German ZEW Expectations Survey Turns Positive, UK Data Misses Expectations

Notes/Observations

• Markets await key events this week ranging from the UK election and central bank meetings to trade developments between the US and China
• UK Monthly GDP continued its string of no-growth results and longest such run in over 10 years
• German and Euro Zone Dec ZEW Expectation Survey turned positive for 1st time since April
• Trade deal between US-China deemed unlikely this week with US distracted by USMCA, but new tariffs not expected to be implemented on Dec 15th

Asia:

• China Nov CPI data hits its highest annual reading since Jan 2012 (YoY: 4.5% v 4.3%e)
• US/China trade deal not expected this week, with the US focused on the USMCA deal but sources in both China and the US believed that new tariffs would not go into place as it would place too much economic pressure on both countries
• Japan Econ Min Nishimura: Overall Japan retail consumption has been weak since Oct, though the drop was not as large as last sales tax hike; saw the economy gradually recovering
• UN Security Council said to hold debate on North Korea on Wed, Dec 11th at 15:00 ET (20: GMT) regarding recent missile launch

Americas:

• Ag Sec Perdue stated that he did not believe that Dec 15th tariffs would be implemented; did not know when Phase 1 trade deal with China would occur
• White House Adviser Kushner: We were heading in a good direction on China talks; reiterated if the agreement was right for the US, Trump would sign deal with China. Kushner also added he did not know what Trump’s decision would be’ [Kushner was asked if Trump would apply more tariffs on China on Dec 15th]
• Democrats and White House said to reach tentative USMCA trade deal; could hold vote in the House by Dec 18th
• Democrats to announce articles of impeachment against Trump on Tuesday

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.89% at 402.80, FTSE -1.20% at 7,162.09, DAX -1.23% at , CAC-40 -0.62% at 5,801.14, IBEX-35 -0.75% at 9,284.00, FTSE MIB -0.33% at 22,880.56, SMI -0.84% 10,347.00, S&P 500 Futures -0.25%]
• Market Focal Points/Key Themes: European indices in the red following indices in Asia mixed and slightly lower US futures. Sanofi rises on unveiling new growth strategy and long-term targets. UK supermarkets Sainsbury, Tesco and Morrison down following Kantar 4-week grocery sales and market share update, with the grocers reporting negative sales growth for the corresponding period. Deutsche Bank holding investor day and presenting longer term targets; market not impressed as shares down a tad. Ashtead down following earnings results. Ted Baker tanks 18% following profit warning and suspension of dividend, as well as resignation of CEO and Chairman. Computacenter shares up following trading update and revising FY19 outlook higher. Watches of Switzerland also up on earnings. Just Eat rejects Prosus’ revised offer and recommends Takeaway’s offer; Takeaway and Prosus shares down. Rallye rises after finalizing safeguard debt repayment plan yesterday after market close. Celyad down 6% following study update. Notable earners today include AutoZone, HD Supply, Conn’s Inc and Designer Brands among others.

Equities

• Consumer discretionary: Ted Baker [TED.UK] -16% (trading update; CEO and Chairman resigned; div suspended)
• Financials: Deutsche Bank [DBK.DE] -1% (investor day)
• Healthcare: Sanofi [SAN.FR] +3% (new strategy), Celyad [CYAD.BE] -5% (study update)
• Industrials: XP Power [XPP.UK] +1% (revenues and adjusted profit before tax for 2019 being below current market consensus)
• Technology: Computacenter [CCC.UK] +6% (trading update)

Speakers

• Sanofi rises on unveiling new growth strategy and long-term targets. UK supermarkets Sainsbury, Tesco and Morrison down following Kantar 4-week grocery sales and market share update, with the grocers reporting negative sales growth for the corresponding period. Deutsche Bank holding investor day and presenting longer term targets; market not impressed as shares down a tad. Ashtead down following earnings results. Ted Baker tanks 18% following profit warning and suspension of dividend, as well as resignation of CEO and Chairman. Computacenter shares up following trading update and revising FY19 outlook higher. Watches of Switzerland also up on earnings. Just Eat rejects Prosus’ revised offer and recommends Takeaway’s offer; Takeaway and Prosus shares down. Rallye rises after finalizing safeguard debt repayment plan yesterday after market close. Celyad down 6% following study update. Notable earners today include AutoZone.

