This Is What You Need To Know Week Of Jan 7th
Mon, Jan 7th
US: Bank stress test results due (results made public in Mar); JPMorgan Health Care Conference starts; CES starts (MSFT and AAPL are not taking part)
Asia: Australia Trade balance; Japan 10-yr JGB auction; Earnings: Samsung may give prelim Q4
Europe: EU PPI; Switzerland Foreign currency reserves; Germany to sell €4.0B in 6-month BuBills; France Debt Agency (AFT) to sell between €6.0-7.2B in 3-month, 6-month and 12-month Bill
Tues, Jan 8th
US: Earnings: AA
Asia: Australia retail sales; Australia HIA new home sales
Europe: Germany Trade balance and current account; France trade balance; EU unemployment rate; Germany factory orders; Greece Debt Agency (PDMA) to sell combined €2.0B in 4-week and 26-week Bill
Wed, Jan 9th
US: Gartner and IDC publish Q4 PC market data
Asia: Australia building approvals, China new yuan loans, trade balance, money supply (could release from 9th-15th); Earnings: Tata Motors
Europe: UK trade balance; EU Final Q3 GDP; Germany industrial production; Germany to sell €5.0B in 5-Year BOBL; Earnings: Iberdrola, Balfour Beatty
Thurs, Jan 10th
US: Earnings: INFY; Earnings: TIF holiday sales
Asia: China CPI, PPI; Japan current account
Europe: ECB and BOE hold policy meetings (no change expected, some chatter ECB could lower rates or move deposit rates into negative zone); ECB's Draghi press conference; Spain Debt Agency (Tesoro) to sell 2015, 2018 and 2026 bonds; Italy Debt Agency (Tesoro) to sell 12-month Bills; Earnings: Tesco
Fri, Jan 11th
US: US Trade balance; JPMorgan Health Care Conference ends; CES ends; Earnings: BBY holiday sales
Asia: India industrial production
Europe: Swiss CPI; UK Manufacturing production; UK NIESR GDP estimate; German Chancellor Merkel attends EPP Leaders' Meeting in Cyprus; Greek Parliament Must Vote on Tax Bill (Most Decisive Action Needed for Tranche Disbursement); Earnings: Tullow Oil
Fed commentary this week: Following last week's release of FOMC minutes and Dec employment data, traders are expected to focus on this week's commentary out of the Fed for further clarity on the central bank's policy outlook. An article in the FT suggested that some believe that the recent jobs data was not strong enough to persuade the doves on the FOMC to support tighter policy at the current time. Fed officials due to comment during the week include George (Thursday, Jan 10th), Bullard (Thursday, Jan 10th), Kocherlakota (Thursday, Jan 10th) and Plosser (Friday, Jan 11th).
Yield rise: US Treasury yields are expected to be watched closely following the multi-month highs seen last week for Treasury and Gilt yields, amid the improvement in risk appetite, better than expected US economic data and commentary out of the Fed. In Asia, 10-yr Treasury yields are lower by about 2bps and below 1.9%.
US Debt Ceiling/budget cuts: There was continued speculation in the weekend press that US Republicans could use the debt ceiling issue as a way to win additional spending cuts. It was also reported that Republicans could seek to force a government shutdown at the end of March. According to a report in the Washington Post, the White House is said to still be open to discussing elements of the prior "grand bargain" proposal as a framework for dealing with the budget cut negotiations.
US corporate earnings start to pick up. Firms seen reporting this week include Alcoa, Monsanto, Supervalu and Wells Fargo. In the UK, various retailers (including Tesco) are due to update the market on trading during the Christmas season.
Peripherals make 2013 return to the bond market. On Tuesday, Greece is due to sell 4 and 26-week bills. On Thursday's session, Italy is expected to sell 12-month bills and Spain is due to sell 2015,2018 and 2026 bonds. Also, Italy is due to sell bonds on Friday's session. During the prior week, Spanish yields hit lows not seen since March 2012, while Italy's 10-yr yield hit the lowest level since late 2010.
European central bank meetings: The BoE and ECB are expected to hold their policy decisions on Thursday, Jan 10th. Both central banks are expected to leave policy unchanged. Following the Dec ECB meeting there was speculation that the central bank could examine additional rate cuts. Ahead of this week's ECB meeting, 3-month Euribor is trading off of the record lows seen back in Dec.
Officials ease Basel III global liquidity rules by widening the definition related to easy-to-sell assets. Banks will now be able to satisfy up to 15% of the liquidity rule by using less traditional assets, such as highly-rated residential-mortgage-backed-securities.
China data. Amid the recent recovery in Chinese manufacturing and property market data, various data is due to be released out of the country this week including monthly trade balance and CPI.
(EU) ECB continues to have issues with collateral management - German press; The Bank of France has allowed too much credit compared with collateral to six banks due to inadequate haircuts on the collateral; the Bank provided credit in exchange for Short-Term European Paper (STEP) which it accepted as collateral from the banks; According to an ECB spokesperson said there was no impact on the monetary policy operations and added no further comments.
