Spanish Dec CPI reading stays steady

Notes/observations

- Price action subdued amid a holiday lull leading up to the New Year.

- Spain Dec Prelim CPI holds steady.

- Central Bank theme of 'higher for longer' becoming less of a priority as 2024 approaches.

Asia

- South Korea Dec CPI M/M: 0.0% v 0.2%e; Y/Y: 3.2% v 3.3%e; CPI Core Y/Y: 2.8% v 2.9%e.

Global conflict/tensions

- Russia said to have used hypersonic, ballistic and cruise missiles simultaneously for the first time in months in Ukraine attack overnight.

- North Korean leader Kim Jong Un has ordered the country's industrial and military sectors to prepare for war with the US, citing unprecedented confrontational activity by the US and its allies.

Europe

- President Biden extended the suspension of tariffs on European Union steel and aluminum for two years to continue negotiations on overcapacity and low-carbon production.

Americas

- Trump disqualified from the Republican Ballot in another State (Maine).

- USTR Tai said to have extended China 301 tariff exclusions on 352 Chinese imports and 77 Covid-related categories until May 31, 2024. The tariffs, enacted in 2018 and 2019 by then-President Trump under the Trade Act of 1974, were expected to be repealed by President Biden.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.31% at 479.58, FTSE +0.23% at 7,740.16, DAX +0.27% at 16,747.02, CAC-40 +0.31% at 7,558.47, IBEX-35 +0.19% at 10,104.99, FTSE MIB +0.31% at 30,424.00, SMI +0.45% at 11,107.50, S&P 500 Futures +0.06%].

Market focal points/key themes: European indices open generally higher in thin trading and remained upbeat through the early hours of the final session of the year; UK markets to close early for holiday; communication services and consumer discretionary among sectors leading the way higher; among lagging sectors are utilities and financials; EDP Renovaveis to buy back stake in wind portfolio held by Three Gorges; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Barratt Developments [BDEV.UK] +1.0% (UK house prices data).

- Energy: EDP Renováveis [EDPR.PT] -0.5% (acquisition).

- Financials: Commerzbank [CBK.DE] +1.0% (German govt considers options for Commerzbank stake), Man Group [EMG.UK] -0.5% (looking to make acquisitions).

- Healthcare: Carmat [ALCAR.FR] +6.5% (software enhancement).

- Industrials: Hapag Lloyd [HLAG.DE] +0.5% (Hapag-Lloyd, 4rd largest container shipping firm in the world, planned situation review for its Red Sea and Suez Canal routes later today), Valmet [VALMT.FI] -1.0% (analyst downgrade).

Speakers

- Spain PM Sanchez appointed Carlos Cuerpo as new Spain Econ Min to replace Calvino (**Reminder: **Reminder: Calvino became European Investment Bank (EIB) head).

- Turkey Central Bank (CBRT) Monetary Policy Outlook for 2024 maintained its 5% inflation target with band +/-2ppct. Maintained the 1-Week Repo Rate as main policy tool and to hold 12 meetings in 2024. To continue with quantitative tightening and continue its strategy to build up FX reserves.

- India Fin Min Sitharaman stated that the country would continue to make oil purchases from Russia.

- China to adjust currency weighting in CFETS RMB Index. To cut USD weighting from 19.83% to 19.46% and cut Euro weighting from 18.20% to 18.08%.

Currencies/fixed income

- USD ends 2023 on wobbly legs as the 'higher for longer' stance was becoming less of a priority.

- EUR/USD steady just off 5-month highs as Dec CPI for some of the region did not pick up the pace. Dealers noted that Spanish inflation remaining steady did help temper a likely euro-zone pickup in CPI. Dealers noting that if trend kept place for upcoming German and French readings that it might help policymakers move in-line with market expectations on rate cuts. Pair at 1.1075 by mid-session.

Economic data

- (NL) Netherlands Nov Retail Sales Y/Y: 3.7 v 3.9% prior.

- (ZA) South Africa Nov M3 Money Supply Y/Y: 5.5 v 6.1% prior; Private Sector Credit Y/Y: 3.8 v 3.9% prior.

- (FI) Finland Nov Preliminary Retail Sales Volume Y/Y: -1.7% v -1.3% prior.

- (RU) Russia Dec Manufacturing PMI: 54.6 v 53.8 prior; Services PMI: 56.2 v 52.2 prior; Composite PMI: 55.7 v 52.4 prior.

- (UK) Dec Nationwide House Price Index M/M: 0.0% v 0.1%e; Y/Y: -1.7% v -1.3%e.

- (FI) Finland Oct Final Trade Balance: €0.0B v €0.0B prelim.

- (SE) Sweden Nov Household Lending Y/Y: 0.5% v 0.5% prior.

