UK monthly GDP data showing lockdown impact not as severe compared to last spring

Notes/Observations

- UK Nov GDP contraction was less than expected ahead of the tightening of coronavirus restrictions

- German CDU party to begin 2-day digital congress starting today to decide on the new leader of the party

- President-elect Biden $1.9T coronavirus relief proposal within expectations

Asia:

- Bank of Korea (BOK) left 7-Day Repo Rate unchanged at 0.50% (as expected); Reiterated to maintain accommodative policy stance. Decision to keep policy steady was unanimous

- PBOC conduced CNY500B in its 1-year MLF operation with the rate unchanged at 2.95%; resulted in small net drain in funds; suggests a shift to a tightening bias in monetary policy.

- China said to be considering allowing some imports of Australia Coal Cargo; broader ban on coal imports remains in effect

Coronavirus:

- Total global cases 93.1M (+0.8% d/d); total death toll 1.99M (+0.8% m/m)

Europe:

- Italy PM Conte to address lower house over Government crisis on Monday Jan 18th and the upper house on Jan 19th

- Italy cabinet approved request for €32B in extra budget deficit (as expected)

Americas:

- President-elect Biden announced his $1.9T American Rescue Plan which concentrated on stimulus payments, income support, funding for state/local govt and more money to tackle Covid-19. He stated that planning to achieve 100M vaccine doses in 1st 100 days, Recovery plan would not come cheap ; tax loopholes for corporations would be closed ; Called for minimum wage to be increased to $15 an hour

- Fed Chair Powell stated that time to raise rates is no time soon. Would no longer going to raise rates just because unemployment was well below our estimates of a natural rate

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.36% at 410.52, FTSE -0.54% at 6,765.82, DAX -0.39% at 13,934.30, CAC-40 -0.54% at 5,650.50, IBEX-35 -0.40% at 8,339.00, FTSE MIB +0.26% at 22,697.50, SMI +0.15% at 10,866.96, S&P 500 Futures -0.29%]

Market Focal Points/Key Themes: European indices open broadly lower and stayed under pressure as the session wore on; sectors among better performers are financials and consumer discretionary ; real estate and telecom sectors among downward leaders; French FinMin le Maire streniously objects to Carrefour takeover; GE sues Siemens Energy over alleged trade secrets violation; events expected during the upcoming US session include JPMorgan, Citigroup, and Wells Fargo

Equities

- Consumer discretionary: Carrefour [CA.FR] -4% (French officials reiterates opposition to Carrefour, Couche Tard deal)

- Energy: Petrofac [PFC.UK] -22% (Serious Fraud Office statement)

- Financials:

- Healthcare: Indivior [INDV.UK] +10% (earnings), DBV Technologies [DBV.FR] +32% (FDA feedback)

- Industrials: Gama Aviation [GMAA.UK] +13% (acquistion), Babcock [BAB.UK] -18% (trading update)

- Technology: Aveva [AVV.UK] +4% (trading update)

Speakers

- ECB’s Makhlouf (Ireland): full impact of crisis had yet to emerge

- Poland Finance Ministry official Skuza (debt office): Weaker currency helps exporters and shores up budget

- IMF chief Georgieva stated that its outlook for 2021 is less gloomy compared back to October forecasts

- Taiwan Central Bank reiterated request that large exporters should spread out FX sales

- China PBoC Vice Gov Chen Yulu: 2021 monetary policy to provide necessary support for recovery and be more flexible, targeted and appropriate. To prioritize stability in monetary policy with no sudden shifts. CNY currency (Yuan) exchange rate volatility was normal; future FX moves to depend on global economy

- PBoC's Sun Guofeng (Monetary Policy Dept Head): Current interest-rate level was appropriate

Currencies/Fixed Income

- USD was steady and keeping its recent strength and had its best week in two months.

- GBP/USD was trading at 1.3650 area despite UK monthly GDP data showing lockdown impact not as severe compared to last spring. The 1.37 area continuing to be resistance.

- EUR/USD at 1.2140 by mid-session in dull trading. Various EU CPI readings for France and Spain highkighting the distance inflation needs to go to reach ECB target.

- China MLF operation reinforced tightening perceptions while PBoC official seemed to downplay such expectations. Markets focusing on key Chinese data next week that included the Q4 GDP reading.

Economic data

- (FI) Finland Nov GDP Indicator Y/Y: -0.4% v -1.8% prior

- (UK) Nov Monthly GDP M/M: -2.6% v -4.6%e; GDP 3M/3M: 4.1% v 3.3%e

- (UK) Nov Industrial Production M/M: -0.1% v +0.5%e; Y/Y: -4.7% v -4.2%e

- (UK) Nov Manufacturing Production M/M: 0.7% v 1.0%e; Y/Y: -3.8% v -4.8%e

- (UK) Nov Construction Output M/M: 1.9% v 0.5%e; Y/Y: -1.4% v -8.0%e

- (UK) Nov Index of Services M/M: -3.4% v -5.7%e; 3M/3M: 3.7% v 2.5%e

- (UK) Nov Visible Trade Balance: -£16.0B v -£11.4Be; Overall Trade Balance: -£5.0B v -£1.7Be; Trade Balance Non EU: -£8.0B v -£3.6Be

