-EU bourses opened flat to mixed and turned lower as traders digest corporate results. Participants eyeing up major Central Bank rate decisions next week from FOMC, ECB and BoE.
-Technology sector moved lower in wake of MSFT earnings at US close. Aerospace & Def stocks outperform following US and German military tank developments for Ukraine.
- UK PPI data eases and now has money markets fully pricing in a 25bps rate cut by the BOE before the end of the year.
-AUD/USD pushed higher overnight on back of hotter than expected Australia Dec CPI YoY 8.4% v 7.7%e.
-Asia closed mixed with Kospi outperforming at +1.4%. EU indices are broadly lower -0.5%. US futures are -0.5% to -1.0%. Gold -0.4%, DXY 0.0%; Commodity: Brent 0.0%, WTI 0.0%, TTF -2.4%; Crypto: BTC -1.0%, ETH -4.4%.
- New Zealand Q4 CPI Q/Q: 1.4% v 1.3%e; Y/Y: 7.2% v 7.1%e.
- Australia Q4 CPI remained hot with annual pace hitting the highest since 1990 (Q/Q: 1.9% v 1.6%e; Y/Y: 7.8%v 7.6%e).
- Australia Dec CPI Y/Y: 8.4% v 7.7%e.
- Chris Hipskins has been sworn in as the new NZ PM.
- German govt said to has decided to send some Leopard tanks to Ukraine and allow other countries including Poland to re-export Leopard tanks to Ukraine.
- US said to be poised to approve sending Abrams tanks to Ukraine.
- Swiss National Bank Vice Chair Schlegel noted that it was too soon to sound all clear for Swiss inflation. Noted that underlying inflation pressures were persisting. Reiterates stance that SNB could not exclude further rate hikes.
- UK Office for Budget Responsibility (OBR) said to have privately told Fin Min Hunt it overestimated med-term growth prospects.
- Senate Minority Leader Mitch McConnell stated that the solution to the debt limit was between House Majority Leader McCarthy and President Biden.
- Weekly API Crude Oil Inventories: +3.4M v +7.6M prior.
Indices [Stoxx600 -0.21% at 452.42, FTSE -0.01% at 7,756.33, DAX -0.43% at 15,028.75, CAC-40 -0.35% at 7,025.50, IBEX-35 -0.46% at 8,925.84, FTSE MIB -0.22% at 25,828.00, SMI -0.38% at 11,363.20, S&P 500 Futures -0.62%].
Market Focal Points/Key Themes: European indices had a mixed open; sectors inclined to the upside include industrials and materials; more pessimistic sectors include real estate and technology; North Holdings raises and extends offer for Caverion; Lysogene enters reorganization proceedings; earnings expected in the upcoming US session include Tesla, IBM, Boeing and Abbott Laboratories.
- Consumer discretionary: EasyJet [EZJ.UK] +7.0% (trading update; bookings outlook), JD Wetherspoon [JDW.UK] -1.0% (H1 trading update), Ascential [ASCL.UK] +23.5% (FY23 trading update).
- Consumer staples: Amplifon [AMP.IT] +2.0% (analyst action - raised to buy at Jefferies).
- Financials: Covivio [COV.FR] +1.5% (analyst action - raised to buy at Goldman Sachs).
- Healthcare: Lonza Group [LONN.CH] -1.0% (reports FY22 - authorizes CHF2B share buyback).
- Industrials: Rheinmetall [RHE.DE] +3.0% (German govt said to have decided to deliver tanks to Ukraine), Maersk [MAERSKB.DK] -3.0% (to discontinue alliance with MSC), Alstom [ALO.FR] +1.0% (reports Q3), Aixtron [AIXA.DE] -4.0% (analyst action - cut to hold at Deutsche Bank), Demant [DEMANT.DL] -2.5% (analyst action - cut to underperform at Exane BNP), Brenntag [BNR.DE] +1.0% (analyst action - raised to overweight at Morgan Stanley).
- Technology: ASML [ASML.NL] -2.0% (reports Q4 - guides Q1 and FY23), Atos [ATO.FR] -3.0% (exclusive negotiations with Mitel for sales of Unified Communications & Collaboration business).
- Czech Central Bank's (CNB) Dedek noted that interest rates were at a level that could subdue demand. Further rate hikes could have more visible negative impact.
- German IFO Economists noted that the domestic economy was beginning 2023 with cautious optimism.
- Thailand Central Bank (BOT) Policy Statement noted that the Vote to hike by 25bps was unanimous. Rate hikes to be gradual and measured. Noted that the economic outlook was improving. Headline inflation to fall while core to remained elevated. Medium-term inflationary expectations remained within target. Reiterated stance to monitor THB currency (Baht) closely.
- Japan Cabinet Office Jan Monthly Report cut the overall economic assessment (1st cut in 11 months). It noted that the domestic economy was recovering modestly but some weakness was seen recently.
Currencies/ fixed Income
Some risk aversion sentiment bubbling, and this provided some support to the beleaguered USD.
- Recent soft data out of the UK has money markets fully pricing in a 25bps rate cut by the BOE before the end of the year. - GBP/USD back at week lows and hovering around the 1.2300 area by mid-session.
- EUR/USD staying off recent 7-month highs as European yield drifted lower. Pair at 1.0870 by mid-session.
- AUD was firmer during the Asian session after CPI data posted fresh 30year highs. Dealers noted that the inflation data bolstered the case for further rate increase by the RBA. AUD/USD at 0.7090 as the NY morning approached.
- (UK) Dec PPI Input M/M: -1.1% v -0.8%e; Y/Y: 16.5% v 19.2% Oct prior.
