Various EU Q4 GDP data showing lockdowns have less impact compared to last spring

EU Mid-Market Update: Various EU Q4 GDP data showing lockdowns have less impact compared to last spring; issuance front remains heavy.

Notes/Observations

- UK Jan Nationwide House Prices registered its 1st monthly decline since June

- Various EU GDP data (Euro Zone, Italy and Portugal) showed less economic fallout from the coronavirus pandemic from last spring’s lockdown

- Issuance remains steady as countries and companies race to take advantage of low borrowing costs

- Companies expected to report during the NY morning include ConocoPhillips, Emerson Electric, Eaton Corp, W.W. Grainger, HCA, Harley Davidson, Manpower, McKesson, Marathon Petroleum, Pitney Bowes, Pfizer, Sirius XM, Sysco Corp, UPS, Exxon

Asia

- RBA left policy steady with Cash Rate Target unchanged at 0.10% and maintained 3-year Yield Target at 0.10%; Increased QE buying by A$100B when current program ended in Mid-April

- South Korea Jan CPI M/M: 0.8% v 0.3%e; Y/Y: 0.6% v 0.5%e

Coronavirus

- Total global cases 103.4M (+0.4% d/d); total deaths 2.24M (+0.5% d/d)

- EU Commission chief Von Der Leyen confirmed the target was to vaccinate 70% of Europe’s adult population by the summer

Europe

- Talks to restore Italy government's collapsed as ruling coalition said to have hit a roadblock over policy differences

- SNB Chairman Jordan stated that the domestic economy might contract in Q4 and Q1. Reiterated stance that FX interventions remained very important, we had seen great pressure on the franc

- UK PM Johnson said to be pushing to reopen schools on March 8th amid declining COVID cases

- UK Chancellor of the Exchequer Sunak (Fin Min) said to have ruled out raising the tax rate of income tax, value-added tax or National Insurance to strengthen public finances

Americas

- White House Press Sec stated that President Biden had productive discussions with Republican Senators on COVID relief; there were many areas where their [GOP] proposal did not address urgent issues

- Republicans proposed $618B Covid-19 stimulus plan

- CBO issues 2020-2024 economic projections: upgrades economic outlook; sees GDP reaching pre-pandemic peak by mid-2021, unemployment to fall to 5.3% by end of 2021

- President Biden to sign executive order on immigration Tuesday, Feb 2nd

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +1.28% at 405.90, FTSE +0.84% at 6,520.25, DAX +1.41% at 13,813.70, CAC-40 +1.85% at 5,562.48, IBEX-35 +1.48% at 7,914.00, FTSE MIB +1.32% at 22,113.50, SMI +0.90% at 10,837.34, S&P 500 Futures +0.92%]

Market Focal Points/Key Themes: European indices open higher across the board and advanced as the session progressed; technology and industrials sectors are among better performers; sectors to the downside include health care and materials; Metro Bank acquires RateSetter; ForFarmers completes acquisition of De hoop Mengvoeders; earnings expected in the upcoming US session include ExxonMobil, Amazon, Alphabet and UPS

Equities

- Consumer discretionary: Airbus [AIR.FR] +6% (analyst upgrade), Electrolux [ELUXB.SE] -1% (earnings)

- Energy: BP [BP.UK] -3% (earnings)

- Healthcare: Fresenius [FME.DE] -6% (prelim earnings)

- Technology: ATOS [ATO.FR] +3% (Reportedly Atos plans to break off talks to acquire DXC)

- Telecom: Telenor [TEL.NO] +2% (earnings), Tele2 [TEL2B.SE] -3% (earnings)

Speakers

- SNB President Jordan stated that the economic situation remained uncertain and fragile for economy; GDP would not reach pre-crisis levels until 2022

- Sweden Central Bank (Riksbank) Gov Ingves testified in Parliament that amortization requirement exception must remain temporary

- Turkey Central Bank (CBRT) reiterated stance that upside risks on inflation forecasts remained significant

- India Divestment Sec Pandey: FY22 asset sale target of INR1.75T was realistic

- South Korea Fin Min Hong stated that an extra budget could be discussed in March if needed

- Bank of Korea (BOK) Jan Minutes had one member noted that financial imbalance risks were accumulating. One member noted home prices rose excessively in Seoul.

- Japan Econ Min Nishimura confirmed to extend state of emergency in 10 prefectures through Mar 7th

Currencies/ Fixed Income

- EUR/USD steady around 1.2075 area as markets perceived the EU was not handling the crucial vaccination process well. Euro failed to find any upside momentum despite various EU Q4 GDP data showing that the impact of lockdown measures were much less compared to last spring. ECB speak has been trying to limit any potential upside in the pair and appeared to have some effect at this time.

- GBP was mustering some believers as the UK vaccine rollout appeared to be better coordinated compared to Europe, Cable hovering around 1.37 as vaccination hopes boosting the chances of an economic rebound.

