Quiet Trading Heading into New Year’s Holiday

Notes/Observations

• Overall trading volumes in FX, Fixed Income and equities were muted before the New Year holiday.

Asia:

• Hong Kong Financial Sec Chan stated that he saw the GDP contraction continuing with Q4 GDP reading
• China Commerce Ministry reiterates stance that have proactively dealt with trade frictions with the US this year; Remained in close touch with the US on signing the trade deal
• China PBOC told banks to start using the loan prime rate (LPR) as new benchmark to price loans issued before Jan 1, 2020, instead of using the old benchmark lending rates (Note: PBoC is transitioning from the high, slow-moving, government-set benchmark, to the lower, faster moving, market-sensitive Loan Prime Rates as the reference rate for loans)

Europe/Mideast:

• US Def Sec Esper: US airstrikes hit 5 facilities associated with Iranian supported militia responsible for attacks on US military forces in Iraq. US carried out “defensive strikes” against terror group Kata’ib Hezbollah in Iraq and Syria on Sunday
• Brexit:
• PM Johnson reportedly to set up new negotiating team for post Brexit trade deal with the EU

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 -0.36% at 418.24, FTSE -0.30% at 7,622.05, DAX -0.60% at 13,256.64, CAC-40 -0.29% at 6,019.83, IBEX-35 -0.36% at 9,666.00, FTSE MIB -0.35% at 23,675.54, SMI -0.34% at 10,693.50, S&P 500 Futures +0.11%]

Market Focal Points/Key Themes:

European indices lower following indices in Asia mixed and slightly higher US futures. EssilorLuxottica down following disclosure of fraudulent financial activity at a factory in Thailand. Tecnicas Reunidas up on FY20 guidance and Algeria contract. Roma trading higher on news that US billionaire Friedkin is reportedly in discussions to purchase the soccer club. Swedish Orphan Biovitrum down on sale of commercial rights of RUCONEST to Pharming.

Equities

• Energy: Azelio [AZELIO.SE] +27% (outcome of rights issue)
• Healthcare: SOBI Swedish Orphan Biovitrum [SOBI.SE] -3.5% (divests rights)
• Industrials: Tecnicas Reunidas [TRE.ES] +4% (updates outlook due to contract award)

Speakers

• Czech Central Banker Michl: Domestic inflation did not require any activist policy
• Russia govt spokesperson: Too early to comment on Ukraine gas talks but they are continuing
• China PBoC: To roll out supervisory rules on blockchain and personal financial information protection in 2020
• Iran criticized US attack on Iranian-allied militia in Iraq and Syria

Currencies/ Fixed Income

• USD remained on soft footing for the 3rd straight session with dealers citing year-end position adjustments as the rationale.
• GBP/USD was higher by 0.1% around the 1.31 level as market participants looked to the lifting of Brexit uncertainty and fiscal stimulus from the new UK government. Cable was higher for the 5th straight session as markets looked past the near-term economic weakness
• EUR/USD probing the 1.12 level for a 4-month high, advancing towards the upper end of its 2019 trading range
• USD/JPY unable to break above the 109.70 level has hampered by some year-end position off-setting