- (NO) Norway Dec Trade Balance (NOK): 12.1B v 0.0B prior

- (DK) Denmark Dec PPI M/M: 0.9% v 0.6% prior; Y/Y: -2.0% v -2.6% prior

- (TR) Turkey Central Bank Jan TCMB Survey of Expectations: Next 12 Months: 10.5% v 10.8% prior

- (CN) Weekly Shanghai copper inventories (SHFE): 73.7K v 82.4K tons prior

- (FR) France Dec Final CPI M/M: 0.2% v 0.2%e; Y/Y: 0.0% v 0.0%e; CPI (ex-tobacco Index): 104.09 v 104.07e

- (FR) France Dec Final CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 0.0% v 0.0%e

- (FR) France Nov YTD Budget Balance: -€176.8B v -€159.9B prior

- (ES) Spain Dec Final CPI M/M: 0.2% v 0.2%e; Y/Y: -0.5% v -0.5%e

- (ES) Spain Dec Final CPI EU Harmonized M/M: 0.2% v 0.1%e; Y/Y: -0.6% v -0.6%e

- (ES) Spain Dec CPI Core M/M: 0.0% v 0.3% prior; Y/Y: 0.1% v 0.2% prior

- (RU) Russia Narrow Money Supply w/e Jan 8th (RUB):13.83 T v 13.47T prior

- (SE) Sweden Dec CPI M/M: 0.7% v 0.6%e; Y/Y: 0.5% v 0.3%e; CPI Level: 339.34 v 338.99e

- (SE) Sweden Dec CPIF M/M: 0.7% v 0.6%e; Y/Y: 0.5% v 0.4%e

- (SE) Sweden Dec CPIF (ex-energy) M/M: 0.6% v 0.5%e; Y/Y: 1.2% v 1.1%e

- (PL) Poland Dec Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 2.4% v 2.3% prelim

- (IS) Iceland Dec International Reserves (ISK): 817B v 864B prior

- (IT) Italy Nov General Government Debt: €2.587T v €2.587T prior (matches record high)

- (EU) Euro Zone Nov Trade Balance (seasonally adj): €25.1B v €22.0Be; Trade Balance NSA (unadj): €25.8B v €30.0B prior

Fixed income Issuance

- (IN) India sold total INR224.5B vs. INR220B indicated in 2023, 2033, 2035 and 2050 bonds

- (ZA) South Africa sold total ZAR2.0B vs. ZAR2.0B indicated in I/L 2025, 2038 and 2046 bonds

Looking Ahead

- 06:00 (IE) Ireland Nov Trade Balance: No est v €5.5B prior

- 06:00 (BR) Brazil Jan FGV Inflation IGP-10 M/M: 0.9%e v 2.0 % prior

- 06:00 (UK) DMO to sell £4.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.5B respectively)

- 06:30 (IN) India Dec Trade Balance: -$15.0Be v -$9.9B prior; Exports Y/Y: No est v -8.7% prior; Imports Y/Y: No est v -13.3% prior

- 06:30 (IN) India Weekly Forex Reserve w/e Jan 8th: No est v $585.3B prior

- 07:00 (IL) Israel Dec CPI M/M: 0.0%e v -0.2% prior; Y/Y: -0.6%e v -0.6% prior

- 07:00 (BR) Brazil Nov Retail Sales M/M: 0.3%e v 0.9% prior; Y/Y: 4.6%e v 8.3% prior

- 07:00 (BR) Brazil Nov Broad Retail Sales M/M: 0.8%e v 2.1% prior; Y/Y: 4.4%e v 6.0% prior

- 08:00 (RU) Russia Nov Trade Balance: $8.0Be v $6.4B prior; Exports: $29.8Be v $28.2B prior; Imports: $21.2Be v $21.8B prior

- 08:00 (RU) Russia Dec Official Reserve Assets: $591.0Be v $582.7B prior

- 08:00 (PL) Poland Central Bank (NBP) Dec Minutes (two meetings ago)

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

- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance

- 08:00 (IN) India announcement on upcoming bill issuance (held on Wed)

- 08:30 (US) Jan Empire Manufacturing: 6.0e v 4.9 prior

- 08:30 (US) Dec Advance Retail Sales M/M: 0.0%e v -1.1% prior; Retail Sales (ex-auto) M/M: -0.2%e v -0.9% prior; Retail Sales (ex-auto/gas): -0.3%e v -0.8% prior’ Retail Sales (Control Group): +0.1%e v -0.5% prior

- 08:30 (US) Dec PPI Final Demand M/M: 0.4%e v 0.1% prior; Y/Y: 0.8%e v 0.8% prior

- 08:30 (US) Dec PPI (ex-food/energy) M/M: 0.2%e v 0.1% prior; Y/Y: 1.3%e v 1.4% prior

- 08:30 (US) Dec PPI (ex-food/energy/trade) M/M: 0.2%e v 0.1% prior; Y/Y: 0.9%e v 0.9% prior

- 09:15 (US) Dec Industrial Production M/M: 0.5%e v 0.4% prior; Capacity Utilization: 73.6%e v 73.3% prior; Manufacturing Production: 0.5%e v 0.8% prior

- 10:00 (US) Nov Business Inventories: 0.5%e v 0.7% prior

- 10:00 (US) Jan Preliminary University of Michigan Confidence: 79.5e v 80.7 prior

- 10:00 (PE) Peru Dec Unemployment Rate: No est v 15.1% prior

- 10:00 (PE) Peru Nov Economic Activity Index (Monthly GDP) Y/Y: -3.8%e v -3.8% prior

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

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