Notes/Observations

- UK GDP surpassed its pre-pandemic level.

- EU Area inflation remained elevated for Dec (final readings for France, Spain).

- Euro Zone runs a trade deficit in Nov as Deficit due to surge in the cost of imported oil and gas.

Asia

- Bank of Korea (BoK) raised its 7-Day Repo Rate by 25bps to 1.25% (as expected). Statement noted that would appropriately adjust degree of policy accommodation with further policy adjustment dependent on effects of prior rate hikes. Economic growth to be in line with Nov Projections while CPI to be above the projections.

- China Dec Trade Balance: $94.5B v $74.0Be; Exports Y/Y: 20.9% v 20.0%e; Imports Y/Y: 19.5% v 27.8%e.

- BOJ policy makers said to be debating when to 'telegraph' a rate hike that can come before hitting 2.0% CPI target; noted an actual rate hike was not imminent.

Americas

- President Biden had selected Raskin to become the Vice Chair of supervision (as expected); Cook and Jefferson selected as Fed Governors (as expected).

- Fed's Waller (Hawk, Voter) stated that did not favor 50bps hike in March; 3 hikes in 2022 was still a good baseline, if inflation remained 'stubbornly' high, there could be 4 or even 5 rate hikes.

- Fed's Daly (non-voter, dove) stated that the pace of balance sheet reduction could be faster than last time but should be predictable and not meeting-by-meeting; Did not want to raise rates while still buying bonds.

- Fed's Evans (dove, non-voter) stated that 3 rate hikes was a good 'opening bid' for 2022, and could go to 4 hikes if inflation did not improve fast enough.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

Indices [Stoxx600 -0.58% at 483.36, FTSE -0.09% at 7,556.79, DAX -0.55% at 15,942.66, CAC-40 -0.59% at 7,158.38, IBEX-35 -0.56% at 8,767.50, FTSE MIB -0.69% at 27,653.00, SMI -0.37% at 12,574.24, S&P 500 Futures +0.17%].

Market focal points/Key themes

Equities

- Consumer discretionary: Cineworld [CINE.UK] +1.5% (trading update).

- Energy: Electricité de France [EDF.FR] -20% (cuts outlook as France pushes for lower energy prices).

- Industrials: Maersk [MAERSKB.DK] -2% (prelim results), Experian [EXPN.UK] -1.5% (trading update; raises outlook).

- Technology: SAP [SAP.DE] +0.5% (prelim earnings; buyback), Minds + Machines [MMX.UK] +15% (intends to delist).

Speakers

- Germany Fin Min Lindner reiterated pledge to restore the debt brake in 2023. German finances to send message to Europe.

- Germany Economic Ministry noted that the upward inflation trend to weaken noticeably from January but still at pre-crisis level. Q4 GDP growth to be subdued due to production difficulties and virus restrictions.

- German Stats Office stated that Q4 GDP likely contracted between 0.5-1.0% range.

- France European Affairs Min Beaune reiterated stance that UK needs to be more flexible and constructive in its approach to post-Brexit negotiations.

- EU's Sefcovic stated that had instructed teams to intensify Brexit talks next week (**Note: Sefcovis to meet UK Brexit negotiator Truss on Jan 24th).

- Brexit negotiator Truss stated that there was a deal to be done with EU over post-Brexit trade issues. Would look at alternatives if progress is not made (**Note: refers to question on triggering Article 16).

- Russia Foreign Min Lavrov stated that believed could have a security agreement with good will. Wanted a fast written detailed response from US and NATO on the security proposal. Could respond in various ways if West spurns security proposals on NATO non-expansion. Putin to visit Beijing on Feb 4th for Russia-China summit.

- Russia Central Bank (CBR) Gov Nabiullina stated that the labor shortage was a major economic challenge.

- Russia Econ Min Reshetnikov stated that inflation would be above 9% without govt measures.

- China FX Regulator SAFE stated that it had strengthen forex market regulations.

Currencies/Fixed income

- USD remains on soft footing for the 4th straight day that began after inflation data from earlier this week. Dealers noted recent hawkishness from FED members appeared to be already been priced in.

- EUR/USD approaching the key resistance of 1.15 area.

- GBP/USD above 1.3730 after Nov GDP beat expectations and brought it back to its pre-pandemic size for the first time. Dealers did note that but GDP was poised set for a temporary setback due to Omicron.

- USD/JPY at 113.65 and off earlier lows on reports that BOJ was deliberating how it could start telegraphing an eventual rate increase somewhere down the road.

Economic data

- (NL) Netherlands Nov Trade Balance: € v €3.6B prior.

- (FI) Finland Dec CPI M/M: -0.1% v +0.4% prior; Y/Y: 3.5% v 3.7% prior.

- (FI) Finland Nov GDP Indicator Y/Y: 4.2% v 4.7% prior.

- (FI) Finland Nov Final Retail Sales Volume Y/Y: +1.1% v -1.9% prelim.

- (UK) Nov GDP M/M: 0.9% v 0.4%e; GDP 3M/3M: 1.1% v 0.8%e.

- (UK) Nov Industrial Production M/M: 1.0% v 0.2%e; Y/Y: 0.1% v 0.5%e.

- (UK) Nov Manufacturing Production M/M: 1.1% v 0.2%e; Y/Y: +0.4% v -0.3%e.

- (UK) Nov Construction Output M/M: 3.5% v 0.6%e; Y/Y: 6.8% v 3.1%e.

