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Notes/observations

-Mixed European flash PMI data for France, Germany, Euro Zone and UK, but indicated any recession in Europe would likely be limited or even avoided. Notable FX move in GBP/USD to the downside after UK PMI; Overnight, Australia Jan Flash PMI Manufacturing registered 1st contraction in 33 months, Japan also weak and registered 3 straight decline.

-UK Dec Govt borrowing his record high mostly due to the household energy support scheme and high debt interest costs. UK Govt remains stuck between rock and a hard place (weak finances and widespread public sector industrial action).

-Geo-politically, German Defense Min stated Germany remains undecided on Leopard tanks, as NATO Sec Gen Stoltenberg warned of new upcoming Russian offensive and a decision on German tanks soon. Indecision appearing to create tension across bloc.

-Finland Foreign Min Haavisto expressed potential for NATO bid without Sweden after Turkey Pres Erdogan said Finland and Sweden cannot expect support from Turkey for its NATO application following recent demonstrations at the Turkish Embassy in Sweden
-3-month Euribor fixing passes 2.5% as it continues to make new decade highs.

-Asia closed mixed with Nikkei225 +1.5%. EU indices are mixed to marginally lower. US futures are -0.2%. Gold +0.4%, DXY 0.0%; Commodity: Brent -0.4%, WTI -0.5%, TTF -10.6%; Crypto: BTC +0.5%, ETH -0.9%.

Asia

- Australia Jan Preliminary PMI Manufacturing registered its 1st contraction in 33 months (49.8 v 50.2 prior).

- Australia Dec NAB Business Confidence: -1 v -4 prior.

- Japan Jan Preliminary PMI Manufacturing registered its 3rd straight contraction (48.9 v 48.9 prior).

- China said to comment on US debt issue. Believed the biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem, and stop sabotaging other sovereign countries’ active efforts to solve their debt issues.

Europe

- Numerous ECB members (including chief Lagarde) reiterate stance to stay the course on policy.

Americas

- US said to 'confront' China over companies related to the Russia war as it suggests some Chinese state-owned companies might be providing assistance for Russia’s war effort in Ukraine.

Energy

- US Energy Secretary Granholm noted that President Biden would veto bill on strategic petroleum reserve if it passed in Congress.

- US said to increase pressure on China regarding Iranian oil. Talks to dissuade Beijing from the purchases and to be intensified. China is the main destination of illicit exports by Iran.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.03% at 454.60, FTSE -0.37% at 7,756.20, DAX -0.09% at 15,089.65, CAC-40 +0.19% at 7,045.05, IBEX-35 -0.17% at 8,929.22, FTSE MIB -0.03% at 25,814.00, SMI -0.07% at 11,398.40, S&P 500 Futures -0.18%].

Market Focal Points/Key Themes: European indices open generally higher but quickly turned around to trade marginally in the red; better performing sectors include real estate and consumer discretionary; underperforming sectors include health care and telecom; Iveco takes controlling stake in MIRA; earnings expected during the upcoming US session include General Electric, 3M, Johnson & Johnson and Raytheon.

Equities

- Consumer discretionary: Swatch Group [UHR.CH] +2.0% (earnings), Sportech [SPO.UK] +6.5% (trading update).

- Consumer staples: Associated British Foods [ABF.UK] -1.0% (Q1 trading update - affirms FY23).

- Energy: Technip Energies [TE.FR] -1.0% (awarded contract).

- Financials: Senior plc [SNR.UK] +10.0% (trading update), Saga [SAGA.UK] +3.5% (H2 trading update - better than expected trading).

- Healthcare: Basilea Pharma [BSLN.CH] +3.0% (prelim FY22 - above prior guided), Ambu [AMBUB.DK] -2.5% (analyst action - cut to sell at SEB Enskilda).

- Industrials: Komax [KOMN.CH] +2.0% (prelim FY22 - rev beats estimates), Henry Boot [BOOT.UK] -4.0% (trading update).

