China Said To Tweak Language On Its Monetary Policy Stance For 2019

Notes/Observations

• France Q3 Final revised lower; Nov Consumer spending data misses expectations (protests likely cited)
• Italy Dec Confidence data misses expectations
• China Govt said to drop ‘neutral;’ from its prudent monetary policy stance following its 3-day works council meeting on the 2019 outlook

Asia:

• Japan Nov National CPI Y/Y: 0.8% v 0.8%e; CPI Ex-Fresh Food (core) Y/Y: 0.9% v 1.0%e; CPI Ex Fresh Food/Energy (core-core) Y/Y: 0.3% v 0.4%e
• Japan Cabinet approved general account budget spending of ~¥101.5T for FY19/20 (record amount, in line with press speculation); Government to sell new bonds worth ~¥32.7T in FY19/20 (9th straight decline, in line with press speculation)

Europe:

• PM May said to be hatching a secret Brexit plan B to avoid Armageddon. options on the table said to include postponing the divorce from the European Union, calling another referendum or even announcing fresh national elections.

Americas:

• US House voted to pass stopgap bill, but opposition expected in the Senate; Senate Majority Leader McConnell (R) said Senate to take up House-passed bill on Friday, Dec 21st (Note: House measure would fund the government through Feb 8th)
• House Speaker Ryan: Trump in meeting said he wouldn’t sign the Senate-approved funding bill; Trump wanted to see agreement that protected the border

Macro

• (FR) France: Q3 GDP was unexpectedly revised down to 0.3% q/q from 0.4% q/q reported initially. The annual rate was left unchanged at 1.4% but the weaker quarterly rate read in conjunction with deteriorating confidence and consumer spending numbers suggests a renewed slowdown in growth in the near term.
• (DE) Germany: November import price inflation dropped to 3.1% y/y in November from 4.8% y/y in the prior month in large part due to a significant drop in energy price inflation to 19.3% y/y from 37.2% in October. Excluding energy the rate was unchanged at 1.1% but lower on an annual comparison. Import price pressures are easing and the most recent drop in oil prices will also help keep a lid on any significant inflation upside.
• (US) United States: House Speaker Ryan said the White House won’t sign the spending bill as it is presented as they seek an agreement that protects the border. This followed meetings with the President and puts the deal to avoid a government shutdown in jeopardy one day to go before recess.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.8% at 334.0 FTSE -0.4% at 6688, DAX -0.7% at 10541, CAC-40 -1.1% at 4643, IBEX-35 -1.1% at 8503, FTSE MIB -1.2% at 18360, SMI -0.7% at 8352, S&P 500 Futures -0.6%]
• Market Focal Points/Key Themes: European Indices trade lower across the board continuing the downward trend after Asian Indices traded mixed, following more weakness in the US overnight. On the corporate front Danske Bank trades lower after cutting its outlook, with Technicolor another notable decliner after guiding full year EBITDA. Bekaert fall after noting impairments will mean the company misses its forecasts. SLM Solutions has faded earlier sharp losses after cutting their outlook, Interserve trades lower after initial strength after announcing its deleveraging plan. In the M&A space Delivery Hero trades over 10% higher after divesting its German business and providing 2019 and 2020 outlook. Looking ahead notable earners include Karmax

Equities

• Consumer discretionary: Technicolor [TCH.FR] -13.3% (Defines outlook), Delivery Hero [DHER.DE] +13% (Sells German ops, provides outlook), Just Eat [JE.UK] +4% (Up with Delivery hero)
• Materials: Bekaert [BEKB.BE] -4.5% (Impairment charges)
• Financials: Danske Bank [DANSKE.DK] 3.3% (Cuts outlook)
• Healthcare: Mithra Pharmaceuticals [MITRA.BE] +1.0% (Trial data)
• Industrials: Interserve [IRV.UK] -2.7% (Deleveraging update)
• Technology: SLM Solutions [AM3D.DE] -4% (Cuts outlook)

Speakers

• Italy Fin Min Tria stated that needed a bigger effort to avoid a VAT hike in 2020 and 2021
• China State Council guideline on implementing work Report reiterates its proactive fiscal policy; modifies its prudent monetary policy stance for 2019. Reiterated stance to keep economic operation with reasonable range in 2019; to stabilize aggregate demand and prioritize employment. Reiterated view to keep liquidity reasonably ample and look to increase market confidence. Would continue structural deleveraging to prevent abnormal financial market volatility and resolve financing difficulties for SMEs. To handle local govt debt risks in a reliable way
• Russia said to cut oil output by 228K bpd as part of November OPEC+ deal

Currencies/Fixed Income

• USD remained on soft footing in the aftermath of the Fed dovish rate hike earlier in the week. No safe haven flows into the greenback despite an environment of another round that saw risk assets come under pressure in Asia and EU session.
• EUR/USD continued to have difficulties breaking above the 1.15 level where various technical headwinds persist. Continued concerns on growth front for the region saw the pair give back its initial gains to trade at 1.1430 just ahead of the NY morning.
• GBP currency was poised to end the week on a positive tone for the 1st time in over a month. GBP/USD slightly higher just under the 1.2670 level
• JPY currency continued to benefit from safe-haven flows to probe the lower end of the 111 neighborhood.