Equities

• Consumer discretionary: Ted Baker [TED.UK] -16% (trading update; CEO and Chairman resigned; div suspended)
• Financials: Deutsche Bank [DBK.DE] -1% (investor day)
• Healthcare: Sanofi [SAN.FR] +3% (new strategy), Celyad [CYAD.BE] -5% (study update)
• Industrials: XP Power [XPP.UK] +1% (revenues and adjusted profit before tax for 2019 being below current market consensus)
• Technology: Computacenter [CCC.UK] +6% (trading update)

Speakers

• Italy PM Conte said to call for relaunch of Govt and for a tax cut. Govt had a plan for reforms through 2023 that includes lower taxes. Govt must work together to purse structural reforms which require joint effort. Further tax cuts were necessary including decisive reform of income tax
• Italy Fin Min Gualtieri said to reiterates stance that was against changes to rules on sovereign bond holding
• Swiss regulator Finma: Swiss investment properties faced risk of price collapse. Vacancies in investment properties stood at record, which put pressure on rents and investment gains. Increased loan losses would burden bank sector capital
• Norway FSA Risk Outlook Report: Growth in household debt has gradually abated and now more in-line with increase in disposable income

Currencies/Fixed Income

• FX markets were quite tame as markets awaited key events this week ranging from the UK election and central bank meetings to trade developments between the US and China.
• EUR/USD was slightly higher despite an improvement in German ZEW data. Focus turns to Thursday ECB rate decision where chief Lagarde is expected to talks about her stratedgy reform
• USD/JPY was steady despite speculation that a trade deal between US-China was deemed unlikely this week. Dealers noted that new tariffs were not expected to be implemented on Dec 15th as threatened by President Trump

Economic Data

• (NL) Netherlands Oct Manufacturing Production M/M: 0.1% v 1.6% prior; Y/Y: 0.4% v 1.4% prior;; Industrial Sales Y/Y: -2.8% v -2.8% prior
• (FI) Finland Oct Industrial Production M/M: -0.5% v -1.2% prior; Y/Y: 1.6% v 0.3% prior
• (FR) France Q3 Final Private Sector Payrolls Q/Q: 0.2% v 0.3%e; Total Payrolls: 0.2% v 0.2%e
• (FI) Finland Oct Preliminary Trade Balance: €0B v -€0.2B prior
• (NO) Norway Nov CPI M/M: 0.3% v 0.3%e; Y/Y: 1.6% v 1.7%e
• (NO) Norway Nov CPI Underlying M/M: 0.1% v 0.1%e; Y/Y: 2.0% v 2.0%e
• (NO) Norway Nov PPI (including oil) M/M: 1.7% v 0.1% prior; Y/Y: -9.5% v -13.8% prior
• (DK) Denmark Nov CPI M/M: -0.2% v +0.4% prior; Y/Y: 0.7% v 0.6% prior
• (DK) Denmark Nov CPI EU Harmonized M/M: -0.3% v +0.5% prior; Y/Y: 0.6% v 0.6% prior
• (FR) France Oct Industrial Production M/M: 0.4% v 0.2%e; Y/Y: -0.2% v -0.4%e
• (FR) France Oct Manufacturing Production M/M: 0.5% v 0.4%e; Y/Y: +0.1% v -0.2%e
• (CZ) Czech Nov CPI M/M: 0.3% v 0.2%e; Y/Y: 3.1% v 2.9%e
• (CZ) Czech Oct Export Price Index Y/Y: -0.8% v +0.9% prior; Import Price Index Y/Y: -1.9% v -0.7% prior
• (HU) Hungary Nov CPI M/M: 0.1% v 0.1%e; Y/Y: 3.4% v 3.4%e
• (SE) Sweden Oct Household Consumption M/M: 0.2% v 0.8% prior; Y/Y: 3.3% v 3.2% prior
• (NO) Norway Nov Region Output Past 3-months Survey: 1.06 v 1.38e; Output Next 6-months Survey: 0.96 v 1.23e
• (IT) Italy Oct Industrial Production M/M: -0.3% v -0.2%e; Y/Y: -2.4% v -2.0%e; Industrial Production NSA (unadj) Y/Y: -2.4% v +0.9% prior
• (CN) China Nov New Yuan Loans (CNY): 1.390T v 1.200Te
• (CN) China Nov Aggregate Financing (CNY): 1.750T v 1.485Te
• (CN) China Nov M2 Money Supply Y/Y: 8.2% v 8.4%e
• (UK) Oct GDP M/M: 0.0% v 0.1%e; 3M/3M: 0.0% v 0.1%e
• (UK) Oct Industrial Production M/M: 0.1% v 0.2%e; Y/Y: -1.3% v -1.2%e
• (UK) Oct Manufacturing Production M/M: 0.2% v 0.0%e; Y/Y: -1.2% v -1.4%e
• (UK) Oct Construction Output M/M: -2.3% v -0.3%e; Y/Y: -2.1% v -0.1%e
• (UK) Oct Visible Trade Balance: -£14.5B v -£11.7Be; Overall Trade Balance: -£5.2B v -£2.7Be; Trade Balance Non EU: -£5.7B v -£3.5Be
• (UK) Oct Index of Services M/M: 0.2% v 0.1%e; 3M/3M: 0.2% v 0.2%e
• (DE) Germany Dec ZEW Current Situation Survey: -19.9 v -22.0e; Expectations Survey: 10.7 v 0.3e (1st positive reading since April)
• (EU) Euro Zone Dec ZEW Expectations Survey: +11.2 v -1.0 prior (1st positive reading since April)
• (GR) Greece Nov CPI Y/Y: +0.2% v -0.7% prior; CPI EU Harmonized Y/Y: +0.5% v -0.3% prior
• (GR) Greece Oct Industrial Production Y/Y: -0.3% v +2.4% prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €1.63B vs. €1.0-2.0B indicated range in 3-month and 9-month bills
• (ZA) South Africa sold total ZAR 4.53B vs. ZAR4.53B indicated in 2023, 2030 and 2035 bonds
• (CH) Switzerland sold CHF408.1M in 3-month bills; Avg Yield: -0.861% v -0.868% prior
• (AT) Austria Debt Agency (AFFA) sold €B vs. €460M indicated in 0.5% Feb 2029 RAGB bond; Avg Yield: -0.104% v -0.116% prior; Bid-to-cover: 2.52x v 2.57x prior

