Notes/Observations
- UK Q4 GDP avoids a contraction while annual pace matches a 10-year low
- Central bankers dominating the agenda later in session, with a number of key speakers (Fed Chair Powell begins his semi-annual testimony in Congress)
- New Hampshire primary to be the main highlight on US political front
Asia:
- Coronavirus Update: 42.7K confirmed cases (+2.5K); total deaths 1,017(+108); recovered patients +4,022(+740)
- Monday (Feb 10th) saw ‘hundreds of thousands’ of workers returning to work in Shenzhen (China) after extended Lunar New Year holiday
- China gov’t official expressed concern about local gov’t rules that prevent companies from reopening [Shenzhen gov’t previously announced that all businesses must apply for permission before they resumed work after the extended holiday break]
- Over 300 companies (including tech firms) in China said to be seeking a total of at least CNY57.4B in bank loans in order to deal with the impact of the coronavirus
Europe:
- ECB strategic review to be divided into 8 topics, CPI target could be set by July under review
- Former Italy PM Renzi said to threatened a no-confidence motion against his own justice minister Bonafede. Move could be viewed as a fresh risk to the survival of the ruling coalition
Americas:
- White House formally released its 2021 budget proposal: proposes $4.8T in spending and reducing deficit to $966B. Proposed sale of 15M bbls of crude oil from the Strategic Petroleum Reserve (SPR) in 2021
- President Trump: China working very hard to combat coronavirus. “Not happy” with Fed Chair Powell, raised to quickly and cut too slowly
- Fed’s Harker (hawk, voter in 2020): central bank should hold rates steady for a while; Fed should monitor developments before taking action
- Fed’s Daly (dove, non-voter): inflation a bit above target is far better than a bit below in the current environment. Did not see hitting 2% inflation target until 2021
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 +0.63% at 427.32, FTSE +0.70% at 7,499.06, DAX +0.63% at 13,578.68, CAC-40 +0.43% at 6,041.24, IBEX-35 +0.18% at 9,834.00, FTSE MIB +0.39% at 24,603.17, SMI +0.30% at 11,072.50, S&P 500 Futures +0.20%]
- Market Focal Points/Key Themes: European indices in the green following Asia indices higher and higher US futures. Daimler up slightly following soft Q4 earnings results and dividend cut; however, the company guided FY20 EBIT to be significantly higher y/y. Tui rallying despite weak quarterly results; company raised FY20 revenue guidance, expecting a strong summer season. Other risers following earnings include Air Liquide, Delivery Hero, Ocado, Home24 and Aker BP. JD Sports Fashion up as the company guides FY19 results to top end of estimates. Michelin down on annual results and guiding FY20 segment operating income down slightly y/y. Moncler trading lower on FY19 results and warning on coronavirus sales and earnings impact. Kemira plummets on meaningfully lower quarterly profits y/y. Other decliners following earnings results include AMS, Randstad and Norway Royal Salmon. On the M&A front, Deutsche Telekom up on speculation that US court will rule in favor of T-Mobile/Sprint merger today. Sanoma and Alma Media both jumped on agreement for Alma to divest regional news media business and printing operations in Finland to Sanoma. NMC plunges after KKR confirmed that it has not made and does not intend to make an offer for NMC. William Hill up on partnership as CBS sportsbook provider across all media platforms. Marks & Spencer lower on CFO departure. Notable earners today include Goodyear Tire & Rubber, Omnicom, AutoNation, Hasbro and Under Armour.
Equities
- Consumer discretionary: TUI [TUI1.DE] +11% (earnings), Home24 [H24.DE] +4% (earnings), Alma Media [ALMA.FI] +6% (divestment), Delivery Hero [DHER.DE] +1% (earnings), Marks & Spencer [MKS.UK] -2% (new CFO)
- Financials: William Hill [WMH.UK] +4% (confirm deal with CBS)
- Industrials: Daimler [DAI.DE] +1% (earnings)
- Technology: AMS [AMS.CH] -5% (earnings)
- Telecom: Deutsche Telekom [DTE.DE] +4% (Sprint/T-mobile merger)
Speakers
- EU Commission President Von der Layen: Australian arrangement for UK-EU relationship means basic WTO rules
- EU Brexit Negotiator Barnier: There would not be a general open-ended ongoing equivalence for financial services with UK
- India Fin Min Sitharaman stated that Govt and RBI taking steps to increase growth; and saw ‘green shoots’ taking root in economy, industrial activity was on a rebound
- China reportedly urged quicker output resumption in most regions
- China National Health Commission scientist Zhong Nanshan: Current model suggested that coronavirus could peak later in Feb then plateau
- Russia Energy Min Novak reiterated stance that Russia was not yet prepared to announce its position on OPEC+ production actions as they considered impact of coronavirus outbreak
Currencies/Fixed Income
- USD continued to hold onto its recent gains with focus on a rash of central bank speak later in the session.
- EUR/USD tested 4-month lows as it probed the lower end of the 1.09 handle.
- GBP/USD was slightly higher as UK Q4 GDP data avoided a contraction. The overall price action was muted as BOE commentary and recent data releases underpinned a good start to 2020 (thus improvement in Q1 data down the road).