Economic Data

• (NL) Netherlands Dec Producer Confidence Index: 2.9 v 2.8 prior
• (RU) Russia Dec PMI Manufacturing: 47.5 v 46.8e (8th straight contraction)
• (NO) Norway Nov Retail Sales (with auto/fuel) M/M: 1.0% v 0.7%e
• (TR) Turkey Dec Economic Confidence: 93.8 v 91.3 prior
• (TH) Thailand Nov Current Account Balance: $3.4B v $2.9Be; Overall Balance of Payments (BOP): $0.9B v $1.1B prior; Trade Account Balance: $2.0B v $2.1B prior; Exports Y/Y: -7.7% v -5.0% prior; Imports Y/Y: -13.9% v -9.2% prior
• (ES) Spain Q3 Final GDP Q/Q: 0.4% v 0.4%e; Y/Y: 1.9% v 2.0%e
• (ES) Spain Dec Preliminary CPI M/M: +0.2% v -0.1%e; Y/Y: 0.8% v 0.9%e
• (ES) Spain Dec Preliminary CPI EU Harmonized M/M: -0.1% v 0.0%e; Y/Y: 0.8% v 1.0%e
• (CH) Swiss Dec KOF Leading Indicator: 96.4 v 94.5e
• (AT) Austria Nov PPI M/M: +0.2% v -0.1% prior; Y/Y: -1.1% v -1.5% prior
• (SE) Sweden Nov Trade Balance (SEK): +2.9B v -4.0B prior
• (HK) Hong Kong Nov Trade Balance (HKD): -26.2B v -33.3Be; Exports Y/Y: -1.4% v -6.2%e; Imports Y/Y: -5.8% v -8.8%e
• (NO) Norway Central Bank (Norges) Jan Bank Daily FX Purchases (NOK): -500M v -700M prior
• (ES) Spain Oct Current Account Balance: €2.8B v €0.7B prior
• (CH) Swiss Weekly Total Sight Deposits (CHF): 584.6B v 585.8B prior; Domestic Sight Deposits: 499.0B v 498.9B prior
• (UK) Nov BBA Finance Loans for Housing: 43.7K v 41.2Ke `

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) sold total €4.5B vs. €3.5-4.5B indicated range in 5-year and 10-year BTP bonds
• Sold €2.0B vs. €1.5-2.0B indicated range in 0.35% Feb 2025 BTP bonds; Avg Yield: 0.61% v 0.64% prior; Bid-to-cover: 1.47x v 1.29x prior
• Sold €2.5B vs. €2.0-2.5B indicated range in 1.35% Apr 2030 BTP; Avg Yield: 1.35% v 1.29% prior; Bid-to-cover: 1.33x v 1.22x prior

Looking Ahead

• 06:00 (PT) Portugal Nov Industrial Production M/M: No est v 3.0% prior; Y/Y: No est v -2.4% prior
• 06:00 (PT) Portugal Nov Retail Sales M/M: No est v 2.2% prior; Y/Y: No est v 3.5% prior
• 06:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:30 (BR) Brazil Nov Primary Budget Balance (BRL): -16.4Be v +9.4B prior; Nominal Budget Balance: -48.6Be v -10.9B prior; Net Debt to GDP Ratio: 55.9%e v 55.9% prior
• 08:00 (RU) Russia GDP Y/Y: 1.7%e v 1.7% prelim
• 08:30 (US) Nov Advance Goods Trade Balance: -$68.8e v -$66.5B prior
• 08:30 (US) Nov Preliminary Wholesale Inventories M/M: 0.2%e v 0.1% prior; Retail Inventories M/M: 0.1%e v 0.3% prior
• 09:45 (US) Dec Chicago Purchasing Managers Index (PMI): 48.0e v 46.3 prior
• 09:45 (EU) ECB weekly QE bond buying update
• 10:00 (US) Nov Pending Home Sales M/M: +1.5%e v -1.7% prior; Y/Y: 7.8%e v 3.9% prior
• 10:30 (US) Dec Dallas Fed Manufacturing Activity Index: 0.0e v -1.3 prior
• 11:30 (US) Treasury to sell 13-Week and 26-Week Bills
• 11:30 (US) Treasury to sell 51-Week Bills
• (MX) Mexico Nov YTD Budget Balance (MXN): No est v -154.1B prior
• 16:00 (KR) South Korea Jan Business Manufacturing Survey: No est v 71 prior; Non-Manufacturing Survey: No est v 74 prior
• 18:00 (KR) South Korea Dec CPI M/M: +0.1%e v -0.6% prior; Y/Y: 0.6%e v 0.2% prior; CPI Core Y/Y: 0.6%e v 0.6% prior
• 20:00 (CN) China Dec Manufacturing PMI: 50.1e v 50.2 prior; Non-Manufacturing PMI : 54.2e v 54.4 prior; Composite PMI: No est v 53.7 prior
• 21: 00 (SG) Singapore Nov M1 Money Supply Y/Y: No est v 4.0% prior; M2 Money Supply Y/Y: No est v 4.8% prior
• 21: 00 (SG) Singapore Nov Bank Loans and Advances Y/Y: No est v 2.6% prior