Economic Data

• (NL) Netherlands Dec Consumer Confidence Index: 9 v 13 prior
• (NL) Netherlands Oct Consumer Spending Y/Y: 1.7% v 2.1% prior
• (DE) Germany Jan GfK Consumer Confidence: 10.4 v 10.3e
• (DE) Germany Nov Import Price Index M/M: -1.0% v +1.0% prior; Y/Y: 3.1% v 4.8% prior
• (DK) Denmark Q3 Final GDP Q/Q: 0.7% v 0.7% prelim; Y/Y: 2.3% v 2.0% prelim
• (DK) Denmark Dec Consumer Confidence Indicator: 2.9 v 4.3 prior
• (DK) Denmark Nov Retail Sales M/M: +1.2% v -0.5% prior; Y/Y: 3.4% v 2.4% prior
• (FI) Finland Nov Unemployment Rate: 6.2% v 6.3% prior
• (FI) Finland Nov PPI M/M: -0.3% v +0.3% prior; Y/Y: 4.7% v 5.8% prior
• (FI) Finland Nov Preliminary Retail Sales Volume Y/Y: 1.2% v 1.0% prior
• (TR) Turkey Dec Consumer Confidence Index: 58.2 v 59.6 prior
• (MY) Malaysia mid-Dec Foreign Reserves: $101.4B v $102.0B prior
• (FR) France Q3 Final GDP Q/Q: 0.3% v 0.4%e; Y/Y: 1.4% v 1.4%e
• (FR) France Dec Business Confidence: 102 v 102e; Manufacturing Confidence: 104 v 103e; Production Outlook Indicator: -10 v +2e; Own-Company Production Outlook: 11 v 14 prior
• (FR) France Nov Consumer Spending M/M: -0.3% v 0.0%e; Y/Y: -2.0% v -1.6%e
• (FR) France Nov PPI M/M: 0.4% v 0.4% prior; Y/Y: 2.6% v 3.9% prior
• (CH) Swiss Nov M3 Money Supply Y/Y: 2.8% v 2.6% prior
• (AT) Austria Oct Industrial Production M/M: 1.2% v 0.8% prior; Y/Y: 5.0% v 3.5% prior
• (HU) Hungary Oct Final Trade Balance: €0.3B v €0.3B prelim
• (RU) Russia Narrow Money Supply w/e Dec 14th (RUB): 10.38T v 10.22T prior
• (SE) Sweden Nov Retail Sales M/M: 0.8% v 0.6%e; Y/Y: 1.1% v 0.4%e
• (SE) Sweden Nov PPI M/M: 0.0% v -0.3% prior; Y/Y: 7.9% v 9.5% prior
• (SE) Sweden Oct Non-Manual Workers’ Wages Y/Y: 2.7% v 2.6% prior
• (HK) Hong Kong Q3 Current Account Balance: $45.8B v $15.6B prior; Overall balance of payments (BOP): -$41.7B v -$48.5B prior
• (ZA) South Africa Nov Budget Balance (ZAR): -16.9B v -32.7B prior
• (IT) Italy Dec Consumer Confidence Index: 113.1 v 114.0e; Manufacturing Confidence: 103.6 v 103.8; Economic Sentiment: 99.8 v 101.1 prior
• (NO) Norway Dec Unemployment Rate: 2.3% v 2.3%e
• (PL) Poland Nov Unemployment Rate: 5.7% v 5.8%e
• (PL) Poland Nov Retail Sales M/M: -2.7% v -2.9%e; Y/Y: 8.2% v 7.9%e; Real Retail Sales Y/Y: 6.9% v 6.5%e
• (UK) Q3 Final GDP Q/Q: 0.6% v 0.6%e; Y/Y: 1.5% v 1.5%e
• (UK) Q3 Current Account Balance: -£26.5B v -£22.0Be
• (UK) Q3 Final Total Business Investment Q/Q: -1.1% v -1.2% prelim; Y/Y: -1.8% v -1.9% prelim
• (UK) Nov Public Finances (PSNCR): +£4.4B v -£3.5B prior; Public Sector Net Borrowing: £6.3B v £7.0Be; Central Government NCR: +8.4£B v -£3.2B prior; PSNB ex Banking Groups: £7.2B v £7.7Be
• (SL) Sri Lanka Nov National CPI (NCPI) Y/Y: 1.0% v 0.1% prior
• (BR) Brazil Dec FGV Consumer Confidence: 93.8 v 93.2 prior
• (BR) Brazil Dec FGV Construction Costs M/M: 0.1% v 0.1%e
• (BE) Belgium Dec CPI M/M: -0.2% v 0.2% prior; Y/Y: 2.3% v 2.8% prior

