

- Senate confirmed that Trump impeachment trial is constitutional by 56-44 vote

Energy:

- Weekly API Crude Oil Inventories: -3.5M v -4.3M prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.23% at 411.36, FTSE +0.19% at 6,544.05, DAX -0.08% at 00, CAC-40 +0.82% at 5,693.04, IBEX-35 -0.30% 8,077.00, FTSE MIB +0.30% at 23,371.50, SMI +0.46% at 10,852.86, S&P 500 Futures +0.35%]

Market Focal Points/Key Themes: European indices open modestly higher and failed to gather momentum as the session wore on; materials and utilites sectors among better peformers; underperforming sectors include energy and technology; reportedly Germany to extend lockdowns until March; Equinor sells its stake in Bakken oil field; AstraZenaca sells rights to Crestor in Europe; focus on upcoming US CPI data; earnings expected in the upcoming US session include Under Armour, General Motors, Metro and Uber

Equities

- Consumer discretionary: Ubisoft [UBI.FR] -7% (sales), Heineken [HEIA.NL] -2% (earnings)

- Energy: Equinor [EQNR.NO] -1% (earnings)

- Financials: Societe Generale [GLE.FR] +3% (earnings), ABN AMRO [ABN.NL] -3% (earnings)

- Industrials: ThyssenKrupp [TKA.DE] +5% (earnings; raises outlook), Maersk [MAERSKB.DK] -8% (earnings), Air Liquide [AI.FR] -1% (earnings)

Speakers

- ECB’s de Cos (Spain) reiterated Council view that recovery was fragile and faces downside risks. ECB prepared to adjust all instruments as needed. Reiterated stance that ample monetary conditions are needed

- Sweden Central Bank (Riksbank) Policy Statement reiterated its forward guidance that the Repo Rate to remain at current level in coming years. To continue to purchase assets within the window of SEK700B. Expansionary monetary policy was needed to facilitate recovery and help inflation. Reiterated stance that Repo Rate could be cut if necessary and deemed effective, particularly if confidence in inflation target were to be threatened

- Sweden Central Bank (Riksbank) Gov Ingves post rate decision digital press conference noted that the current situation was brighter than earlier as the domestic economy was more resilient in the second wave of pandemic than the first wave.

- EU Commission President Von Der Leyen testified in EU Parliament that was too optimistic in respect to vaccines but added the vaccination campaign was accelerating. Reiterated stance to vaccinate 70% of EU adults by summer end - parliament testimony

- German virus lockdown measures could be lifted around March 7th or Mar 14th period at the earliest (**Reminder: Chancellor Merkel to discuss further covid measures with state premiers on Wed (Feb 10th) and was expected to agree to extend lockdowns)

- Poland Central Bank member Kochalski reiterated stance that main scenario is for steady rates

- BOJ said to seek clarification at its upcoming March policy review that it has room to deepen negative rates if necessary

Currencies/Fixed Income

- USD maintained a softer footing during a quiet EU session. The greenback was lower for the fourth consecutive day

- GBP/USD approached 3-year highs as the pair tested 1.3850

- Sweden Riksbank kept its policy steady. EUR/SEK dipped to test 10.04 for 2-week lows but the Krona consolidated its gains afterwards.

Economic data

- (NL) Netherlands Dec Manufacturing Production M/M: +0.5 v -0.2% prior; Y/Y: -0.2 v -2.7% prior; Industrial Sales Y/Y: -6.8 v -6.2% prior

- (FI) Finland Dec Industrial Production M/M: -0.9% v +0.8% prior; Y/Y: -2.5% v -1.1% prior

- (DE) Germany Jan Final CPI M/M: 0.8% v 0.8%e; Y/Y: 1.0% v 1.0%e

- (DE) Germany Jan Final CPI EU Harmonized M/M: 1.4% v 1.4%e; Y/Y: 1.6% v 1.6%e

- (DK) Denmark Jan CPI M/M: +0.2% v -0.2% prior; Y/Y: 0.6% v 0.7%e

- (DK) Denmark Jan CPI EU Harmonized M/M: +0.2% v -0.2% prior; Y/Y: 0.4% v 0.4% prior

- (NO) Norway Jan CPI M/M: 1.1% v 1.0%e; Y/Y: 2.5% v 1.8%e(above target for 1st time since May 2019)

- (NO) Norway Jan CPI Underlying M/M: +0.1% v -0.2%e; Y/Y: 2.7% v 2.4%e

- (NO) Norway Jan PPI (including Oil) M/M: 5.3% v 1.6% prior; Y/Y: +0.6% v -5.7% prior

