Notes/Observations
- Mid-East tension ease but focus remains on Iran’s next move
- Signs that global growth may stabilize in 2020 have calmed fears that the current slowdown could morph into a recession
- Euro Zone Dec CPI suggests that a tough was made in inflation Mid-East/
Energy:
- Iran Supreme Leader Khamenei: Any attack must be direct and proportional attack on American interests, openly carried out by Iran security forces
- Iran parliament approved draft that labels US military as a terrorist
- Trump administration reportedly to bar Iran top diplomat Zarif from entering US to address UN Security Council on Thursday, Jan 9th
- Qassem Soleimani’s successor vowed to expel US from Middle East
- US Defense Sec Esper: US had no plans to pull out of Iraq; US saw rise in attacks by Iran proxy groups (Note: US-led coalition sent letter to Iraqi military saying they ‘would be repositioning forces over the course of the coming days and weeks to prepare for onward movement’)
Asia:
- Japan Dec Final PMI Services registered its fastest contraction in 3 years and lowest level since Sept 2016 (49.4 v 50.6 prelim)
- China Vice Agriculture Min Han Jun stated that China would not increase annual grain (corn, wheat and rice) import quotas to accommodate higher US farm purchases. China’s import quota was offered to global markets and China would not adjust it for one country.
- China State Administration of Foreign Exchange (SAFE): China to “steadily and prudently” diversify its $3.1T foreign exchange reserve holdings
Brexit:
- UK Emergency preparations for a ‘no deal’ Brexit had been stood down with immediate effect
- UK Chancellor of the Exchequer Javid stated that to release budget on Mar 11th and it would seize opportunities of Brexit and unleash a decade of renewal. To make good on pledges to cut taxes
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.59% at 419.08, FTSE +0.12% at 7,584.75, DAX +0.99% at 13,256.51, CAC-40 +0.62% at 6,050.95, IBEX-35 +0.32% at 9,632.00, FTSE MIB +0.78% at 23,764.26, SMI +0.73% at 10,743.00, S&P 500 Futures +0.17%]
- Market Focal Points/Key Themes: European indices in the green following Asia indices higher and higher US futures. Morrison up following Christmas trading update and affirmed FY19 outlook. Other UK grocers Sainsbury, Ocado and Tesco also up following Kantar and Nielsen UK grocery sales and market share data. Aston Martin tanks following profit warning that saw the company lower FY19 adj EBITDA margin forecast from ~20% to 12.5%-13.5%. 888 Holdings also down following trading update. Brunello Cuccinelli rises on strong FY19 sales. Infineon shares up after US peer Microchip Technology provided Q4 outlook yesterday. Norwegian Air up following December load factor and passenger traffic stats. Premier Oil rallying following trading update and asset acquisitions in the UK North Sea. Dassault Aviation trading lower after the company’s 2019 Falcon deliveries came in below target. Schmolz+Bickenbach rallying 23% following BigPoint Holding AG purchase of shares in the company. XXL shares surge on new CEO appointment. Burford Capital jumps on withdrawal of US class action suit filed against the company. Silence Therapeutics higher on entering agreement with Takeda.
Equities
- Consumer discretionary: WM Morrison [MRW.UK] +3% (trading update), XXL [XXL.NO] +14% (appoints CEO)
- Consumer staples: Carr’s Group [CARR.UK] -3% (trading update)
- Energy: Premier Oil [PMO.UK] +13% (acquires assets from BP), Rockhopper Exploration [RKH.UK] +29% (Heads of Terms with Navitas Petroleum)
- Industrials: Aston Martin Lagonda Global Holdings [AML.UK] -12% (profit warning; cost savings program)
Speakers
- France PM Philippe stated the he expected pension reform to become law in March. Police forces would be ready to make sure that oil depots are not blockaded
- France Fin Min Le Maire stated that had just over two weeks to find a compromise on the digital tax issue; agreed with US Tsy Sec Mnuchin to step up efforts to find possible compromise
- UK DMO raised its net financing requirement for FY19/20 (current fiscal year) by £16B to £142.8B
- Iran said to be assessing 13 retaliation scenarios against US and noted that the ‘weakest’ retaliation scenario to cause ‘historic nightmare’
- Iran Deputy Foreign Min Araghchi: Nuclear deal not dead yet
Currencies/Fixed Income
- The session saw a move away from traditional safe havens flows due to a perceived easing in the current round of Mid-East tensions. The focus remained on Iran’s next move
- Signs that global growth may stabilize in 2020 have calmed fears that the current slowdown could morph into a recession
- EUR/USD slightly lower by 0.1% at 1.1180 level. Dec inflation data continued to add hope that the worst of the economic data has past for the region.
- USD/JPY probing hourly resistance at 108.50 area. Unwinding of safe-haven flows weakening the yen currency.
- GBP/USD just below the 1.32 level as Parliament returns to debate the PM’s Withdrawal Agreement for Brexit.
