Notes/Observations
- Geo-political tensions heat up; oil higher by 3%; Gold firmer by over 1%
- Top Iranian Commander who led the Revolutionary Guards’ Quds force killed in US airstrike on President Trump’s order; Iran Supreme Leader Khamenei vows ‘severe retaliation’
- North Korea state media warns of ‘immediate and powerful strikes’ against threats
- European Dec CPI moves off recent trough
- European data continued to point to signs of stabilization (improving Spanish unemployment, Swiss PMI, Euro Area inflation)
- Catalan separatists to break Spain’s political deadlock
Asia:
- North Korea state media warns of ‘immediate and powerful strikes’ against threats
- China PBoC said to believe that policy easing remains on track despite higher inflation; Maintains annual CPI target at ~3% for 2020
- PBoC official says the RRR in China is still relatively high by global standards, can be adjusted further
- Europe/Mideast:- US airstrikes in Iraq have killed a commander of Iran supported Islamic Revolutionary Guard Senior Iranian Commander Qassim Soleimani and Iraqi militia commander Muhandis said to have been killed in air strike on convoy in Baghdad Airport. Pentagon confirmed that Iran commander was killed on US President Trump orders
- Spain’s Catalan separatist party ERC reaches deal with Socialist Party ahead of investiture debate (Jan 5-7); ERC support means Sanchez has the votes needed to secure his 2nd term as PM
Brexit:
- UK Labour party (opposition) said to table an amendment to Withdrawal Agreement bill that would seek an extension to Brexit transition period until 2023 if there’s no deal by June
Americas:
- US forces put on heightened alert following airstrike that killed Iranian Commander Qasem Soleimani
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.68% at 416.86, FTSE -0.32% at 7,579.95, DAX -1.39% at 13,199.28, CAC-40 -0.52% at 6,009.94, IBEX-35 -0.91% at 9,603.00, FTSE MIB -1.13% at 23,566.74, SMI +0.08% at 10,625.50, S&P 500 Futures -1.02%]
Market Focal Points/Key Themes:
- European indices in the red following mostly lower Asian indices and meaningfully lower US futures. Markets’ sentiment affected by geopolitical developments in the Middle East.
- UK retailer Next up a tad following Q4 trading update and slightly raised FY19 guidance; peer UK retailers Asos and Marks & Spencer shares more or less flat in sympathy. European airlines down on fears of rising oil prices following US airstrikes in Iraq; Lufthansa and Air France-KLM shares particularly hit. European tobacco shares British American Tobacco, Swedish Match and Imperial Brands up as FDA issued only a limited ban on some flavored vaping products. Orphazyme up after reporting positive arimoclomol data from open-label phase 2/3 extension in Niemann-Pick disease Type C. Grenke down after reporting FY19 new business volume figures and in Norway, XXL shares dive 14% on profit warning. Atlantia down on further comments from Italian Mister of Transport that its motorway concession should be revoked. Cellnex higher on acquisition of Morgan Stanley and Altice towers in Portugal. Galliford Try in focus after completing its sale of Linden Homes and Partnerships & Regeneration businesses. Finablr down after the company’s Travelex has taken down all of its sites due to a software virus. UK gambling stocks including William Hill and 888 Holdings down on press report that betting firms face being banned from ‘VIP Schemes’
Equities
- Consumer discretionary: Next [NXT.UK] -1% (sales update), XXL [XXL.NO] -15% (trading update), Ryanair [RYA.UK] -2% (traffic; oil spike due to case in Iran)
- Consumer staples: British American Tobacco [BATS.UK] +1.5% (comments on US decision on vaping)
Speakers
- Czech Central Bank Dec Minutes: Majority believed that a rate hike could pose too great a risk to the real economy; best to keep policy steady for the time being
- EU Trade chief Hogan said to be planning a trip to Washington for Jan 14-16th
- Thailand Fin Min Uttama Savanayana stated that had policy room to take care of THB currency (Baht)
- Iran Supreme Leader Khamenei: ‘Severe retaliation’ await those who killed Iranian Commander Qassim Soleimani
- Iran President Rouhani stated that the nation ‘would take revenge’ after killing of Soleimani The assassination would make Tehran more decisive in its resistance against the US
- Iran Defense Min Hatami: Tehran to take a crushing revenge for assassination of Soleimani
- Iraq Shi’ite Cleric Sadr: (Iran-backed) called on fighters to be on alert following the killing of Senior Iranian Commander Qassim Soleimani
- Iraq PM Abdul-Mahdi: Assassination of Iraqi military commander holding an official position was an act of aggression
Currencies/ Fixed Income
- Risk aversion flows aided the JPY currency in the session as USD/JPY tested 2-month low below the 108 level. Safe-haven flows occurred after US authorized an airstrike in Baghdad that killed a key Iranian military leader and a top Iraqi paramilitary commander. Spot gold climbed over 1% to approach the $1,550/oz while oil surged approx. 3% with Brent testing above $68.40/barrel
- EUR/USD lower by 0.3% to test below the 1.1150 level and USD/CHF higher by 0.2% at 0.9725 just ahead of the mid-session.