Looking Ahead

• (PT) Bank of Portugal Oct ECB financing to Portuguese Banks:
• 05:30 (UK) Weekly John Lewis LFL Sales data
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 05:30 (DE) Germany to sell €4.0B in 0.0% Dec 2021 Schatz
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €2.2B in 3-month and 12-month bill
• 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 06:00 (US) Nov NFIB Small Business Optimism: 103.0e v 102.4 prior
• 06:00 (IL) Israel Nov Consumer Confidence: No est v 124 prior
• 06:00 (PT) Portugal Oct Trade Balance: No est v -€1.8B prior
• 06:00 (ZA) South Africa Oct Manufacturing Production M/M: -0.2%e v -2.4% prior; Y/Y: -2.6%e v -2.4% prior
• 06:30 (CL) Chile Central Bank Monthly Economists Survey
• 07:00 (BR) Brazil CONAB crop report
• 07:00 (RU) Russia announces upcoming OFZ Bond issuance
• 07:45 (US) Goldman Economist Chain Store Sales
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:30 (US) Q3 Final Nonfarm Productivity: -0.1%e v -0.3% prelim; Unit Labor Costs: 3.4%e v 3.6% prelim
• 08:55 (US) Weekly Redbook LFL Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 10:00 (IT) ECB’s Visco (Italy) – 10:40 (EU) IMF chief Georgieva in Washington DC
• 12:00 (US) WASDE Crop Report
• 13:00 (US) Treasury to sell 10-Year Notes
• 16:30 (US) Weekly API Oil Inventories
• (MX) Mexico Nov ANTAD Same-Store Sales Y/Y: No est v 2.1% prior
• (MX) Mexico Nov Nominal Wages: No est v 4.0% prior
• 16:45 (NZ) New Zealand Nov Total Card Spending M/M: No est v -0.2% prior; Retail Card Spending M/M: +0.5%e v -0.6% prior
• 18:00 (KR) South Korea Nov Unemployment Rate: 3.5%e v 3.5% prior
• 18:30 (AU) Australia Dec Consumer Confidence Index: No est v 97 prior
• 18:50 (JP) Japan Nov PPI M/M: 0.1%e v 1.1% prior; Y/Y: 0.0%e v -0.4% prior
• 18:50 (JP) Japan Q4 BSI Large All Industry Q/Q: No est v 1.1 prior; Large Manufacturing Q/Q: No est v -0.2 prior
• 19:00 (NZ) New Zealand Half-Year Fiscal, Economic Update
• 19:00 (AU) Australia to sell A$500M in 2.75% 2024 bonds
• 22:00 (KR) South Korea Oct M2 Money Supply M/M: No est v 0.7% prior; “L” Money Supply M/M: No est v 0.4% prior
• 22:00 (CN) China to sell 2-year 5-year upsized bonds