- (TR) Turkey Nov Unemployment Rate: 12.9% v 12.7% prior

- (FR) France Dec Industrial Production M/M: -0.8% v +0.4%e; Y/Y: -3.0% v -1.7%e

- (FR) France Dec Manufacturing Production M/M: -1.7% v -0.3%e; Y/Y: -3.6% v -3.2%e

- (SE) Sweden Central Bank (Riksbank) left the Repo Rate unchanged at 0.00% (as expected)

- (ZA) South Africa Jan Sacci Business Confidence: 94,5 v 93.0e

Fixed income Issuance

- (DK) Denmark sold total DKK2.0B in 3-month, 6-month and 9-month Bills

- (SE) Sweden sold total SEK5.0B vs. SEK5.0B indicated in 2025 and 2028 Bonds

- (UK) DMO sold £2.0B in 1.25% Oct 2041 Gilts; Avg Yield: 0.987% v 0.802% prior; bid-to-cover: 2.51x v 2.22x prior; Tail: bps v 0.1bps prior

- (IT) Italy Debt Agency (Tesoro) sold €7.0B vs. €7.0B indicated in 12-month Billsl Avg Yield: -.0454% v -0.478% prior; Bid-to-cover: 1.39x v 1.53x prior

Looking Ahead

- (MX) Mexico Jan Nominal Wages: No est v 5.4% prior

- (EU) Daily ECB Liquidity Stats

- (CH)) Switzerland to sell 2031 and 2042 Bonds

- 05:30 (DE) Germany to sell €4.0B in 0% Apr 2026 BOBL

- 06:00 (PT) Portugal Q4 Unemployment Rate: No est v 7.8% prior

- 06:00 (PT) Portugal Jan Final CPI M/M: No est v -0.3% prelim; Y/Y: No est v 0.3% prelim

- 06:00 (PT) Portugal Jan Final CPI EU Harmonized M/M: No est v -0.3% prelim; Y/Y: No est v 0.2% prelim

- 06:00 (IL) Israel Jan Consumer Confidence: no est v 91 prior

- 06:00 (RU) Russia to sell 2025 2030 and 2031OFZ Bonds

- 06:30 (CL) Chile Central Bank Economists Survey

- 06:45 (US) Daily Libor Fixing

- 07:00 (US) MBA Mortgage Applications w/e Feb 5th: No est v 8.1% prior

- 07:00 (IS) Iceland Jan Unemployment Rate: No est v 12.1% prior

- 07:00 (BR) Brazil Dec Retail Sales M/M: -0.8%e v -0.1% prior; Y/Y: 5.5%e v 3.4% prior

- 07:00 (BR) Brazil Dec Broad Retail Sales M/M: -0.9%e v +0.6% prior; Y/Y: 6.0%e v 4.1% prior

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

- 08:00 (HU) Hungary Central Bank Jan Minutes

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

- 08:00 (EU) ECB chief Lagarde

- 08:00 (IT) ECB’s Panetti (Italy)

- 08:30 (US) Jan CPI M/M: 0.3%e v 0.4% prior; Y/Y: 1.5%e v 1.4% prior

- 08:30 (US) Jan CPI (ex-food/energy) M/M: 0.2%e v 0.1% prior; Y/Y: 1.5%e v 1.6% prior

- 08:30 (US) Jan CPI Index NSA: 261.800e v 260.474 prior; CPI Core Index SA: 270.592e v 270.117 prior

- 08:30 (US) Jan Real Avg Hourly Earning Y/Y: No est v 3.7% prior; Real Avg Weekly Earnings Y/Y: No est v 4.9% prior

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

- 10:00 (US) Dec Final Wholesale Inventories M/M: 0.1%e v 0.1% prelim; Wholesale Trade Sales M/M: No est v 0.2% prior

- 10:30 (US) Weekly DOE Oil Inventories

- 12:00 (CA) Canada to sell 30-year bonds

- 13:00 (US) Treasury to sell 10-Year Notes

- 14:00 (US) Jan Monthly Budget Statement: -$150.0Be v -$143.6B prior

- 14:00 (AR) Argentina Dec Capacity Utilization: No est v 63.3% prior

- 16:45 (NZ) New Zealand Jan Total Card Spending M/M: No est v 3.5% prior; Retail Card Spending M/M: No est v 19.2% prior

- 19:00 (AU) Australia Feb Consumer Inflation Expectation Survey: No est v 3.4% prior

- 23:00 (MY) Malaysia Q4 GDP Q/Q: 0.0%e v 18.2% prior; Y/Y: -3.1%e v -2.7% prior

- 23:00 (MY) Malaysia Q4 Current Account Balance (MYR): 20.5Be v 26.1B prior