- (UK) Nov Index of Services M/M: 0.7% v 0.5%e; 3M/3M: 1.3% v 1.1%e.

- (UK) Nov Visible Trade Balance: -£11.3B v -£14.3Be; Overall Trade Balance: +£0.6B v -£2.5Be; Trade Balance Non EU: -£5.7B v -£6.8B prior.

- (TR) Turkey Central Bank Jan TCMB Expected Inflation Survey: Next 12-Month Outlook: 25.4% v 21.4% prior.

- (RO) Romania Dec CPI M/M: 0.7% v 0.3%e; Y/Y: 8.2% v 7.9%e (8th month above target range).

- (CN) Weekly Shanghai copper inventories (SHFE): 30.3K v 29.2K tons prior.

- (FR) France Dec Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 2.8% v 2.8% prelim; CPI Ex-Tobacco Index: 107.03 v 107.06e.

- (FR) France Dec Final CPI EU Harmonized M/M: 0.2% v 0.2% prelim; Y/Y: 3.4% v 3.4% prelim.

- (FR) France Nov YTD Budget Balance: -£181.0B v -€171.6B prior.

- (ES) Spain Dec Final CPI M/M: 1.2% v 1.3% prelim; Y/Y: 6.6% v 6.7% prelim (confirmed the highest annual pace since 1989).

- (ES) Spain Dec Final CPI EU Harmonized M/M: 1.2% v 1.2% prelim; Y/Y: 6.7% v 6.7% prelim.

- (ES) Spain Dec CPI Core M/M: 0.3% v 0.6% prior; Y/Y: 2.1% v 1.7% prior.

- (HU) Hungary Dec CPI M/M: 0.3% v 0.1%e; Y/Y: 7.4% v 7.2%e (9th month above target range and matched 14-year high).

- (RU) Russia Narrow Money Supply w/e Jan 7th (RUB): 14.61T v 14.47T prior (Dec 30th).

- (SE) Sweden Dec CPI M/M: 1.3% v 1.2%e; Y/Y: 3.9% v 3.9%e; CPI Level: 352.47 v 352.32e.

- (SE) Sweden Dec CPIF M/M: 1.3% v 1.2%e; Y/Y: 4.1% v 4.0%e.

- (SE) Sweden Dec CPIF (ex-energy) M/M: 0.4% v 0.4%e; Y/Y: 1.7% v 1.8%e.

- (DE) Germany 2021 GDP NSA (unadj) Y/Y: 2.7% v 2.7%e; Budget deficit to Maastricht Criteria: -4.3% v -5.5%e.

- (PL) Poland Dec Final CPI M/M: 0.9% v 0.9% prelim; Y/Y: 8.6% v 8.6% prelim.

- (IT) Italy Nov General Government Debt: €2.694T v €2.710T prior.

- (EU) Euro Zone Nov Trade Balance (seasonally adj): -€1.3B v +€1.5Be; Trade Balance NSA (unadj): -€1.5B v +€3.6B prior.

Fixed income issuance

- (ZA) South Africa sold total ZAR1.2B vs. ZAR1.2B indicated in I/L 2033, 2038 and 2050 Bonds.

- (IN) India sold total INR240B vs. INR240B indicated in 2032, 2034 and 2061 bonds.

Looking ahead

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

- 06:00 (IE) Ireland Dec Live Register Monthly Change: No est v 0.1K prior; Live Register Level: No est v 170.2K prior.

- 06:00 (UK) DMO to sell £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively).

- 06:30 (IN) India Weekly Forex Reserve w/e Jan 7th: No est v $633.6B prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 07:00 (IL) Israel Dec CPI M/M: +0.1%e v -0.1% prior; Y/Y: 2.6%e v 2.4% prior.

- 07:00 (BR) Brazil Nov Retail Sales M/M: 0.0%e v -0.1% prior; Y/Y: -5.8%e v -7.1% prior.

- 07:00 (BR) Brazil Nov Broad Retail Sales M/M: -0.5%e v -0.9% prior; Y/Y: -4.7%e v -7.1% prior.

- 08:00 (PL) Poland Central Bank (NBP) Jan Minutes.

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

- 08:00 (RU) Russia Dec Official Reserve Assets: $628.0Be v $622.5B prior.

- 08:15 (EU) ECB’s Lagarde at conference.

- 08:30 (US) Dec Advance Retail Sales M/M: -0.1%e v +0.3% prior; Retail Sales (ex-auto) M/M: 0.2%e v 0.3% prior; Retail Sales (ex-auto/gas): -0.2%e v +0.2% prior; Retail Sales (control group): 0.0%e v -0.1% prior.

- 08:30 (US) Dec Import Price Index M/M: 0.2%e v 0.7% prior; Y/Y: 10.8%e v 11.7% prior; Import Price Index (ex-petroleum) M/M: 0.6%e v 0.7% prior.

- 08:30 (US) Dec Export Price Index M/M: 0.3%e v 1.0% prior; Y/Y: 16.0%e v 18.2% prior.

- 09:15 (US) Dec Industrial Production M/M: 0.2%e v 0.5% prior; Capacity Utilization: 77.0%e v 76.8% prior; Manufacturing Production: 0.3%e v 0.7% prior.

- 10:00 (US) Nov Business Inventories: 1.3%e v 1.2% prior.

- 10:00 (US) Jan Preliminary University of Michigan Confidence: 70.0e v 70.6 prior.

- 11:00 (EU) Potential sovereign ratings after European close.

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

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