TradeTheNews.com Staff
TradeTheNews.com
Notes/Observations
- Risk aversion sentiment peculated but EU stocks moved off worst levels.
- Fed's signaled for aggressive tightening. Money markets currently pricing 5 rate hikes of 25bps for Fed during 2022.
- Turkey Central Bank raised its inflation forecasts after recent collapse in the currency pushed CPI to its highest in President Erdogan’s 19-year rule.
- Italy Presidential selection process moved into simple majority phase in Parliament (from 67% during the 1st three votes).
- Focus on US Q4 advance GDP data later this morning.
Asia
- New Zealand Q4 CPI Q/Q: 1.4% v 1.3%e; Y/Y: 5.9% v 5.8%e.
Europe
- ECB issued warning to European lenders with Russian exposure to prepare for imposition of international sanctions against Moscow.
- US and NATO sent written responses to Putin’s Security proposals. Stressed that NATO’s door was open and remain so. Preferred diplomacy and prepared to move forward, where there was the possibility of communication and co-operation.
Americas
- FOMC left the Target Rate unchanged between 0.00-0.25% (as expected). Stated that would soon be appropriate to raise rates. Would bring bond buying to an end in early March.
- Fed Chair Powell post rate decision statement noted that with elevated inflation and strong labor market, Fed would continue to adapt policy. Would remain attentive to risks including potential for high inflation to be more persistent than expected. Committee was of a mind to raise the Fed funds rate at the March meeting” if conditions were there to do so. Did not rule out raising rates at every FOMC meeting.
- Chile Central Bank (BCCh) raised the Overnight Rate Target by 150bps to 5.50%; more-than-expected.
Speakers/Fixed income/FX/Commodities/Erratum
Equities
Indices [Stoxx600 % at #, FTSE +0.34% at 7,495.31, DAX -0.34% at 15,406.31, CAC-40 -0.03% at 6,979.62, IBEX-35 +0.53% at 8,666.24, FTSE MIB +0.38% at 26,720.00, SMI -0.39% at 12,051.10, S&P 500 Futures +0.12%].
Market Focal Points/Key Themes: European indices open lower across the board but retraced most of it to trade generally mixed later in the session; all sectors start the day lower; better performing sectors include financials and utilities; sectors among those leading to the downside are materials and technology; UBS acquires Wealthcfront; Generali takes further stake in India unit; Air Partner to be acquired by Wheels Up; focus on release of US GDP figures later in the day; earnings expected during the upcoming US session include Dow Chemical, McDonald’s, MasterCard and LVMH.
Equities
- Consumer discretionary: EasyJet [EZJ.UK] +1.5% (trading update), Air Partner [AIR.UK] +53% (to be acquired), Dr. Martens [DOCS.UK] -14% (trading update), Elior [ELIOR.FR] -11% (sales).
- Energy: PGS ASA [PGS.NO] -30% (earnings).
- Financials: Deutsche Bank [DBK.DE] +5% (earnings).
- Healthcare: Galapagos [GLPG.BE] +14% (new CEO).
- Industrials: Renault [RNO.FR] +3% (alliance).
- Technology: STMicroelectronics [STM.FR] +5% (earnings), SAP [SAP.DE] -6% (final earnings).
Speakers
- Italy Econ Min Franco stated that 2021 GDP growth was seen at 6.5% compared to its 6.0% target.
- Germany IG Metall Union stated that it was aiming for wage agreement above ECB target.
- Turkey Central Bank (CBRT) Kavcioglu reiterated to monitor impact of prior easing from the Sept-Dec period. Expected disinflation process to begin and to focus on de-dollarization.
- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raised the end-2022 inflation from 11.8% to 23.2% and raised the end-2023 inflation from 7.0% to 8.2%.
- Russia Foreign Min Lavrov stated that had no positive reaction on main points from US on security proposals but could begin serious talks on secondary issues. President Putin to decide next steps.
- Russia govt spokesperson stated that Putin had read the US and NATO response to security proposals; did not take Russia's concerns into account. No agreement when Lavrov/Blinken to meet again but working level contacts to continue.
- Russian forces said to leave Belarus after drills (**Reminder: drills to run from Feb 10th to Feb 20th).
- China Commerce Ministry (MOFCOM) stated that the US should take immediate action to correct wrongdoing in trade remedy investigation against China.
- China Premier Li reiterated to adopt effective measures to deal with challenges and stabilize market expectations. Confirms to step up cross-cyclical policies to stabilize economic operations within a reasonable range.
- Taiwan Central Bank (CBC) Dec Minutes saw one member note it would consider hike in March due to inflation.
Currencies/Fixed income
- USD continued to firm following Wednesday’s Fed rate decision after Powell provided clear signals it would soon raise key interest rates and then swiftly reduce its balance sheet, Money markets currently pricing 5 rate hikes of 25bps during 2022.
- EUR/USD testing below the 1.12 area. Italy’s presidential election entered a new phase today as various political blocs jockey their candidates to win via a simple majority. The spread on the Italian-German 10-year bond has widened over the week to above 140bps. Dealers noted that placing Draghi into the presidential palace could propel Italy into early elections (general elections due in 2023).
- GBP/USD at 1.3430 area as PM Johnson continued to go on the offensive ahead of report on Downing Street Covid breaches.
- USD/JPY probing the 115 level as higher US yields aiding the greenback.