Economic Data
- (UK) Dec Nationwide House Price Index M/M: 0.1% v 0.0%e; Y/Y: 1.4% v 1.4%e
- (TR) Turkey Dec CPI M/M: 0.7% v 0.4%e; Y/Y: 11.8% v 11.5%e; CPI Core Y/Y: 9.8% v 9.6%e
- (TR) Turkey Dec PPI M/M: +0.7% v -0.1% prior; Y/Y: 7.4% v 4.3% prior
- (NO) Norway AKU Unemployment Rate: 3.8% v 3.9%e
- (CN) Weekly Shanghai copper inventories (SHFE): 141.3K v 123.7K tons prior
- (FR) France Dec Preliminary CPI M/M: 0.4% v 0.3%e; Y/Y: 1.4% v 1.3%e
- (FR) France Dec Preliminary CPI EU Harmonized M/M: 0.5% v 0.3%e; Y/Y: 1.6% v 1.4%e
- (DE) Germany Dec CPI Saxony M/M: +0.6% v -0.8% prior; Y/Y: 1.4% v 1.1% prior
- (ES) Spain Dec Unemployment Change: -34.6K v -40.0Ke
- (CH) Swiss Dec PMI Manufacturing: 50.2 v 48.8e (1st expansion in 9 months)
- (HK) Hong Kong Nov Retail Sales Value Y/Y: -23.6% v -24.6%e; Y/Y: -25.4% v -25.1%e
- (DE) Germany Dec Unemployment Change: +8.0K v +4.0Ke; Unemployment Claims Rate: 5.0% v 5.0%e
- (EU) Euro Zone Nov M3 Money Supply Y/Y: 5.6% v 5.7%e
- (DE) Germany Dec CPI Hesse M/M: +0.5% v -0.8% prior; Y/Y: 1.5% v 0.9% prior
- (DE) Germany Dec CPI Bavaria M/M: +0.5% v -0.8% prior; Y/Y:1.3 % v 0.9% prior
- (UK) Dec Construction PMI: 44.4 v 45.9e (8th month of contraction)
- (UK) Nov Net Consumer Credit: £0.6B v £1.0Be; Net Lending: £4.1B v £4.0Be
- (UK) Nov Mortgage Approvals: K v 64.5Ke
- (UK) Nov M4 Money Supply M4 M/M: 0.8% v 0.0% prior; Y/Y: 4.5% v 3.5% prior; M4 Ex IOFCs 3M Annualized: 4.5% v 3.9% prior
- (DE) Germany Dec CPI North Rhine Westphalia M/M: +0.5% v -0.7% prior; Y/Y: 1.7% v 1.2% prior
Fixed Income Issuance
- (IN) India sold total INRB vs. INR160B indicated in 2021, 2026, 2029. 2039 and 2059 bonds ‘
Looking Ahead
- (DE) Germany Dec CPI Baden Wuerttemberg M/M: No est v -0.8% prior; Y/Y: No est v 0.9% prior
- (DE) Germany Dec CPI Brandenburg M/M: % v -0.8% prior; Y/Y: % v 1.3% prior
- (RO) Romania Dec International Reserves: No est v $38.2B prior
- 06:00 (UK) DMO to sell €3.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.0B respectively)
- 06:30 (IN) India Weekly Forex Reserve w/e Dec 27th: No est v $454.9B prior
- 08:00 (CZ) Czech Dec Budget Balance (CZK): No est v -38.6B prior
- 08:00 (DE) Germany Dec Preliminary CPI M/M: +0.4%e v -0.8% prior; Y/Y: 1.4%e v 1.1% prior
- 08:00 (DE) Germany Dec Preliminary CPI EU Harmonized M/M: +0.5%e v -0.8% prior; Y/Y: 1.4%e v 1.2% prior
- 08:00 (SG) Singapore Dec Purchasing Managers Index (PMI): 49.9e v 49.8 prior; Electronic Index: No est v 49.7 prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance
- 08:30 (US) Weekly USDA Net Export Sales
- 09:45 (US) Dec ISM New York: No est v 50.4 prior
- 10:00 (US) Dec ISM Manufacturing: 49.0e v 48.1 prior; Prices Paid: 47.5e v 46.7 prior
- 10:00 (US) Nov Construction Spending M/M: +0.4%e v -0.8% prior
- 10:00 (CO) Colombia Nov Exports: $3.0Be v $3.3B prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Weekly DOE Oil Inventories
- 11:00 (DK) Denmark Dec Foreign Reserves (DKK): No est v 440.7B prior
- 13:00 (US) Weekly Baker Hughes Rig Count
- 14:00 (US) FOMC Dec Minutes
