• US lifted its designation of China as a currency manipulator noting that China had made “enforceable commitments” not to devalue the yuan and has agreed to publish exchange-rate information
  • US corporate earning seasons begins


  • China Dec Trade Balance: $46.8B v $45.7Be; Exports Y/Y: 7.6% v 2.9%e; Imports Y/Y: 16.3% v 9.6%e. China’s soybean, pork imports from the US have significantly rebounded in December
  • Japan Nov Current Account Balance (BOP basis): ¥1.437T v ¥1.423Te; Trade Balance: -¥2.5B v +¥103.8Be


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  • ECB chief Lagarde: targets Jan 23rd to announce ECB strategy review


  • EU said to be requiring fishing to be included in post Brexit trade agreement (UK said it wanted to control its waters after Brexit)


  • Treasury Semi-annual currency report confirmed the removal of China from the designation as a currency manipulator; Insisted that China take necessary steps to avoid a persistently weak currency. Continuing to monitor currency practices of China, Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Vietnam and Switzerland. Real dollar remains 8% above its 20-year average; sustained dollar strength would likely exacerbate persistent trade and current account imbalances
  • Trade Rep Lighthizer: Close to being finished with translation of phase 1 China trade agreement, deal included commitments on currency manipulation. Added that US was going to make it public on Wednesday before the signing of the trade agreement
  • Speculation of what the Phase-1 trade agreement said to contained China commitment to buy $200B of US goods over a two-year period in four industries. Target for manufactured goods purchases will be the largest, worth around $75B; China to also promise to buy $50B worth of energy, $40B in agriculture and $35-40B in services



  • Indices [Stoxx600 +0.16% at 419.06, FTSE % at #, DAX +0.21% at 13,479.94, CAC-40 +0.05% at 6,038.88, IBEX-35 -0.12% at 9,532.00, FTSE MIB +0.08% at 23,916.08, SMI -0.07% at 10,615.00, S&P 500 Futures +0.05%]

Market Focal Points/Key Themes:

  • European indices mainly in the red following Asia indices mostly higher and slightly lower US futures Lindt up slightly after trading update. Swiss BKW rallying after raising FY19 profit guidance and DNO up after issuing annual production update. Boohoo gains on strong trading update and increased FY19 revenue and EBITDA guidance. Other risers following trading updates include Page Group, Taylor Wimpey, Grafton and Games Workshop. Suedzucker down as the company cut FY19 revenue projections for the sugar segment. McBride, Elementis and Flowtech Fluidpower tank after profit warnings. DFS and Kindred dive after reporting soft trading updates. William Hill, GVC and 888 Holdings declining on news that the UK’s gambling commission is planning to ban consumers from using credit cards to place bets. Evonik down after shareholder sells 5.2% stake. Lekoil tanks after a $184M Qatari loan obtained by the company appears to be an alleged loan scam. Notable earners today include Citigroup, Delta Airlines, JP Morgan Chase and Wells Fargo


  • Consumer discretionary: [BOO.UK] +5% (trading update), PageGroup [PAGE.UK] +2% (trading update), Lindt & Spruengli [LISP.UK] +1% (earnings), Games Workshop [GAW.UK] +7% (earnings), AB InBev [ABI.BE] -1.5% (US wine sales decline first time since 1994), William Hill [WMH.UK] -1.5% (gambling on credit cards to be banned in UK)
  • Energy: BKW [BKW.CH] +7% (outlook)
  • Financials: McBride [MCB.UK] -17% (trading update; profit warning)
  • Industrials: Taylor Wimpey [TW.UK] +1% (trading update)


  • ECB’s Mersch (Luxembourg): Regional economy appeared to be stabilizing for both growth and inflation (in-line with Council view). Proven right to have an accommodative policy
  • France Fin Min Le Maire reiterated stance that labor protests would not have a large impact on domestic GDP growth. To speak with US Treasury Sec Mnuchin on digital tax on Tuesday, Jan 14th (today)
  • France, Germany and UK said to elect nuclear dispute mechanism against Iran on Tuesday, Jan 14th
  • Hong Kong Leader Lam: Government to spend HK$10B on new relief measures
  • China Foreign Ministry spokesperson Geng Shuang stated that the removal of the CNY manipulator tag ‘was in line with truth; reiterated govt stance to keep currency basically stable

Currencies/ Fixed Income

  • FX markets remain quite quiet ahead of the expected Wed signing of the US-China trade agreement.
  • USD/JPY stayed above the 110 level and near 8-month highs as sentiment continued to favor unwinding of safe-haven flows ahead of the signing of the US-China phase-one trade agreement

Economic Data

  • (SE) Sweden Dec PES Unemployment Rate: 4.0% v 3.9% prior
  • (SE) Sweden Maklarstatistik Dec Housing Prices Y/Y 5% v 4% prior; Apartment Prices Y/Y: 5% v 4% prior
  • (FI) Finland Dec CPI M/M: +0.1% v -0.1% prior; Y/Y: 0.9% v 0.7% prior
  • (IN) India Dec Wholesale Prices (WPI) Y/Y: 2.6% v 2.4%e
  • (TR) Turkey Nov Industrial Production M/M: +0.7% v -0.9% prior; Y/Y: 5.1% v 5.5%e
  • (RO) Romania Dec CPI M/M: 0.3% v 0.2%e; Y/Y: 4.0% v 4.0%e
  • (RO) Romania Q3 Final GDP Q/Q: 0.5% v 0.6% prelim; Y/Y: 3.0% v 3.0%e
  • (HU) Hungary Dec CPI M/M: 0.3% v 0.2%e; Y/Y: 4.0% v 4.0%e
  • (ZA) South Africa Q4 BER Consumer Confidence: -7 v -8e
  • (SE) Sweden Nov Household Consumption M/M: 0.0% v 0.1% prior; Y/Y: 2.3% v 3.0% prior