Economic Data
- (SE) Sweden Jan PES Unemployment Rate: 4.1% v 4.0% prior
- (NO) Norway Q1 Consumer Confidence: 14.5 v 14.8 prior prior
- (UK) Q4 Preliminary GDP Q/Q: 0.0% v 0.0%e; Y/Y: 1.1% v 0.8%e
- (UK) Dec Monthly GDP M/M: 0.3% v 0.2%e
- (UK) Q4 Preliminary Private Consumption Q/Q: 0.1% v 0.1%e; Government Spending Q/Q: 2.1% v 0.5% e; Gross Fixed Capital Formation Q/Q: -1.6% v -0.3%e; Exports Q/Q: 4.1% v 1.8%e; Imports Q/Q: -0.8% v -0.1%e
- (UK) Dec Industrial Production M/M: 0.1% v 0.3%e; Y/Y: -1.8% v -0.8%e
- (UK) Dec Manufacturing Production M/M: 0.3% v 0.5%e; Y/Y: -2.5% v -1.0%e
- (UK) Dec Construction Output M/M: +0.4% v -0.5%e; Y/Y: 5.0% v 3.6%e
- (UK) Dec Visible Trade Balance: +£0.9B v -£10.0Be; Overall Trade Balance: +£7.7B v -£0.4B; Trade Balance Non EU: +£6.7B v -£2.0B
- (UK) Dec Index of Services M/M: 0.3% v 0.2%e; 3M/3M: 0.1% v 0.0%e
- (ZA) South Africa 4Q Unemployment Rate: 29.1% v 29.1%e
Fixed Income Issuance
- (IT) Italy Debt Agency (Tesoro) opened its book to sell EUR-denominated Mar 2036 BTP bond; guidance seen +9bps over BTPs
- (UK) DMO opened its book to sell 1.625% Oct 2071 Gilt; guidance seen -2.25 to -2.00bps to July 2068 gilts
- (ID) Indonesia sold combined IDR8.0T v combined IDR7.0T target in 6-month bills, 2-year, 4-year and 25-year Islamic bond (Sukuk) bonds
- (NL) Netherlands Debt Agency (DSTA) sold €B vs. €1.0-2.0B in 0.5% July 2026 DSL bond; Avg Yield: % v 0.265% prior
- (ZA) South Africa sold total ZAR4.53B v ZAR4.53B indicated in 2030, 2035 and 2048 bonds
- (ES) Spain Debt Agency (Tesoro) sold total €4.5B vs. €4.0-5.0B indicated range in 6-month and 12-month bills
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 (BE) Belgium Debt Agency (BDA) to sell 3-month and 12-month bills
- 05:30 (SI) Slovenia to sell 3-month and 12-month bills
- 06:00 (US) Jan NFIB Small Business Optimism: 103.3e v 102.7 prior
- 06:00 (ZA) South Africa Manufacturing Production M/M: -1.0%e v -1.5% prior; Y/Y: -3.9%e v -3.6% prior
- 06:00 (BR) Brazi; Feb IGP-M Inflation (1st Preview): 0.2%e v 0.7% prior
- 06:00 (US) Fed’s Daly in Dublin
- 06:30 (CL) Chile Central Bank Economists Survey
- 07:00 (MX) Mexico Dec Industrial Production M/M: 0.0%e v 0.8% prior; Y/Y: -0.6%e v -2.1% prior
- 07:00 (TR) Turkey to sell 11% 2027 Bonds
- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
- 07:45 (US) Goldman Economist Chain Store Sales
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:55 (US) Weekly Redbook LFL Sales data
- 09:00 (EU) Weekly ECB Forex Reserves
- 09:00 (EU) ECB chief Lagarde in EU Parliament
- 10:00 (US) Dec JOLTS Job Openings: 6.9250Me v 6.800M prior
- 10:00 (MX) Mexico Weekly International Reserves
- 10:00 (US) Fed chair Powell in Congress
- 11:30 (DE) ECB’s Schnabel (Germany)
- 12:00 (UK) BOE’s Haskel
- 12:00 (IE) ECB’s Lane (Ireland, chief economist
- ) – 12:15 (US) Fed’s Quarles on bank supervision
- 13:30 (US) Fed’s Bullard on economy and monetary policy
- 14:15 (US) Fed’s Kashkari
- 15:50 (AU) RBA’s Heath Gives Speech in Sydney
- 16:30 (US) Weekly API Oil Inventories
- 16:45 (NZ) New Zealand Jan Total Card Spending M/M: No est v -0.6% prior; Retail Spending Retail M/M: +0.4%e v -0.8% prior
- 18:00 (KR) South Korea Jan Unemployment Rate: 3.8%e v 3.8% prior
- 18:50 (JP) Japan Jan M3 Money Stock Y/Y: 2.3%e v 2.3% prior; M2 Money Stock Y/Y: 2.7%e v 2.7% prior
- 20:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate (OCR) unchanged at 1.00%
- 21:00 (NZ) New Zealand Central Bank (RBNZ) Gov Orr post rate decision press conference
- 22:00 (CN) China to sell 2-year and 5-year Upsized Government Bonds
- 22:30 (HK) Hong Kong to sell HKD1.7B in 1.97%10-Year Bonds
- 22:35 (JP Japan to sell CPI Linked 10-Year Bonds
- 23:00 (MY) Malaysia Q4 GDP Q/Q: 1.0%e v 0.9% prior; Y/Y: 4.1%e v 4.4% prior; Annual 2019 Y/Y: 4.5%e v 4.7% prior
- 23:00 (MY) Malaysia Q4 Current Account Balance (MYR): 6.9Be v 11.5B prior