Economic data
- (FI) Finland Jan Consumer Confidence: -1.7 v -3.5 prior; Business Confidence: 19 v 18 prior.
- (FI) Finland Dec Preliminary Retail Sales Volume Y/Y: -2.9% v 1.1% prior.
- (DE) Germany Feb GfK Consumer Confidence: -6.7 v -8.0e (3rd straight negative reading).
- (CH) Swiss Dec Trade Balance (CHF): 3.7B v 6.1B prior; Real Exports M/M: -3.2% v +1.6% prior; Real Imports M/M: -0.8% v +4.4% prior; Watch Exports Y/Y: %11.2 v 12.0% prior.
- (NO) Norway Nov AKU Unemployment Rate: 3.5% v 3.6%e.
- (ES) Spain Q4 Unemployment Rate: 13.3% v 14.2%e.
- (TW) Taiwan Q4 GDP Y/Y: 4.9% v 3.9%e; Overall 2021 GDP Y/Y: 6.3% v 6.1%e.
- (TW) Taiwan Dec Monitoring Indicator: 37 v 37 prior.
- (HU) Hungary Dec Unemployment Rate: 3.7% v 3.7%e.
- (HK) Hong Kong Dec Trade Balance (HKD): -32.8B v -27.0Be; Exports Y/Y: 24.8% v 16.3%e; Imports Y/Y: 19.3% v 11.8%e.
- (HU) Hungary Central Bank raises One Week Deposit Rate by 30bps to 4.30% (as expected).
- (AT) Austria Jan Manufacturing PMI : 61.5 v 58.7 prior (19th straight expansion).
- (IT) Italy Nov Industrial Sales M/M: 2.4% v 2.9% prior; Y/Y: 22.2% v 17.0% prior.
- (ZA) South Africa Dec PPI M/M:1.3 % v 0.7%e; Y/Y: 10.8% v 10.2%e.
Fixed income issuance
- (IT) Italy Debt Agency (Tesoro) sold €6.0B vs. €6.0B indicated in 6-month bills; Avg Yield: -0.488% v -0.563% prior; Bid-to-cover: 1.42x v 1.43x prior.
Looking ahead
- (PT) Portugal Year-to-Date Budget Report.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
- 06:00 (UK) Jan CBI Retailing Reported Sales: 10e v 8 prior; Total Distribution Reported Sales: No est v 12 prior.
- 06:00 (CA) Canada Jan CFIB Business Barometer: No est v 62.6 prior.
- 06:00 (CZ) Czech Republic to sell 1-month bills.
- 06:45 (US) Daily Libor Fixing.
- 07:00 (MX) Mexico Dec Trade Balance: +$0.4Be v -$0.1B prior.
- 08:00 (RU) Russia Gold and Forex Reserve w/e Jan 21st: No est v $638.2B prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: Expected to raise Interest Rates by 25bps to 4.00%.
- 08:30 (US) Q4 Advance GDP Annualized Q/Q: 5.5%e v 2.3% prior; Personal Consumption: 3.4%e v 2.0% prior.
- 08:30 (US) Q4 Advance GDP Price Index: 6.0%e v 6.0% prior; Core PCE Q/Q: 4.9%e v 4.6% prior.
- 08:30 (US) Dec Preliminary Durable Goods Orders: -0.6%e v +2.6% prior; Durables (ex-transportation): 0.3%e v 0.9% prior ; Capital Goods Orders (non-defense/ex-aircraft): 0.4%e v 0.0% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.5%e v 0.3% prior.
- 08:30 (US) Initial Jobless Claims: 265Ke v 286K prior; Continuing Claims: 1.67Me v 1.635M prior.
- 08:30 (US) Weekly USDA Net Export Sales.
- 08:30 (EU) ECB’s Scicluna.
- 10:00 (US) Dec Pending Home Sales M/M: -0.4%e v -2.2% prior; Y/Y: -4.0%e v +0.2% prior.
- 10:30 (US) Weekly EIA Natural Gas Inventories.
- 11:00 (US) Jan Kansas City Fed Manufacturing Activity Index: 21e v 24 prior.
- 12:00 (CA) Canada to sell 30-year bonds.
- 13:00 (US) Treasury to sell 7-year notes.
- 16:00 (NZ) New Zealand Jan Consumer Confidence Index: No est v 98.3 prior.
- 18:00 (KR) South Korea Dec Industrial Production M/M: -0.3%e v +5.1% prior; Y/Y: 1.8%e v 5.9% prior.
- 18:30 (JP) Japan Jan Tokyo CPI Y/Y: 0.5%e v 0.8% prior; CPI (ex-fresh food) Y/Y: 0.3%e v 0.5% prior; CPI (ex-fresh food/energy) Y/Y: -0.7%e v -0.3% prior.
- 19:30 (AU) Australia Q4 PPI Q/Q: No est v 1.1% prior; Y/Y: No est v 2.9% prior.
- 19:30 (TW) Taiwan Jan PMI Manufacturing: No est v 55.5 prior.
- 21:30 (SG) Singapore Q4 Unemployment Rate: 2.4%e v 2.6% prior.
- 22:30 (JP) Japan to sell 3-Month Bills.
- 23:00 (MY) Malaysia Dec Trade Balance (MYR): 21.9Be v 18.9B prior; Exports Y/Y: 24.4%e v 32.4% prior; Imports Y/Y: 27.8%e v 38.0% prior.
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