(EU) According to London School of Economics economist Paul De Grauwe, the EU economy has not hit rock bottom and the worst of the crisis is yet to come; Germany needs to urgently stimulate growth - De Tijd
Basel Committee on Banking Supervision have eased first global liquidity rules, widening definition of the easy-to-sell assets that banks will have to hold to survive a 30-day liquidity crisis - press
(FR) France govt does not plan to raise taxes for next few years - French press
(FR) France Budget Minister Cahuzac: To reallocate €2B from its 2013 budget to state-aided job creation to help reduce unemployment
Daimler [DAI.DE]: China Sovereign Wealth Fund (CIC) may take a stake of 4-10% in Daimler - Chinese press
(GR) Greece criticized for not addressing tax evasion fast enough - financial press
(IT) PIMCO Gross: Continue to buy European debt, Italy bonds look good at 3.5%
(PT) IMF's Lagarde: Portugal is on the right track in meeting economic targets - Portugal press
(ES) Spain banks to have one year to comply with rule requiring each bank to a single partner for the sale of insurance- Cinco Dias
(ES) Spain Oct volume of food consumption down 1.8% - El Pais
(ES) Almost 50k Spanish found work in Germany in 2012, up 15.8% y/y- El Pais
GILTS: (UK) Bond markets may have already priced in a UK sovereign downgrade - US financial press
(UK) PM Cameron: Wants to continue serving as PM until at least 2020 to help oversee UK's renegotiated relationship with Europe - financial press
(UK) HSBC analysts see risks for UK fiscal slippage leading to a AAA rating downgrade; would buy EUR/GBP
(US) NY Fed issues monetary policy expectations survey of dealers regarding December meeting; Median expectation for first rate increase in Q3 of 2015; bond buying expectation is for bond buying to end in Q1 of 2014
(US) Goldman Chief economist Hatzius: Employment report was a little weaker than we thought but nothing disturbing - CNBC interview
(US) Senate Minority Leader McConnell (R-KY): Republicans are "done raising taxes"
(US) Pres Obama: Republicans playing a "dangerous game" on the debt ceiling
(US) Former deficit commission Co-Chair Bowles: Using the debt ceiling is the wrong place to draw a line in the sand on deficits - CNBC
(US) The US dollar may become a less attractive funding currency - FT
Alitalia [AZA.IT]: In advanced discussions to be acquired by Air France, could reach an agreement in principal by this week - Il Messagero
Illumina [ILMN]: Acquires Verinata Health for $350M, plus up to $100M in milestone payments
Illumina [ILMN]: Roche Chairman: No longer considering a bid for Illumina - financial press
Steel: (CN) China Iron and Steel Association (CISA): 2012 crude steel production expected at 720M tons (record high) - financial press
(CN) According to the latest survey from Xinhua News, Dec CPI has accelerated to 2.3% from 2.0% in Nov due to food shortages as a result of cold weather - China Daily
(CN) China urbanization plan said to have been submitted to State Council - Chinese press
(CN) (CN) China may set 2013 GDP target at 8% vs 7.5% for 2012 - Chinese press
(CN) China PBoC said to favor over CNY9.0T in new Yuan loans for 2013 - financial press; Favors M2 Money Supply growth over 13%
(CN) China PBoC gauges demand for 7-day, 14-day and 28-day reverse repos - financial press
(CN) China Index Academy: Dec home prices across 100 major cities rose 0.23% m/m to CNY9,715/sqm; 7th month of increase - Shanghai Daily
(CN) China Central Depository & Clearing: China faced with higher bond market credit risk in 2013 - Chinese press
USD/JPY: (JP) Japan Business Lobby chief Yonekura: Current level of 88 in pair is acceptable
USD/JPY: (JP) Japan Chief Cabinet Sec Suga: Recent moves in stock and Fx markets are very welcome
(JP) Japan Fin Min Aso: Not necessarily seeking a written policy accord with BOJ - NHK News ; No need for govt to be attached to BoJ accord as long as there's communication and mutual understanding on how to help shore up the Japanese economy; Govt and BOJ will get together at least once a month during a meeting of the Council of Economic and Fiscal Policy
(JP) Japan Chief Cabinet Sec Suga: Moving toward accord with the BoJ; Plans to issue joint statement with BoJ at next policy meeting - financial press
(JP) Japan supplementary budget may amount to about ¥12T; May include ¥5-6T in public works spending - Japan press
(JP) Japan Ministry of Finance may resume inflation-linked JGB offerings in FY13 - Japanese press
(JP) Japan BoJ 6-month funding operation failed; first failure since middle-Dec - financial press
(JP) JAPAN DEC MONETARY BASE Y/Y: 11.8% V 5.0% PRIOR (11-month high)