- Technology: Rheinmetall [RHM.DE] +1.5% (Germany said to allow other countries to send Leopard tanks to Ukraine).

- Telecom: Ericsson [ERICB.SE] -2.5% (analyst action - cut to sell at Goldman Sachs).

Speakers

- France Fin Min Le Maire reiterated stance that inflation should decline from mid-2023.

- NATO Sec Gen Stoltenberg stated that Putin was planning new offensives; Needed to enable Ukraine soon to repel offensive.

- German Defense Min Pistorius stated that there was no new position on Leopard tanks for Ukraine; Could act quickly if a positive decision was made.

- Turkey President Erdogan stated that Finland, Sweden could not expect support from Turkey for its NATO application, following recent demonstrations at the Turkish Embassy in Sweden.

Currencies/fixed income

- Dealers continued to debate whether the Fed’s current hawkish stance was untenable given the recent spat of weak data. Risk appetite has found some recent leg room as fears over a hard landing for the global economy eased.

- EUR/USD was steady around 1.0880 as major European Jan Preliminary PMI reading were mixed but indicated any recession in Europe would likely be limited. Data suggested that region's economy was stabilizing which would keep the ECB focusing on inflation.

- GBP/USD fell during the session by 50+ pips to test below 1.2350 as UK Govt borrowing came in at a record high for Dec due to inflation boosts debt payments. Also the PMI reading remained in contraction with Services component deteriorating more. Data highlighted risks to the economy and curbed expectations for future interest-rate hikes.

- USD/JPY danced around the 130 handle for the time being.

Economic data

- (FI) Finland Dec PPI M/M: -0.8% v -0.8% prior; Y/Y: 14.5% v 18.8% prior.

- (DE) Germany Feb GFK Consumer Confidence: -33.9 v -33.3e.

- (UK) Dec Public Finances (PSNCR): £17.2B v £20.6B prior; PSNB (ex-Banking Groups): £27.4B v £17.3Be; Central Government NCR: £23.1B v £25.5B prior; Net Borrowing: £26.6B v £23.2Be.

- (CH) Swiss Dec Trade Balance (CHF): 2.8B v 2.4B prior; Real Exports M/M: +5.7% v -2.7% prior; Real Imports M/M: +0.3% v -0.4% prior; Watch Exports Y/Y: 5.8% v 11.0% prior.

- (ZA) South Africa Dec Leading Indicator: 123.1 v 123.0 prior.

- (FR) France Jan Business Confidence: 102 v 102e; Manufacturing Confidence: 103 v 102e; Production Outlook Indicator: -8 v -7e; Own-Company Production Outlook: 17# v 17 prior.

- (FR) France Jan Overall Demand Business Survey: 5 v 13 prior.

- 03:00 (CZ) Czech Jan Business Confidence: 5.3 v 3.9 prior; Consumer Confidence Index: -25.3 v -32.0 prior; Composite Confidence (Consumer & Business): -0.8 v -3.3 prior.

- (FR) France Jan Preliminary Manufacturing PMI: # v 49.6e (1st expansion in 5 months) ; Services PMI: 49.2 v 49.7e; Composite PMI: 49.0 v 49.5e.

- (DE) Germany Jan Preliminary Manufacturing PMI 47.0 v 48.0e; Services PMI: 50.4 v 49.5e; Composite PMI: 49.7 v 49.7e.

- (EU) Euro Zone Jan Preliminary Manufacturing PMI: 48.8 v 48.5e; Services PMI: 50.7 v 50.2e; Composite PMI: 50.2 v 49.8e.

- (IC) Iceland Dec Wage Index M/M: 4.0% v 0.4% prior; Y/Y:12.4 % v 8.0% prior.

- (UK) Jan Preliminary Manufacturing PMI: 46.7 v 45.4e (6th straight contraction); Services PMI: 48.0 v 49.5e; Composite PMI: 47.8 v 48.9e.

Fixed income issuance

- (ID) Indonesia sold total IDR14.5T vs. IDR14.0T target in Islamic bills and bonds (sukuk).