- (TR) Turkey Nov Trade Balance: -$5.9B v -$5.9Be.

- (CN) Weekly Shanghai copper inventories (SHFE): 30.9K v 28.7K tons prior.

- (ES) Spain Preliminary Dec CPI M/M: 0.0% v 0.2%e; Y/Y:3.1 % v 3.2%e.

- (ES) Spain Preliminary Dec CPI EU Harmonized M/M: 0.0% v 0.1%e; Y/Y: 3.3% v 3.3%e; CPI Core Y/Y: 3.8% v 4.5% prior.

- (CH) Swiss Q3 Foreign Exchange Transactions (CHF): -37.6B v -40.3B prior.

- (CH) Swiss Dec KOF Leading Indicator: 97.8 v 97.0e.

- (AT) Austria Nov PPI M/M: +0.1% v -0.1% prior; Y/Y: -2.8% v -3.9% prior.

- (RU) Russia Narrow Money Supply w/e Dec 22nd (RUB): 18.31T v 18.25T prior.

- (ES) Spain Oct Current Account Balance: €3.8B v €3.0B prior.

- (NO) Norway Central Bank (Norges) Jan Daily FX Purchases (NOK): 350M v 1.4B prior.

- (CZ) Czech Nov M2 Money Supply Y/Y: 7.9% v 8.0% prior.

- (GR) Greece Oct Retail Sales Value Y/Y: -6.3% v -3.4% prior; Retail Sales Volume Y/Y: 0.1% v 3.3% prior.

Fixed income issuance

- (IN) India sold total INR330B vs. INR330B indicated in 2028, 2033 and 2053 bonds.

Looking ahead

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

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

- 05:30 (IN) India Nov Fiscal Deficit (INR): No est v 1.018T prior.

- 06:00 (PT) Portugal Preliminary Dec CPI M/M: No est v -0.3% prior; Y/Y: No est v 1.5% prior.

- 06:00 (PT) Portugal Preliminary Dec CPI EU Harmonized M/M: No est v -1.0% prior; Y/Y: No est v 2.2% prior.

- 06:00 (PT) Portugal Nov Retail Sales M/M: No est v -0.4% prior; Y/Y: No est v 0.5% prior.

- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£1.5B, £1.5B and £2.0B respectively).

- 06:30 (IN) India Nov Eight Infrastructure (Key) Industries: No est v 12.1% prior.

- 06:30 (IN) India Weekly Forex Reserve w/e Dec 22nd: No est v $616.0B prior.

- 06:30 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (ZA) South Africa Nov Trade Balance (ZAR): No est v -12.7B prior.

- 07:00 (ZA) South Africa Nov Monthly Budget Balance (ZAR): No est v -41.2B prior.

- 07:00 (BR) Brazil Nov National Unemployment Rate: 7.5%e v 7.6% prior.

- 07:00 (CL) Chile Nov Manufacturing Production Y/Y: 5.1%e v 9.5% prior; Industrial Production Y/Y: 1.3%e v 1.1% prior; Total Copper Production: No est v 464.3K prior.

- 07:00 (CL) Chile Nov Unemployment Rate: 8.8%e v 8.9% prior.

- 07:00 (CL) Chile Nov Retail Sales Y/Y: -3.6%e v -6.9% prior; Commercial Activity Y/Y: No est v -0.9% prior.

- 08:00 (RU) Russia Q3 Final Current Account: No est v $17.0B prelim (revised from $16.6B).

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:45 (US) Dec Chicago Purchase Manager’s Index (PMI): 50.0e v 55.8 prior.

- 10:00 (MX) Mexico Nov Net Outstanding Loans (MXN): No est v 5.91T prior.

- 10:00 (CO) Colombia Nov National Unemployment Rate: No est v 9.2% prior; Urban Unemployment Rate: 9.2%e v 9.0% prior.

- 11:00 (RU) Russia Q3 Final GDP (3rd of 3 readings) Y/Y: 5.5%e v 5.5% prelim.

- 11:00 (RU) Russia Dec Preliminary CPI M/M: 0.9%e v 1.1% prior; Y/Y: 7.6%e v 7.5% prior.

- 13:00 (US) Weekly Baker Hughes Rig Count.

Weekend

- 20:30 (CN) China Dec Manufacturing PMI (Govt Official): 49.6e v 49.4 prior; Non-Manufacturing PMI: 50.5e v 50.2 prior; Composite PMI: No est v 50.4 prior.

- (KR) South Korea Dec Trade Balance: $4.4Be v $3.8B prior; Exports Y/Y: 3.7%e v 7.7% prior (revised from 7.8%); Imports Y/Y: -11.1%e v -11.6% prior.