Economic Data
- (NO) Norway Nov Credit Indicator Growth: 5.6% v 5.6% prior
- (CH) Swiss Dec CPI M/M: 0.0% v -0.1%e; CPI Y/Y: 0.2% v 0.0%e; CPI Core Y/Y: 0.4% v 0.4%e
- (CH) Swiss Dec CPI EU Harmonized M/M: +0.2% v -0.4% prior; CPI EU Harmonized Y/Y: -0.1% v -0.2%e
- (SE) Sweden Dec PMI Services: 48.7 v 47.9 prior; PMI Composite: 48.3 v 47.3 prior
- (CH) China Dec Foreign Reserves: $3.108T v $3.110Te
- (TW) Taiwan Dec CPI Y/Y: 1.1% v 1.0%e; CPI Core Y/Y: 0.6% v 0.6%e; WPI Y/Y: -3.4% v -5.0% prior
- (TW) Taiwan Dec Trade Balance: $2.5B v $4.4Be; Exports Y/Y: 4.0% v 3.1%e; Imports Y/Y: 13.9% v 5.0%e
- (BR) Brazil Dec FIPE CPI (Sao Paulo): 0.9% v 1.2%e
- (AT) Austria Dec Wholesale Price Index M/M: % v 0.0% prior; Wholesale Price Index Y/Y: % v -2.7% prior
- (HU) Hungary Nov Retail Sales Y/Y: 7.3% v 5.8%e
- (HU) Hungary Nov Unemployment Rate: 3.5% v 3.5%e
- (DE) Germany Dec Construction PMI: 53.8 v 52.5 prior
- (IT) Italy Q3 Budget Deficit to GDP Ratio: 3.2% v 4.0% prior
- (PL) Poland Dec CPI M/M: 0.8% v 0.3%e; CPI Y/Y: 3.4% v 2.8%e (highest annual pace since 2013)
- (SG) Singapore Dec Foreign Reserves: $279.5B v $276.0B prior
- (EU) Euro Zone Advance Dec CPI Estimate Y/Y: 1.3% v 1.3%e; Core Y/Y: 1.3% v 1.3%e; CPI M/M: 0.3% v 0.3%e
- (EU) Euro Zone Nov Retail Sales M/M: 1.0% v 0.7%e; Retail Sales Y/Y: 2.2% v 1.5%e
- (IT) Italy Dec CPI M/M: 0.2% v 0.2%e; Y/Y: 0.5% v 0.5%e
- (IT) Italy Dec CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 0.5% v 0.5%e
- Fixed Income Issuance
- (ID) Indonesia sold total IDR20.0T vs. IDR15.0T indicated in 3-month and 6-month Bills and 5-year, 10-year, 15-year and 20-year Bonds
- (AT) Austria Debt Agency (AFFA) sold total €1.035B vs. €1.035B indicated in 2024 and 2029 RAGB bonds
Looking Ahead
- (IL) Israel Dec Foreign Currency Balance: No est v $122.4B prior
- (ZA) South Africa Dec Naamsa Vehicle Sales Y/Y: No est v -5.8% prior
- 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 (UK) DMO to sell 0.875% Oct 2029 Gilts
- 05:30 (DE) Germany to sell €500M in 0.5% Apr 2030 inflation-linked bonds (Bundei)
- 05:30 (BE) Belgium Debt Agency (BDA) to sell 3-month and 6-month bills
- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
- 06:00 (IE) Ireland Dec Unemployment Rate: No est v 4.8% prior‘
- 06:00 (ZA) South Africa Nov Electricity Production Y/Y: No est v -1.9% prior; Electricity Consumption Y/Y: No est v -2.1% prior
- 06:00 (ES)Spain Parliamentary session to decide whether Sanchez should continue as PM
- 06:30 (CL) Chile Dec Trade Balance: $1.0Be v $0.1B prior; Total Exports: No est v $5.3B prior; Total Imports: No est v $5.2B prior
- 06:30 (CL) Chile Dec International Reserves: No est v $38.8B prior
- 06:30 (EU) ESM to sell €2.5B in 3-month bills
- 07:00 (IN) India 2020 GDP Annual Estimate: 5.1%e v 6.8% prior
- 07:00 (MX) Mexico Dec Domestic Vehicle Sales: No est v 124.8K prior
- 07:00 (CL) Chile Nov Nominal Wages M/M: No est v 0.1% prior; Y/Y: No est v 4.5% prior
- 07:00 (RU) Russia announces upcoming OFZ Bond issuance
- 07:45 (US) Goldman Economist Chain Store Sales
- 08:00 (PL) Poland Dec Official Reserves No est v $119.8B prior
- 08:00 (BR) Brazil Dec Vehicale Production: No est v 227.5K prior; Vehicle Sales: No est v 242.3K prior; Vehicle Exports: No est v 31.7K prior
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (US) Nov Trade Balance: -$43.7Be v -$47.2b prior
- 08:30 (CA) Canada Nov Int’l Merchandise Trade: -1.2Be v –C$1.1B prior
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (US) Dec ISM Non-Manufacturing Index: 54.5e v 53.9 prior
- 10:00 (US) Nov Factory Orders -0.7%e v +0.3% prior; Nov Factory Orders (ex-transportation): No est v 0.2% prior
- 10:00 (US) Nov Final Durable Goods Orders: -2.0%e -2.0% prelim; Durables Ex Transportation: No est v 0.0% prelim; Capital Goods Orders (Non-defense/ex-aircraft) No est v 0.1% prelim; Capital Goods Shipments (Non-defense/ex-aircraft) No est v -0.3% prelim
- 10:00 (CA) Canada Dec Ivey Purchasing Managers Index (Seasonally Adj): No est v 60.0 prior; PMI (unadj): No est v 58.4 prior
- 11:00 (NZ) New Zealand Dec QV House Prices Y/Y: No est v 3.3% prior
- 13:00 (US) Treasury to sell 52-Week Bills
- 16:30 (AU) Australia Nov AIG Performance of Construction Index: No est v 40 prior
- 16:30 (US) Weekly API Oil Inventories
- 18:30 (JN) Japan Nov Labor Cash Earnings Y/Y: -0.1%e v 0.0% prior (revised from 0.5%); Real Cash Earnings Y/Y: -0.7%e v -0.4% prior (revised from +0.1%)
- 19:30 (AU) Australia Nov Building Approvals M/M: +2.0%e v -8.1% prior; Y/Y: -11.7%e v -23.6% prior
- 19:30 (AU) Australia Nov Job vacancies: No est v -1.9% prior
- 22:00 (CN) China to sell 3-year and 7-year Government Bond