- (EU) European Union opened its book to sell EUR-denominated 3.0% Mar 2053 bonds via syndicate; guidance seen +88bps to mid.

- (UK) DMO opened book to sell new 3.75% Oct 2053 Gilts via syndicate; guidance seen +2.75-3.25bps to UK treasuries.

- (NL) Netherlands Debt Agency (DSTA) sold €1.995B vs. €1.0-2.0B indicated range in 3.00% Jan 2054 DSL Bonds; Avg Yield: 2.362%.

- (ZA) South Africa sold total ZAR3.9B vs. ZAR3.9B indicated in 2030, 2032 and 2035 bonds.

- (AT) Austria Debt Agency (AFFA) sold total €1.55B vs. €2.0B indicated in 3-month and 6-month Bills.

Looking ahead

- (NG) Nigeria Central Bank Interest Rate Decision: Expected to raise Key Rate by 50bps to 17.00%.

- (IL) Israel Dec Leading 'S' Indicator M/M: No est v 0.1% prior.

- 05:15 (CH) Switzerland to sell 3-month Bills.

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

- 05:30 (DE) Germany to sell €1.5B in 0.00% Oct 2025 green BOBL.

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

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

- 06:00 (UK) Jan CBI Industrial Trends Total Orders: -9e v -6 prior; Selling Prices: No est v 52 prior; Business Optimism: No est v -48 prior.

- 06:45 (US) Daily Libor Fixing.

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

- 07:00 (BR) Brazil mid-Jan IBGE Inflation IPCA-15 M/M: 0.5%e v 0.5% prior; Y/Y: 5.8%e v 5.9% prior.

- 07:00 (CL) Chile Dec PPI M/M: No est v 0.0% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 13.00%.

- 08:00 (PL) Poland Dec M3 Money Supply M/M: 0.8%e v 0.5% prior; Y/Y: 5.9%e v 5.6% prior.

- 08:00 (NG) Nigeria Central Bank (CBN) Gov Emefiele pre-rate decision press conference.

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

- 08:30 (US) Jan Philadelphia Fed Non-Manufacturing Regional Index: No est v -12.8 prior (revised from -17.1).

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

- 09:00 (HU) Hungary Central Bank (MNB) post rate decision press conference.

- 09:45 (US) Jan Preliminary S&P/Markit Manufacturing PMI: 46.0e v 46.2 prior; Services PMI: 45.0e v 44.7 prior; Composite PMI: 47.0e v 45 prior.

- 10:00 (US) Jan Richmond Fed Manufacturing Index: -5e v+ 1 prior.

- 11:30 (CH) SNB’s Schlegel.

- 11:30 US) Treasury to sell 52-Week Bills.

- 13:00 US) Treasury to sell 2-Year Notes.

- 14:00 (AR) Argentina Nov Economic Activity Index (Monthly GDP) M/M: No est v -0.3% prior; Y/Y: No est v 4.5% prior.

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

- 16:45 (NZ) New Zealand Q4 CPI Q/Q: 1.3%e v 2.2% prior; Y/Y: 7.1%e v 7.2% prior.

- 18:30 (AU) Australia Dec Westpac Leading Index M/M: No est v -0.1% prior.

- 19:30 (AU) Australia Q4 CPI Q/Q: 1.6%e v 1.8% prior; Y/Y: 7.6%e v 7.3% prior.

- 19:30 (AU) Australia Dec CPI Y/Y: 7.7%e v 7.4% prior; CPI Trimmed Mean Y/Y: 5.8%e v 5.6% prior.

- 20:10 (JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years; 5~10 Years and 10~25Years maturities.

- 20:30 (KR) Bank of Korea (BOK) to sell 3-month Monetary Stabilization Bonds (MSB).

- 21:00 (NZ) New Zealand Dec Credit Card Spending M/M: No est v -2.6% prior; Y/Y: No est v 16.0% prior.

- 21:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Expected to leave Key Rates unchanged.

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