Economic data

- (UK) Jan Nationwide House Price Index M/M: -0.3% v +0.3%e; Y/Y: 6.4% v 6.9%e

- (FR) France Jan Preliminary CPI M/M: 0.2% v 0.0%e; Y/Y: 0.6% v 0.3%e

- (FR) France Jan Preliminary CPI EU Harmonized M/M: 0.3% v 0.0%e; Y/Y: 0.8% v 0.5%e

- (ES) Spain Jan Unemployment Change: +76.2K v +36.8K prior

- (CZ) Czech Q4 Advance GDP Q/Q: +0.3% v -2.5%e; Y/Y: -5.0% v -7.6%e

- (HU) Hungary Dec PPI M/M: 1.0% v 0.0% prior; Y/Y: 6.8% v 5.5% prior

- (HK) Hong Kong Dec Retail Sales Value Y/Y: -13.2% v -14.7%e; Retail Sales Volume Y/Y: -14.0% v -11.4%e

- (IT) Italy Q4 Preliminary GDP Q/Q: -2.0% v -2.0%e; Y/Y: -6.6% v -6.6%e

- (PT) Portugal Q4 Advance GDP Q/Q: +0.4% v -2.0%e; Y/Y: -5.9% v -9.0%e

- (EU) Euro Zone Q4 Advance GDP Q/Q: -0.7% v -0.9%e; Y/Y: -5.1% v -5.3%e

Fixed income Issuance

- (ID) Indonesia sold total IDR35.0T vs. IDR35.0T target in bills and Bonds

- (BE) Belgium Debt Agency (BDA) opened its book to sell EUR-denominated 50-year OLO bond via syndicate; guidance seen +7bps to 2066 OLO; order book over €41B

- (CY) Cyprus opened book to sell EUR-denominated 5-year bond; guidance seen +50-55bps to mid-swaps; order book above €7.5B

- (FI) Finland opened book to sell EUR-denominated 30-year bond via syndicate; guidance seen +3bps to mid-swaps; order book over €22B

- (ZA) South Africa sold total ZAR6.6B vs. ZAR6.6B indicated in 2032, 2037 and 2040 bonds

- (UK) DMO sold £3.0B in 0.125% Jan 2026 Gilt; Avg Yield: 0.039% v 0.072% prior; bid-to-cover: 2.78x v 2.06x prior; Tails: 0.2bps v 0.3bps prior

Looking Ahead

- (US) Jan Vehicle Sales data during session

- 05:10 (EU) Daily ECB Liquidity Stats

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

- 05:30 (DE) Germany to sell €6.0B in new 0.00% Mar 2023 Schat

- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month Bills

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)

- 06:30 (UK) DMO to sell £1.0B in 1.625% Oct 2071 Gilts

- 06:30 (EU) ESM to sell €1.5B in 3-month bills

- 07:00 (BR) Brazil Dec Industrial Production M/M: -0.2%e v +1.2% prior; Y/Y: 5.5%e v 2.8% prior

- 08:00 (SG) Singapore Jan Purchasing Managers Index (PMI): 50.9e v 50.5 prior; Electronics Sector Index: No est v 51.2 prior

- 08:00 (BR) Brazil Jan Vehicle Production: No est v 209.3K prior; Vehicle Sales: No est v 244.0K prior; Vehicle Exports: No est v 38.4K prior

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

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)

- 08:55 (US) Weekly Redbook LFL Sales data

- 09:00 (EU) Weekly ECB Forex Reserves

-09:45 (US) Jan ISM New York: No est v 61.3 prior

- 09:45 (UK) BOE to buy £1.48B in APF Gilt purchase operation (over 20-years)

- 10:00 (MX) Mexico Dec Total Remittances: $3.6Be v $3.381B prior

- 10:00 (MX) Mexico Central Bank Economist Survey

- 10:30 (MX) Mexico Jan PMI Manufacturing: No est v 42.4 prior

- 11:00 (DK) Denmark Jan Foreign Reserves (DKK): No est v 439.6B prior

- 13:00 (MX) Mexico Jan IMEF Manufacturing Index: No est v 48.7 prior; Non-Manufacturing Index: No est v 48.1 prior

- 14:00 (US) Fed’s Mester

- 16:00 (KR) South Korea Jan Foreign Reserves: No est v $443.1B prior

- 16:30 (AU) Australia Dec Performance of Construction Index: No est v 55.3 prior

- 16:30 (US) Weekly API Oil Inventories

- 16:45 (NZ) New Zealand Q4 Unemployment Rate: 5.6%e v 5.3% prior

- 17:00 (AU) Australia Jan Final PMI Services: No est v 55.8 prelim; PMI Composite: No est v 56.0 prelim

- 18:00 (AU) Australia Jan CoreLogic House Price Index M/M: No est v 0.9% prior

- 19:00 (NZ) New Zealand Jan Commodity Price Index: No est v 1.8% prior

- 19:30 (JP) Japan Jan Final PMI Services: No est v 45.7 prelim; PMI Composite: No est v 46.7 prelim

- 19:30 (SG) Singapore Jan PMI (whole economy): No est v 50.5 prior

- 19:30 (HK) Hong Kong Jan PMI (whole economy): No est v 43.5 prior

- 19:30 (AU) Australia Dec Building Approvals M/M: 3.0%e v 2.6% prior

- 20:01 (IE) Ireland Jan PMI Services: No est v 50.1 prior; PMI Composite: No est v 53.4 prior

- 20:30 (AU) RBA Gov Lowe in Canberra

- 20:45 (CN) China Jan Caixin PMI Services: 55.5e v 56.3 prior; PMI Composite: No est v 55.8 prior

- 23:30 (TW) Taiwan to sell TWD35B in 6-month Bills