Fixed Income Issuance

  • (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 10-year bonds; guidance seen +37bps to mid-swaps
  • (CY) Cyprus opened its book to sell EUR-denominated 10-year and 20-year bonds (10-year notes guidance seen +65bps to mid-swaps and 20-year note guidance seen +85bps to mid-swap)
  • (ID) Indonesia sold total IDR7.0T in 6-month Islamic Bills and 2-year, 4-year and 25-year Islamic Bonds (Sukuk)
  • (NL) Netherlands Debt Agency (DSTA) sold €1.2B vs. €0.75-1.25B indicated range in 0.5% 2040 DSL Bonds; Avg Yield: 0.298% v 0.557% prior
  • (ES) Spain Debt Agency (Tesoro) sold total €5.106B vs. €4.5-5.5B indicated range in 6-month and 12-month bills
  • (ZA) South Africa sold total ZAR4.53B vs. ZAR4.53B indicated in 2032, 2037, and 2044 bonds
  • (IT) Italy Debt Agency (Tesoro) sold total €6.75B vs. €5.25-6.75B indicated range in 3-year, 7-year and 20-year BTP bonds
  • Sold €3.0B vs. €2.5-3.0B indicated range in 0.05% Jan 2023 BTP bonds; Avg Yield: 0.18% v 0.22% prior; Bid-to-cover: 1.40x v 1.53x prior
  • Sold €2.5B vs. €2.0-2.5B indicated range in 0.85% 2027 BTP; Avg Yield: 0.94% v 0.91% prior; Bid-to-cover: 1.47x v 1.28x prior
  • Sold €1.25B vs. €0.75-1.25B indicated range in 3.1% 2040 BTP; Avg Yield: 2.14%; Bid-to-cover: 1.49x

Looking Ahead

  • 05:30 (UK) Weekly John Lewis LFL Sales data
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
  • 05:30 (UK) DMO sell £3.25B in 0.625% 2025 Gilts
  • 05:30 (BE) Belgium Debt Agdency (BDA) to sell 3-month and 12-month bills
  • 06:00 (US) Dec NFIB Small Business Optimism Index: 104.8e v 104.7 prior
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (BR) Brazil Nov IBGE Services Sector Volume Y/Y: No est v 2.7% prior
  • 07:00 (IS) Iceland Dec Unemployment Rate: No est v 4.1% prior
  • 07:00 (RU) Russia announces upcoming OFZ Bond issuance
  • 07:00 (TR) Turkey to sell 2021 and 2026 bonds
  • 07:45 (US) Goldman Economist Chain Store Sales
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Dec CPI M/M: 0.2%e v 0.3% prior; Y/Y: 2.3%e v 2.1% prior
  • 08:30 (US) Dec CPI (ex-food/energy) M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.3% prior
  • 08:30 (US) Dec CPI NSA Index: 257.169e v 257.208 prior; CPI Core Index (seasonally Adj): 266.087e v 265.62 prior
  • 08:30 (US) Dec Real Avg Weekly Earnings Y/Y: No est v 1.1% prior; Real Avg Hourly Earning Y/Y: No est v 1.1% prior
  • 08:55 (US) Weekly Redbook LFL Sales data
  • 09:00 (EU) Weekly ECB Forex Reserves
  • 09:00 (US) Fed’s Williams in London
  • 10:00 (MX) Mexico weekly International Reserves data
  • 12:30 (EU) ECB’s Villeroy (France) in Paris
  • 13:00 (US) Fed’s George in Kansas City
  • 14:00 (AR) Argentina Nov Capacity Utilization: No est v 62.1% prior
  • 16:00 South Korea Dec Export Price Index M/M: No est v -1.8% prior; Y/Y: No est v -6.2% prior
  • 16:00 South Korea Dec Import Price Index M/M: No est v -1.0% prior; Y/Y: No est v -2.1% prior
  • 16:30 (US) Weekly API Oil Inventories
  • 16:45 (NZ) New Zealand Dec Food Prices M/M: No est v -0.7% prior
  • 18:00 (KR) South Korea Dec Unemployment Rate: 3.6%e v 3.6% prior
  • 18:50 (JP) Japan Dec M2 Money Stock Y/Y: 2.7%e v 2.8% prior; M3 Money Stock Y/Y: 2.3%e v 2.83prior
  • 19:00 (AU) Australia to sell AUD400M in 2.75% 2024 Bonds
  • 19:30 (JP) BOJ Gov Kuroda at Branch Managers’ Meeting
  • 22:00 (TH) Thailand to sell THB15B in 2038 bonds
  • 22:00 (CN) China to sell 2-year, 5-year and 10-year Upsized Bonds
  • 22:35 (JP) Japan to sell 5-Year JGB Bonds
  • 23:00 (ID) Indonesia Dec Trade Balance: -$0.4Be v-$1.3B prior; Exports Y/Y: -2.2%e v -5.7% prior; Imports Y/Y: -5.0%e v -9.2% prior
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