- (UK) Dec PPI Output M/M: -0.8% v +0.1%e; Y/Y: 14.7% v 14.8% Oct prior.
- (SE) Sweden Dec PPI M/M: 2.1% v 2.0% prior; Y/Y: 18.7% v 19.5% prior.
- (TR) Turkey Jan Real Sector (Manufacturing) Confidence (seasonally adj): 103.4 v 101.6 prior; Real Sector Confidence NSA (unadj): 101.7 v 97.8 prior.
- (TR) Turkey Jan Capacity Utilization: 75.3% v 76.4% prior.
- (TH) Thailand Central Bank (BOT) raised the Benchmark Interest Rate by 25bps to 1.50% (as expected).
- (HU) Hungary Nov Average Gross Wages Y/Y: 16.8% v 17.4%e.
- (ES) Spain Dec PPI M/M: -1.7% v -2.4% prior; Y/Y: 14.7% v 20.5% prior.
- (ES) Spain Nov Total Mortgage Lending Y/Y: 11.9% v 23.3% prior; Mortgage Approvals Y/Y: 9.3% v 13.5% prior.
- (DE) Germany Jan IFO Business Climate Survey: 90.2 v 90.3e; Current Assessment Survey: 94.1 v 94.9e; Expectations Survey: 86.4 v 85.3e.
- (CH) Swiss Jan Expectations Survey: -40.0 v -42.8 prior.
- (PL) Poland Dec Unemployment Rate: 5.2% v 5.2%e.
Fixed income issuance
- (IN) India sold total INR80B vs. INR80B indicated in 2028 and 2033 green bonds.
- (IN) India sold total INR290B vs. INR290B indicated in 3-month, 6-month and 12-month bills.
- (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 10-year SPGB bond via syndicate; guidance seen +12bps to SPGB.
- (DE) German State of North Rhine Westphalia (NRW) to sell EUR-denominated 9-year and 30-year bonds via syndicate.
- (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2027 and 2042 bonds.
- (SE) Sweden sold SEK12.5B vs. SEK12.5B indicated in 3-month Bills; Avg Yield: 2.7169% v 2.6059% prior; Bid-to-cover: 1.75x v 1.38x prior.
- (CO) Colombia Dec Retail Confidence: No est v 19.2 prior; Industrial Confidence: No est v 0.1 prior.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell combined €2.5B in 2038 and 2044 bonds.
- 05:30 (GR) Greece Debt Agency (PDMA) to sell €625M in 26-week Bills.
- 06:00 (BR) Brazil Jan FGV Consumer Confidence: No est v 88 prior.
- 06:00 (FR) France Q4 Total Jobseekers: No est v 2.946M prior.
- 06:00 (CZ) Czech Republic to sell 2027, 2030 and 2037 Bonds (3 tranches).
- 06:00 (RU) Russia to sell OFZ Bond (2 tranches).
- 06:45 (US) Daily Libor Fixing.
- 07:00 (US) MBA Mortgage Applications w/e Jan 20th: No est v 27.9% prior.
- 07:00 (MX) Mexico Nov IGAE Economic Activity Index (Monthly GDP) M/M: -0.1%e v 0.0% prior; Y/Y: 4.0%e v 4.4% prior.
- 07:00 (UK) Weekly PM Question time in House.
- 07:00 (SE) Sweden Cemtral Bank) (Riksbank) Climate Report.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 09:00 (BE) Belgium Jan Business Confidence: No est v -13.6 prior.
- 10:00 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to raise Interest Rate by 25bps to 4.50%.
- 10:30 (US) Weekly DOE Oil Inventories.
- 11:00 (RU) Russia Dec PPI M/M: No est v -0.4% prior; Y/Y: No est v -1.9% prior.
- 11:30 (US) (US) Treasury to sell 2-Year FRN.
- 11:30 (US) (US) Treasury to sell 17-Week Bills.
- 12:30 (BR) Brazil Dec Federal Debt Total (BRL): No est v 5.871T prior.
- 13:00 (US) Treasury to sell 5-Year Notes.
- 14:00 (AR) Argentina Nov Supermarket Sales Y/Y: No est v -1.6% prior; Shop Center Sales Y/Y: No est v 8.2% prior.
- 16:00 (NZ) New Zealand Government 5-Month Financial Statements.
- 16:00 (KR) South Korea Jan Consumer Confidence: No est v 89.9 prior.
- 18:00 (KR) South Korea Q4 Advance GDP Q/Q: -0.4%e v +0.3% prior; Y/Y: 1.3%e v 3.1% prior; 2022 GDP Y/Y: 2.5%e v 4.0% prior.
- 18:50 (JP) Japan Dec PPI Services Y/Y: 1.6%e v 1.7% prior.
- 18:50 (JP) BOJ Summary of Opinions from Jan Policy Decision.
- 19:01 (IE) Ireland Jan Consumer Confidence Index: No est v 48.7 prior.
- 20:00 (PH) Philippines Dec Trade Balance: -$3.6Be v -$3.7B prior; Exports Y/Y: 9.0%e v 13.2% prior; Imports Y/Y: -5.8%e v -1.9% prior.
- 21:00 (PH) Philippines Q4 GDP Q/Q: 1.3%e v 2.9% prior; Y/Y: 6.6%e v 7.6% prior; Overall 2022 GDP Y/Y: 7.4%e v 5.6% prior.
- 22:00 (TH) Thailand Central Bank to sell THB20B in 2024 Bonds.
- 22:35 (JP) Japan to sell 40-year JGB Bonds.
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