Fixed Income Issuance

• (IN) India sold total INR120B vs. INR120B indicated in 2020, 2027, 2032, 2035 and 2045 bonds
• (DK) Denmark sold total DKK300M in to sell 3-month and 6-month
• (CH) Switzerland sold CHF107.5M in 3-month Bills; Avg Yield: -0.979% v -1.018% prior

Looking Ahead

• (CO) Colombia Nov Retail Confidence: No est v 26.8 prior; Industrial Confidence: No est v 1.3 prior – OPEC to publish detailed production targets
• 06:00 (BR) Brazil mid-Dec IBGE Inflation IPCA-15 M/M: -0.1%e v 0.2% prior; Y/Y: 3.9%e v 4.4% prior
• 06:00 (ES) ECB’s De Guindos (Spain) in Madrid
• 06:00 (UK) DMO to sell €B in 1-month, 3-month and 6-month bills (£1.5B, £1.5B and £1.5B respectively)
• 06:30 (CL) Chile Central Bank Traders Survey
• 06:30 (IN) India Weekly Forex Reserves w/e Dec 14th: No est v $393.7B prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (IN) India announces upcoming bill issuance (held on Wed)
• 07:30 (BR) Brazil Nov Current Account Balance: -$1.7Be v $0.3B prior; Foreign Direct Investment (FDI): $11.0Be v $10.4B prior
• 07:30 (BR) Brazil Nov Tax Collections (BRL): 119.2Be v 131.9B prior
• 08:10 (UK) Baltic Dry Bulk Index
• 08:30 (US) Q3 Final GDP Annualized (3rd reading) Q/Q: 3.5%e v 3.5% prelim; Personal Consumption: 3.6%e v 3.6% prelim
• 08:30 (US) Q3 Final GDP Price Index: 1.7%e v 1.7% prelim; Core PCE Q/Q: 1.5%e v 1.5% prior
• 08:30 (US) Nov Preliminary Durable Goods Orders: +1.6%e v -4.3% prior; Durables Ex-Transportation: 0.3%e v 0.2% prior; Capital Goods Orders (Non-defense/ex-aircraft): 0.2%e v 0.0% prior; Capital Goods Shipments (Non-defense/ex-aircraft): 0.2%e v 0.3% prior
• 08:30 (CA) Canada Oct Retail Sales M/M: 0.5%e v 0.2% prior; Retail Sales (Ex-auto) M/M: 0.2%e v 0.1% prior
• 08:30 (CA) Canada Oct GDP M/M: +0.2%e v -0.1% prior; Y/Y: 2.2%e v 2.1% prior
• 09:00 (MX) Mexico Oct IGAE Economic Activity Index (Monthly GDP) Y/Y: 2.2%e v 2.1% prior
• 10:00 (US) Nov Personal Income: 0.3%e v 0.5% prior; Personal Spending: 0.3%e v 0.6% prior; Real Personal Spending (PCE): 0.3%e v 0.4% prior
• 10:00 (US) Nov PCE Deflator M/M: 0.0%e v 0.2% prior; Y/Y: 1.8%e v 2.0% prior
• 10:00 (US) Nov PCE Core M/M: 0.2%e v 0.1% prior; Y/Y: 1.9%e v 1.8% prior
• 10:00 (US) Dec Final University of Michigan Confidence: 97.5e v 97.5 prelim
• 10:00 (CA) Bank of Canada Q4 Senior Loan Officer Survey: No est v -10.9 prior; Business Outlook Future Sales: No est v 15.0 prior; Overall Business Outlook Survey: No est v 2.8 prior
• 10:00 (EU) Euro Zone Dec Advance Consumer Confidence: -4.3e v -3.9 prior
• 11:00 (US) Dec Kansas City Fed Manufacturing Activity: 13e v 15 prior
• 13:00 (US) Weekly Baker Hughes Rig count data
• 14:00 (CO) Colombia Oct Economic Activity Index (Monthly GDP) Y/Y: 3.1%e v 2.3% prior
• 15:00 (CO) Colombia Central Bank Interest Rate Decision: expected to leave Overnight Lending Rate unchanged at 4.25%